Development of Global Trade and its Impacts on the Shipping Industry

Maritime exploration and trade first began as early as 3000BCand it was during the Arab age of discovery between the 3rd-7th centuries when the modern maritime global trade and shipping began.  The development of global trade over the years has made its many impacts on the shipping industry, whereby if one region of the globe is doing well, its mirrors onto the opposing side. This is usually the case; let’s dig down deeper to explain.

Global trade development can be monitored by paying close attention to the global economic centre of gravity that is calculated with weighting countries by their GDP (Gross Domestic Product). Based on figuring out the centre of gravity, the most potent of economic regions can be sought out, with a shift from Europe towards Asia in the past decade, with China being the centre of gravity well into 2025, as per market analyses carried out of the firm KPMG.

This trend also resonates with the global trade shipping industry, with 61% of sea cargo deliveries unloading in Asian seaports, whilst Asian seaports are loading approximately 40% as well. The significant of the Asian region with global trade and shipping can be highlighted especially with the likes of China and other Asian countries that influence finance factors such as with export credit agencies (or ECAs).

Ports under Asian companies are also focusing on refurbishment and development of ports to expand their capabilities such as to receive shipments via ULCV/S which stand for Ultra Large Container Vessels/Shipments.  Being one of the most utilised types of vessels by major shipping companies, which amounts to almost half of the currently available 20ft equivalent units for shipments, this has place pressure on port authorities to develop their ports to facilitate the servicing of the likes of ULCV/S.

The shipping industry and global trade also has to react to regulations being introduced such as the LSF2020 which is an initiative to reduce the fuel sulphur content from 3.5% to 0.5%.  Many shipping companies have tackled this by shifting to liquefied natural gas or LNG as a more beneficial alternative with a long-term viability. Thus, ports will also be required to include LNG terminals to service ships whilst attempting to stay relevant and on par with the trends and regulations of the shipping industry.

Apart from the above, dynamic global players are also affecting the temperature of the shipping industry. From development of port operators to strategies, the likes of a dynamic global player such as DP World as emerged on top as one of the leading terminal operators with sights on reshaping the industry.

What are your thoughts on the developments of global trade and its impacts on the shipping industry?