The international shipping industry is responsible for the carriage of around 90% of world trade.
Shipping is the life blood of the global economy. Without shipping, intercontinental trade, the bulk transport of raw materials, and the import/export of affordable food and manufactured goods would simply not be possible.
Seaborne trade continues to expand, bringing benefits for consumers across the world through competitive freight costs. Thanks to the growing efficiency of shipping as a mode of transport and increased economic liberalisation, the prospects for the industry’s further growth continue to be strong.
There are over 50,000 merchant ships trading internationally, transporting every kind of cargo. The world fleet is registered in over 150 nations, and manned by over a million seafarers of virtually every nationality.
Ships are technically sophisticated, high value assets (larger hi-tech vessels can cost over US $200 million to build), and the operation of merchant ships generates an estimated annual income of over half a trillion US Dollars in freight rates.
World Seaborne Trade
It is difficult to quantify the value of volume of world seaborne trade in monetary terms, as figures for trade estimates are traditionally in terms of tonnes or tonne-miles, and are therefore not comparable with monetary-based statistics for the value of the world economy.
However, the United Nations Conference on Trade and Development (UNCTAD) estimates that the operation of merchant ships contributes about US$380 billion in freight rates within the global economy, equivalent to about 5% of total world trade.
Shipping trade estimates are often calculated in tonne-miles, as a way of measuring the volume of trade (or “transportation work “, as it is sometimes referred).
Throughout the last century the shipping industry has seen a general trend of increases in total trade volume. Increasing industrialisation and the liberalisation of national economies have fuelled free trade and a growing demand for consumer products. Advances in technology have also made shipping an increasingly efficient and swift method of transportation. Over the last four decades total seaborne trade estimates have quadrupled, from just over 8 thousand billion tonne-miles in 1968 to over 32 thousand billion tonne-miles in 2008.
As with all industrial sectors, however, shipping can be susceptible to economic downturns. Indeed, following several years of incredibly buoyant shipping markets, for many trades the best in living memory, much of the international shipping industry has fallen prey to the worldwide economic downturn. Shipping is inherently the servant of the economy, so the contraction in trade, following the beginning of the ‘credit crunch’ in late 2008, has translated into a dramatic and abrupt reduction in demand for shipping.
Notwithstanding the current situation, the longer term outlook for the industry remains very good. The world’s population continues to expand, and emerging economies will continue to increase their requirements for the goods and raw materials that shipping transports so safely and efficiently. As the below graph illustrates, the volume of world trade carried by sea has again begun to steadily increase in recent years. In the longer term, the fact that shipping is the most fuel efficient and carbon friendly form of commercial transport should work in favour of an even greater proportion of world trade being carried by sea.