451
1 REGULATORYSCHEMEOFTHEGLOBAL
MARITIMETRANSPORTSECTOR
1.1 Themainsystemsandmechanismsofregulationof
theglobalmaritimetransport
Maritimetransportsectorjustlikemanyotherforms
andareas of internationalcommercial and economic
activityhasbeen regulatedfor ages.Nowadays,real
activityofthatglobalsector
issubjecttoregulationof
the complex system which consists of two
independent, however different in their nature,
regulatory subsystems. Each of them has its own
specific characteristics. It is a public subsystem, the
essence of which consists in international as well as
autonomous subsystem based on freight market
regulatory
processes. The first one is external to the
transport sector, while the second, is both external
and internal, largely because one of the markets,
namely freight market, is an integral element of the
sectoritself–itisoneofitssubsystems.Eachofthem,
alongwiththesetofregulatorytoolstypicalforitself,
affectstosomedegreetheefficiencyoftheoperational
activity of maritime transport and its relationship
with global environment. The mutual relationship
between the regulatory scheme of the maritime
transportsectoranditssubsystems,andthemaritime
transport real sector, is presented, in a schematic
form,infig.1.
The presented scheme shows that international
maritimetransportissubjecttotheregulation ofthe
two, running in parallel, although to a large extent
independentlyfromeach other, and hence, not
fully
coordinated with each other, regulatory subsystems.
Each of them has its own independent regulatory
mechanisminfluencingdirectlytherealactivityofthe
maritime transport sector and indirectly its various
relationships with other sectors of the global
economy.Theprimaryregulatorysubsystemremains
asbeforethemarketsubsystem.Onashort
‐,mid‐and
long‐term basis it plays a steering role in regulating
International Maritime Transport Sector Regulation
Systems and their Impact on World Shipping and
Global Trade
A.S.Grzelakowski
GdyniaMaritimeUniversity,Gdynia,Poland
ABSTRACT: The main purpose of the paper is to analyze the impact of two nowadays existing global
regulatorysystemsoftheworldmaritimetransportsectoroninternationalshippingindustryandglobaltrade
development.Theauthorhasfocusedonthecharacterizationoftheautonomousregulatorysystem
represented
inthissectorbyfreightmarketwithtypicalforitmechanismaswellasonpublicregulatorysystemexpressed
in form of the existing international regulatory scheme introduced by IMO and other international
organizations. Both regulatory mechanisms has been analyzed and viewed in terms of efficiency and
effectivenessoftheir
influenceuponshippingindustryandglobalcommoditymarkets.Attheend,theresults
offunctioningofbothregulatorysubsystemshavebeenassessedwiththeaimtoindicatehowtheyareableto
creategrowthpotentialfortheworldmaritimetransportandtradesectoraswellastheglobaleconomy.
http://www.transnav.eu
the International Journal
on Marine Navigation
and Safety of Sea Transportation
Volume 7
Number 3
September 2013
DOI:10.12716/1001.07.03.18
452
therealactivityoftheinternational,widelyglobalized
maritimetransportsector.
Figure1. The regulatory system of the global maritime
transportanditsmaincomponents
Theglobal maritimetransportsector performs its
duties within well‐developed typical international
marketframework,stillsubstantiallyfragmented.Itis
characterized currently in general by well‐advanced
degree of liberalization. However, in some of its
segments,mainlyregionalones,relativelystrongstate
regulatory measures and simultaneously,
protectionist practices are maintained. While
characterizing market environment of the maritime
transport sector, one should note that it consists not
only of the global freight market but also of other
types of transport markets as well as commodity,
capital and labor markets. Each of them has a
significant impact on the maritime transport sector.
All
these markets through their regulatory
mechanisms shape real processes carried out in the
maritime transport sector, i.e. its real activity and
eventually determine the form of its links with the
globalenvironmentwhichisagloballogisticssystem
(logistics megasystem). The position and function as
wellastherelationsbetweenthe
maritimesectorand
othercomponentsofthelogisticsmegasystem,i.e.the
logisticssupplychains andnetworksarepresentedin
figure2.
Itisobviousthattheefficiencyandeffectivenessof
the autonomous regulation of the real activity of
maritime transport depends on the degree of
coherenceofvarioustypesof
marketsand,infact,itis
specifiedbythelevelofliberalizationofeachofthem
(fig.2).Themoreitisaligned,themoreefficiencyand
productivity is generated by market regulation
regardedasacomplexautonomoussubsystem.Such
subsystem, along with its equally liberalized market
mechanisms, able to produce synergy
effects, is fit
enoughonly to actasan instrumentof optimization
of the real activity of the international maritime
transport. One should note that such a complex
market optimization of the short‐, mid‐, and long‐
term real processes carried out in the international
shipping sector, applies not
only to the sector itself
butalsotothewholeenvironmentitiscloselylinked
with,i.e.tologisticsmegasystem(fig.2).
Figure2. International maritime transport in the global
logisticssystem.
1.2 Diffusionofregulatoryprocesseswithintheglobal
maritimetransportregulatoryscheme
The mechanism of market regulation of the global
maritime transport sector which determines its
position and function in the global logistics supply
chains and networks constituting logistics
megasystem is, in fact, autonomous. However, as
such,ithaslongbeen
subjecttoregulation.Thereare
many reasons for this, but unlike other transport
markets (road, rail, etc.), which have not been fully
developed, and immature markets (infant markets)
even at the stage of global deregulation (WTO) are
nowadaysstilloperatinginmanyregionsasgenerally
imperfectones, the freight markets
do not need any
form of de‐monopolization of their supply side or
support in terms of construction a fully‐developed,
competitive and transparent regulatory pricing
mechanism.Inthemaritimetransportsector,whichis
one of the most internationalized areas of global
economic activity, the reason for public intervention
inmarket
activityisprimarilyto:1/provideadequate
conditions and safety standards in the carriage of
peopleandgoods(intermsofsafetyandsecurity),as
well as ensure security of the supply chain (supply
chain security) along with ecological and social
securityinthisareaoftransport,2/establishuniform
rules for access to the profession in the shipping
sectorandentrytoitsmarketaswellasperform,ina
proper way, all regulatory functions by maritime
administration of coastal states, 3/ harmonize legal,
organizational and technical standards
(standardizationofloadingunits,documents,etc.)in
international transport by sea and
land, in order to
ensurebetterintegrationofintermodaltransportand
C
P
Ground
transport
Maritimetransport
Ground
transport
Seaports Seaports
Seaportsandfreightmarkets
Commoditymarkets–Primarydemand
Transportmarkets–Secondarydemand
Globallogisticssupplychains
andnetworks
Globallogisticssystem
Logisticsmegasystem
REGULATORYSCHEME
OFMARITIMETRANSPORTSECTOR
INTERNATIONAL
PUBLICSUBSYSTEM
AUTONOMOUS
SUBSYSTEM
Public
mechanism
Market
mechanism
MARITIMETRANSPORTSECTOR
REALSPHERE
REALMARITIME
TRANPORTPROCESSES
453
logistics operations within the supply chains and
networks in the global logistics system. The market
mechanism is not able to pursue automatically all
thesetasksandgoalsintheinternationaldimension.
Attempts taken to regulate freight markets are
generally focused on the supply side, both on
potentialandeffectiveone.
Public intervention, which from the very
beginning has been perceived as a form of public
controlinthemaritimetransportsector,andassuch,
isusuallyimplementedindirectlythroughthemarket
mechanisms, has been applied by two subsystems:
Theseare:1.national(domestic)regulationsubsystem
and2.internationalone(fig.1).
Thefirstonecontains
generalstandardsaswellaslegalandadministrative
arrangementssetineachmaritimecountryrelatedto
this sector of transport‐its operational sphere of
activity. The second one, however, comprises the
package of international regulations related directly
andindirectlytothemaritimetransportactivitysuch
as:conventions,
resolutionsandrecommendationsof
international organizations, governmental and non‐
governmentalorganizations,aswellasvarioustrade
and economic associations and communities.
Nowadays, international public regulation of the
worldshippingsectorhasbeencarriedoutbymany
specializedinternationalorganizationssuchas:IMO,
EU,WTO,ILO,UNCTADandotherregionalbranch
associations e.g. ECSA, ESC. The second public
regulation system since the very beginning of
globalization has played the dominant role and in
manyareashasreplacedthenationalsubsystemsthe
role of which is being gradually diminished. This
processof growinginternationalizationofthe public
regulatory system in the shipping sector
is
irreversibleonaworldscale. Itisthemostadvanced
in the countries being members of free trade zones
and especially in those ones integrated in form of
economiccommunities,liketheEU.TheEUmember
states have worked out a common shipping policy
which is oriented at substantial
international (IMO)
goalsandinstruments,especiallyasfarassafetyand
securitystandardsareconcerned.
Therefore,therealactivityoftheglobal maritime
transportsectorisformedbyverycomplexregulatory
system based on two mechanisms which in fact do
nothavecomplementarycharacter.Atthattimewhen
the leading shipping
countries played the dominant
role in the world maritime transport sector their
national shipping policies strongly affected the
international public regulation subsystem. As the
freightmarketregulationsubsystemwasatthattime
barelyinitsinitialphaseandinfactunabletoassure
free and competitive market regulation, such public
regulatory mechanism tried to substitute to some
extent the market mechanism. Therefore, public
regulatory subsystem replaced the market one in
some areas through protectionist practices and, as a
result, deformed market relations in the global
shippingsector.Onlyasaresultofongoingprocesses
of globalization of the maritime transport sector,
growing integration and liberalization of cargo and
freight markets and, consequently, the development
of logistics and global supply chains, those
subsystemsandtheirmechanismshavebeguntolose
their typically substituting character bringing
graduallyclosereachother.Itisexpressedintheform
of still closer and closer adaptation of
the area of
internationalpublicregulation(internationalshipping
policy) to the requirements of the global freight
marketsandisbeingaffectedbytheshrinkageofthe
national regulation in favor of the international one
which has already been performed according to the
much more liberalized principle: not instead of the
market,
but through the (freight) market. It means
that the main area of its impact is becoming the
freight market itself and predominantly, its supply
side.
Suchastrategyhasbeeneffectively implemented
by IMO and the EC for more than 15 years. It has
gradually increased the scope of international
cooperation in the area of the global freight market
regulation.TheIMOhasplayedtheleadingrole,but
inrecent years thedrivingforce,especiallyasfaras
theenvironmentalstandardintheshippingindustry
is concerned, was taken by the EC, becoming the
triggerofinitiativesandrealchangesin
thisfield.
2 SHIPPINGMARKETASREGULATORY
MECHANISMANDITSIMPACTONTHE
GLOBALMARITIMETRANSPORTSECTOR
2.1 Commodityandfreightmarketsasautonomous
regulatorymechanismintheinternationalmaritime
transport
Commodity markets as primary ones determine the
dynamicsandtheefficiency offreightmarkets.Asa
result,the shipping
markets, belonging to the group
ofsecondaryones,inanaturalwayhavetoreflectthe
main tendencies and processes occurring on the
primary markets. It means that all freight market
components and primarily its demand side, is
influencedtoagreatextentbynumerousfluctuations
of effective supply and demand
for commodities
transportedbysea.Such adirectformofcorrelation
existing between particular segments of adequate
commodity markets and freight markets creates a
special pattern of economic relations and ties. They
areexpressedinatraditionalwayinmarkettermsby
parametersofpriceelasticityofdemandforshipping
services.Themethodofcalculatingpriceelasticityof
demandforservicesprovidedbyshippingcompanies
clearlyindicatesthat:
1
1 demand for maritime transport services has
derivativecharacterandisinducedbydemandfor
commoditiescarriedbysea,
2 commoditymarketsplayvitalroleinshapingand
structuring the freight markets, simultaneously
formingtheirdynamicsaswellastheeffectiveness
of meeting the effective demand for maritime
transportservices.
Taking the above into account it must be
concluded that commodity markets constitute,
alongsidetheinternationalmaritimetransportpolicy,
animportantdirecttooloffreightmarketregulation.
1
J. G.Jansson,TransportSystemOptimizationand Pricing. The Eco‐
nomic Research Institute. Stockholm School of Economics. Stock‐
holm1980,p.399andA.Grzelakowski,Naturalequilibriumasopti‐
mum condition of port services market. “International Journal of
TransportEconomics”1985,no.3,p.49
454
It means that these markets, together with other
markets such as: transport, capital or labor ones,
influence indirectly the real sphere of activity of the
maritime transport sector, determining its efficiency
aswellasthevirtueoffreightmarketmechanism.As
aresult,theirmechanism,autonomousinitsnature,is
subject to relatively strong impact of other
autonomousregulatoryforces,induced,infact,bythe
market‐oriented environment of the global maritime
transport sector. This means, de facto, that the
autonomous mechanism in this transport sector is
fairly comprehensive in its character. However, as
such,duetoregulatoryweaknesses,accounts
forthe
globalpublic regulatory mechanism. The complexity
of the nowadays existing autonomous regulatory
system, along with all interactions occurring among
all its components and especially between demand
and supply on commodity and freight markets, are
brieflypresentedbelow.
Theinternationalseaborne trade as an absolutely
dominantcomponentofworldmerchandise
tradeand
worldmaritimetransport that remains the backbone
of international trade and global economy, has
supportedstronglynotonlytheongoingprocessesof
globalization but also the rapid development of the
global supply chains and networks. Both are fueled
bytheworldeconomicgrowth,i.e. increasingworld
production and
consumption stimulating GDP on a
global scale and consequently, merchandise trade.
The last one, due to highly advanced processes of
deregulation of economies and liberalization of all
types of markets on a global scale, has grown very
fastinrecentdecades,leavingfarbehindothermacro
parametersreflectingthosetendencies.
In
2011,thevolumeofinternationalseabornetrade
reached8.72billiontons.Itmeansthatalmost80per
cent of world merchandise trade by volume (tones)
and more than 90 per cent in ton‐miles have been
carriedbysea.
2
In2011worldseabornetradegrewby
4percent,whereastheglobaleconomy,measuredin
terms of the world GDP, expanded only by 2.7 per
cent (compared with 4.1 per cent in 2010). Such a
significant slowdown was caused among others by
decelerated industrial production in the OECD
countries
which grew at modest 2.1 per cent (down
from8.5percentin2010)andsharpdropintheworld
merchandisetrade.Growthintheworldmerchandise
trade by volume expanded at an annual rate
(2011/2010)of5.9percentascomparedwith13.9per
cent in the previous year.
3
Referring to WTO rough
estimates, deceleration in the global trade continued
in 2012 and the world merchandise trade volumes
expanded presumably only by 2.5 per cent, rate far
belowthe6percentaveragerecordedovertheperiod
of1990‐2011.
4
2
Ton‐miles is a unit which offers a measure of real demand for
shippingservicesandtonnageinvolvedintheirmanufacturingasit
takesintoaccountdistance,whichdeterminestrueshipavailability.
Compare:2012. Review of Maritime Transport 2012. Report by the
UNCTAD secretariat. UNTAD/RMT/2012, New York and Geneva
2008,
p.4‐17.
3
Themerchandisetradeinvalueterms(basedonexport)increased
however,duetothegrowingcommoditypricesin2011,by19per
centand reached$ 18.2 trillion.In 2010 itaverage annualgrowth
rateaccountedfor22percent.Ibidem,p.19‐21
4
Ibidem,p.19,21
Therecentgrowthintradingcommodityvolumes
transportedbysea,4.0percentincreaseyear‐on‐year,
was not very much impressive, despite the still
existing economic downturn, higher than the one
recorded in the last decades. Indeed, since 1970 the
annual average growth rate of the world seaborne
tradehas
beenestimatedat3.2percent.
5
In2012,the
volume of cargoes transported by sea was 2.4 times
higher than in 1990. After all, its growth dynamics
was still more than two times lower than the world
merchandise export. Its annual average growth rate
accounted for 8.7 per cent over the period of 2000‐
2012.
Taking
intoaccountthat:
1 globalseaborneshipmentsaregrowingintandem
with the world merchandise trade (measured on
exportbase)aswellastheworldGDPand
2 currently existing barriers to development of the
maineconomiesbeingthetriggerofglobalgrowth
willhavetobesmoothlyovercomeinthe
nexttwo
years and the world production and trade will
entertheirpreviouspathofgrowth;
one may assume that in 2020 the seaborne trade is
likely to increase by 36‐40 per cent as compared to
2010, reaching 12.0‐12.5 billion tones.
6
By such
dynamics, the volume of goods carried by sea can
exceedin2031twicethelevelreachedin2010.
Therefore,theinternationalforecastsregardingthe
development of seaborne trade and freight markets
on a global scale in the next decades, despite the
envisaged economic turbulences, are as previously
assumed
optimistic.Theyarebasedonassumption,as
itwasmentionedearlier,thatdespitegrowingglobal
risks and uncertainties, the seaborne trade will
increase in tandem with the world economy
measuredinthegrowingworldGDPandproduction
aswellasglobalmerchandisetrade.Itisassumedthat
the correlations between all
these factors remain in
thepredictedperiod moreorlessatthesamelevelas
theywereovertheperiodof1990‐2011.Atthattime
(1990=100) the global merchandise export grew 3.1
times what corresponded with the dynamics of
seabornetrade (2.72 times),whereas the world GDP
was enlarged
1.78 times and industrial production
only1.41times.
7
Itisobviousthattheserelationsaredeterminedby
many other economic factors inherited in other
segments of the global economy which influence
significantlytheworldmaritimetransport,too.They
originate from other type of markets, e.g. capital or
energy ones as well as primary markets themselves.
The main factors
here include: rising energy prices
(bunker) with their potential implications for
transportcostsandtrade,soaringnon‐oilcommodity
prices, the uncertainties on global financial markets,
etc. All of them, as relatively strong regulatory
instruments,willinfluencetheglobalfreightmarkets,
boththeirdemandandsupplyside,determiningthe
5
Insight& Analysis. World Trade Service Brochure Global Insight
2011,p.2
6
A.Stachniol, The expectedoverallimpacton trade from a mari‐
timeMarketBased‐Mechanism(MBM),March2011,s.2
7
WTO2011.Tradegrowthtoeasein2011butdespite2010record
surge, crisis hangover persists. World Trade 2010. Prospects for
2011,PressReleases/6287,April2011,p.5
455
scope and the structure of the global maritime
transportrealsphereofactivity.Despitethegrowing
role of non‐autonomous measures, their regulatory
drivingforceinthissectorseemstobestilldominant
2.2 Freightmarketmechanismasregulatoryinstrument
ofglobalmaritimetransportsector
Maritimetransportsectoroperatingon
aglobalscale
has constantly undergone pressure of numerous
market forces, especially these stemming from the
freight market itself. Therefore, freight market
mechanismasapowerful regulatory tool of the real
sphere of activity of the maritime transport sector,
able to fulfill its traditional autonomous regulatory
functions in the global
shipping industry, becomes
theprimarydrivingforceofanychangesinthisarea.
Closely connected with other markets, it steadily
affectsthedecisionmakingprocessesofdemandand
supply side representatives concerning both their
short‐term operational activity and long‐term
investmentengagements(formsofcapital allocation).
In such a way,
freight markets not only inform all
sides involved in the maritime transport operation
about the current fluctuations of effective demand
andpotentialsupply,determiningtosomeextendthe
futuremarketpatterntoo,butalsostimulatethemto
cause appropriate reaction and ensure pro‐market
oriented behavior. How efficiently it works
as
regulatorytoolofthissectorabletoadjustthesupply
side,beinglesssensitiveinadoptingitselftodemand
fluctuations, to dynamic changes occurring on the
other market side, may be viewed on the data base
concerningpredominantlythelastfiveyears.Itwasa
veryturbulenttime, rich in
many extraordinary and
spectacular events, the effects of which significantly
affectedtheglobalshippingindustry.Hence,itcanbe
usedtoexaminethefunctioningofthefreightmarket
mechanism as well its evaluation as a regulatory
instrument.
As a result of the growing world economy and
subsequently, international merchandise trade,
the
world merchant fleet, representing the potential
supplyofmaritimetransportsector,duetodeliveries
of new buildings expanded by almost 10 per cent
during2011.
8
Thepotentialglobalsupplyinmaritime
transport reached in 2012 1.6 billion dwt. It means
thattheworldtonnagegrew2.5timesfasterthanthe
wordmerchandisetradecarriedbyseain2011.
The merchant fleet recorded an impressive
increase of over 45 per cent in just five years.
However,
itshouldbenotedthatsincetheeconomic
crisis of 2008 and 2009, far fewer new orders have
been placed by global ship operators than tonnage
delivered by the world shipyards. As a result, the
existingorderbookoftheglobalshipyardsectorhas
beensignificantlyreduced.Nevertheless,in2010and
2011moretonnagewas added to the existing world
fleetthaninanypreviousyear,whichinfactresulted
fromordersplacedpriortotheeconomiccrisis.
This general tendency, however, concerns in
varying degree particular groups of world tonnage.
Lookingatthistrendatthesupplysideinlong
term
8
2012.ReviewofMaritimeTransport2012.Op.cit.,p.51‐62,
period, one must conclude that growth dynamics of
eachgroupoftonnageinrecent30yearswasinline
withtheneedsdeterminedbythedemandsideofthe
freight markets, reflecting the quantitative and
structural changes observed on global commodity
markets. For example, since 1980 the general cargo
fleethas
declinedby7percent,whereastherestofthe
tonnage categories grew by more than 150 per cent;
oiltankersgrewbymorethan164percent,drybulk
byalmost335percentandcontainersgrew18times
indeadweighttonnage.
Suchtendencyobservedatthesupplysideof
the
globalmaritimetransportfreightmarketascompared
with the demand fluctuations (its deceleration), has
causedseveralconsequencesforbothshipownersand
shippers. On the one hand, the world tonnage has
been renewed and its average age per dwt slightly
diminished (11.5 years). Thanks to that, its potential
earning capability is
being increased. However, it
does not mean that operational productivity of the
world fleet has to follow the said capability (tab.1).
On the other hand, the threat of speeding up the
already ongoing tonnage overcapacity (oversupply)
was getting much more realistic with all market
consequences, e.g. for freight and charter
rate
distortions. In fact, all these negative economic and
financial consequences were unfold on the freight
markets at that time, painfully hitting not only ship
operators but also other participants of the global
logisticssupplychain.
9
However,duetotheexisting
freight market regulatory power, expressed in the
efficientreactionsgeneratedbytheshipoperatorsand
shipowners, the global freight market as well as its
majorsegmentshavegreatviabilitytosurviveunder
turbulenttime.
10
Suchelasticityandadaptabilityofthesupplyside
of the freight market to the demand side, which
obviously differs accordingly to the type of market:
linerortrampone,hasitsrootsinfreemechanismof
shipregistration(shipping assetsdistribution).Infact,
anyshipownerhas generallyfreechoice
ofnational
(ownership) or foreign flag, indicating the country
wheretheirshipisregistered.Theuseofinternational
openregistersaswellastheso‐calledsecondregisters
(DIS,FIS,NIS,etc)generatestoship‐ownersstillmore
economicandfiscalprivilegesthanflyingthenational
(country owned) flag. Due to
that, the share of the
foreign –flagged fleet is gradually growing in the
globaltotaltonnageandcurrentlyaccountsformore
than 72 per cent. As open registers are in use, and
many countries offering all ship‐owners such
administrative and economic instrument are
nowadayscompetingwitheachother,the
processof
tonnage concentration in this “secondary shipping
nations” is relatively high. The top 35 open and
international registers run by foreign countries, the
so‐calledflagofconveniencehaveconcentratedalmost
92 per cent of flagged‐out fleet. Ten major open
registersconcentrate57percentoftonnageregistered
under
foreign flags. This tendency intensifies since
9
N. Davidson N., Global container terminal operators forecast: 2012.
Globaleconomicdownturn,demandupturnandthechangingfaceofter‐
minal network investment. Drewry Shipping Consultants, London,
UK,2011,
10
E.Vanaale,BlackSeaContainerPorts.DrewryMaritimeAdvisors.
ESPOVarna2013,p.5‐6,
456
vast majority of new‐buildings is registered under
foreignflag.
11
Asaresult,thegrowthofmostofthe
major flags of registration is getting higher than the
growthofthetotalglobalfleetwithallconsequences
forship‐owningcountries.
Due to that free scheme of ship registration,
ownership of the fleet which belongs to substantial
maritimeassetsin
thissectornotnecessarily implies
thattheship‐owningcountryeffectivelyoperatesand
controls the shipping operation). The ship owning
countries can not fully benefit from possessing their
maritimeassets(taxesandotherincomes)andtryto
take economic and administrative measures to
stimulatethe process of reflagging ships using open
internationalregister.However,theprocessseemsto
beirreversible.
This group of countries, quite different from
thoseofferingopenregisters,ischaracterizedbyvery
high degree of world tonnage concentration. As of
January 2012, only 35 countries and territories with
the largest owned fleet controlled 95.5 of the global
fleet.
Theirmarketshareisestimatedtogrowfurther.
Whatismore,almost50percentoftheworldtonnage
is owned by shipping companies from just four
countries.
As a result, tonnage concentration in a relatively
smallgroupofcountriesasfarasvesselsownershipis
concerned, is getting some
characteristics of the
contemporary global freight market and may
influence the primary markets as well as global
logistics costs and final prices of commodities
transportedbysea.Allexternalfactorsunequivocally
indicate that such tendency will gradually go ahead
inthenextyears,partiallyasaresultofstillgrowing
international
competition and already achieved
position of the main shipping countries on the
commodities and freight markets (economies of
scale).
The above indicated tendencies observed in the
international maritime transport on its supply and
demandsideaswellas in its contemporary existing
regulatory mechanism, especially relating to
merchant fleet distribution
on the basis of tonnage
ownership(realcontrol)andvesselsregistration(fleet
management), have great impact on the world fleet
operational productivity and its effectiveness. As
maritime transport constitutes a very important link
in the global supply chains, servicing primary
markets (see fig.1), such trends and tendencies have
toinfluence significantly
the efficiencyandelasticity
of the logistics supply chains and the international
seabornetrade.Toexaminethescopeandintensityof
theirimpactonsecondaryandprimarymarketuseby
global supply chains operators, the indices of the
world fleet operational productivity need to be
analyzed.
Themainindexesof
thiskindaredefinedintons
andton‐milesperdeadweight ton (dwt).Theyshow
thestillchangingrelationsbetweenthegrowthinthe
supply of tonnage and the growth in the total
seabornetrade as well as in ton‐miles performed by
11
Amongthetonnagedeliveredin2011almost83percentwasreg‐
isteredabroad,i.e.incountriesrunningopeninternationalregisters.
2012Review,op.cit.,p.62
the world fleet, which corresponds with a distance
one ton was carried over. Consequently, as the
growthinthesupplyofthefleetoutstripsthegrowth
in the total seaborne trade, which on the highly
competitiveglobalfreightmarkethasbeenastandard
relationinrecentyears,thetonsofcargo
carriedper
deadweight ton (dwt) decreases. In 2007 the global
average of tons of cargo carried per dwt of cargo
carrying capacity was 7.7 and in 2011 only 5.7 (see
tab.1).Inotherwords,itmaybeinterpreted,thatthe
average ship was fully loaded 7.7 and 5.7 times
respectively
duringthoseyears.Since2007,duetothe
growingimbalancesbetweenthedemandandsupply
side on the global freight market, the operational
productivityhasdecreasedsignificantly(seetab.1).
Table1.Operational productivityofthetotalworldfleetin
theperiodof1970–2011(selectedyears)
_______________________________________________
YearTonscarried Thousandsofton‐miles
perdwt performedperdwt
_______________________________________________
19707.932.7
19805.424.6
19906.126.0
20007.529.7
20077.731.6
20087.435.1
20096.631.0
20106.029.3
20115.727.9
_______________________________________________
Source:CalculationsonLloyd’sRegister‐Fairplay,Fernleys,
ReviewandReviewofMaritimeTransport2008,2010,2012.
Duringthe sameperiod,theton‐miles performed
per deadweight dropped from 31.6 to 27.9 (tab.1).
These indices inform all market representatives that
the average dwt of cargo carrying capacity of the
world fleet transported one ton of cargo over a
distanceof31,600nauticalmilesin2007,i.e.87
miles
perdayand,duetothegrowingovercapacityofthe
wordfleetandslightlyshrinkingdistances(growing
fuelprices),itsproductivitydecreasedin2011asfew
as27.900miles.
The indices of operational productivity of the
world fleet presented in tab.1 indicate that it varies
significantlyonyear‐to‐year
basis.Ontheonehand,it
isaresultofthehighdemandfluctuations,andonthe
other,itreflectsthelevelofovercapacitygeneratedby
shipping operators accomplishing on the highly
competitive freight markets the strategy of flexible
and efficient demand meeting. The level of world
tonnage overcapacity (tonnage
oversupply in all
groupsandcategories)ispresentedintab.2.
Table2.Tonnageregardedasidle(tonnageoversupply)as
percentageofworldfleetinselectedyears(1990‐2011).
_______________________________________________
Year 1990 2000 2005 2008 2010 2011
_______________________________________________
9.7 2.3 1.0 2.2 1.4 0,9
_______________________________________________
Source:Elaboratedon data presented by Lloyd’s Register –
Fairplay and Lloyd’s Shipping Economics as well Review of
MaritimeTransport2008,2010and2012p.68
As regards the operational productivity of the
worldtonnage,oneshouldmentionthatinresponse
tostill rising oil prices,shipoperators usually run a
slow stemming strategy. They are interested in
457
reducingevenby20percenttheservicespeedoftheir
vesselswiththeaimtosavefuel.Suchastrategyhas
been widely used by shipping operators since 2007,
especially in liner shipping. However, with lower
servicespeeds,morevesselsarerequiredona given
route. On the one hand,
it helps to reduce
overcapacity,leadingontheother,atthesametimeto
significantdecreaseinoperationalproductivityofthe
world fleet. The capacity constraints and congestion
at ports also have negative impact on the fleet
productivity, as ship capacity is tied up while
queuing.Allthesefactorsstemming
fromcommodity
andfreightmarkets(fig.1),theirrelationsandexisting
imbalances, have influenced not only the degree of
the idle world merchant fleet and its operational
productivity, but also the level of maritime freight
costs as a percentage of the value of imported and
exportedgoodsintheglobalmerchandisetrade.
Maritime freight costs still remain an important
component of the price of goods purchased by final
consumers.
12
High maritime transport costs for
imported goods may impact significantly the price
levelofthebasketofconsumers’goodsandintheend
canstimulateinflation.Ontheother hand, excessive
freight rates for exported goods affect sometimes
painfullythetradecompetitivenessoftheproductsof
acountryonthe
globalmarkets.Hence,eachcountry,
their economic groupings and regions have to be
interested in working out proper approaches to
reduce both inbound and outbound maritime
transportcosts intheirtraderelations with partners.
Their activity in this area is focused on commodity
and freight markets and is expressed in the
form of
maritime transport policy, regarded as a regulatory
measure able to affect the maritime transport sector
anditsfreightmarkets.
Theshareofglobalfreightpaymentsinthevalue
ofworldimportshasreachedonaverage6.7percent
as compared with the recent five years.
13
In 2000 it
amountedto6.26percentinthedevelopedcountries
and 8.63 in the group of developing countries from
AsiaandAmericaandincreasedtenyearslaterinthe
firstgroup ofcountries to6.52 percent, concurrently
decreasing in the second group to 7.57 per cent.
14
Thesetendenciesreflectsthefollowingfig.3.
Figure3.Seabornetransportcosts(paidfreight)aselement
of maritime trade value (as per import; (average annual
12
ReviewofMaritimeTransport2012,op.cit.,p.89‐91
13
See:ReviewofMaritimeTransport2008,2010&2012,op.cit.,p.91.
14
Ibidem,p.91
changesduring5years)
Source:Reviewofmaritimetransport2012,p.74
Theseindicesreflectingmaritimetransportcostsas
apercentageof thetotalvalueofimportedgoodsas
well as their volatility over time simultaneously
indicateinthelongtermatendencytowardsalower
ratio between freight costs and value of goods
occurredamongallgroupsofcountries.Furthermore,
thefreight
ratesshareofdevelopingcountrieswhich
is relatively high as a result of the existing trade
imbalances (in value and volume terms of imports
and exports), tend to converge to these developed
countries. It is a positive sign indicating that the
freightmarketpricemechanismisefficientlyreducing
theeconomic
differencesgeneratedbyexistingworld
trade pattern created by the developed countries.
Moreover,thistendencycreatedbythefreightmarket
mechanism, not rarely to the detriment of the
shipping sector which does not belong in the
economic terms to the beneficiaries of its activity,
does not hamper the globalization processes. The
moreintegrationbetweenglobalfreightmarketsand
commoditymarkets,themoreeffectsforshippersand
ship operators as well as in the end for the final
consumersofgoodstransportedbysea.
3 INTERNATIONALMARITIMETRANSPORT
POLICYANDITSREGULATORYIMPACTON
THEGLOBALSHIPPINGINDUSTRY
The international maritime transport
policy, created
directly or indirectly by international organizations
(i.e. IMO, ILO, HELCOM, and EMSA) and
international (regional) groupings such as EU,
NAFTA, BSSC, etc., constitutes in the contemporary
world a very important and powerful regulatory
mechanismofthewholeshippingsector.Itcompletes
the still functioning, typical for this open,
international
transportsector,autonomousregulatory
mechanism.
The said group includes primarily IMO, which
plays the most important role in composing such
regulatorysubsystemintheworldscale.Themajority
ofconventionsadoptedundertheauspicesofIMOor
forwhich this organization is otherwise responsible,
fall into three main categories. The
first group
concerns maritime safety; the second the prevention
of marine pollution; and the third the liability and
compensation, especially in relation to damage
caused by pollution. Outside these major groupings
thereareanumberofotherconventionsdealingwith
facilitation, tonnage measurement, unlawful acts
againstshippingandsalvage,etc.Taking
intoaccount
the number of the IMO regulatory instruments
existing in the form of conventions and protocols
amending the first ones, as well as a number of
contracting parties (countries) and the percentage of
world tonnage covered by each of those legal
instruments,itmaybeclaimedthatthisorganization
creates real global shipping policy constituting the
backboneoftheworldmaritimetransportregulatory
mechanism.
In addition to IMO, ILO also participates in
formatting the widely understood economic, social,
458
technical and environmental order in the world
shipping industry. ILO prepares conventions and
recommendations concerning regulation of social
standardsinmaritimesector.Theorganizationhasset
outmanyminimumrequirementsfordecentworkin
themaritimeindustry.Recently,in2006,ILOadopted
anewconsolidatedConvention(C186)thatprovides
comprehensive labor charter for the worldʹs 1.2
million or even more seafarers, addressing the
evolvingrealitiesandneedsofthesectorthathandles
90percentoftheworldʹstrade.TheConventionsets
minimum requirements for seafarers to work on a
ship and contains provisions on the terms
of
employment, hours of work and rest,
accommodation, recreational facilities, food and
catering,healthprotection,medicalcare,welfareand
socialsecurityprotection.
Upon discussing the international maritime
transport policy, one should notice that the EU is
strongly committed to setting up such regulatory
mechanismandnotonlywithintheCommunity.The
European Commission’s transport policy aims at
harmonious performance of the European maritime
transport system as a whole. It performed two
strategic goals, at once. Over the years, the
Commission built quite comprehensive regulatory
framework encouraging the efficiency of ports and
maritime transport services, inter alia reinforcing
marketpositionofthe
EUfleetflyingmemberstates’
flags and strengthening competitive advantages for
the EU shipowners for the benefit of all other
economic sectors and of the final consumers on the
one hand and safety and security in shipping
activities on the other. The Commission supports
actively the efforts of the EU member
states to
promotetheEuropeanmerchantfleetofferingquality
shipping services in Europe and, what is important,
allovertheworld.TheCommissionisalsopromoting
short sea connections between all the maritime
regions of the European continent, as this transport
mode represents an opportunity to solve road
congestionproblems
whilereducingsignificantlythe
environmental impact of the overall transport and
supply chains. Thanks to the Commissionʹs decisive
action Europe is protected today with very strict
safety rules preventing sub‐standard shipping and
reducing the risk of environmental catastrophes (i.e.
strict requirements for double hull tankers,
acceleratingphasing‐outsingle
‐hulltankers,etc).The
recent EU actions and regulations concerning
maritime safety will hopefully limit the number of
maritimeaccidents.ThepackagesErikaI,Erika IIor
thethirdpackageofmaritimesafetymeasuresshould
yield gradual but significant improvement of
maritime safety
15
. The Commission also works
actively against piracy and terrorism threats. Other
important field of activity of the EC concerns the
social dimension, looking after working conditions,
health and safety issues and professional
qualifications of seafarers. Finally, the EC works for
the protection of citizens as users of maritime
transport services,
ensuring safe and secure
conditions,providingthem withadequatepassenger
rights and examining the adequacy of the public
service maritime transport connections proposed by
15
MaritimeTransportPolicy.EuropeanCommission.Brussels.2006
theEU memberstates. Lastbutnot least,duetothe
growing environmental constraints maritime
transportis also regarded in the EU as the potential
area for the internalization of external costs its
generatesonaglobalscale.Admittedly,itparticipates
in the total sum of external costs at a relatively
low
level,butsomecostcategoriesrelatedtoairpollution
(SO
x,NOx,etc.)andshipaccidents(mainlyoilspills)
regardedas typicalmaritimeexternalitiesamountto
quitesignificantsumsonaglobalscale.Duetothat,
inclosecooperationwithIMO,theECwithintheEU’s
sustainable maritime transport policy has included
this sector into its regulatory framework concerning
internalization of external
costs. In case of
accomplishing the said objective, it would be the
thoroughrecognizedformofpublicinterventioninto
the real sphere of activity of the international
maritimetransport.
4 CONCLUSIONS
Maritimetransportregulatorysystemwithitstypical
dual mechanism interacting international shipping
real sphere of activity, strongly affects both
operationalactivityandthedevelopmentofmaritime
transportonaglobalscale.Wecancurrentlyobserve
there widely visible numerous global effects of its
regulatoryactivity,suchas:
1 forming the international order in this transport
sector based on common, widely accepted
international standards related to technical,
operational, economic, social and
environmental
aspects,
2 growing safety and security at sea as well as
securityof maritime supply chains; it means that
shippingisgettinglessriskyandmorereliableas
mode of transport, able to support the
development of seaborne trade and logistics
supplynetworks,
3 enhancing intermodal competitiveness of the
maritime transport operators, especially by
promoting short sea shipping, development of
intermodaltransportandnewconceptsoflogistics
supplychainmanagement;itappliesmostlytothe
globalcontainershipownersandoperators,
4 increasing the operational productivity in the
maritime transport which should bring about its
higherefficiencyandeffectivenessinterms
oftime
andcostsofhandlingseabornetrade,
5 encouraging technical and technological progress
in shipping industry as well as widely perceived
innovation,
6 reducingvesselslifecyclesinpurelytechnicaland
economic terms, speeding up implementation of
digressivemethodsofshipsdepreciation,
7 growingexploitationcostsoftheexisting
fleet(the
results of necessary technical conformity to the
exorbitant environmental standards), which will
undoubtedly escalate the competitiveness in
maritimetransportandsubsequentlythepressure
towards further vertical and horizontal
concentrationinthissector.
The existing (dual) regulatory mechanism in the
shipping sector, consisting of two in their nature
differentsubsystems,
needstobeinternallycoherent
459
and not self‐contradictory. As a result of growing
international public activity and the need for
regulation (safety and security reasons), maritime
transportsectorisgettingmoreinternationalevenin
thatsensethatitsgloballydispersedmarketsbecome
moreinternationalandunified,notsofragmentedas
it used to be.
Consequently, autonomous regulatory
subsystem in maritime transport becomes more
homogenous and coherent as well. The process of
relatively extensive public regulatory mechanism
penetratingthe autonomous one will have to last as
longasfreightmarketsbeingundergrowingpressure
of the international maritime transport policy fully
accumulate and in the
end incorporate the main
objectivesofpublicregulation.
Itmaylastforaverylongtime,beingdetermined
to some extent by the development of world trade
and the global economy which significantly
strengthen the market forces in shipping industry.
The volume and value of the world trade and
especially the
commodity trade which handles
maritimetra nsportsector,unambiguouslyindicateits
significant importance and functions in the global
economysystem.Itsdynamicdevelopmentexpressed
in the form of constant increase in the world fleet
transport potential and its high adaptation to
quantitative and qualitative requirements of
commodity markets, unambiguously shows that
maritime transport and especially container one not
onlyfollowstheneedsandrequirementsoftheworld
trade handling efficiently and effectively enormous
commodity flows but also secures and creates, in
technical and operational, and also economic and
financialaspects,thetransportandlogisticspotential
indispensable for its further undisturbed
development and
thereby the increase in global
economy stimulated by globalization processes. The
said situation univocally proves that international
maritime transport sector which has been strongly
based on well developed freight market closely
connectedwithglobal commoditymarketis efficient
and flexible enough even in the contemporary
turbulent times. Its second international
regulatory
scheme,publicone,initscurrentlyexistingcharacter
neitherhasitconsiderablyhamperednordeteriorated
intoa hybriddeformedandinefficientform.Infact,
theycomplementeachother,actingforthebenefitof
efficient international maritime transport
developmentcapabletofulfillitsallfunctionsinthe
growing global merchandise trade
and globalizing
worldeconomy.
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