Article

If you facilitate 90% of the world's trade, would you influence change?


by Melvin Mathews - published on 1 December 2020 73

This article was already published on Mel´s Musing blog on May 9th 2020
(see link at the end of the article)


The shipping industry is a well-oiled machinery for moving global trade. To understand its staggering size and impact, one must know what it's transportation market share is. It is estimated that roughly 90% of cargo around the planet is moved on ships. So significant is its contribution to the world, that many do not realise if the shipping industry were to stop suddenly, supermarkets shelves would be empty in 3 days. In comparison if one looks at aviation, air-cargo accounts for less than 1% of the total cargo moved globally.


Without a shadow of doubt, shipping is a key enabler of our current way of life and the globalized world we live in today. The irony is that the average person is unaware of the significance or contribution of the shipping industry and how much we rely on ships working without disruption. Perhaps the industry is to blame for this general lack of awareness. But we have to give credit where it is due, because shipping has operated relatively smoothly and without significant disruption through stock-market booms and busts. This is quite remarkable even though shipping is an extremely diverse and fragmented industry.
However, there is one thing that stands out whenever there is a crisis and that is the apparent lack of unity within the industry. Every shock to the industry reveals even more clearly the disbanded nature of shipping, driven purely by fierce competition and lack of any consensus. Here are a few incidents witnessed:
  • During the early part of the decade when there was glut of ships, big shipowners sat together at an event and angrily complained that owners should stop ordering new ships because the market was already flooded with excess tonnage. Yet the very next day the same owner who bought up the subject, signed a deal with a shipyard for a series of 10 extra-large vessels.
  • A few months later with rock bottom freight rates & TCEs, and sky-high fuel prices the CEO of a big company was in tears explaining how the company was haemorrhaging due to astronomical operating costs and historically low earnings.
  • In the last few years every time a new regulation comes out, individually companies are screaming their lungs out, saying they have barely recovered from the last recession and cannot afford any further cost of compliance immediately.
  • This year many shipowners and managers in their new digital avatars on social media, have privileged us with rants on how crew-change has been an issue for seafarers and how they are struggling to arrange it.
Within the industry we have hardly come across an article, presentation or speech which proudly does not proclaim that 90% of the world's goods are carried by sea. Yet never once have we seen the shipping industry collectively coming together to leverage that dominant position. If it were to happen, we could have solved most problems rather quickly. This forces us to ask a few tough questions:
  • The taxi service in any part of the world has a minimum rate which covers the cost of operation and includes a minimum profit. Is it so hard for globally operating shipowners to come to consensus with charterers on such a mutually agreed minimum rate for the sustainability of their business and the industry?
  • The International Ship and Port Facility Security (ISPS) code was rapidly brought into force after a terrorist attack. The IMO deserves full credit for speed of processing the much-needed regulation. How difficult is it for shipowners to collectively come to a consensus on not to offer their ships to trade in countries that refuse crew shore-leave or crew-change at their ports?
Do you think such things are doable & what will be it's impact?

Or will the industry wait for seafarers to take matters into their own hands:https://bit.ly/32vloFq

What other problems and pain points do you think we could solve if the shipping industry came together?



Let me know your thoughts.
Editor's note:
Opinion pieces reflect the personal opinion of individual authors. They do not allow any conclusions to be drawn about a prevailing opinion in the respective editorial department. Opinion pieces might be deliberately formulated in a pronounced or even explicit tone and may contain biased arguments. They might be intended to polarise and stimulate discussion. In this, they deliberately differ from the factual articles you typically find on this platform, written to present facts and opinions in as balanced a manner as possible.
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