Small Island States Still Cut Off from Major Trade Routes

Small island developing states (SIDS) face severe and complex transport challenges, UNCTAD’s Review of Maritime Transport 2014 reports.

For UNCTAD, the way forward requires a portfolio of measures spanning a range of areas, including trade logistics, climate change and resilience-building, energy, and the financing of sustainable and resilient transport systems.

In this International Year of SIDS, the special chapter of the Review of Maritime Transport sheds light on the transport and trade logistics challenges faced by SIDS worldwide.

“SIDS pay more for their transport, and their shipping connectivity is lower than that of any other country group” UNCTAD’s Secretary-General Mukhisa Kituyi said. “As documented by the Review of Maritime Transport, the situation of SIDS is challenging due to, in particular, their small size, remoteness, trade imbalances and at times oligopolistic shipping markets. Lower volumes of trade will empirically lead to higher freight costs. Smaller vessels are less fuel efficient per unit carried, smaller ports have higher operating costs per ton of cargo, and investments in infrastructure take longer to pay off for smaller volumes of business.”

The average SIDS has during the last decade paid 2 percentage points more for the international transport of their imports than the world average of 8.1 per cent. The highest values are estimated for the Comoros (20.2 per cent), followed by Seychelles (17.9 per cent), Solomon Islands (17.4 per cent) and Grenada (17.0 per cent).

The maritime transport services connecting SIDS to global trade networks face severe structural, operational and development obstacles, according to UNCTAD. Remoteness from main global trade routes constitutes a major disadvantage in terms of cost and time, but also quality and frequency of services that access international markets.

As open small economies, SIDS are vulnerable to global economic and financial shocks and are in many cases located unfavourably in relation to global weather systems and in areas prone to natural disasters and climate change factors.

In response to the special challenges faced by SIDS, the Review of Maritime Transport 2014 recommends a range of measures, such as deriving gains from operating at a small scale by making use of local resources and catering for local needs, adapting to unavoidable climate-change impacts on transport, in particular seaport and airport infrastructure, by investing in disaster-risk reduction, and strengthening national planning as well as public policy and financial systems for climate response (for example, using climate-change finance assessment tools).

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