Shipping: Indispensable to the world

29 September 2016

Few industries have such impact on the growth of the global economy as shipping. According to the International Maritime Organsiation (IMO), around 80 per cent of the world trade is transported by the shipping industry, bringing goods to individuals and communities all over the world.

Few of us spends a thought on that almost everything we use or wear in a day is produced in a different country and transported to us. Global trade allows us to have a wider selection of products to choose from in our shops and shipping allows the transportation to be done in a cost efficient manner.

Bringing benefits to consumers around the world

Without international trade, very few countries could maintain an acceptable standard of living. With only access to domestic supplies, each country would simply be able to produce limited products, eventually leading to shortages. In fact, only about 23 per cent of all international trade is made between countries with a common border¹ so the majority goods travel far distances to reach the end consumer.

“Products we take for granted in our shops, come from the other side of the world, having been through final assembly in one country, while its numerous components may be coming from dozens of other countries”, Says Teresa Lehovd, Head of Market Intelligence in her blog post on the 23 September. “In reality, the shipping industry is enabling these complex supply chains to work. Considering all these intermediary moves, the final product in the market, is still much cheaper today than it was in the past. This is thanks to all parts of the supply chain, including shipping, contributing each with their own efficiencies.”

Adjusting to demand

To cater for the growing demand, the vessels have become larger, the trade networks more complicated and the ports larger and more efficient. As an example we can mention how the exports of cars from Japan to Europe took off in the 1960’s and shipping, with Höegh at the driving seat, was soon to develop vessels specially designed for this purpose. In the 1980’s the need for transporting more high and heavy units started and so the vessels were further developed to take on that type of cargo. And over the last decades the design has been refined and made more flexible to cater for an increasingly fast change in demand. Today we see the cycle turn, with production becoming more regional again. To support the new reality, smaller vessels are moving in to shorter trades, reducing pressure on roads and railroads, while the mega ships are bringing goods in an even more cost efficient way than before between continents. Shipping is adjusting to cater for the new demands, like it has done through cycles in all times.