Part B Text Study

Maritime Transport

Maritime transport and economic development

Maritime transport, also named sea transport, marine transport, or ocean transport, refers to seaborne transport, and is the major conduit of international trade. It has grown in parallel with the seaborne trade or international trade, and its development has experienced strong growth and profound changes over recent decades. Freight volumes and container traffic in particular have grown with the intensification of global trade and the geographical dispersion of production.

Maritime transport attaches great weight to the development of international trade and further national economy by transferring the economic wealth accrued from handling enormous cargo volumes and their processing to the hinterland and then conveying it to the national economy. Nowadays, about 90 percent of all trade in goods (by volume and by weight) is carried by sea. There is a close relationship between efficient shipping services and prospects for economic development. Maritime transport services account for about 10 percent of all trade in services, and have reached 3 percent annual growth rate over last decade. In short, maritime transport is of huge economic significance as a service sector in its own right but also as an indispensable ancillary activity for trade in goods.1

Maritime transport chain

The movement of seaborne trade involves a transport system consisting of five components. The first component is the land carriers serving the domestic ports. Broadly speaking, this encompasses the whole domestic transport system, which may involve road transport on trucks or railroad, water transport on barges on inland waterways, or coastal transport. The second component consists of the domestic ports with all the related facilities such as quays, tugs, warehouses, storage and cargo handling equipment, where the goods transfer takes place. The third component refers to the ocean carriers including domestic as well as foreign flag ships that may be chartered or owned and engaged in liner or charter operations. The fourth component is foreign ports, together with their equipment, where unloading takes place. The fifth and final component is land carriers serving the foreign ports, i.e. the receiving country's transport system.

The maritime transport system comprises three middle components: the ocean carriers, the domestic ports, and the foreign ports. However, maritime transport cannot be viewed in isolation from the total transport system when the shippers make decisions on transport.Shippers will have to view the whole network to determine limitations and bottlenecks of their alternatives. Every transport mode offers possibilities and limitations (Table 1.1). The key features making a maritime transport system attractive to many shippers are large capacity, low cost per transported unit, the least environmentally damaging mode of transport, and high flexibility with different types of services and ships for various transport needs.2However, maritime transport must be viewed as a slow mode of transport, and is characterized by need for activity and reliability, impact on the global economic system, extremely high value of the property and possible damage to cargoes carried.

Categories of maritime transport

Maritime transport falls into three groups: liner shipping (liner services), charter shipping (charter services), and industrial shipping (industrial services).

1. Liner shipping. Liner shipping means that a fleet of ships with a common ownership or management provide a fixed service, at regular intervals, between named ports, and offer transport to any goods in the catchment area served by those ports and ready for transit by their sailing dates. That is, liners operate on a scheduled service between a group of ports, and sail on scheduled dates and time irrespective of whether they are full or not. Shipment so made on liners is relatively small but frequent. Thus, fixed route, fixed sailing schedule, fixed ports of call (POC) and fixed freight rates are the main features of liner shipping. Meanwhile, liner basic freight has in it the loading and unloading charges. The respective rights and liabilities of shippers and carriers are listed in the liner bill of lading (B/L) issued by the liner companies. Liner companies usually publish their sailing schedule in newspapers and company websites for the use of shippers and/or freight forwarders.

2. Charter shipping. Unlike the liners, a tramp does not sail on a fixed route and a fixed schedule, but goes all over the world in search of cargoes, primarily bulk shipments carried in complete shiploads. Tramp vessels are engaged under chartering on a time and voyage basis, and sometimes are chartered to supplement existing liner services to meet peak cargo shipment demands.

3. Industrial shipping. Industrial shipping refers to the services, which are not generally available in the market, for well-defined ocean transport needs of large industrial enterprises that control services and ships either directly through ownership or through long-term contracts. Industrial carriers, such as oil tankers, gas carriers, car carriers, mineral carriers, and paper carriers, are often purpose-built to cover transport needs which are not adequately met by independent shipping, and the shippers (e.g. oil companies owning large fleets of regular tankers) find it economical to control their own fleet. The operations and trade patterns of vessels in industrial carriage are often regular, and the vessels generally carry full (homogeneous) cargoes and may also be used in other kinds of services.

Low environmental impacts of maritime transport

Different modes of transport have different environmental impacts. According to the analysis by the Swedish Network for Transport and the Environment, maritime transport produces fewer grams of exhaust gas emissions for each ton transported one kilometer than rail, road, or air transport. For example, the grams of CO2emitted by transporting 1 ton of goods 1 kilometer by ship, train, lorry, and airplane are 3g, 18g, 45g, and 560g respectively, thus maritime transport is the most carbon-efficient mode of transport. As the main part of maritime transport, containerization has revolutionized the movement of goods and the increased efficiency of moving goods has produced numerous benefits including lower environmental impacts associated with the movement of products from one point to another.

The size and global nature of the shipping industry makes it important for the industry to continuously work to reduce its environmental impacts, and there is evidence that the industry has made significant progress. According to a recent report of an International Maritime Organization (IMO) expert working group, international maritime shipping accounts for 2.7 percent of annual global greenhouse gas (GHG) emissions; a study by Lloyd's Register found that the fuel efficiency of container ships has improved 35 percent;now the millions of containers used around the world are 98 percent recyclable; and new IMO regulations also establish strict standards for vessels' nitrogen oxides, sulfur oxides, and particulate matter emissions.

Some important trends of maritime transport

1. Maturity of the containerization cycle. Containerization has a business cycle which involves phases of introduction, growth and maturity. The last ten years has seen an acceleration of its adoption as the dominant mode supporting global supply chains (GSC), and its fast growth is usually followed by a phase of maturity. There is mounting evidence that containerization is entering a phase of maturity, implying that its future growth potential is more limited and likely linked to niche market opportunities. The maturity of containerization is likely to trigger a reallocation of ship assets along shipping routes to more closely reflect optimality in terms of capacity and level of service.3

2. Containerization of commodities. A general rise in commodity prices and growing demand in new markets have made many commodities more prone to be containerized from a value standpoint. Fluctuations and rises in bulk shipping rates, as evidenced by the Baltic Dry Index (BDI), have incited the search of options to bulk shipping. Volatility also makes long-term planning for bulk shipping complex and subject to risks. Relatively stable and even declining container shipping costs, particularly in light of rising commodity prices, render the containers even more attractive. The above converging factors support the containerization of commodities.

3. Rationalization of the shipping and port industries. The maritime shipping and port industries are facing the prospects of a rationalization of their assets and services. Maritime shipping companies and terminal operators will reassess their capacity deployment and their pricing, thus having profound impact on the industry and global supply chains. It can be expected that port (market) size and productivity will be an important factor in this expected rationalization, and large ports could be less impacted than smaller ports because of their pricing power and better hinterland access. As the maritime sector now becomes less profitable, capital will be more difficult to secure and investment needs for new or expanded projects will be assessed more closely.

4. Wide application of information technologies (IT). IT has multiplying effects on maritime transport, particularly over the management of intermodal assets. IT widely applies to the loading and unloading sequence of container ships, stacking in container yards,navigation (GPS), scheduling (pick up and delivery), gate access, tracking the whereabouts of a container, and supply chain integration. Electronic data interchange (EDI) is also widely used because of a higher level of control over freight flows, particularly through vertical integration.

5. Automation of terminal operation. More stringent supply chain management (SCM) practices, productivity pressures on terminal real estate, economies of scale in maritime shipping and better integration with inland freight distribution have incited various terminal automation strategies, which are capital intensive. Automation can be applied to three intermodal stages within the terminal. The first concerns transshipment with the loading and unloading sequence, the second relates to container tracking and yard management, such as stacking, and the third involves the interface between the terminal and inland transport systems.

E-commerce in maritime transport

E-commerce, also named e-business, calls for fundamental changes in the maritime transport system in various ways, thus providers of maritime transport and related logistics services have to adapt their infrastructure, marketing, and customer service to provide support to the electronic market place.

1. Need of faster, more reliable, and more frequent services. E-commerce transactions are faster than traditional commercial transactions. The identification of products by importers, comparison of prices, ordering, invoicing, payment, and arranging for delivery can be automated and completed over very short periods of time. Traders in e-commerce will inevitably want to link their electronic sales to a transport or distribution system that meets their requirements. This will in turn put pressure on the maritime transport system to respond by providing faster, more reliable and more frequent services.

2. Increase in demand for maritime transport. E-commerce makes it possible for transactions to take place without limitations caused by distance between exporters and importers. This means that exporters can reach a much larger number of foreign customers directly, while importers get access to potentially unlimited sources of products. Also, importing and exporting take place without being constrained by availability of space in warehouses or sheds. All this helps to expand the scope of the foreign market and hence the number of physical origins and destinations for products to be transported around the world. In turn, it increases the overall demand for maritime transport.

3. Greater demand for information and communications technology (ICT). Given that the very essence of e-commerce is the processing of transactions by electronic means, it seems inevitable that maritime transport services and operations serving e-commerce will also need to rely to a considerable degree on information processed and transmitted electronically. Specifically, there will be increased demand for the application of advanced ICT in order to optimize the use of existing maritime transport networks.

4. Transformation of the traditional maritime transport chain. The emergence of e-commerce makes it possible for a given participant in the maritime transport chain to interact quickly and at low cost with any of the participants on the chain, without following the ordered sequence on the chain. For example, a carrier can deal online directly with shippers without using the services of agents. This opens totally new types of relationships and competitive forces between carriers, shippers, and middlemen in the maritime transport chain.

5. Need of comprehensive and integrated services. As e-commerce traders have to deal with numerous customers around the world, they prefer to use service providers that can supply comprehensive and integrated services to meet their transport requirements, which traditionally have been supplied individually by freight forwarders, transport agents, transport companies, and financial and insurance companies. Because of large financial and logistics requirements for operating such integrated services, maritime transport service providers have entered into horizontal alliances with other transport service providers and also vertically with intermediaries such as freight forwarders, shipping agents, and insurance and financial institutions.

Maritime transport industry

The maritime transport industry constitutes economic activities that have some direct and indirect relationship with the sea, and serves as an input into every other industry in the national economy and many of those across a country's borders. As a fairly complex industry, its main activities include vessel operations (i.e. those directly involved with ships, mainly merchant shipping), shipbuilding and marine engineering, marine resources, marine fisheries, and other marine-related activities (mainly tourism and services) (Table 1.2).

Maritime transport involves a group of people—shipowners, shippers, brokers, shipbuilders, bankers, and regulators—who work together on the constantly changing task of transporting cargo by sea. Hence the maritime transport industry is often associated with shipping lines involved in the carriage of cargo and many other shipping service providers as can be seen from Table 1.3.

Some organizations related to maritime transport

The following organizations are concerned with both maritime transport and international trade: inspection organization, customs house, bank, freight forwarder, ocean shipping company, ocean shipping agency, maritime court, customs clearing agency, stevedoring company, tally company, container company, and the like.

1. Ocean shipping company. Ocean shipping companies own and operate shipping vessels for sea transport of cargoes. They specialize in carrying goods from the port/place of shipment to the port/place of destination.

In China, the leading ocean shipping company is China COSCO Shipping Corporation Limited (usually referred to as China COSCO Shipping Group or the Group), which is a state-owned enterprise (SOE) headquartered in Shanghai and the merged entity of the first two of the top 20 liner companies in the world, China Ocean Shipping (Group) Company (COSCO) and China Shipping (Group) Company (China Shipping). Its total fleet capacity and container fleet capacity rank No.1 and No. 4 in the world respectively. Moreover, the company owns over 48 container terminals all over the world, with over 209 berthing spaces, and its container terminals' annual throughput worldwide amounts to 90 million TEUs (twenty-foot equivalent units). Its vision is to undertake the mission of globalizing Chinese economy, integrate advantageous resources, take global shipping, integrated logistics and shipping-related financial services as core business, and develop diversified industrial clusters, so as to build a world-leading business entity that provides integrated logistics and supply chain services.4Table 1.4 shows the Group's major business sectors.

2. Ocean shipping agency. Ocean shipping agency exclusively acts as a sole agent for all kinds of ships engaged in international civil service calling at ports. The scope of business of ocean shipping agency is to attend to the procedure for ship's entry into and departure from a port, arrange for pilotage and ship's berth, and arrange marine survey, ship's repairs and fumigation, etc.5

3. Stevedoring company. Stevedoring company plays a special role in international trade. Its key function is to provide service of cargo handling. It is responsible for loading cargoes onto vehicles or vessels and discharging cargoes from vehicles or vessels. Stevedoring company is the intermediary between the shipping lines and the transport operators, and provides shipside lifting to cargoes on and off vessels. For container cargo, the stevedoring companies also provide landside activities such as providing terminals for container transit, the storage and loading of containers on and off truck or rail transport, and the provision of vehicle booking systems.

4. Tally company. Tally company's chief responsibility is to count the quantity of the cargoes in the course of loading the cargoes. Tally can be divided into tally on shore and tally on board ships. The tally company normally should give a tally report after finishing tallying the cargoes. The tally company tallies cargoes on behalf of the cargo owner. The crew of the ship can sometimes tally cargoes for the shipping company.

5. Container company. A container company can be understood in three ways. Container transport company is responsible for carrying goods in standard containers, and it can be further divided into container shipping company carrying goods in containers by special container ship and container land transport company carrying goods in containers by special trucks. Container manufacturing company manufactures standard containers based on the ISO standards. Container leasing company only engages in leasing containers to customs.

Maritime cluster

Maritime cluster is an entity consisting of numerous maritime businesses. The enterprises and other institutions of the maritime cluster operate in close cooperation with each other and benefit from this network. The maritime cluster includes marine industries, shipping and port operations. Maritime clusters are of significant economic importance to the countries and regions involved. The maritime sectors have linkages to nearly all other industries through intermediate deliveries and purchases, and the effective functioning of many industries and overall economies require reliable, extensive infrastructure for transport of goods, which depends upon many levels of the cluster from shipping and port to maritime services and equipment. Thus the strength of the core sectors, i.e. shipping, ports, and offshore industries, determines cluster prosperity and growth.

Maritime clusters have two economic impacts. Direct impacts occur from the employment and economic activities, i.e. investments and other spending, in the maritime cluster companies themselves, and the indirect impacts consist of the derived employment and economic activities in surrounding industries, arising from the maritime cluster enterprises' purchasing of goods and services in the supply chain, as well as the induced spending and consumption of those employed in the maritime clusters and the supply chain.Though maritime activities are international, the value they create remains to a large extent domestically to benefit their hosts. The value and demand generated in the maritime clusters trickle down through the overall economy to create further employment and demand, including the derived employment and economic activities on shore. The direct and indirect economic impacts in terms of employment and contribution to gross domestic product (GDP) make maritime clusters vitally important to a society.

Enterprises locate in a maritime cluster because a maritime cluster environment holds advantages such as the proximity to customers and suppliers, existence of positive externalities from investments by maritime cluster actors, which facilitates the development and sharing of specialized labor pools, knowledge, and information. These aspects of a maritime cluster enhance dynamics such as cooperative rivalry, innovation pressures, and the establishment of trust relations among maritime cluster actors. The benefits from maritime cluster dynamics are actively sought by some sectors in the maritime cluster, such as maritime service providers and marine equipment producers, as well as related and supporting industries. In doing so, they seek to locate themselves close to the “core”, shipping companies, whose presence enhances local demand, interaction, and provides a basis for maritime cluster dynamics. Thus, it is important to ensure that these core companies can operate on a level playing field with their international competitors, so that they are not driven to relocate abroad due to cost and tax disadvantages in the maritime cluster. Table 1.5 indicates some benefits from maritime clusters.

Notes

1. In short, maritime transport is of huge economic significance as a service sector in its own right but also as an indispensable ancillary activity for trade in goods.

简言之，海运自身作为服务部门对经济发展有着重大的意义，同时也为货物贸易提供必不可少的辅助服务。

2. Every transport mode offers possibilities and limitations. The key features making a maritime transport system attractive to many shippers are large capacity, low cost per transported unit, the least environmentally damaging mode of transport, and high flexibility with different types of services and ships for various transport needs.

任何运输方式都有其优势与局限性。海运吸引众多托运人的关键在于其是一种具有运输量大、单位运输成本较低、对环境损害（或污染）程度最轻、能灵活地以各种不同类型的业务与船舶满足各种运输需求等特点的运输方式。

3. There is mounting evidence that containerization is entering a phase of maturity, implying that its future growth potential is more limited and likely linked to niche market opportunities. The maturity of containerization is likely to trigger a reallocation of ship assets along shipping routes to more closely reflect optimality in terms of capacity and level of service.

越来越多的事实表明，集装箱运输正进入成熟期，这就意味着其未来的增长潜力逐渐变得有限，越来越会利用尼基市场的机会。集装箱运输的成熟很可能引发各航线中船舶资源的重新配置以达到运力与服务的最优化。

4. Its total fleet capacity and container fleet capacity rank No.1 and No.4 in the world respectively. Moreover, the company owns over 48 container terminals all over the world, with over 209 berthing spaces, and its container terminals' annual throughput worldwide amounts to 90 million TEUs. Its vision is to undertake the mission of globalizing Chinese economy, integrate advantageous resources, take global shipping, integrated logistics and shipping-related financial services as core business, and develop diversified industrial clusters, so as to build a world-leading business entity that provides integrated logistics and supply chain services.

其船队综合运力与集装箱船队规模分居世界第一与第四，且在全球的集装箱码头超过48个，泊位数超过209个，集装箱年吞吐能力超过9000万标箱。其发展愿景是，承载中国经济全球化使命，整合优势资源，打造以全球航运、综合物流及航运相关金融服务为支柱，多产业集群、全球领先的综合性物流供应链服务集团。

5. The scope of business of ocean shipping agency is to attend to the procedure for ship's entry into and departure from a port, arrange for pilotage and ship's berth, and arrange marine survey, ship's repairs and fumigation, etc.

远洋运输代理的业务范围包括办理船舶进出港口的手续，安排引航与泊位，洽办船舶检验、修理与熏舱等。

Comprehension Enhancement

Decide whether the following statements are true or false and try to correct the false ones.

( ) 1. Maritime transport is a kind of derived demand, and it attaches great weight to the development of international trade.

( ) 2. Maritime transport has the characteristics of low cost, slow speed, and small carrying capacity.

( ) 3. Maritime transport chain merely consists of ocean carriers, the domestic ports, and the foreign ports.

( ) 4. Tramps are engaged under chartering on a time and voyage basis, and sometimes are chartered to supplement existing liner services to meet peak cargo shipment demands.

( ) 5. Liner shipping is generally used to carry bulk cargoes, and its shipment is relatively small but frequent.

( ) 6. As the maritime sector becomes less profitable, capital will be easier to secure and investment needs for new or expanded projects will be assessed more loosely.

( ) 7. The maritime transport industry functions as an input into every other industry in the national economy.

( ) 8. E-commerce has posed new challenges to the maritime transport system and calls for fundamental changes in the maritime transport system in various ways.

( ) 9. In view of large financial and logistics requirements for operating the integrated services, maritime transport service providers have entered into vertical alliances with other transport service providers.

( ) 10. Maritime transport is important as an indispensable ancillary activity for trade in services.