The Hindu Business Line : Global shipping: Challenges ahead

"MUCH of the world community, particularly its elected representatives, most of the time, in most cases, appear to be blissfully unaware of the significance of sea transport to the civilisation, consumption and production of the world," said Lord Kinnock, former European Union Transport Commissioner, at the centenary celebrations of the shipping industry body BIMCO (Baltic and International Maritime Council) at the IMO (International Maritime Organisation) early this year.

Of all the sectors that make up the global transport infrastructure, shipping probably has the lowest public profile and the least representative public image, says an IMO background report titled `International Shipping: Carrier of World Trade'.

The report, available on IMO's Web site, takes a broad look at the industry, its public image and the challenges ahead. Here are some excerpts from the report:

Public image

In the developed world, most people are familiar with the rituals and frustrations of air travel; trains not only cross vast empty plains but also rattle through busy cities and suburban towns; and the lorries, cars and vans that crowd the road network are simply a part of everyday life.

By contrast, most people never encounter a ship, except perhaps for the occasional trip on a ferry. To all intents and purposes, shipping is "out of sight and out of mind."

Shipping actually has a positive story to tell. In terms of efficiency, safety, the environment and its contribution to global trade, shipping is unmatched by any other transport sector.

What tends to be overlooked is that vast supplies of sea-borne oil, for example, are needed every day. About 60 per cent of the annual world oil consumption of 3.6 billion tonne is transported by sea. And, of this, 99.9997 per cent is delivered safely.

Shipping and the global economy

Over 90 per cent of global trade is carried by sea. The United Nations Conference on Trade and Development (Unctad) estimates that the operation of merchant ships contributes about $380 billion in freight rates within the global economy, equivalent to about 5 per cent of total world trade.

Shipping trade estimates are usually calculated in tonne-miles — a measurement of tonnes carried, multiplied by the distance travelled. In 2003, the industry shipped around 6.1 thousand million tonnes over a distance of about 4 million miles, resulting in a staggering total of over 25 thousand billion tonne-miles of trade.

Over the last four decades, total sea borne trade estimates have more than quadrupled, from less than 6 thousand billion tonne-miles in 1965 to the latest full year figure of 25 thousand billion tonne-miles in 2003.

Overall, between 1980 and 1999, the value of world trade grew at 12 per cent a year, while total freight costs during the same period increased only 7 per cent, demonstrating the falling unit costs of marine transportation.

The transport cost element in the shelf price of consumer goods varies from product to product, but is ultimately marginal.

For example, transport costs account for just 2 per cent of the shelf price of a television set and only 1.2 per cent of a kilo of coffee.

The world fleet

As on January 1, 2005, the world trading fleet was made up of 46,222 ships, with a combined 597,709,000 gross tonnes. The vast bulk of the fleet was made up of: general cargo ships (18,150), tankers (11,356), bulk carriers (6,139), passenger ships (5,679) and container ships (3,165). Other ship types accounted for 1,733 vessels.

The overall safety record of shipping has been improving steadily for many years. The number of ships lost in maritime casualties, according to casualty statistics produced by Lloyds Register of Shipping between 1966 and 1985, was never fewer than 300 annually. The worst years, 1978 and 1979, together saw 938 losses at a ratio of 6.7 ships per thousand in the world fleet.

In 1959, when IMO began, the ratio of vessels lost was running at 5 per thousand. The number and percentage of losses began to dip significantly in 1980 and has continued on a downward curve ever since. In 1990, the number of annual losses dipped under 200, at 2.4 per thousand vessels. By 2004, the overall figure had approached the 100 mark.

Seafarers

The global population of seafarers serving on international trading merchant ships is estimated to be 400,000 officers and 825,000 ratings. The OECD countries (North America, Western Europe and Japan) remain the most important source for officers although growing numbers of officers are now recruited from other Far-Eastern countries and Eastern Europe.

The Philippines alone provides almost 20 per cent of the global maritime workforce. China and India are also significant maritime labour supply nations, with many seafarers from these countries enjoying employment opportunities on foreign flagships operated by international shipping companies.

Challenges ahead

In the current global climate the challenge for the maritime community in this respect is twofold: on the one hand, to ensure that security consciousness and heightened vigilance become so ingrained as to become second nature; and, on the other, to achieve an effective and workable balance between security measures and the free and uninterrupted flow of maritime traffic — which does, after all, underpin the entire global economy.

Maintaining strategically vital sea passages, such as the Malacca Strait, as trouble-free shipping routes are of crucial importance to everyone, not just those involved in shipping.

Another important issue to be tackled without delay is whether or not the physical assets and the infrastructures of the shipping and port industries are able to adapt quickly enough to keep pace with changes in global trading patterns and, more fundamentally, whether it is commercially sensible to equip for levels of activity and for patterns of activity that may or may not be long-lasting. Commercial considerations of this nature have always vexed the maritime industries and they will continue to be among the issues that will dominate them over the next decade.

For IMO, creating the conditions in which international shipping can operate safely, securely and with a minimal impact on the global environment remains its mission.

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