THE IMPORTANCE OF THE MARITIME TRADE IN THE WORLD ECONOMY.

 

THE IMPORTANCE OF THE MARITIME TRADE

IN THE WORLD ECONOMY.

  

Prepared by:

Ashan Silva

AFNI(UK), CMILT (UK), ACIM (UK)

Ex. MSc (Strategic Marketing), Ex. MBA, MBA, Reading for DBA 

 

As explained by maritime world, if the world is the heart ships are the arteries of it. Around 42% of the export & 35% of the import merchandise volumes movements are happening through sea route for developed and transition economies in the world. Without such movements half of the world will starve.

So, maritime sector playing a vital role in those economies.

The growth of the maritime trade decelerated in all segment in year 2019.

               

The volume of trade moving by sea is about 90% of the trade. According to the statistics roughly we are served by over 98,140 ships by early 2020 (of 100 GRT and above). Out of which largest portions are representing as follows

Bulk carriers                – 19.6%

Oil Tankers                  – 17.3%

Offshore vessels           – 17.1%

 

To operate those ships around 16,47,500.  

(Officers 774,000 & Ratings 873,500) seafarers working round the clock all over the world.

 

Trade is always facing to various resistances such as trade wars between superpowers, political instability, natural disasters, security incidents. But in 2020 it went through an unexpected disruption facing a pandemic. Which is called as COVID – 19. Supply & demand chain went through a tremendous disruption because of worldwide restriction on mobility, travel, and economic activities.

In addition to recent globalization efforts, this pandemic revealed the importance of the global interdependence and the motion of new trends that will reshape the maritime transport sector.  

Said pandemic will create a lasting impact on maritime transport and trade. Such as,

·         Technological and digital uptake.

·         Risk assessments covering global interdependency and interlinkages.

·         Adaptation to in line with the changes in the operating landscape.  

·         Shifting from globalization patterns (regionalization will increase the momentum).

·         Changes in Consumer spending behaviour which will change demand pattern and change the transport requirement.       

So, maritime transport sector should identify actions they should take to face the ongoing challenges and the challenges arising from the pandemic. Some of them in brief are as follows,

·         Trade support through steps like introducing automation, enhancing trade facilitations, etc. to overcome the bottlenecks.

·         Economical support for countries those who are suffering to come out from their fiscal constraints which they have faced due to multiple shocks due to this pandemic condition.

·         Find out ways and means to mitigate the impact towards economies through unsustainable globalization patterns.

·         Ports and shipping should adjust their strategies to face future supply chain requirement. E.g. Using latest technology to support ports and shipping trade to enhance the efficiency.   

·         Cooperated action between economies to support the effected global supply chains.

·         Better risk assessment and preparation. E.g. how to handle and move critical cargo (medicine, food items, etc.), handling restrictions against shipping labour force (vessel crew, port operating staff like stevedores, etc.).

·         While addressing the main issue such as pandemic conditions, address the other global disruptive issues and prepare policies and procedures to place them in time without waiting till last moment. E.g. The efforts towards greening of shipping industry, etc. 

·         Digitalization of shipping industry to enhance the efficiencies and productivity of transport sector.          

 

By addressing all above, we can drive maritime trade towards sustainability, and prepare for any similar situations in future.  

With such preparation, trade will be able to face similar conditions without any panic and mitigate any issues like lack of stocks of essential goods in the market. Same time, it will reduce unreasonable cost surging by using such conditions which will be an added burden for economies.

Ships make the trade flow of the world and will create a fertile ground for business to grow.     

 

 

THANK YOU