Seaborne transport

Shipping is essential to the functioning of the global economy and its dependence upon international trade and the resulting need to move goods from production to consumption sites. Raw materials and finished goods have been the main cargoes in international trade. In later decades, trade in intermediate goods for further processing has grown steeply and in parallel with the so-called fragmentation of production processes. Fragmentation implies splitting the production process on several geographically different locations so that each component is produced where the production costs are most favourable. Trade in these components constitutes an important share of seaborne trade.


World seaborne trade rises with economic growth. The development of world gross domestic product and the seaborne cargo flows show this. Fragmentation and specialisation further increase the volume traded relative to the production volume. Figure 3.1 illustrates growth in seaborne trade, world GDP and OECD industrial production.




Figure 1 World economic growth and seaborne trade, Index 1990=100

Source UNCTAD (2011, 21) Figure 1.1




Whereas shipping dominates world international cargo transport, passenger transport has met strong competition from air transport. Consequently, intercontinental passenger lines ceased operating. The remaining passenger shipping segments are regional and coastal ferries, high-speed crafts in regular traffic and cruise vessels for tourists. The traditional intercontinental passenger liners have disappeared from the scene.


Ferries markets show big variations. Ferries range from small passenger ferries crossing rivers and fiords such as ferries on Hudson River in New York, in Hong Kong harbour and in Norwegian fiords, to big Ro-Ro (Roll-on Roll-off) ferries with a capacity to carry 3000 passengers and 650 cars as those operating across the English Channel. North Sea ferries and Hurtigruten ( ) resemble cruise vessels carrying fewer cars/lorries but with capacities up to 1-2000 passengers. Color Line a major operator in the North Sea, in later years has invested in vessels with capacity for passengers and cars similar to the channel ferries. Ferry operations involve many passengers and crews. A local example: Color Line in 2011 carried more than 4,0 million passengers, almost 990,000 private cars and approximately 170,000 heavy goods vehicles. (Color Group, 2011)
(Color Group, 2011)


The American market is the largest cruise market with more than 12 million passengers in 2011. The Mediterranean and Asian markets are also developing fast, however. . A special segment is the exploration markets in Arctic and Antarctic waters. Cruise Market Watch (2012) states “Total worldwide cruise capacity at the end of 2012 will be 428,835 passengers (a 4.5% increase over 2011) and 256 ships. Annualized total passengers carried worldwide will be 20.3 million in 2012, a 5.6% increase over 2011. Of these approximately 60 per cent are US citizens and 25 per cent are Europeans”. The larger cruise vessels carry several thousand passengers and crews of several hundred persons. As an illustration of the number of passengers carried in one trip, the second biggest cruise line RCL in December 2009 started operating M/S Oasis with a capacity of 5400 passengers. The largest cruise vessel on order for delivery in 2014 has 4100 lower berths. . This may be an indication of interruption of the steady growth in vessel size.


The major commodities in seaborne trade are crude oil, oil products, gas, chemicals, coal, iron ore, grain, phosphate, alumna, and intermediary and finished goods. The latter two are moved mainly in containers, whereas the first nine are moved in bulk. In addition, special shipping segments such as transportation of cars and of heavy cargoes plus offshore vessels supporting offshore oil production have emerged and grown into important segments in international shipping.



Figure 2 Global container, tanker and major dry bulk volumes, Indices 1990=100

Source UNCTRA (2011, 23)


Cost of carrying in world trade has fallen over the years. This partly explains the strong growth in interregional trade since WWII. Stopford (2009) (
) points out that for example the oil freight amounted to 30 per cent of the value of a barrel of Arabian Light Oil in 1960. In 2004, the freight was less than 5 per cent of the value of the oil. This relationship varies with the oil price fluctuations and the freight rate variations over the years, however. The real costs of transporting coal have fallen. This reduction in coal transport cost in real terms from 1960 until 2004 is illustrated by Clarkson (2004, 17).
.The cost of transporting general cargoes has also fallen dramatically, mainly because of containerisation and the accompanying change in cargo handling and efficiency.


 Picture 4


Figure 3 example of trade cost

Source: Shipping Facts and World Trade. (Marisec, 2012a)