Globalisation & International Maritime Transport

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Globalisation has evolved with a realisation that resources and goods are not always produced in a location where there is an actual need for it. A population at another corner of the globe would be in dire need of the same products, which facilitated the concept of ‘globalisation.’ This was not possible without having an economically feasible mode of global transportation.

While transportation is a major pillar of globalisation, (apart from communications, standardisation and liberalisation), shipping has been its cornerstone particularly on the international and interregional trade front. The shipping industry has been a key ingredient in fostering trade and the maritime industry duly adapted itself with technologies, national registries, and labour resources to fit to the demands of globalisation.

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Maritime Shipping

Global goods movement is a critical element in the global freight transportation system that includes ocean and coastal routes, inland waterways, railways, roads, and air freight. Today, port corridors are proving themselves as crucial nodes for freight transportation network, connecting railways and roadways to the hinterland. Especially in the containerised, liquid and dry bulk cargo segments, the maritime transportation complements other modes of transportation.

Dependence of Economy on Maritime Trade

Former Chairman of INTERCARGO, Nicholas Pappadakis once said, “World trade, world finance and the health of the world economy are all inter-related with shipping.” The marine transportation system is a network of specialised vessels, the ports they visit, and transportation infrastructure from factories to terminals to distribution centers to markets. All components together, have become an integral part of the global economy. For many commodities and trade routes, there is no direct substitute for waterborne commerce.

From refrigerated freighters and container ships to car carriers and supertankers, the world’s shipping industry has played an incredibly key role in transporting 90% of the world’s food, products and energy while helping to transform the global economy along the way. Each year, some 86,000 ships move more than 9 billion tons of cargo – more than a ton for each person on the planet – across our seas each year.

(Image Courtesy: Financial Times)

Shipping Connects Cost Effective Labour Markets

Globalisation has identified overseas labour intensive markets, which encouraged transport of raw materials and intermediate products to places where manufacturing costs were lower. With low-cost petroleum and ‘gas’ energy for vessel propulsion, the costs of semi-finished and retail products have substantially reduced. Thanks to international maritime trade, it is common for agri-products to be harvested on one continent, shipped to another for intermediate processing, transported to a third continent for final assembly, and then delivered to market.

Impact of Globalisation on Human Resources

Though seafaring is an age-old employment generating sector, globalisation has augmented absorption of professionals and semi-skilled resources from different countries. This has resulted in multinational crews. With very specific international qualification standards and crew training protocols in place, most modern ships are operated by talented international manpower. Except where flag registry includes citizenship requirements, qualified seafarers are largely hired according to economic rather than residency criteria.

(Image Courtesy: Maritime Logistics Professional)

Impact on Environment

Efforts are now underway to reduce air pollution from ships, which have impacted the flora and fauna to a considerable extent. While different nations have their own environment emission control guidelines, the International Maritime Organisation is on a mission-mode to implement a common minimum charter, for all ship-owning and ship-operating nations.

A number of emissions control technologies and operational strategies are in use or currently being evaluated, especially for pollutants such as NOx and PM. These emissions controls have been categorised as either pre-combustion, in-engine, or post-combustion controls. IMO’s agenda being, “technology alone may not solve environmental issues. It would require alternative energy sources and more sustainable freight operations.”

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The Way Ahead

The intrinsic connection between maritime transportation, international trade, and globalisation trends will continue as long as economic wealth continues to derive from consumption of goods and services. A fundamental change in the connection between trade and global economic growth would require significant changes in population demographics or social valuation of goods and services.

While predicting the future changes in global economics is not easy, the shipping industry will definitely play a pivotal role to bridge the developed and developing economies. Gerry Wang, CEO of Seaspan Corp., addressed container shipping as “the ocean highway” which connects manufacturers to consumers. “Without the effective container-shipping network, you can forget about Walmart, forget about globalisation, and you can also forget about China being the global manufacturing center,” Wang opines.

(References: Forbes, International Chamber of Shipping, Organisation for Economic Co-operation and Development)

Sea News Feature, February 9