Seaborne Trade Characteristics

1.1Introduction

The best world to describe the shipping industry is the world “Dynamic”. When the economist talk about a dynamic market they mean a market when the price signals is the result of continual changing in both demand and supply of any particular product or group of products(Investopedia,N.D). Similarly in shipping market this price is called fright rate and comes from the changing of supply and demand for world merchant fleet and the volume of goods traded by sea. Stopford (2009) notes that the shipping industry characterized by Shipping Market Cycles and that the supply and demand are the economic mechanisms to control them. If the people can understand the factors that affect the demand and supply maybe they can predict some of

Over the past four decades, world seaborne shipments grew at an annual average rate of 3 per cent, rising from 2.6 billion tons in 1970 to 8.4 billion tons in 1970 to 8.4 billion tons in 2010. In 2011, volumes increased at an annual rate of 4 per cent to reach 8.7 billion tons. The most important factors that impact the seaborne trade are the seaborne of commodity trade. As a result, of seasonality of products there is short-term volatility in seaborne commodity trade. Long-term trends in commodity trade can be identified by observing economic characteristics of the industries that produce and consume the commodities in terms of form, place, process, and time .However there is Rapid growth in containerized trade (8.6 per cent) like a figure ….. shows. Similarly is noted an increase in dry cargo market and the five major bulk commodities iron ore, coal, grain, bauxite and alumina, and phosphate rock (United Nation,2013).In view of globalization increased trade in intermediate goods, growth in consumption and production levels especially in developing regions an expanding “containerizable” cargo base (for example, agricultural cargoes), and the effect of China moving up the value chain in global manufacturing, containerized trade and the underlying supply chains are set to change and grow greatly. Accordingly, the container shipping and port sectors continue

The container market is the closet to the consumers and by its nature the demand is strongly driven by the GDP developments in the world. The developing economies of Brazil, Russia, India, China and South Africa will play a very important role in shipping industry. Looking ahead, some analysts are predicting that the value of world merchandise trade will more than double between 2010 and 2020 and that China’s exports to Europe will be valued at almost twice those of the United States’ exports to Europe (Ernst and Young, 2011). They are also expecting that intraregional Asian trade will grow rapidly to reach $5 trillion and that Europe’s exports to Africa and Western Asia will be around 50 per cent larger than its exports to the United States. In terms of sectoral contribution, trade in machinery, transport equipment, consumer electric products (for example, computers, televisions and washing machines) and industrial goods are expected to make the largest contribution to global merchandise trade over the next ten years (Ernst and Young, 2011). Against a background of booming business opportunities in emerging developing economies and projected growth in the world merchandise trade, and bearing in mind the prevailing risks and uncertainties, the maritime transport industry will need to adjust its business strategies to reflect changes in the world economy and patterns of trade, which