The Essay On Maritime Transport's Importance In World Economy.

The History of Maritime Transport

What is Maritime transports?

The shipment of cargo and people by waterways is known as the maritime transport. The maritime transport is the backbone of world economy and has the potential to alleviate poverty in developing nations.

The history of development of maritime transport

The maritime transportation is the support of global trade and maritime transport originated in 3200 BC with the development of river and coastal sail-ships in Egypt. An example of a long maritime route is the trading of the Egyptian ships till Sumatra during 1200 BCE. The regional trade networks were established by the Chinese merchants in 10^th century when they travelled through the Indian Ocean and the South China Sea. In the beginning of the 15^th century, various major expeditions were conducted by 317 vessels which are manned by 28000 crewmen and led by Admiral Zheng.  In the 16^th century, a network for trade was established globally by colonial powers of Europe which include England, France, Spain, Portugal and Netherlands (Pallis). The maritime shipping activity was centered on the North Atlantic, the Mediterranean, the Pacific Asia, the Caribbean and the Indian Ocean.  In the middle of the 19^th century, the seam engine developed and ships were no longer driven by patterns of wind. The 20^th century witnessed an exponential growth in the development of maritime transport and maritime transport got interrelated with international trade. The maritime transportation is the derived demand of the trade relations between countries.  The maritime shipping capacity also influences the trade relations between countries. The ownership and operation of maritime transport is globalized and the 21^st century has witnessed technological development of the maritime transport. The multilateral negotiations in the World Trade Organization and the bilateral and regional agreements have decreased the barriers of trade among countries and have boosted the maritime transport.  Globalization has also led to the development of maritime trade because counties source parts and raw materials from other countries and production facilities are located in different geographical location. Thus the maritime transport developed to support the world global economy. The trade policies of many developing countries like India and China have undergone unilateral liberalization.  The reforms of trade facilitation like the standardization of documents and data, the cooperation between customs and other agencies resulting in the development of a single window, development of transit corridors, development of risk-management schemes and information and communication technology have supported the development of maritime transport. However, the landlocked countries do not have direct access to the facility of maritime transport. The landlocked countries have to enter into agreement with neighboring countries so that they can access the facilities of port through rail, river or highway.  The port operations have become fast and cheap and pendulum routes have developed in recent years boosting the maritime transport (David, Gollasch and Hewitt).

The Significance of Maritime Transport in Trade Relations

Pros of Maritime Transport

Maritime transport is of paramount importance because it provides developing countries an opportunity for participation in international trade. The transportation of more than 80 percent of goods takes place by sea and ports act as nodes of the international trade transport networks. The international cost of trading can decrease with implementation of maritime transport because it enhances the efficiency of the trade chain across the globe (David, Gollasch and Hewitt).

The maritime transport acts as a backbone for global economy and global trade. The maritime transport helps countries in the process of import and export because no country in the world is self-sufficient (David, Gollasch and Hewitt).

The maritime transport cost has reduced over time and the container ships can take advantage of economies of scale because the transport system has evolved. According to the World Trade Report of the World Trade Organization, there has been change in technology which helped in reducing shipping costs. The industry of shipping is cheap and is a cost-effective way for transportation of goods through long distance (David, Gollasch and Hewitt).

The maritime transport is safe and eco-friendly(Viana et al. )The maritime transport is less dangerous for environment and leads to reduced emission of green house gases

The maritime transport has the capacity to move large volumes of cargo. In comparison to the capacity of trucks and airplanes, the maritime transport can carry huge amount of goods and raw materials. The maritime transport also facilitates movement of dangerous cargo, liquids and gas (Cullinane and Bergqvist).

The maritime transport places a pivotal role to improve the standards of living of people across the globe and has the potential to alleviate poverty across many countries. The maritime industry provides opportunities for jobs to billions of people in the developing nations of the world and the living standards of developed countries are dependent on the maritime industry (David, Gollasch and Hewitt).

The public-private partnership and the single-windows system are effective methods by which coordination can be increased among different agencies that are involved in controlling the maritime transport. The reforms of trade facilitation and improvement of the process of logistics and documentations can enhance the process of the maritime transport. Public-private partnership and projects that are jointly financed, for instance, ports can facilitate trade and enhance opportunities of maritime transport (Shi and Kevin).

The maritime transport is boosted by several initiatives, for instance, the Aid for Trade Initiative which was launched by the World Trade Organization in the year 2005, the policy coherence of Development by OECD and the integrated framework for technical assistance related to trade. There are many organizations like the IMO, the UN/ CEFACT, the WCO which helps in the facilitation of trade between countries and thus boosting the maritime transport (David, Gollasch and Hewitt).

The Capacity of Maritime Transport to Move Large Volumes of Cargo

High cost of transit and transport

The economic reforms and bilateral and regional agreement of trade and negotiations of the World Trade Organization have reduced the barriers of trade in between countries. But despite of the reduction of trade barriers like tariffs, countries could not leverage the opportunities of free trade which is boosted by globalization. The reason behind this is associated with high cost of maritime transport, the transit costs for transport of goods to ports are also quite high, and the requirements of large number of documents and lack of transparency are barriers that affect the maritime transport. The landlocked countries of Asia and Africa are poor countries and in these countries, the cost of transport is 50 percent more than the countries in coastal areas. The high cost of transport enhances the price consumers need to pay for goods which are imported(Valentine,  Benamara and  Hoffmann).

The requirement of reform and need for modernization of border agencies

The border agencies belong to separate line ministries, these are controlling point at the border and these agencies have varied priorities and mandate. The collection of revenue which contributes to the State budget has been the prior goal of customs agencies of many developing countries. According to The World Trade Organization in 2005, the legislation of customs is outdated in many countries and these countries need to undertake modernization of customs and alignment with international commitments, for instance, The Kyoto convention revised by WCO is necessary for the customs department. The staffs of customs department do not have the competency requited to work in a modernized trade environment and the administration of customs fails to implement modern technology like the Information and Communication Technology (ICT).The maritime transport needs to be modernized to cope with international business requirement of Just-In-Time technology, security level also needs to be enhanced to combat terrorism and there is need for safety to combat risk of health like SARS(Talley and ManWo ).

The Ports also act as bottlenecks for maritime transport in developing countries. The ports are controlled by different authorities and there is lack of coordination among these authorities. The information flow between these authorities are not smooth, containers are opened multiple times, goods handling and information system is strained and custom authorities do not abandon old practices like ledgers written by hand and handling of goods manually. The procedures for regulations of ports are often ambiguous and the government-owned ports of developing countries are not modernized (Gibbs et al.).

Corruption and seeking of rent

Corruption can be associated with monopoly. The customs department of many developing countries is affected by corruption, the services of government associated to imports and exports are also often corrupted. The rent seeking practices of customs administration for various activities like post-clearance audit is a reason for corruption (Talley).

The requirements for documents are cumbersome and lack transparency

The FAL convention of IMP has noted that the maritime transport is subjected to over-regulation. Ships that visit different countries are required to fill forms related to security, immigration, shipping, health, customs and environmental conservation which are cons of maritime transport (David, Gollasch and Hewitt).

Conclusion

The maritime transport has developed with globalization, liberalization of trade and development of technology. However the ports in many countries still require modernization and authorities which control the maritime transport at ports need to collaborate among one another to boost the facility of maritime transport.

Reference Lists

Cullinane, Kevin, and Rickard Bergqvist. "Emission control areas and their impact on maritime transport." (2014): 1-5.

David, Matej, Stephan Gollasch, and C. Hewitt. Global Maritime Transport and Ballast Water Management. Springer Science, in preparation, 2015.

Gibbs, David, et al. "The role of sea ports in end-to-end maritime transport chain emissions." Energy Policy 64 (2014): 337-348.

Pallis, Athanasios A. The common EU maritime transport policy: Policy Europeanisation in the 1990s. Routledge, 2017.

Shi, Wenming, and Kevin X. Li. "Themes and tools of maritime transport research during 2000-2014." Maritime Policy & Management 44.2 (2017): 151-169.

Talley, Wayne K. "Maritime transport chains: carrier, port and shipper choice effects." International Journal of Production Economics 151 (2014): 174-179.

Talley, Wayne K., and ManWo Ng. "Maritime transport chain choice by carriers, ports and shippers." International Journal of Production Economics 142.2 (2013): 311-316.

Valentine, Vincent F., Hassiba Benamara, and Jan Hoffmann. "Maritime transport and international seaborne trade." Maritime Policy & Management 40.3 (2013): 226-242.

Viana, Mar, et al. "Impact of maritime transport emissions on coastal air quality in Europe." Atmospheric Environment 90 (2014): 96-105