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The Importance of Shipping in the International Trade Volume

Updated on July 21, 2018
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Merchant Navy Engineering Officer on passengers ship since 2008

The importance of shipping lies in the international trade process. It's the link between the foreign trade movements, the main pillar, and the base for the export development, imports and re-exports movements between the different countries of the world. The more developed and improved means of shipping, the ports of shipping, and unloading increased the possibility of transport of goods between countries and expanded the foreign trade movement, the creation of new outlets, and commercial markets.

Maritime transport is the oldest transportation means used by humans, particularly by the neighboring countries of the water (oceans, seas, lakes).

The ancient Egyptians were the first to take the seas and oceans, the Phoenicians, the Greeks, and the Romans have followed them.

The end of the 15th century was a period of great discoveries, including that of the new world by CHRISTOPHE COLOMB in 1492, and that of the West African coast in 1482 by DIEGO CAM. In the sixteenth century, the bulk of international trade was on the Mediterranean Sea between Europe and the Maghreb countries; it is therefore in this geographical area that maritime transport was concentrated.

These discoveries gave birth to the triangular traffic between Europe, America, and Africa. Technical progress also participated in the development of maritime transport with the invention of the steam propulsion system which helped to make boats faster and more efficient. Nowadays, with globalization and the principle of free trade, shipping occupies a place of choice in international trade. Indeed, 90% of goods are transported by sea.

International ports and the navy fleet play the key role in the good movement facilitations, transport price reduction, and driving the economic movement of the global logistics system. Recently, with the increased interest in this large economic activity, the shipping has faced significant challenges.

The mission of the commercial vessels is primarily to transport goods and passengers by sea between countries; the safety of life, ship and goods during the voyage to achieve the appropriate economic return cannot be achieved without the use of practical methods, modern equipment, and crews trained in the work of navigation and loading and unloading.

The owner of the vessel and the master on board shall be responsible for the shipment and the care from delivery on the ship's side and during the voyage until unloading in the appropriate condition to the recipients. Therefore, the master and the officers must take the precautions dictated by international laws, regulations , scientific and practical experience to preserve the ship, and goods and lives of various dangers which cannot be overcome except the ongoing study and scientific research.

Types of Vessels

The ships differ in their different types and the multiplicity of purposes for which they are built. The seas that the ship and the ports pass through and deal with are essentially governed by their shape, strength, load, speed, and other characteristics. Naturally, each ship is built for a specific purpose or in a clearer sense to serve a particular trade. So that the shipowners don't build these ships and then think about the work what they can do or how they operate.

The marine engineer designs the ships but doesn't do this according to his hobby; the owners provide him with the necessary instructions to get a good ship in accordance with their objects.

According to the vessel commercial activity we can find several types of ships, among them resumed by the following picture.

The Shipping Characteristics:

-Specialization: Ship transport is based on the transport of certain materials such as oil tankers, banana carriers between Central America and the United States, and grape juice carriers between Algeria and France. There are also passenger ships.

- Increasing the load of one vessel: In some ships, several hundred thousand tons in areas with a water basin of more than (10) meters.

- Speed: The speed of ships due to the techniques used in shipbuilding increased to (50) nautical miles.

- Lower shipping costs compared to other means of transport.

- International companies specializing in shipbuilding, shipping, and all shipbuilding and repair services, from the construction of maintenance basins or warehousing and marine insurance.

- The existence of major maritime transport lines in the world.

Shipping is one of the pillars of economic development of different countries, it contributes to improving the balance of payments of those countries and provide employment opportunities for national manpower, building, and booming cities that lie on the sea by building projects such as ports, naval shipyards, shipping companies, factories, and others. These qualities are getting increased reliance on shipping. It is also the cheapest of all transport types in terms of material costs or potential ability to shipping, requires no constructions only at the beginning and end of the road navigation as ports and jetties. These roads don't need expensive maintenance or repairs. If we gazed world map, we find that there are States benefited greatly from marine coasts made huge business fleets scouring the World East and West, such as Greece and Japan. While other countries are still in the process of attempts such as Arabic countries and in particular Saudi Arabia, and Qatar. There are countries still rely on foreign fleets like many developing States.

Shipping is described as a very diverse market, due to the large and continuous change that characterized it . It provides the shipper with many options and competitive basis to select the suitable for its needs. The shipper may take in consideration the following points:

  • Knowing the type of service available on each shipping line for each type of goods and the terms of the contract related there to.

  • Monitoring the international shipping market closely and know the different shipping prices for each market. A ship operating on an irregular liner has been subject to a lower shipping price than a regular liner, but may take a longer route; the shipper has to choose between these two.

In general, the shipping market can be divided into two main parts:

1. The regular line markets: Are characterized by high and fixed operating costs. In order to maintain the previously announced, the vessel can leave the port whether filled or empty. In addition, this market is characterized by the work of ships on specific and regular routes. It also have a list of shipping rates every period (approximately every 3 months) and are often high compared to other non-scheduled vessels. The goods carried on ships of this type are of high quality, making competition in this area more based on quality of service than on price reduction. The elements affecting the navigation schedules and refueling are:

  • Political obstacles.

  • Trade barriers imposed by some countries on products.

  • Wars, conflicts, and terrorist operations.

  • The time that prevails in some places.

  • The new security laws.

2. The market of mobile vessels: This market is divided into two sub-sections:

  • The tanker market: Means oil tankers and its products and gases.
  • Market carriers of dry solid goods: The price in this market is determined according to the prevailing supply and demand theory for each type of product to be transferred.

To distinguish between ships operating on regular lines and mobile ships, the first thing to consider is that the operators of the regular liners are general carriers and thus:

  • Companies that offer regular or mobile shipping services called carriers and their customers are shippers.
  • The regular transport companies shall publish the dates of their regular sailing, the arrival times and ports.
  • Mobile vessels often carry one or two types of goods on a single trip for only one charger.
  • The shipment of liners includes all the so-called general goods, but the shipment of the car includes excessive or liquid goods which are shipped in large quantities.

Between the main shipping routes used by cargo ships, the nearshore dominates by the Panama Canal and the Suez Canal which relieve the three poles of the world economy. But, the big companies do actually this trips around the world in three roads that have many stops within each regional group. Container ships serve regular lines. The routes are drawn at regular intervals, routes and routing times are known to the customer which allows the organization of flows. Thus, some ports are simple transhipment ports. Container ships of smaller size, take over for secondary links or cabotage, thus operating a real mesh. Some ports are transhipment ports while being in the hinterland, this is particularly the case in areas of high production or consumption.

According to Unctad's forecasts (2017):

  • Maritime merchandise trade is expected to increase with volumes totaling of 10.6 billion tonnes.
  • Oil shipping has continued to grow. In total, the volume carried by tankers reached 3.1 billion tonnes.
  • Crude oil transport also increased in volume to 1.8 billion tonnes.
  • Global demand for dry bulk transport increased to 4.9 billion tonnes.
  • The iron ore trade recorded growth reaching 1.4 billion tonnes.
  • The global containerized trade accelerated at a faster pace, reaching about 140 million dollars.

According to the same statistics, European companies are at the forefront of the world in the field of container transport. But Chinese companies are growing rapidly and have made their appearance in the rankings. Here are the top ten worldwide (in transported containers), in descending order: Maersk Line (Denmark); MSC (Switzerland); CMA CGM (France); Hapag Lloyd (Germany); Evergreen (Taiwan); APL (Singapore); CSAV Group (Chile); COSCO (China); Hanjin Shipping (South Korea); CSCL (China).

Maritime transport supports international trade to account for the global economy as a whole, we cannot find a trade without transport or a transfer without the commercial link between the business process and the transport process; the economic development of the human being must be devoted to the development of maritime transport, the latter in our days has become an important necessity to meet the needs of the community.

© 2018 Freedom of the sea


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