The shipping industry transports cargo through designated sea routes. The global shipping industry is regulated by the International Maritime Organization. • Commercial shipping can be traced back to the Phoenician merchants who transported goods across the Mediterranean.
The shipping industry boomed after the opening of the Suez Canal (1869), which facilitated faster trade between Europe and Asia.
The industry continued its growth, especially in Asia, with Hong Kong inaugurating the world’s largest container port in 1989.
Demand and Supply drivers of the Shipping Industry: • Freight rates • Trade growth • Geographical concentration of trade • Government sanctions on shipment • Access to and suitability of other modes of shipment • Demand for oil and dry bulk • Climatic conditions (rains, storms and tides)
The Top Shipping Company : • APM Maersk, with a TEU capacity of 2,031,886. • Mediterranean Shipping Company with TEU capacities of 1,469,865. • CMA CGM Group with TEU capasity 988,141 respectively. • The shipping industry is considered to be a catalyst for economic development, as it facilitates 90% of world trade. • As markets became increasingly globalized, shipping volumes soared.
The challenges/problems of globalization in shipping industries. • Financial status • Value of the ship - $100 millions • Operating costs - $15000 per day • Where does the capital come from ? • Bank (HSH Bank, Commerz Bank) • Government Loan…e.g China • Capital injection from shareholders’ • Issuance of shares • Bonds e.g Islamic Sukuk, Samurai • Suppliers’ credit
The challenges/problems of globalization in shipping industries. • Shortage of competent seafarers • Lack of awareness/interest • Availability /opportunity of jobs ashore……offshore oil and gas (0&G) industry • Abandonment of seafarers • Inconsistency in legislation • Stringent requirement on qualification..STCW
Piracy/Port and Sea route Security • Due to the value of ships, cargo • Gulf of Aden, Somalia • Hijacking • Supertanker • 2004, International Ship & Port Facility Security Code
The environmental impact • Sea trade contribute almost twice to the word’s carbon footprint than air traffic. • Sea trade contribute 4.5% - 6% of total emissions annually. • 60000 premature death each year in coastal area by entering the blood stream and affecting the heart and lung. • The emission will affect the climate change.
MINI ASSIGNMENT • In a group, think a challenge/problem of globalization that may occur in shipping industries.