Maritime Transportation in the Economic Development of the Country - Assignment Example

The Role of Shipping Business in the Economic Development of a Country is Important. Hence, Maritime Transport Plays A Significant Role In That Development." Discuss. Table of Contents Introduction 3 History 3 Role of Maritime Transport in the Economic Development 6 Role of Shipping Business in the Economic Development 8 Conclusion 9 References 11 Introduction ‘Maritime’ can be defined as the study of ships along with sea-faring. It is also referred to as marine archaeology. It also includes the submerged study related to shipwrecks along with study related to earliest voyages, inscription and written documents regarding sailing voyages as well as commerce and ship construction. According to World Trade Organisation, “Maritime services have benefited in recent years by considerable expansion fostered by globalization” (World Trade Organisation, 2012). Maritime transport comprises of transport of the passengers along with the goods and services by means of sea which is also referred to as shipping trade. The three main components of the maritime transport system which tends to be significant for the movement of the goods and services are fixed infrastructures, means of transportation and organizational system which is quite significant for ensuring that ships and fixed infrastructures are used in an effective and efficient manner (Samija, n.d.). History Since its foundation in the 3200 BC as Egyptian coastal sail ships, it can be observed that the maritime transportation has endorsed in the global trade. It was during 1200 BC, most of the Egyptian ships were found to trade as far as Sumatra which has been observed to be one of the lengthy maritime routes of that particular time. European regal powers, generally England, Netherlands, Spain and France were the first countries to develop a worldwide maritime trade network. Maritime transportation can be considered as a derived demand. It has been noticed that seaborne trade led to 89.6% of the world business and 70.1% in terms of value in 2006 (Tamiotti & et. al., 2009). When considered in terms of ownership, maritime shipping is found to be a globalised industry. Maritime transportation is geographical by its physical characteristics, strategic in terms of control as well as commercial in terms of usage and thus tends to run on its own space similar to land and air modes. Rivers and oceans are considered to be the two main components of physiography of maritime transportation. Modifications made to the water canals, augmentation of the size and specialization of vessels have been because of the technological alterations that had a major impact upon the water transport. It has been noted that the significance and configuration of maritime route has altered with economic developments as well as technical developments (Rodrigue & et. al., n.d.) A noteworthy characteristic of the economies of shipping is mainly focused upon its capital costs thereby demanding financing. It is due to their size, ships demonstrate a noteworthy capital outlay. One of the crucial benefits of maritime transportation is related to its economies of scale which makes it one of the inexpensive modes of transport per unit in comparison to all the transport modes. It is appropriate for most of the industrial activities. Conversely, the cost of entry of the maritime transportation tends to be higher in the transportation sector (Rodrigue & et. al., n.d.) It has been identified that there was major improvements in the global maritime circulation with the constructions of Suez Canal in the year 1869 and Panama Canal in the year 1914 that took place for the purpose of diminishing intercontinental distances. Suez Canal along with Panama Canal can be considered to be among the significant waterways in order to conduct international marine transportation and trade (Rodrigue, 2010). In the year 2007, it was noted that 80% of the world trade was done via shipping. There has been growth in the maritime transportation by 3.1% annually since the past three decades (GFP, 2012). Maritime transport is compiled of the maritime shipping as well as port dimensions. The main areas of focus are to develop a vision for the future of maritime transport, recognize the innovative technologies business models as well as policies that will lead to change, fight against the threats to innovation and create the governance patterns at both global as well as national levels in order to endorse innovations required by our society for more sustainable as well as better performing transport system for the future (Rodrigue, 2010). Role of Maritime Transport in the Economic Development Maritime transportation is at the centre of worldwide freight distribution in relation to its unparallel physical ability as well as its capability to take freight at relatively lower cost and at long distances. Maritime transportation has been considered as vital for the economic development as well as prosperity throughout the history. It has often been noticed that maritime transportation possesses high degree of efficiency as well as quality. The reason behind this is that the transport of the goods and services is done via sea which tends to be quite rich in natural ecosystems. It has been noted that there has been rapid progress in trade among the Association of Southeast Asian Nations (ASEAN) countries which are economically in sound positions. Singapore, Malaysia, Indonesia and Thailand enjoy the biggest trade flows in terms of maritime trade. Cooperative exchange of goods and services takes place between Singapore and Malaysia and is considered as the most crucial flow of trade amongst the ASEAN associates. One of the most vital shares of inter-ASEAN trade is containerized cargoes. The maritime trade in such ASEAN countries comprises of ‘consumption goods’ as well as ‘intermediate goods’ and includes semi finished products and parts. The dominant position of Singapore depends upon the constant efforts made by the government and is also concerned with the Port of Singapore to develop and sustain the port’s competitive advantage (Trace & et. al. 2009). It has been found that Singapore is generally dependent upon international trade and its capability to access the international markets for economic growth. Maritime transportation fosters international trade which in turn helps in the creation of the foreign currencies and thereby helping in the economic development of the country. The country obtains one third of its Gross Domestic Product (GDP) from the maritime transport. The well-known position of Singapore in global transportation system is mainly because of the efficiency of its ports as one of the intermodal maritime centers possessing deep water berths. Singapore has obtained huge advantages from its strategic position and created intermodal infrastructures as well as related activities. In the world, Singapore is considered to have one of the active ports in terms of total tonnage of ships. Given the strategic location of Singapore in Asia, maritime transport plays a significant role in the promotion of the trade and services in the economy. In the year 2003, it was noted that the country was the world’s busiest ports in terms of shipping tonnage with approximately 986.4 million gross tons and possessing 135386 vessels calling at the port (Francois & et. al., 2011). Maritime transport is considered as an important aspect in the economic development of each and every maritime country. The main task of maritime transport is to offer shipping services which means that it may also be deemed as the product of the shipping economic activity. Maritime transport is considered as one of the most optimal and cost efficient methods of transportation of huge quantity of goods. It helps in the creation of the employment opportunities in numerous dependent industries such as ship building, ship repairing, ship breaking and maritime training among others (Trade Chakra, 2008). Maritime transport plays a noteworthy role in enhancement of trade and creation of employment. According to the "Review of Maritime Transport 2007", a report by the United Nations Conference on Trade and Development (UNCTAD), Singapore is the 10th most imported maritime country (Trade Chakra, 2008). Role of Shipping Business in the Economic Development The shipping industry has benefited from record markets and freight rates in the contemporary years; however, the cost of freight for consumer goods has demonstrated only a small fraction of the shelf price. It has been because of the constant progress in the technology as well as efficiency that has assisted to ensure that the maritime transport costs remain competitive (Maritime International Secretariat Services Limited, 2012). In the context of shipping industry which is dominated by large vessels, acquisitions, mergers as well as strategic alliances, the potential expenses at the sea have been found to be reducing and the ways to allocate cost savings is surmounting (Rodrigue, 2010). The figure below helps to comprehend the trend of shipping rates during the downturn in the economy. It is evident that there had been sharp decline in the shipping rates during the times of global economic downturn. Companies were observed to be sending their taskforces out to sea in 2010, but not at the rates it was in 2008 and 2009. Singapore ports were found lying idle during such economic meltdown (Investmentu, 2012). Source: (Investmentu, 2012). Conclusion Maritime transport is considered as an economic activity which faces stiff competition which forces the shipping companies to enhance their services and thus develop and modernize their fleets. It has been found that maritime transportation plays a significant role in the economic development of the country. It is considered to be one of the easiest ways to transport the goods and services from one country to the other country. Maritime transportation has assisted in the economic development of Singapore to a significant extent. It has helped in the transportation of the goods and services from one country to the other and therefore facilitated international trade. With the increase in the international trade, there is increase in the foreign currencies which in turn has assisted in fostering the development of Singapore. It has also assisted in the generation of the employment opportunities in the country and therefore assisted in the reduction of the poverty rates. Hence, it has been evident that maritime transportation has a positive impact transportation system in the modern day context. Government must make efforts to further improve maritime transportation so that there is constant growth in the economy of Singapore. References Francois, J. & et. al., 2011. National Strategies for Regional Integration: South and East Asian Case Studies. Anthem Press. GFP, 2012. Maritime Transport and Port Operations. Transport Operations. [Online] Available at: http://www.gfptt.org/entities/topicprofile.aspx?tid=45124a21-5f6c-40a0-bf24-21d118c674b8 [Accessed February 02, 2012]. Investmentu, 2012. Our Principles. Investment Research. [Online] Available at: http://www.investmentu.com/2010/January/the-oil-contango.html [Accessed February 02, 2012]. Maritime International Secretariat Services Limited, 2012. The Low Cost of Transporting Goods By Sea. Shipping and World Trade. [Online] Available at: http://www.marisec.org/shippingfacts/worldtrade/the-low-cost-of-transporting-goods-by-sea.php [Accessed February 02, 2012]. Rodrigue, J., 2010. Factors Impacting North American Freight Distribution in View of the Panama Canal Expansion. Vanhorne. [Online] Available at: http://vanhorne.info/files/vanhorne/Panama.pdf [Accessed February 02, 2012]. Rodrigue, J. & et. al., No Date. Maritime Transportation. The Geography of Transportation Sector. [Online] Available at: http://people.hofstra.edu/geotrans/eng/ch3en/conc3en/ch3c4en.html [Accessed February 02, 2012]. Rodrigue, J., 2010. Maritime Transportation: Drivers for the Shipping and Port Industries. Downloads. [Online] Available at: http://people.hofstra.edu/jean-paul_rodrigue/downloads/OECD%202010%20Maritime%20Transport%20JPR_Final.pdf [Accessed February 02, 2012]. Samija, S., No Date. Maritime Transport Management For The Purpose Of Efficiency And Safety of Shipping Services. Introduction. [Online] Available at: http://www.geocities.ws/icts_papers/Papers/Samija.pdf [Accessed February 02, 2012]. Trace, K. & et. al., 2009. Maritime Connectivity in Archipelagic Southeast Asia: An Overview. Asian Development Bank. [Online] Available at: http://www.adb.org/Documents/Papers/Southeast-Asia-Working-Paper-Series/Maritime-Connectivity.pdf [Accessed February 02, 2012]. Trade Chakra, 2008. Maritime Transport in Singapore. Economy. [Online] Available at: http://www.tradechakra.com/economy/singapore/maritime-transport-in-singapore-106.php [Accessed February 02, 2012]. Tamiotti, L. & et. al., 2009. Trade and Climate Change. Responding To Climate Change: Mitigation And Adaptation. [Online] Available at: http://www.unep.org/pdf/UNEP_WTO_Trade_and_CC_June_09.pdf [Accessed February 02, 2012]. World Trade Organisation, 2012. Services: Sector By Sector. Maritime Transport. [Online] Available at: http://www.wto.org/english/tratop_e/serv_e/transport_e/transport_maritime_e.htm [Accessed February 02, 2012]. Read More