The pandemic has had many tragic impacts, and the economic effects are secondary. But they are enormous. The IMF expects global economic activity to decline on a scale not seen since the Great Depression, with 170 countries seeing income per capita decline this year. There have been striking changes in the value, volume and direction of trade. WTO expects world merchandise trade to fall by between 13 and 32 per cent in 2020, with exports from North America and Asia hit hardest. There have also been changes in the relative importance of different forms of infrastructure. Take airlines for instance. Passengers are vanishing, flights are cancelled, and this means that air freight capacity is also reduced, because much air freight has actually been carried in passenger planes. However, some airlines are now using passenger planes to carry freight. Rail is also beginning to come into its own: trains are now carrying the post from China to Europe. A 12-14day journey is a lot quicker than sending goods by sea, especially when demand is high. Another vital infrastructure, telecommunications networks, is under pressure. Voice has seen a resurgence, and network disruptions have been reported across Europe. With remote working, as well as the general population staying at home, the strain on internet services is severe. Video streaming has been reduced in technical quality in order to relieve the pressure on the systems. (As for the quality of the films themselves, this is the same as it was.) And some further pressure on the system is on hold for the moment: there is a global shortage of webcams.
Sending goods by sea is the norm. And, if you’re worried about CO2 emissions, you’ll initially be glad to hear that according to the World Shipping Council “Maritime shipping is the world’s most carbon-efficient form of transporting goods – far more efficient than road or air transport.” . They give figures of 10 grammes of CO2 to move a tonne of goods one kilometer. To do the same by rail (diesel train) takes 21, truck and trailer 59, and by air the figure is 470 grammes. But of course an electric train, depending on the source of the electricity, might do better, as might an electric truck in the future. The main problem is that world trade is so big that, even though most of it goes on ships, the total CO2 emissions are enormous. (So are other pollutants: the fifteen largest ships produce more Nox and SO2 than all the cars in the world).
What can be done? The International Maritime Organisation, a UN specialised agency, has a target of reducing CO2 emissions from world shipping by 50 per cent by 2050. Continued technical progress in ships, engines, and fuels will all play a role. But there are also big benefits from ships going more slowly. This has been an increasing trend in any case as a cost saving measure, but it also reduces the CO2 emissions. An obvious additional step is to start taxing maritime fuel, which at the moment, like aviation fuel, is not taxed at all. The IMF has been looking at this and is quite excited about it:” In short, maritime carbon taxes are an economically and administratively promising instrument”
Further steps to take include the electrification of rail lines, which opens up the possibility of using alternative energies in rail freight. What about trade wars? New tariffs on trade and “bringing the jobs home” should cut down on international sea freight, shouldn’t it? Well, producing locally of course reduces the need for imports and thus for freight. But it is almost certainly not the most efficient way to go. Tariffs impose a cost on consumers and they hinder growth and this means that there will be fewer resources for combatting climate change or for anything else.
There’s another development, an unfortunate by-product of climate change that may actually be useful. With global warming, new sea routes are opening up in the Arctic, the fabled Northwest and Northeast Passages. They could halve the time of sea freight voyages between some big markets.