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The shipping industry is constantly changing as the world economy

The shipping industry is constantly changing as the world economy

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The transport sector is essential for the functioning of the countries; for that is the State who builds the road infrastructure: roads, railways, ports and airports, which everyone can use more or less freely. For any underdeveloped area the building of a road is a guarantee, and a condition of development.

Transport prices depend on the distance, the volume, the necessary care during transport (cold for example), and loading and unloading operations. The price of transport can exercise decisive influence on the unit price of the product. When this total unit cost is less than the unit cost of production, the article is imported from places where it is manufactured cheaper. This facilitates the functional specialization of regions. This allows to achieve in the exclusive dedication to a product, or a small range of products comparative advantages, raises incomes enough to allow transport and import of goods that have stopped producing.

In the transport sector we find the shipping industry, which has an important relevance in this sector, because the shipping industry may form an integral part of global trade, but it has been hit particularly hard in the last years. A decline in global demand caused huge levels of overcapacity in the industry. However, the five years of overcapacity seem to be drawing to an end for the industry. With global economies getting their houses in order and returning to steadier levels of growth than seen for many years, many observers see demand pushing the shipping industry back towards pre-crisis levels. One industry betting on shipping seems to be private equity, which has invested increasing amounts in maritime firms in recent months.

Many experts has expressed continuing concern about over-tonnaging and excess shipbuilding capacity. Some researches shows that, “The over-ordering of ships by investment funds, together with the huge shipbuilding capacity created by China, are not conducive to an orderly market, with the result that shipping investments remain very risky.” Another point of view, “As a result of excess shipbuilding capacity and the low cost of finance, shipping markets have been suffering from over-supply for years. We can only hope for strong growth in demand to improve the situation.” The cost of regulatory compliance, meanwhile, was referenced by a number of respondents, with one commenting, “Environmental regulations will continue to drive costs and uncertainty”.

Looking ahead, 2016 and 2017 are going to be tough, while another remarked, Unless and until the global economy starts to improve, things are unlikely to change significantly. Elsewhere, however, it was noted, major economies are stabilizing and improving, so global trade will respond, which will lead to an improvement in the shipping markets. In similar vein, another respondent said, Shipping will always be a major part of world business, and will retain its importance as a result of recent political developments.

But the most important thing is that the ship owners will have to simultaneously position themselves for the future. This industry has long been criticized for lagging behind on tech innovation. Simple technologies such as ship simulators, voyage management software, electronic VMS, etc. have traditionally been put on a back-burner for lack of enthusiasm. 

Image courtesy of Andrew Priest at Flickr.com
Image courtesy of Andrew Priest at Flickr.com


In conclusion and looking to the future, as the world is changing, so is the shipping industry. New megaships keep outsizing older models, while emerging technologies boost efficiency and the green image of shipping. The maritime industry is constantly evolving and striving for increased innovation. The past few years have been exceptionally interesting. Major trends like globalization and containerization have reshaped the industry and continue to present us with challenging changes even today. This dynamic environment creates a very interesting work setting, pushing the abilities of the employees to the limit and setting a high standard for future co-workers.  When looking towards the future of maritime shipping, a few emerging trends can be observed. New ways of doing business, earning money and distinguishing yourself from the competition are created on a daily basis.
Finally, though bunker is a commodity, companies can achieve savings through better sourcing processes, drawing from a wider range of suppliers and using lower-quality fuels where available. Reducing bunker costs through these moves typically improves earnings by two to three percentage points. For example, one global shipping company optimized the hundreds of millions of dollars of bunker inventory it carries in the ships, saving about 3 percent of total bunker costs from just this one lever.

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