At the start of the COVID-19 pandemic, expectations were that seaborne trade, including containerised trade, would experience a strong downturn. However, changes in consumption and shopping patterns have led to increased import demand for manufactured consumer goods, a large part of which are moved in shipping containers. The increase in demand was stronger than expected and not met with a sufficient supply of shipping capacity. As a result of this, transit shipments and transport operations have been delayed and container freight rates significantly increased in many parts of the world. The landlocked developing countries (LLDCs) were hit hard by this sudden shock. In this context, the session discussed the challenges caused by a shortage of containers and an increase in freight rates and identified practical recommendations to avoid such challenges in the future.

On September 09, 2021, Drewry’s composite World Container index was 309% higher than it was a year earlier. In landlocked developing countries (LLDCs) like Bolivia price of transit containers had increased 10 times. In Mongolia, the price of containers increased by six times. An increase in the price of containers was caused due to factors such as – closure of international borders to arrest the spread of the pandemic - that hampered the timely circulation of containers.

LLDCs typically depend on the neighbouring countries that allow transit to the cargo destined for LLDCs. This often requires multiple border crossings and hence multiple customs checks and related trade procedures. In the COVID induced world, different countries enforced different laws and regulations. The LLDCs faced challenges while adhering to the multitude of transit and transhipment regulations imposed by more than one transit country and yet participate in international trade. Consignments were delayed leading to a demand-supply imbalance both in the domestic and international markets, thereby disrupting global supply chains.

In this regard, the panellists underlined the need for putting in place certain policies, and procedures to help countries across the globe, especially the LLDCs, respond to unforeseen events like the COVID-19 pandemic in a better way without disrupting global value chains. The panellists recommended the adoption of the provisions laid down in the WTO Trade Facilitation Agreement (WTO-TFA). To this end, the panellists emphasised the implementation of the following two crucial provisions of the WTO-TFA – (i) Replacing Transhipment with Transit; (ii) Establishment of National Trade Facilitation Committee (NTFC) by all member countries and assigning a Nodal Person at the national level who would coordinate with all the relevant stakeholders, from both government and private sector, involved in doing/facilitating cross border trade.

The panellists also underlined the need for harmonising, standardising and simplifying customs procedures by adopting measures recommended by the World Customs Organisation (WCO). Additionally, the panellists emphasised the need for digitising customs procedures coupled with increased use of dry ports, and inland container depots.

Lastly, the panellists emphasised on the need to put in place a policy to ensure better circulation of containers.

The panellists concluded that the implementation of WTO-TFA, coupled with simplified customs procedures, and supported by related hard and soft interventions could significantly benefit the LLDCs and help them become more resilient to unforeseen global shocks.

On the panel were Poul Hansen, Chief, Trade Facilitation, UNCTAD; Vyara Filipova, Technical Officer, World Customs Organization; Steven Pope, Head of Trade Facilitation, Go Trade Deutsche Post DHL Group; and Researcher, International Think Tank for Landlocked Developing Countries. The session was moderated by Purevsuren Lundeg, Ambassador, Permanent Representative, Coordinator of LLDC Group in Geneva, Permanent Mission of Mongolia to the WTO.

Reporting by Arnab Ganguly

The report was published on the CUTS Bulletin No.2 dated September 29, 2021.