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The future of the shipping business in developing countries

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The future of the shipping business in developing countries

UNCTAD Review of Maritime Transport 2016
Edition of November 15, 2016

Trade has a new face. “Developing countries are no longer just the suppliers of high volume/ low value raw materials, but instead now also import large volumes of oil, iron ore, coal et al, participating in global value chains and the globalized production of manufactured goods,” reads the UNTAD Review of Maritime Transport 2016 recently released report.

The document highlights that as of January 2016, the top five shipowning economies in terms of dwt were Greece, Japan, China, Germany and Singapore, while the top five economies by flag of registration were Panama, Liberia, the Marshall Islands, Hong Kong (China) and Singapore.

As for shipbuilding, according to the report, the countries with the largest business are China, Japan and the Republic of Korea, accounting for over 91% of gross tonnage constructed. Most demolitions take place in Asia (Bangladesh, India, Pakistan and China – accounted for 95 per cent of ship scrapping gross tonnage.)

Foreign trade and markets

As each maritime business locates in a smaller number of countries, the document shows most countries host a decreasing number of maritime businesses, albeit with growing market shares in the subsectors. There are ample opportunities for developing countries to generate income and employment and help promote foreign trade. Nevertheless, the paradox of larger-than-ever containerships and lower-than-ever container freight rates generated market conditions that led Hanjin Shipping to the largest bankruptcy ever to take place in container shipping. However, inspite of the poor outlook under the present scenario, ships continue to get bigger, and as a consequence the number of providers per country decreases.

The UNCTAD document predicts that shipping will continue to be the most important mode of transport for international trade, with the lowest environmental impact per ton–mile of transported cargo. Despite of positive long-term perspectives for seaborne trade and maritime businesses, policymakers are advised to identify and invest in maritime sectors in which their countries may have a comparative advantage.

Past inspiration for the future

History shows that in the past maritime nations benefited from synergies between different maritime businesses, such as calling on home ports, shipbuilding, repairs, recycling and scrapping and land-based employment close to home. In principle, such synergies remain valid, but modern needs have modified them.

Overall, there are good opportunities for many developing countries. The key is to identify the comparative advantages and boost them to strengthen each country’s specific synergies. With policymakers’ support, the gad between ‘developing’ and ‘developed’ could shorten significantly for those countries, with the maritime transport industry following close behind.

By MundoMaritimo

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