09-Nov-2015

1

International trade and freight by 2050

Jari Kauppila, Senior Economist

OECD Working Party on Shipbuilding, 9 Nov 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

09-Nov-2015

2

3

4

09-Nov-2015

3

Model framework

International trade

projections

Mode split Weight model Shortest path assignment to routes by

mode

Model steps sequence

Centroids

Outputs:

310 centroids, 20 products

International trade by product in weight and tonne-km by origin-destination pair by mode

Related CO2 emissions by mode and region

Travel time and delay by link and node

Underlying network model

Source: ITF International Freight model

OpenStreetMap, OpenFlights, Sea Project, UCL

09-Nov-2015

4

What drives future trade?

7

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

8

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

09-Nov-2015

5

Emerging economies still drive growth

9

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

10

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

09-Nov-2015

6

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

11

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

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%

09-Nov-2015

7

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%

14

09-Nov-2015

8

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

09-Nov-2015

9

Improve capacity management

Many freight facilities are underutilised or managed at low efficiency level Focus on managing supply chains – not only nodes

Invest in missing links

More alternative and multi-modal connections to increase efficiency

Prepare for mega-ships

Adapt infrastructure to more and bigger vessels Also at port-hinterland links

Increase vehicle utilisation

Improve load factors and reduce idle times across supply chains

Aligning policies across supply chains