Maritime Trade: Global Shipping and Economic Impact

Today, maritime trade plays an important role in globalization and the interconnectedness of cultures across the world. Maritime trade is the transportation of goods by sea and connected river systems between trading partners for use in commerce. Because of the cost-effectiveness of sea travel, most of our trade takes place on the high seas.

Maritime trade exists between countries all across the globe using intricate and interconnected maritime trade routes. Trade on a global scale exists because of access to deep-water ports along coastlines and shallow ports on inland river systems. Port efficiency and trade route proximity directly affect the cost of goods across space.

Countries trade with one another over land, air, and sea, but maritime trade is the most cost-effective mode of transportation. According to the US Department of Transportation, the average freight ship runs an astonishing 514 miles per gallon of fuel for every one ton of cargo. The next closest form of transportation is the train, which runs 202 miles per gallon per one ton of cargo. Currently, 75 percent of trade takes place over water.

HISTORY. Sailed ships manufactured out of wood began to appear during the dynastic period of ancient Egypt (3000-2200 BCE). Between 2500 and 1700 BCE, trade opened up between the Indus Harappa Civilization and Mesopotamia. The Minoans of Crete (3650-1400 BCE) began to trade between the Greek mainland, Egypt, and Mesopotamia. In this network, the Greeks used a trireme, which had two rectangular sails and was manned by a crew of oarsmen within the hull of the ship.

Maritime trade continued throughout the Roman Empire (64-1453 CE), bringing wheat from North Africa to feed the Roman people. Most of the trade that took place in the Mediterranean was designed to enrich Rome and later Constantinople. River systems in China, such as the Yellow and Yangtze Rivers, were main transportation highways for maritime vessels.

Although trade was mostly local and intra-imperial throughout the late Middle Ages, the Abbasid Caliphate (750-1258 CE) in Arabia introduced the single triangular-sailed vessel to East Africa. During the Age of Exploration (1400s-1600s CE), the Spanish and Portuguese competed for control over trade routes in the Americas and Southeast Asia.

The nineteenth and twentieth centuries saw a surge in technological innovation in the sphere of maritime shipping. With the invention of steam power, the shipping industry experienced a dramatic increase in the speed and size of ships. The twentieth century saw the development of the internal combustion engine and the advancement of containerization. Shipping containers have made the process of transferring goods from one form of transportation to another much more efficient. Containerization is the process of placing goods into standardized containers that can be moved from ships to other modes of transportation such as trucks and trains. According to the US Bureau of Transportation Statistics, 51 percent of all oceanic cargo is transported in containers.

Ports play an important role in the distribution and servicing of the maritime industry. There is a correlation between ports and wealth. As of 2016, Tokyo, New York, Los Angeles, Seoul, London, Paris, Osaka, Chicago, Moscow, and Shanghai are the richest cities in the world, respectively. These cities have attracted investment, as well as wealthy transnational capitalists, to develop industry around these ports.

Today, approximately 400 ocean liner companies and services move goods on fixed schedules and regularly scheduled routes. Some of the world’s leading merchant fleet companies are Nippon Yusen Kabushiki Kaisha (NYK), Evergreen Marine Corporation, CMA-CGM, Maersk, and the Mediterranean Shipping Company (MSC). These companies compete with one another to control trade routes and increase profits. The busiest maritime traffic today goes through the Strait of Malacca between Malaysia and Singapore. As much as half of the world’s maritime trade goes through this strait every year.

CURRENT TRENDS. Although maritime transportation makes up a large percentage of all international trade throughout the world, current data show that freight traffic has slowed down. This current trend is due to five logistic issues:

- Because of the increasing number of delivery locations and expanding markets, shipping companies are trying to reduce delivery times to increase profits.

- Shipping industries are now more strategically packing merchandise into fewer ships to increase volume to reduce shipping costs.

- Increasing numbers of pharmaceutical products and electronics have required better shipping methods and fewer changes in transportation modes.

- The increase in natural disasters has forced shipping companies to rethink logistics networks.

- Major growth in e-commerce has had a significant impact on business-to-business transportation.

Due to an improvement in technology, the shipping industry has been able to increase efficiency while decreasing traffic along shipping lanes. Digital charts known as Electronic Chart Display and Information Systems have improved shipping efficiency. Service satellites have brought the internet to ships across the globe. Newly conceptualized sailing technologies have been developed, allowing ships to run on wind power more efficiently than older sailing methods. Another solution to current shipping issues is the development of carbon fiber containers so that they can collapse for easy storage on the return trip.

Another reason why maritime shipping has plateaued in recent years is due to the increase in regulations on emissions. The International Maritime Organization (IMO) is one of the main regulatory bodies based out of London. This organization has placed a detailed regulation package requiring the shipping industry to follow safety and environmental protection measures.

Terrorism in the post-9/11 world plays a major role in the safety of consumer goods at sea. New security measures have helped to provide some improvements. In order to improve security, it has been suggested that governments provide alternatives to ports in case of a shutdown and provide ample security to reduce the risk of a closure. States and container companies should also implement improved security measures to defend against piracy.

FURTHER READING: Clark, X., D. Dollar, and A. Micco 2004. “Port Efficiency, Maritime Transport Costs and Bilateral Trade.” Journal of Development Economics 2 (75): 417-50.

Heiberg, H. O. 2012. “The Merchant Fleet: A Facilitator of World Trade.” The Global Enabling Trade Report 2012. http://www3.weforum.org/docs/GETR/2012/GETR_Chapter1.8.pdf. Accessed March 14, 2018.

Paine, L. P 2013. The Sea and Civilization: A Maritime History of the World. New York: Random House.

Rodrigue, J.-P 2013. “Ports and Maritime Trade.” In Oxford Bibliographies in Geography, edited by B. Warf. New York: Oxford University Press. http://www.oxfordbibliographies.com/view/ document/obo-9780199874002/obo-9780199874002-0039.xml. Accessed March 14, 2018.