Multi-year Expert Meeting on Transport, Trade Logistics and Trade Facilitation

Sustainable Freight Transport Systems: Opportunities for Developing Countries

14-16 October 2015

INTERNATIONAL TRADE AND FREIGHT BY 2050

by

Mr. Jari Kauppila

Senior Economist

International Transport Forum (ITF)

14 October 2015

This expert paper is reproduced by the UNCTAD secretariat in the form and language in which it has been received.

The views expressed are those of the author and do not necessarily reflect the view of the United Nations.

International trade and freight by 2050

Jari Kauppila, Senior Economist

UNCTAD, 14-15 Oct 2015

Intergovernmental Organisation

57 member countries (23 non-OECD) focussing on transport

A strategic think tank for global transport policy issues

An annual summit of Ministers

3

4

Underlying network model

Source: ITF International Freight model

OpenStreetMap, OpenFlights, Sea Project, UCL

What drives future trade?

6

Scale and distance

› Size of the economies

› Distance (restrictions to trade, transportation technology, etc.)

Production factors

› Physical and human capital (natural resources, arable land, skills)

› Changes in productivity

Transport policies

Changes in global value chains

Geopolitical forces

Global trade elasticities have changed

7

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2.2

2.4

2.6

2.8

3

3.2

3.4

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Average 2011-2013

Own calculations based on World Bank and OECD

Average 1990-2007

Emerging economies still drive growth

8

GDP growth

0

1

2

3

4

5

6

7

8

2000-2010 2010-2020 2020-2030 2030-2040 2040-2050 2050-2060

Emerging economies

World

Advanced economies

% average annual rate

A growing share of trade between emerging economies

9

2012 2060

Within OECD

25%

OECD w ith non-OECD

42%

Within non-OECD

33%Within OECD

47%OECD w ith non-OECD

38%

Within non-OECD

15%

2050

Emerging economies move to higher value-added activities – changing trade composition

10

Value-added shares by sector

41% 31%

41%

29% 20% 22%

15% 17% 16% 21%

16%

21% 7%

13%

8% 9%

10% 12%

6%

8%

43% 49% 51%

58%

72% 69% 75%

71% 78%

71%

2010 2060 2010 2060 2010 2060 2010 2060 2010 2060

Services

High-skilled

manufacturing

Other sectors

(agriculture, energy

and other

manufacturing)

China India Euro Area Japan USA

CO2 Emissions from Fuel Combustion

11

Total 31.734 Mt

Transport

23%

Freight 8%

International

freight

6%

Source: IEA

Implications for future global freight

12

Global freight will more than quadruple by 2050

(by a factor of 4.3)

(trade value by a factor of 4.2)

Increasing capacity constraints

can hamper economic growth

Strong growth of CO2 emission

(+290%) undermines climate change goals

An unprecedented challenge

Average hauling distance +17%

International trade related CO2 emissions

13

Air 9%

Rail 3%

Road 56%

Sea 32%

2050 Air 7%

Rail 3%

Road 53%

Sea

37%

2010

Global freight volumes and CO2 emissions by corridor

Intra-North America

South Pacific route

Intra- South

America

North Atlantic route

Intra-Europe

Intra-Asia

North Pacific route North Pacific

route

Oceania South Atlantic route

Indian Ocean route

Intra-Africa

Mediterranean and Caspian Sea

+270%

+280%

+374%

+406%

+403%

+715%

+191%

+315%

+332%

+273%

+689%

+195%

Freight volume in billion tonne-km

CO2 Emissions in million tonnes

+344% +263%

15

Domestic share of global freight

10% of international trade takes place within domestic borders

30%

10%

of total trade-related CO2 is emitted here

of international trade takes place within domestic borders

Domestic share of trade-related CO2 emissions

Investment

Adapt infrastructure to more and bigger vessels Also at port-hinterland links Alternative and multi-modal connections to increase efficiency

Management

Focus on managing supply chains – not only nodes

Efficiency

Increased trade will put infrastructure under pressure

Many freight facilities are underutilised or managed at low efficiency level Improve load factors and reduce idle times across supply chains

International

Multilateral agreements International Maritime Organization (IMO) International Civil Aviation Organization (ICAO) Etc.

National

Economic measures

Regulation

Infrastructure and land-use planning

Etc.

Industry

Vehicle design and utilisation Alternative fuels Optimising supply chains Shared loading Etc.

Non-profit organisations

Global methodologies & tools Data reporting platforms

Knowledge platforms Etc.

Aligning policies for sustainable freight