THE ECONOMIC

ORGANISATION OF THE
SHIPPING MARKET

PREPARED BY :-
NILESH M ASNANI
(3801)
HITESH BHADANI
(3802)
RAM M BHETARIYA
(3803)
 Flow of presentation
1) The economic role of the shipping industry
2) The role seaborne trade in economic development
3) Two technical revolutions in shipping
4) The cost of sea Transport
5) How v many market
6) The international transport system
7) Demand for sea transport
8) what is Bulk cargo
9) What is ‘general cargo’
10) Obstacle of general cargo
11) Limitation of seaborne trade statistics
12) The world merchant ships
13) The supply of sea transport
 THE ECONOMIC ROLE OF
THE SHIPPING INDUSTRY
Ø Shipping magnate are subject to the law of supply
and demand
Ø Shipping market is group of people like ship-owners
, brokers , shipbuilding and banker who together
carry out each year the herculean task of
transporting more than 4000 bt of cargo by sea.
Ø Shipping is one of the world’s most international
industries and in studying maritime economic we
drawn into discussion of the world economy as a
whole .
Ø Seaborne trade is ,in a sense at the apex of world
economy activity .
 THE ECONOMIC ROLE OF
THE SHIPPING INDUSTRY
Ø We can not ignore political aspect of the
maritime market .
Ø If we are understand the economic and political
forces that mould development in the shipping
market we must appreciate the to-way
interaction b/w development in shipping and
development in the world economy
Ø “carlo cippolasay that transportation industries
has been one of prime force responsible for
shifting the world from an essentially nations
system to the global economy .
 THE ECONOMIC ROLE OF
THE SHIPPING INDUSTRY
Ø Fast and cheap
Ø Mobility to the world
Ø Bertrand Russell says that “the world
has become one not only astronomer
but for the ordinary citizen”.
Ø Globalization
Ø Two-way exchange
The role seaborne trade in
economic development
Ø Catalyst of economic development
Ø The father of modern economics Adam
smith says that “shipping as one of the
stepping stones to economic growth.
Ø It cheapest mode of transportation while
considering globalization.
Ø Which can open up wider market to
specialization”
The role seaborne trade in
economic development
Ø Adam smith also says that “the
economically developed countries now
have massive inland transport
infrastructure , but technology more in
shipping industry has more than kept
pace.
Ø Shipping business unitization and bulk
shipping have played major part in
global market
 Two technical revolutions
in shipping
1. Unitization that is palletization and
containerization were introduce to
speed up the flow of cargo.
2. Bulk cargo (raw material and final
product) which is reduce the cost of
production.
 The cost of sea Transport
Ø The impressive cost performance was
achieved by following way
2. Economic of scale
3. New technology
4. Better ports
5. More efficient cargo handling
The cost of sea Transport
 How many market
1. Liner business :- it take different cargoes ,providing
different service and has different economic
structure from bulk shipping
2. Single market
3. As result supply / demand is imbalances
Ø Rochdale concluded that most of industry’s
business is concerned with international trade and
inevitably it operates within a complicated world
pattern of agreement s b/w shipping companies
understanding with shipper and policies of
governments.
Ø Different parts :-liner business ,bulk shipping ,the
charter market etc.
The international transport
system
Ø The aim of the shipper is to obtain
better and cheaper transport over the
whole distance from origin to
destination.
Ø This system consist
3. Road
4. Railway
5. Inland waterways
6. Shipping lines
7. Air freight service
The international transport
system
International transport zones and available transport
modes

Shipping roughly move four times more than rail and four
hundred times more than air freight
The international transport
system
1. Transport between region
2. Short sea shipping
3. Competition and cooperation in the transport
industry
Ø Competition b/w rail and road
Ø Competition b/w rail and road with SSS
Ø Competition b/w deep sea and air freight
Ø It also depend on cargo and requirement of
countries.
Ø Integrated transport systems
Ø The driving force which guides the efforts of the
transport system is the quest to win more business
by providing cheaper transport and a better sevice.
Demand for sea transport

Ø The nature of transport demand

2) Price
3) Speed
4) Reliability- “Just in Time”
5) Security
The Demand for Sea Transport
Ø The Nature of transport demand
 Customer’s viewpoint, shipping is a
service.
 The Shipping companies move cargo
around the world and it provide a
variety of services to meet the specific
needs of the customers.
Ø Price:-
 The freight cost is always important but
the greater the proportion of freight in
the overall cost equation.
Ø Speed:-
 Time transit incurs inventory cost, so
shippers of high-value commodities
value speed.
 Reliability:-
 Shipper may be prepared to pay more for
services which is guaranteed to operate to
time and provide services which it has
promised.
 Security:-
 Loss or damage in transit is an insurable
risk ,but raises may difficulties for the
shipper who may well be prepared to pay
more for secure transportation of his
product without risk of damage.
Demand for sea transport
Ø What commodities are traded by sea
2) Energy trades 45% of seaborne
3) Agriculture trades 13% of seaborne
4) Metal trades 25% of seaborne
5) Forest products trades 4.5 of seaborne
6) Other industrial materials 9% of
seaborne
7) Other manufactures 3% of seaborne
 Seaborne trade by
economical activity
 what is Bulk cargo
Ø Major change is come after second world war
Ø It is important to certain industries like steel ,
aluminum and fertilizer manufacture , turned to
foreign supplier for their raw material
Ø Bulk cargo is classified into four main categories
4. Liquid bulk
5. The ‘five major bulks’
6. Minor bulk
7. Specialist bulk cargoes
What is ‘general cargo’
Ø General cargo consist of consignment of less
than ship of hold size .
Ø It high value or delicate cargoes that require a
special shipping service.
Ø Classification of general cargo:-
4. Loose cargo
5. Containerized cargo
6. Palletized cargo
7. Liquid cargo
8. Refrigerated cargo
9. Project cargo
Obstacle of general cargo

Ø Labour intensive operation was slow

Ø Expensive
Ø Difficult to plan
Ø Risk of damage
Ø More time required for operation and
handling of cargo
Ø Economic cost is high
Ø Profit margin is less
 Limitation of seaborne
trade statistics
Ø What is the tonnage of bulk and general
cargo shipped by sea?
Ø Can not easy identified percentage that
the commodities is move by General
cargo
Ø The distinction b/w bulk and general
cargo blurred in statistical term in the
shipping market in no clarity
Ø Which industry use bulk cargo or
general cargo
The world merchant ships

üType of ship in the cargo vehicles

üDevelopment in ship design
üThe Growth of ship size
The world merchant ships

Ø Development in ship design

Ø The Growth of ship size
The increase of size has been greatest in the
specialized trades where transport integration has
provided the investment in port and cargo handling
facilities needed to operate very large vessels.
By capitalizing on economy of scale and developing
integrated transportation system, bulk shipping as
reduced transportation cost to such an extend that it is
often cheaper for industries to import raw material by
sea from supplier several thousands miles way by than
by land from a supplier on a few hundred miles away
Innovation in the world
merchant ships
The world merchant ships

Ø Cargo specialization
Ø The cargo handling revolution
ü Reduce time of handling
ü Economic of scale
ü Decrease service time and waiting time
ü Increase the trade
ü Reduce damages
ü Increase profit
The supply of sea
transport
Ø Shipping companies use the ship are
available and that offer the best profit.

Ø Main function of shipping market is to

flow a cargo with the minimum of waste
 The supply of sea
transport
Ø The shipping industry unit cost function

Unit Cost =(LC+OPEX+CH)

PS
LC=Capital cost of the ship
OPEX= The cost of Operation the ship over
life
CH= The cost of handling cargo
PS=the tonnage of cargo it can carry
The bulk Shipping Industry
Ø The basic principle is one ship – one cargo.
Ø Several different bulk cargoes may be carried in single
ship each occupying a separate hold or possibly even
part of a hold in a traditional tramping operation.
Ø Large companies shipping substantial quantity of bulk
material and often run their own shipping vehicle to
handle a proportion of their transport requirement.
Ø If a shipper has a long term requirement for a bulk
transportation but does not wish to become actively
involved as a ship owner, he may charter tonnage on a
long term basis, ship owner.
Ø The economical reason is cost of production which
reduce the marginal cost.
Liner Shipping Industry
Ø Liner service provide a transport for a
cargoes those are to small to fill a single
ship and need to be grouped with others
for a transportation.
Ø The liner operation must be able to:
Ø offer a regular service for many small
cargo consignment and process the
associated mass of paperwork.
Ø Charge individual consignment on a fixed
tariff basis that yield an overall profit- not
an easy task when many thousand of
consignment must be processed each
week.
Ø Load the cargo/container into the ship
in a way that ensure that it is accessible
for discharge and that ship is stable and
in trim.
Ø Run the service to fix schedule while
allowing for all the normal daily – arises
from adverse whether, breakdown strike
etc…
The role of port in
transport system
Ø There are three term port, port authority
and terminal.
Ø Type of port:
Ø Small local port,
Ø large local port
Ø Large regional port distribution center.
 conclusion

Ø It reduce cost of production

Ø Developed the world economic
Ø Increase the interaction of world and
trade
Ø Every country get benefit of quality
product and advantage to the host.
Thank you