Methods, Problems and Issues in Maritime Policy - Essay Example

Methods, Problems and Issues in Maritime Policy & Introduction The maritime industry, commonly referred to as the shipping industry, is not standardised, but made up of a number of discrete sectors, with each operating in different commercial and regulatory administrations. In addition, the needs of each of these discrete segments are served by vessels whose purposes are differently built. In a broad categorisation, the maritime industry is sub-divided into three principal categories including the passenger shipping services, bulk cargo-carrying services and the liner cargo-carrying services (Garcia 2005, p.10). The passenger shipping service sector is a much specialised sector, served by ferries and cruise ships. The liner cargo-carrying service sector, on the other hand, carries out its operations on regular scheduled services between ports which have been advertised. These advertised ports are known as the liner trades, and they operations are based on the principle of common carriage. In this sector, cargoes are transported for a number of shippers simultaneously, unlike in the bulk sector. It is worth noting that the liner cargo-carrying service sector is ordinarily subjected to a wide scope of regulatory constraints in matters of safety and commercial nature. In a majority of the countries, to be particular, some of the liner shipping practices do enjoy conditional exemptions from the anti-trust laws application. Resultantly, this ability to take part in co-operative practices has been contributory to the organisation and the shape of the sector (Starer & Mayerson 2009, p.1). The bulk cargo-carrying sector, on its part, covers a number of primary sub-divisions whose basis is the specific types of vessels while liquid cargoes are shipped in chemical tankers, crude oil tankers, liquefied gas tankers and refined petroleum product tankers, non-liquid cargoes are shipped in dry bulk carriers and other multipurpose carriers. Ordinarily, vessels operating in the bulk cargo-carrying sector hardly operate on services which have been scheduled. Nevertheless, these vessels operate on precise expeditions in fulfilment of either short- or long-term contracts, in which the entire cargo transported on a particular voyage is property of an individual owner (Hubner n.d., p.24). Furthermore, carriers may be operating a number of routes as per the local demand in certain ports and can be shipping different bulk cargoes. These are habitually known as a tramp shipping sector- which is a separate sector within the shipping industry. The impromptu open market mode of operation distinguishes bulk shipping from liner shipping. From a regulatory viewpoint, bulk sector vessels carry out their operations in a largely free market and are solely subject to national and international safety prerequisites. However, as a result of the virtual hazard of a great percentage of the bulk commodities, such as chemicals and oil products, this code of practices are strictly enforced. In the event that commercial regulatory constraints are lacking on this shipping industry sector, it can therefore be argued out that the sector is not a precise fertile field of examination in respect to further deregulation even when maritime safety regulations foist sizable obligations on the bulk sector (River 2012, p.13). Cooperatively, the different branches of the global maritime industry are subject to an inclusive scope of regulations, reflecting economic, administrative, technical and political objectives. Each and every parameter makes a reflection of a response to definite issues that have once arisen as a result of the evolution of the international system of trading (Brussels 2008, p.5). Such regulations may have international bilateral or multilateral origins, or even the same regulations may be applicable on a national basis. They may cover cargo liability regimes, flag state obligations, commercial conduct, restrictions on cargoes’ access, ship’s equipment and vessel construction or design. Equally covered by these regulations are conditions for ship operation and manning (Toevai 2011, p.11). Maritime transport in characteristically international in nature and on a majority of voyages, vessels operate on the basis of the regulatory prerequisites of the various jurisdictions. As a result, it is hardly anticipated that the progression of the regulations governing the maritime transport industry has been subject to an expansive degree of unanimity between nations, in whose absence the value of any such standards would be limited. A great percentage of the in existence international regulations have thus been established through international intergovernmental organisations, the likes of the International Maritime Organisation (IMO), the United Nations Conference on Trade and Development (UNCTAD) and the International Labour Organisation (ILO) (Goldberg 2012, p.1). Right from the onset, the regulations governing maritime transport operations by ocean-going countries has been so inspired by the yearning to establish and uphold standards as pertains to maritime safety and the safeguarding of marine environment. Other motivations included such as chipping in of national convoys in the transport of its trade and commercial regulations whose focus is to facilitate the orderly conduct of business and the ability of the sea carriers to carry out operations using traditional co-operative liner services even in the event of various laws in most of the countries, which are geared towards averting anti-competitive behaviour (Borgese 1996, p.54). Being an international activity, the maritime industry comes across a network of practices and regulations, both at national and international level. Some of these regulations have been reported to significantly impact on the performance of the shipping industry. Owing to the fact that the maritime industry is not a homogeneous entity, these regulations impact the various segments of the industry at varied magnitudes. Maritime industry regulations broadly fall under two categories; those regulations related to the rights and obligations of states as well as the safety and protection of the environment and those related to commercial operations and practices (CMP 2002, p.4). The first category covers the law of the sea (that is the rights and obligations of flag states), international safety and environment regulations, national environmental and safety regulations, international labour regulations and flag state ad port state inspections. Markedly, this category of regulations is founded on international conventions carrying the force and authority of the United Nations. Moreover, these regulations are a reflection of the judgement of the international community; that states that the social value allied to these regulations is more important than the cost to the users and operators of the maritime services (Juda 2003, p.162). On the other hand, regulations relating to commercial practices and operations cover shipping registration conditions, shipping specific policy regulations, cargo sharing/cargo reservation provisions, cabotage laws, national security measures, competition legislation and cargo liability regimes. As a result of their economic and commercial nature, these regulations do replicate a more realistic rationale geared towards effecting government policies, achieving national and/or economic objectives and ensuring national involvement- what can be termed as regulation of commercial activities. Although some of the regulations, such as anti-trust and competition laws aim at freeing up the market, the greater percentage of these regulations either interfere with or distort the market in a significant magnitude. The ruling of the worth of any of these regulation pivots on the regulation’s ultimate economic or social value (Garcia 2005, p.45). Rationale of the Nature of the Maritime Regulatory Action by Nation States Without getting on a priori the defence of the maritime regulatory regimes, it is imperative to also present a discussion of why some of the regulatory interventions in the maritime industry may be of a great importance. From a competitive policy approach, it is undeniable that any interference with the maritime market is innately objectionable since this is in the offing of birthing negative net benefits. As a result any interference, irrespective of its magnitude, ought to be solely considered for purposes of rectifying a market failure or for the realisation of some undoubtedly definable objective in which the benefits can level-headedly be estimated to surpass the cost of the regulatory action (Starer & Mayerson 2005, p.3). Drawing form the safety and environmental regulation, the arrived at rationale is that any disturbance is imperative since the market has undoubtedly failed to see to it that the levels of ship safety as well as environmental protection that the international community is at ease to accept. Failure of this nature can be attributed to various reasons; including necessity to meet commercial imperatives (which are a must) by the ships dedicated for the shipment of cargo from one point to the other (Garcia 2005, p.16). Realistically, there is no integral benefit that the owners of the ships get to enjoy since their primary concern- forming the bottom line- is availing all-encompassing regard to safety and not to the outcomes of the failure of the ship. Lengthy experience has evidenced that although that is a vast number of high quality ship-owners, those who are not of this high quality are a good number. There are also fears that the number of the low quality ship-owners may rise at a rapid rate in the event that all mandatory environmental and safety regulations were to be scrapped off (Hubner n.d. p.54). In the event that the ship owners were to shave down both the safety standards and the environmental safeguards, the savings that they could realise would be quantifiable. In a free market under normal circumstances, these savings can be passed on to the shippers and later to the consumers. However, in the maritime industry, this has not been the case since unscrupulous ship owners have been retaining the same savings. Moreover, likely consequences of ship failures, the risk of which heightens with a fall in crew skills, levels of vessel maintenance and vessel quality, is in the offing of leading to public costs that are beyond the normal proportions of the savings made through the operation of vessel at considerably lower standards (River 2012, p.23). Secondly, those ship-owners whose primary wish is maximisation of profits usually get assistance from both marine insurance and international nature of shipping arrangements, and this makes it quite challenging to bring on board those parties who are responsible for instances- and more so in the event that ships are registered in flag states whose interest in the effective management of vessels carrying their flag are considerably minimal. This also denotes that those with the obligation of operating and using sub-standard ships infrequently bear directly any cost borne of their actions. In addition, likely costs associated with outcomes such as a major oil spill would be outside the boundaries of reach of every other stakeholder, with the exception of the largest corporations. As a result, damage and losses emanating from a totally free market may in most cases go uncompensated. This argument is a powerful one since besides limiting the risk of similar incidences from taking place, it offer some internationally enforceable avenue of satisfactorily compensating for damage or loss (Brussels 2008, p.9). It can therefore be contended that regulations have a footing in enhancing safety and environmental protection and despite the fact that they cannot assure the non-occurrence of ship incidents, they reduce the risks in the event that they are austerely enforced. Nonetheless, there is a cost that has to be met in meeting these regulations (Toevai 2011, p.17). It is imperative to make sure that regulatory prerequisites do not become counterproductive on the addition of costs which are likely to surpass their benefits. Although additional regulations are believed to improve safety, the same cannot be justified in the event that they do not meet this test. The IMO together with its member states are responsible for coming up with judgements of this nature by taking into consideration available information and analysis (Goldberg 2012, p.1). The same issue of regulations can be considerably sophisticated on the tenet of commercial operations and practices. This might be the case due to the deficiency of stout moral supporting the regulation dealing with human life, safety and the environment. Dual rationale drawn from the persistence of this issue includes public benefit and competition policy. From the public benefit facet, effective regulations play the role of offering a framework for the methodical management of maritime transport services (Borgese 1996, p.78). Such administrative necessities, the likes of uniform cargo liability regimes and ship registration requirements fall under this category. From a public benefit viewpoint, in the event of unclear cut, regulations are focused on favouring national participation in the maritime industry in such areas as cabotage laws, national security measures and cargo reservation that more often than not falsify markets instead of liberalising them. Measures of this footing are ordinarily vindicated on slender national priorities which resultantly place national involvement over and above competitive and efficient markets (CMP 2002, p.21). International liner shipping is characterised with capital intensiveness. This simply means that there are measurable barriers of entry to potential operators. This is customarily the case in the long distance routes whose cargo volumes are considerably limited. An example of this long thin route is the Europe-Oceania route. Service providers operating in these routes often require the deployment of numerous ships so as to avail judicious frequency, specialised equipment (the likes of reefer containers) and reliability (Garcia 2005, p.77). Illustratively, on a long route as the one mentioned above, a round trip is likely to take eight or so weeks and as thus, the operator needs to deploy a minimum of eight vessels if he will be able to maintain consistent weekly services. This thus calls for an enormous investment, meaning that it is only the largest operators who engage in the same maritime services. These situations are more predisposed to culminating into a monopoly or duopoly situations, which in turn may seriously restrict competition. Even more, such situations may lead to vessels being at one time or the other be repositioned to routes of higher yields, thus adversely affecting shippers and in the end, trade flows. This is among the scenarios in which governments have hardly tried their level best to evade by permitting conferences aimed at bringing together various operators without any one of them ineludibly having individually commit itself to a lower risk of vessels, thus abandoning the trade (Hubner n.d., p.97). Bibliography Borgese, EM 1996, Ocean Governance and the United Nations, 2nd ed. Halifax, N.S., Canada: Centre for Foreign Policy Studies, Dalhousie University. Brussels 2008, Communication from the Commission: Roadmap for Maritime Spatial Planning. Achieving Common Principles in the EU, Commission of the European Communities. Center for Maritime Policy 2002, integrated Ocean Management in the APEC Region- Report of APEC Project MRC 01/2002, Wollongong, Australia: University of Wollongong, Australia. Garcia, M 2005, Progress in the Implementation of the Philippine National Marine Policy: Issues and Options, United Nations: The Nippon Foundation Fellow: New York. Goldberg, M 2012, ‘Web-based Mentoring in Maritime Industry- An Introduction’, Maritime Professional. Web, viewed 19 October 2012 . Hubner, W n.d. Regulatory Issues in International Maritime Transport, Directorate for Science, Technology and Industry Division of Transport, Organisation for Economic Co-operation and Development (OCDE), Paris. Juda, L 2003, ‘Changing National Approaches to Ocean Governance: The United States, Canada and Australia’, Ocean Development & International Law, No.34: 161-187 Rivers, A 2012, Beyond the Horizon, Marine Market Review, Willis Limited: London. Starer, BD & Mayerson, SE 2009, The Global Maritime Industry Approaches a Financial Storm, Squire Sanders & Dempsey. Toevai, S 2011, ‘The Changing Nature of Maritime Industry Will Demand Cleverer Training Outcomes’, Weekly Edition Read More