Factors Affecting The Shipping Industry For Heavy Transportation Equipment, Essay.

Shipping Rates

Discuss about the Shipping Industry for Heavy Transportation Equipment.

According to the statistics provided by Lloyd, it’s precise to state that market prices of Ship vessels are on a downward trend. The maritime sector has expanded in the past decade with the increased international trade. Trade between different countries in different continents has been on the rise which has increased the shipping sector. Exportation of raw materials from one country to another requires heavy transportation equipment and container ships are the most efficient means as explained by Winkler, I., et al. (2015).  The growth of the industry has been affected by various factors that include:

The rates at which exports are being transported across the globe affect the long-term performance of the marine industry. The stock available determines the ability of the companies and countries to sustain the shipping process. The availability of stock keeps the shipping rates on the rise over longer periods.  For example, Tsakos ship dry goods in bulk have experienced growth due to the constant supply of these products.

Shipping rates are affected by supply and demand for goods this makes the maritime industry a volatile investment.  A small change percent in supply causes a significant impact on the industry.  Lesser supply of goods reduces fleet utilization which causes a significant negative impact on the industry and vice versa for the increase in stock. Supply determines the number of ships that companies can invest in to avoid making losses as businesses cannot pull out their ships from the firm.

The request for ships is on the rise due to increase in global trade which has grown demand for commodities. The impact of world trade on economic growth in individual countries such as China has become the production of shipping equipment (Crammond 2017). China is emerging superpower, and its crude oil imports have increased over the past decades while in the US, the growth in the use of energy has reduced demand for crude oil. The crude oil tankers manufacturers can analyze markets for their products and shift their focus. They are influenced by policies on mining in specific countries.

Supply of new ships and crapping of activities affect the supply of goods in the shipping industry. In the past half-decade, the demand for new ships reduced supply rates. Shipping rates are a contributing factor to development and improvement of shipping containers (Gubbins 2016). Acquisition of new ship enables a company to venture into new markets and increase their shipping rates which increase the earnings of the enterprise.

Supply and Demand of Stock

The value of companies is determined by its assets and influences the shipping rates. Acquisition of new ships increases the value of the company as orders increase which translates to prices. The driving factors on the cost of ships include the costs of ships and the ability of the companies to acquire and maintain them.

International trade has been accelerated with the increase in globalization and has become a driver of economic growth and development. Many countries are becoming more dependent on imports and exports to grow their economy. Therefore, the shipping industry is the most reliable mode of transportation, especially for heavy goods. The maritime sector has engineered the removal of restrictions in trading through the World Trade Organization and Regional Trade Agreements. International trade is projected to grow in the coming years with increased with creation the expansion of the industry across the globe. Economic growth has been more volatile as global trade increased whereas regional differences in economic growth increased.

In the late 20th century the shipping industry experienced an increase in manufacturing of shipping container. Transportation routes have become more elaborate with the rise in penetration of rate, with the demand for raw and finished products increases. At this age development of port infrastructure increased and their ability to handle a large number of shipping containers increased (Dover 2009). In the contemporary maritime industry, the demand for shipping containers has continued to project high. Ports have expanded to accommodate more ships in the docking point.

The increase in the manufacture of high capacity ships has reduced shipping rates. The reduction in shipping rates affected the profitability of shipping companies and has caused losses since the introduction of such ships in specific companies as explained by Fuchs (2016).  To mitigate these losses, companies reduced the capacity of these ships by removing some storage facilities or reducing shipping time. For example, Panamax vessels introduction to the market caused losses due to their large size. Therefore, companies had to strategize on how to minimize cost impact. This aimed at stabilizing and balancing the supply and demand in the shipping industry across all transportation routes globally.

The maritime sector has been shaped by a shift in local manufacture of shipping containers and is suited for the regions. In the late 20th century, Japan dominated the Asian shipping container manufacturing and distributions. These containers used in the Europe –Asia trade and the Trans-pacific trade. However, there has been a shift in the production and distributing sources across Asia such as China, Taiwan and Korea and currently they are top on the list. These countries have significantly impacted the manufacturing industry as they occupy more than half of the Asian market (Gubbins 2016). China has grown to a major trading partner with various countries across the world. Therefore, it imports products through shipping and is a leader in this industry far from US and Japan. 

Demand Drivers

Containerized trade has intensified over the past decades due to t increase in population across the globe. Container trade has a more networked cycle in the developed world, unlike the developing countries. Asian countries have long been inward looking, therefore, shipping less development in the shipping industry.

The maritime sector shaped by regulations imposed in various countries towards the industry. The establishment of Ocean Shipping Reform in the US and the Regulation 4056 in the EU has regulated the industry operations and expansion. Competition in shipping regulations among trading countries has impacted freedom of shipping companies and daily activities.

The shipping industry is regulated by numerous international agencies mainly the UN through International Maritime Organization. Environmental sustainability is a challenge to transportation industry as the world shift towards conservation of the environment. Some of the environmental regulations on the shipping industry include maritime safety ballast water management, gas emission, and anti-fouling laws.

Through the IMO, maritime safety has been on the forefront to improve the safety at sea. Through this agency, international regulations and standards have been established and have influenced operations in the shipping industry. New maritime regulations are expected to be established as the shipping industry faces changes in globalization and climate (Fayle 2016). Through marine notices, equipment manufacturers are given guidelines on tests timetables for approval. The industry provided with guidance on general safety.

Ballast is used to stabilize ships at sea, therefore, necessary for efficient operations. The use of ballast causes serious ecological and health issues due to its components. New regulations are expected to change the use and the components that make up the ballast. Some of the existing regulations require ships to use a ballast that meets the discharge standard. In the US, ballast management regulations requirements include the use of ballast that is obtained specifically from US public water systems, and ships are expected not  to discharge unmanaged ballast water.

Gas emission in the shipping industry has become intense with the increase in globalization. According to IMO, gas emission such as carbon and nitrogen in the shipping industry are expected to rise to a high percentage  of 250% by 2050. The EU has become a major player in the activism against increasing global warming and has a strong preference for a global approach to reducing emission as explained by Crammond, E. (2017). The IMO made an agreement in 2016 for a global approach to data collection and necessary actions to be taken to tackle the emission challenges in the industry.

Supply Drivers

Anti-fouling paints are used to prevent attachment of sea life on the bottom of the ship.   These compounds have been discovered to harming sea life and the environment. Many studies have shown that there is a possibility of the components entering the food chain. New conventions adopted on regulating the use of these components by the shipping industry have significantly reduced the effects it has had on the sea life and the environment as noted by Crammond (2017).

The industry is expected to grow, and new challenges in regulating are projected to increase therefore countries need to have a greater deal of cooperation. International bodies need to strategize on managing environmental issues to ensure that all countries have a bargaining table and agree on how to manage these issues. The shipping industry may be affected by these regulations and requires the industry to adjust to them.

Conclusion

The shipping industry is a growing sector, and its benefits have been identified hence many countries are motivated to join in the transportation of imports and exports. The safety in the industry has been improved with the advancement of technology which has revolutionized how goods move from one end of the globe to the other. Shipping regulations require a strict implementation and monitoring team to ensure that they remain valid. All the components that make up the maritime transport industry need attention from the shipping stakeholders.

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