Maritime Transportation
International Seaborne Trade and Exports of Goods, 1955-2001
1. (Commentary to slide: Int. Seaborbne Trade….)
The growth of maritime transportation is strongly correlated with the growth of international trade. From about 800 million tons loaded in 1955, maritime traffic has almost reached 6 billion tons in 2000. Indeed, 25,000 billion tons-km of freight are on average transported annually by maritime transportation compared to 7,000 by rail and 3,000 by road. Major fluctuations in export values in the 1970s and 1980s were mainly linked with oil price variations. More recently, the development of containerized maritime transportation was linked to a growing trade of value-added commodities. For every $1,000 of exports, there is one ton of freight being shipped by maritime transportation.
2. Commentary to slide - MAPY ŚWIATA. Evergreen Round-the-World Route, Westbound
Round-the-world routes were introduced in 1984 by the Taiwanese container shipped Evergreen. This route takes about 69 days and is serviced by about 10 4,000 TEUs ships in each direction (Westbound and Eastbound). Each port was thus called twice a week. However, by early 2002 this service was replaced by two pendulum services (North Europe, North and Central America and East Asia; North Europe, Asia and the Pacific North West) offering higher service frequencies.
Author : Dr. Jean-Paul Rodrigue and Dr. Brian Slack
1. Maritime and Fluvial Networks
From its modest origins as Egyptian coastal sailships around 3,200 BC, maritime transportation has always been the dominant support of global trade. By 1,200 BC Egyptian ships traded at Sumatra, representing one of the longest maritime route of that time. With the development of the steam engine in the mid 19th century, this role expanded considerably as ships were no longer subject to dominant wind patterns. This long term attribute has been reinforced by recent trends where changes in international trade and seaborne trade are interrelated. Maritime transportation, like all transportation, is a derived demand. This represents 71% of all freight shipped globally, a figure similar to the share of the world's surface covered by oceans. In terms of weight, about 96% of the world trade is carried by maritime transportation.
Maritime transport, similar to land and air modes, operates on its own space, which is at the same time geographical by its physical attributes, strategic by its control and commercial by its usage. While geographical considerations tend to be constant in time, strategic and especially commercial considerations are much more dynamic. The physiography of maritime transportation is composed of two major elements, which are rivers and oceans. Although they are connected, each represents a specific domain of maritime circulation. The notion of maritime transportation rests on the existence of regular itineraries, better known as maritime routes.
Maritime routes. Corridors of a few kilometers in width trying to avoid the discontinuities of land transport by linking ports, the main elements of the maritime / land interface. Maritime routes are a function of obligatory points of passage, which are strategic places, of physical constraints (coasts, winds, marine currents, depth, reefs, ice) and of political borders. As a result, maritime routes draw arcs on the earth water surface as intercontinental maritime transportation tries to follow the great circle distance.
The most recent technological transformations affecting water transport have concentrated on modifying water canals (such as dredging port channels to higher depths), and on increasing the size, the automation and the specialization of vessels (e.g. container ships, tanker, bulk carrier). These transformations partially explain the development of maritime traffic that has been adapting to increasing energy demand (mainly fossil fuels), the movements of raw materials and the location of major grain markets. This massification of transport into regular flows over long distances is not without consequences when accidents affecting oil tankers can lead to major ecological disasters (e.g. Amoco Cadiz, Exxon Valdez).
Fluvial transportation, even if slow and inflexible, offers a high capacity and a continuous flow. The fluvial / land interface often relies less on transshipment infrastructures and is thus more permissive for the location of dependent activities. Ports are less relevant to fluvial transportation but fluvial hub centers experiences a growing integration with maritime and land transportation, notably since the emergence of containers. The degree of integration for fluvial transportation varies from totally isolated distribution systems to well integrated ones. In regions well supplied by hydrographic networks, fluvial transportation can be a privileged mode of shipment between economic activities. In fact, several industrial regions have emerged in along major fluvial axis. More recently, river-sea navigation is also providing a new dimension to fluvial transportation by establishing a direct interface between fluvial and maritime systems.
The majority of maritime circulation takes place along coastlines and three continents have limited fluvial trade; Africa, Australia and Asia (except China). There are however significant fluvial waterway systems in North America, Europe and China over which significant fluvial circulation takes place. Despite regular services on selected fluvial arteries, such as the Yangtze, the potential of waterways for passenger transport remains limited to fluvial tourism. Most major maritime infrastructures involve maintaining or modifying waterways to establish more direct routes (navigation channels and canals). This strategy is however very expensive and undertaken only when necessary. Significant investments have been made in expanding transshipment capacities of ports, which is also very expensive as ports are heavy consumers of space.
The importance of maritime routes has changed with economic development and technical improvements. For instance, containerization changed the configuration of freight routes with innovative services, such as "round-the-world" routes. Pendulum routes, which tend to be highly flexible in terms of which ports are serviced, have however emerged as the favorite form of containerized maritime circulation. A recent trend has also been the integration and specialization of several routes with feeder ships converging at major maritime hubs. For instance, fluvial-maritime ships enable to go directly from the fluvial to the oceanic maritime network. This is notably the case for Europe (Mediterranean, North Sea and the Baltic).
Not every territory has a direct access to the ocean. Maritime enclaves are such countries that have difficulties to undertake maritime trade since they are not part of an oceanic domain of maritime circulation. This requires agreements with neighboring countries to have access to a port facility through a road, a rail line or through a river. However, being an enclave does not necessarily imply an exclusion from international trade, but substantially higher transport costs which may impair economic development.
2. Maritime Traffic
The last century has seen a growth of the number of ships as well as their average size. Maritime traffic is dominantly focused on freight. Before the era of intercontinental air transportation, transcontinental passenger services were assumed by liner passenger ships, dominantly over the North Atlantic. The dominant segment of oceanic maritime traffic concerns freight, as passengers are now a marginal leisure function solely serviced by cruise shipping. Several oceanic ferry services are also in operation over short distances, namely in Western Europe (Channel; Baltic Sea), Japan and Southeast Asia (Indonesia). The systematic growth of maritime freight traffic has been fueled by:
Increase in energy and mineral cargoes derived from a growing demand from developed economies of North America, Europe and Japan. For instance, coal is mainly used for energy generation and steel-making. Many developing countries, such as China, are also increasingly involved in importing raw materials.
Globalization that went on par with an international division of the production and trade liberalization.
Technical improvements in ship and maritime terminals have facilitated the flows of freight.
Economies of scale permitted maritime transportation to remain a low cost mode, a trend which has been strengthened by containerization.
Maritime traffic is commonly measured in deadweight tons, which refers to the amount of cargo that can be loaded on an "empty" ship, without exceeding its operational design limit. This limit is often identified as a loadline, which is the maximal draft of the ship. Maritime freight is conventionally considered in two categories:
Bulk cargo. Refers to freight, both dry or liquid, that is not packaged such as minerals (oil, coal, iron ore) and grains. It often requires the use of specialized ships such as oil tankers as well as specialized transshipment and storage facilities. Conventionally, this cargo has a single origin, destination and client. It is also prone to economies of scale.
Break-bulk cargo. Refers to general cargo that has been packaged in some way with the use of bags, boxes or drums. This cargo tends to have numerous origins, destinations and clients. Before containerization, economies of scale were difficult to achieve with break-bulk cargo.
There are four broad types of ships employed around the world:
Passenger vessels can be further divided into two categories: passenger ferries, where people are carried across relatively short bodies of water in a shuttle-type service, and cruise ships, where passengers are taken on vacation trips of various durations, usually over several days. The former tend to be smaller and faster vessels, the latter are usually very large capacity ships.
Bulk carriers are ships designed to carry specific commodities, and are differentiated into liquid bulk and dry bulk vessels. They include the largest vessels afloat. The largest tankers, the Ultra Large Crude Carriers (ULCC) are up to 500,000 deadweight tons (dwt), with the more typical size being between 250,000 and 350,000 dwt; the largest dry bulk carriers are around 350,000 dwt, while the more typical size is between 100,000 and 150,000 dwt. The emergence of liquefied natural gas technology enabled the maritime trade of natural gas with specialized ships.
General cargo ships are vessels designed to carry non-bulk cargoes. The traditional ships were less than 10,000 dwt, because of extremely slow loading and off-loading. More recently these vessels have been replaced by container ships that because they can be loaded more efficiently are becoming much larger, with 80,000 dwt being the largest today.
Roll on-Roll off (RORO) vessels, which are designed to allow cars, trucks and trains to be loaded directly on board. Originally appearing as ferries, these vessels are used on deep-sea trades and are much larger than the typical a ferry. The largest are the car carriers that transport vehicles from assembly plants to the main markets.
The distinctions in vessel types are further differentiated by the kinds of services on which they are deployed. Bulk ships tend to operate on both on a regular schedule between two ports or on voyage basis. In the latter case the ship may haul cargoes between different ports based on demand. General cargo vessels operate on liner services, in which the vessels are employed on a regular scheduled service between fixed ports of call, or as tramp ships, where the vessels have no schedule and move between ports based on cargo availability.
3. Maritime Shipping
Maritime shipping is dominated by bulk cargo, which roughly accounted for 72.6% of all the ton-miles shipped in 2000, but the share of break-bulk cargo is increasing steadily, mainly because of containerization. However, technical improvements tend to blur the distinction between bulk and break-bulk cargo, as both can be unitized on pallets and increasingly in containers. For instance, it is possible, and increasingly common, to ship grain and oil, both bulk cargoes, in a container (a specialized tank container for oil). Consequently, the amount of containerized freight has grown substantially, from 23% of all cargo in 1980, 40% in 1990 to 70% in 2000. Shipping has traditionally faced two drawbacks. It is slow, with speeds at sea averaging 15 knots (26 Km/hr). Secondly, delays are encountered in ports where loading and unloading takes place. The latter may involve several days of handling. These drawbacks are particularly constraining where goods have to be moved over short distances or where shippers require rapid service deliveries.
Geographically, maritime traffic has evolved considerably over the last decades especially through growth in transpacific trade. By establishing commercial linkages between continents, maritime transport supports a considerable traffic that covers 90% of the intercontinental transport demand of freight. The strength of maritime transport does not rest on its speed, but on its capacity and on the continuity of its traffic. Railway and road transportation are simply not able to support a traffic at such a geographical scale and intensity. Heavy industrial activities that use bulk raw materials are generally adjacent to port sites, benefiting from load breaks. The average haul length was about 4,200 miles.
Maritime transport has seen several major technical innovations aiming at improving the performance of ships or their access to port facilities, notably in the 20th century. They include:
Size. Size if a common denominator for ships is it expresses type as well as capacity. Each time the size of a ship is doubled, its capacity is cubed. Although the minimum size for cost effective bulk handling is estimated to be around 1,000 deadweight tons, economies of scale have pushed for larger ship sizes to service transportation demand. For ship owners, the rationale for larger ships implies reduced crew, fuel, berthing, insurance and maintenance costs. The largest tankers (ULCC) are around 500,000 dwt (dominant size between 250,000 and 350,000 dwt), while the largest dry bulk carriers are around 350,000 dwt (dominant size between 100,000 and 150,000 dwt). The only remaining constraints in ship size are now the capacity of ports, harbors and canals.
Speed. The average speed of ships is about 15 knots (1 knot = 1 marine mile = 1,853 meters), which is 28 km per hour. Under such circumstances, a ship would travel about 575 km per day. More recent ships can travel at speeds between 25 to 30 knots (45 to 55 km per hour). To cope with speed requirements, the propulsion and engine technology has improved from sailing to steam, to diesel, to gas turbines and to nuclear (only for military ships; civilian attempts were abandoned in the early 1980s). Since the invention of the helix, propulsion has improved considerably, notably by the usage of double helixes, but peaks were reached by the 1970s. Reaching higher maritime speeds remains a challenge which is excessively costly to overcome. As a result, limited improvements in commercial maritime speeds are foreseen.
Specialization of ships. Economies of scales are often linked with specialization. Both processes have considerably modified maritime transportation. In time, ships became increasingly specialized to include general cargo ships, tankers, grain carriers, barges, mineral carriers, bulk carriers, Liquefied Natural Gas (LNG) carriers, RO-RO ships (roll-on roll off; for vehicles) and container ships.
Ship design. Ship design has significantly improved from wood hulls, to wood hulls with steel armatures, to steel hulls (the first were warships) and to steel, aluminum and composite materials hulls. The hulls of today's ships are the result of considerable efforts to minimize energy consumption, construction costs and improve safety. Depending on its complexity, a ship can take between 4 months (container and crude carriers) and 1 year to build (cruise ship).
Automation. Different automation technologies are possible including self-unloading ships, computer assisted navigation (crew needs are reduced and safety is increased) and global positioning systems. The general outcome of automation has been smaller crews being required to operate larger ships.
4. The Spatial Economy of Maritime Transportation
An important feature of the economics of shipping is the capital costs. Because of their size, ships represent a significant capital outlay. Cruise ships represent the most expensive class of vessels, with the Queen Mary 2 costing $800 million, but even container ships represent initial capital outlays of $75 million. The annual cost of servicing the purchase of these vessels represents the largest single item of operating expenditures, typically accounting for over half of the annual operating costs. Container shipping requires the deployment of many vessels to maintain a regular service (14 ships in the case of a typical Far East - Europe service), which is a severe constraint on the entry of new players. On the other hand, older second-hand vessels may be purchased for much smaller amounts, and sometimes the purchase price can be easily covered by a few successful voyages. In some regards, therefore, the shipping industry is quite open and historically has provided opportunities for entrepreneurs to accumulate large fortunes. Many of the largest fleets are in private hands, owned by individuals or by family groups.
The main advantage of maritime transportation is obviously its economies of scale, making it the cheapest per unit of all transport modes, which fits well for heavy industrial activities. On the other hand, maritime transportation has one of the highest entry costs of the transport sector. Typically, a ship has an economic life between 15 and 20 years and thus represents a significant investment that must be amortized. For instance, a large containership can cost $50,000 per day to operate with most of the expenses related to debt payments. The operation of the maritime transport system requires financing that can come from two sources:
Public. The public sector is commonly responsible for guidance infrastructures (beacons and charts), public piers, dredging, security and in several cases of the administration of ports (under the umbrella of port authorities).
Private. The private sector is mostly concerned about specific facilities such as piers, transshipment infrastructures and ships, which are commonly owned by private maritime companies.
The maritime shipping industry offers two major types of services:
Charter services (also known as Tramp). In this form of service a maritime company rents a ship for a specific purpose, commonly between a specific port of origin and destination. This type of shipping service is notably used in the case of bulk cargo, mainly petroleum, iron ore, grain or coal, often requiring specialized cargo ships.
Liner shipping services. Involves a regular scheduled shipping service often calling several ports along a pendulum route. To insure reliability, frequency and a specific level of service, many ships can be allocated to a single route. These maritime shipping services are available to any freight importer of exporter, implying that the cargo being carried on any given ship belongs to different interests. A growing share of liner services is containerized.
In the past, governments have intervened, often massively, in the maritime sector to fulfill different goals such as economic development, national defense, prestige, balance of payments, and the protection of the national industry. To reach those goals, governments relied on methods such as regulations, subsidies, national fleets, preference of cargo and ports of entry. Cabotage regulations have been one of the privileged measures to protect the national maritime transportation industry.
Cabotage. Transport between two terminals (a terminal of loading/embarkment and a terminal of unloading/ disembarkment) located in the same country irrespective of the country in which the mode providing the service is registered. Cabotage is often subject to restrictions and regulations. Under such circumstances, each nation reserves for its national carriers the right to move domestic freight or passengers traffic.
Many cabotage laws were implemented, such as the Passenger Services Act of 1886, which placed cabotage restrictions on oceanborne passenger travel in the United States. In the same line, the Merchant Marine (Jones) Act of 1920 implemented cabotage regulations for freight. Since many container shipping services have a pendulum structure, cabotage imposes some restrictions on these services. The shipping industry has a very international character. This is reflected particularly in terms of ownership and flagging. The ownership of ships is very broad. While a ship may be owned by a Greek family or a US Corporation, it may be flagged under another nationality. Flags of convenience are means by which ship owners can obtain lower registration fees, lower operating costs and fewer restrictions. The maritime industry is now more deregulated than before because of technical changes, mainly containerization and open registry ships operating under fiscal shelters. By 1998, about 46% of the ships and about 62% of the global tonnage was registered under a flag of convenience.
An important historic feature of oceanic liner transport is the operation of “conferences”. These are formal agreements between companies engaged on particular trading routes. They fix the rates charged by the individual lines, operating for example between Northern Europe and the East Coast of North America, or eastbound between Northern Asia and the West Coast of North America. Over the years in excess of 100 such conference arrangements have been established. While they may be seen as anti-competitive, the conference system has always escaped prosecution from national anti-trust agencies. This is because they are seen as a mechanism to stabilize rates in an industry that is inherently unstable, with significant variations in supply of ship capacity and market demand. By fixing rates exporters are given protection from swings in prices, and are guaranteed a regular level of service provision (Brooks 2000). Firms compete on the basis of service provision rather than price. A new form of inter-firm organization has emerged in the container shipping industry since the mid-1990s. Because of the costs of providing ship capacity to more and more markets are escalating beyond the means of many carriers, many of the largest shipping lines have come together by forming strategic alliances with erstwhile competitors. They offer joint services by pooling vessels on the main commercial routes. In this way they are each able to commit fewer ships to a particular service route, and deploy the extra ships on other routes that are maintained outside the alliance. The alliance services are marketed separately, but operationally involve close cooperation in selecting ports of call and in establishing schedules. The alliance structure has led to significant developments in route alignments and the economies of scale of container shipping (Slack 2004).
Domains of Maritime Transport
Oceanic masses and rivers are the two major components of maritime circulation. Oceanic masses account for 71% of the terrestrial surface. The four major oceans relevant to maritime circulation are: the Pacific (165 millions square km), the Atlantic (82 million square km), Indian (73 million square km) and the Mediterranean (2.5 million square km). Although the Pacific is by far the largest ocean, it is not the most significant as far as maritime circulation is concerned. It supports about 15% of the global maritime trade and only a small portion of it is used for commercial transportation purposes. The northernmost parts of the Atlantic as well as the southernmost parts of the Atlantic, Indian and Pacific oceans are not much used mainly because of hazardous conditions (mainly ice) and their remoteness to the centers of economic activity.
Even if maritime transportation has experienced remarkable improvements in its safety and reliability, maritime routes are still hindered by dominant winds, currents and general weather patterns. The North Atlantic and the North Pacific (50 to 60 degrees north) are subject to heavy wave activity during the winter that sometimes impairs navigation, and may cause ships to follow routes at lower latitudes, thereby increasing the route lengths. During the summer monsoon season (April to October), navigation may become more hazardous on the Indian Ocean and the South China Sea.
Rivers may not be useful for commercial navigation if their orientations do not correspond to the directions of transport demand. Thus, many of the major rivers of Russia flow north-south, while the main trade and passenger flows are east-west. Shallow draught and extensive obstacles, such as rapids, may also limit navigation. However, many rivers, such as the Rhine or the Chang Jiang, are significant arteries for water transport because they provide access from the oceans to inland markets.
Geographically, maritime activities can be divided in two major categories:
Interior Waterways. Fluvial transportation is well suited to transport bulk cargo, has low costs and is the most environmentally friendly. It plays an important role for several industrial countries with large waterway systems such as the Volga, the St. Lawrence / Great Lakes, the Mississippi, and the Rhine. Most waterways are solely justified by bulk cargo requirements. However accelerated integration of large industrial regions to maritime shipping because of fluvial-maritime ships can be noted, especially in Western Europe. A growth and diversification of activities on the Chinese waterways has also been a dominant trend as China integrated the global economy and as the growth of its domestic economy resulted in a growth of freight shipped on its fluvial network.
Transcontinental Waterways. Seaborne trade has experienced very strong growth, especially over the Pacific. This is notably linked to the dependence of developed countries for energy, minerals and agricultural products. There is an increased importance of large maritime companies as well as a division of labor and capital in the maritime industry. Markets, technology and capital are provided by developed countries and labor by developing countries.
Geographical Impacts of the Suez Canal
Planned by the French but constructed by the British, the Suez Canal opened in 1869. It represents, along with the Panama Canal, one of the most significant maritime "shortcuts" ever built. It brought a new era of European influence in Pacific Asia by reducing the journey (blue line) from Asia to Europe by about 6,000 km (around Africa; red line). The region became commercially accessible and colonial trade expanded. Great Britain, the maritime power of the time, benefited substantially from this improved access. For instance, the Suez Canal shortened the distance on a maritime journey from London to Bombay by 41% and shortened the distance on the journey from London to Shanghai by 32%.