“The role of shipping in world trade
About 11 billion tons of cargo are transported by ship every year. Based on the current global population, this represents an impressive 1.5 tons per person. Shipping’s ability to move goods and materials from production to final consumption underpins modern life.
For an economic region like the EU, shipping accounts for 80% of total imports and exports and about 50% by value.
Markets for shipping services can influence trade flows, what countries sell, and how price shocks are affected through trade.
Ships transport more than 80% of the world trade volume and about 70% of the trade value. The world fleet in seaborne trade includes dry bulk carriers, container ships and oil tankers. Each vessel type specializes in a different category of products, which can be divided into two categories: those with fixed itineraries, like buses, and those with flexible routes, like taxis. Container ships belong to the first category, while gas/tankers and dry bulk carriers belong to the second category. Dry bulk carriers account for about half of seaborne trade and 45 percent of the world’s fleet, and are the primary mode of transport for commodities such as grain, ore and coal. They operate on flexible routes, hence the name “”ocean taxis””.
World merchandise trade is heavily unbalanced: most countries are either large net importers or large net exporters. This is reflected in shipping costs and vessel movement. This imbalance is largely due to differences in natural inheritance across countries. For example, Australia, Brazil and the Northwest United States (the world’s largest net exporter of goods) are rich in commodities such as minerals, grains and coal. At the same time, developing developing countries need to import raw materials for industrial expansion and infrastructure construction. In recent years, China’s growth has relied on massive imports of raw materials.
How much has the dramatic change in ocean conditions contributed to world trade? As evidenced by the recent blockage of the Suez Canal by Ever Given, the world’s largest channel has had a major impact on world trade. The permanent closure of three important passages (Suez, Panama, Gibraltar) will increase the nautical distance and thus the duration of certain trips. We found that the presence of all corridors greatly increased world trade overall, with particularly large effects in specific regions. In our model, removal of the Suez Canal would reduce trade in the Middle East by 3.5% and as much as 26%; removal of the Panama Canal would reduce world trade by 3% but as much as 28% in Northeast America; Gibraltar appears to be the most critical passage, Because removing it would reduce world trade by almost 7%, compared to as much as 44% in the Mediterranean.
At last
Ships have never been so technologically advanced, so sophisticated, never carried so much cargo, safer and greener than they are today. It is because of this global fleet and a global workforce of more than one million seafarers that the import and export of goods on the scale needed to sustain the modern world is possible.
This is a message that needs and deserves a wider audience. Almost everyone in the world today relies on shipping to some extent – but few realize it. I will certainly do everything in my power to spread the message throughout the year, and I urge everyone involved in this important industry to join me in spreading the word that shipping is integral to the world.”
