Maritime Economics of Australia - Essay Example

College: MARITIME ECONOMICS Introduction The sea and Australia have constantly been intimately related and therefore the fact that at present Australia is a universal leading power in mercantile shipping is easily explained. It is well identified that in prehistoric times, the formation and upholding of marine and mercantile fleets, in addition to this, the developments in nautical architecture and institutions rendered Australia a leading maritime authority in the Mediterranean. (Evans J, 1990, p. 78) The Australian owned mercantile navy continues to lead in the early fraction of the 21st century. The nationwide flag, on the other hand maintaining one of the uppermost seats worldwide as far as tonnage is concerned. (Stopford M, 1997, p. 88) The current data suggests that Australian ship owners are also foremost in the meadow on new buildings and issuing increased quality and additional services to sea trade. Several of these recently commissioned ships were located under the State flag. During January and February of 2007, 300 new-fangled buildings casing all types of vessels, were added to the Australia's owned navy as 59 modern vessels were added to the 910 ships previously beneath the Australian flag. (Wang J, 2007, p. 91) The Australian owned convoy according to current figures accounts for additional 2,600 ships and its transporting competence being at 218,000,000 DWT, casing 16.5% of the world transportation needs. These figures correspond to about 40 billion US $. (Pallis A, 2007, 84) Australian vessel owners uphold 8.5% of the universal fleet and 16.5% of the planet tonnage. They own 24.1% of the tanker navy, 20.4% of the dry shipment convoy and 9.6% of the complex tanker vessels. (Evans J, 1990, p. 85) The administration of Hellenic owned shipping is performed within the organizational framework of overseas countries such as the Great Britain, City of London thus contributing to the expansion of important commerce centers. Thus Australian shipping acquaintances its foremost development and role worldwide to the intercontinental stock market, the charters' worldwide market and other pertinent economic activities. (Stopford M, 1997, p. 93) COMPARATIVE ADVANTAGES Hellenic shipping comprises of ships that are mostly specialized in massive transportation of parched and liquid freight as well as in shipping of traditional general cargoes. These ships account for 95% of Hellenic owned navy while the residual 5% includes cruisers, coastal ships and commercial. (McConville J, 1999, p. 68) Since it is a universal leading power in nautical transportation, Australian owned shipping operates on a globe scale casing the transportation requirements of countries well beyond the Greek state. This flotilla serves the trade requirements of many countries all through the world. Moreover, shipbuilding, repairs, ship scrapping, marine cover and rental take place abroad. (Evans J, 1990, p. 90) Hellenic mercantile shipping has gained all through the years by providing excellent services particularly in the fields of security of steering and at sea, the defense of the maritime environment and in the current form of safety and tradition. (McConville J, 1995, p. 72) Australia having natural gas reserves and the availability of iron ore offer a natural setting for DR foliage which eventually eliminates the need for reliance on imported fragment to the whole Asia Pacific region. (Stopford M, 1997, p. 94) Australian living principles, circumstances of service and wages, and duty rates are considerably higher than those applying to squad employed on most overseas shipping. Australian delivery can never anticipate to compete against these ships. This is because no Australian would recognize wages and circumstances that counterpart those of the lowest levels of emerging nations. (Wang. J, 2007, p.99) COMPARATIVE DISADVANTAGES World delivery is subjugated by flag of conveniences vessels registered in tax havens like Panama and Liberia where they are not necessary to meet intercontinental safety or labour principles. Many of these ships are, according to submissions to an intercontinental inquiry, crewed by poorly trained or deceitfully certified crew from Third World countries. (Engineers M, 1971, p. 80) The Federal Government has opened up the household transport business to guest personnel thus divulging the Australian coast to pollution. (Wang J, 2007, 103) Utilization of labour and tax avoidance enables the ships to recommend cut rate freight rates, which are pouring Australian ships out of business. For instance; seven Australian flag ships have been lost in the last 18 months. (Papadakis N, 1984, p. 94) Ships use huge quantities of light fuel oils known as bunkers for propulsion, this makes Australian Ship Owners Association members tremendously vulnerable to fluctuations in the price of bunkers, and they are predominantly sensitive to taxation policies that increase fuel prices. (Engineers M, 1971, 87) The business recognizes that enhancing Emergency Response Division preparations by way of stationing a retrieve tug at a suitable location has value. Nevertheless, finding an appropriate equilibrium between expenses and incident deterrence is problematic. (Evans J, 1990, p. 98) CASE STUDIES THE DEFENCE ISSUE A query that is often raised in association with the Australian shipping industry is the maintenance of an Australian fleet in case of a martial obligation for an Australian mercantile shipping capacity. (Goss O, 1977, p. 67) If there is any heaviness to be located on the survival of an Australian shipping capability it has not been raised with the business by any government agency. The experience of the business is that the Department of Defence has made no overtures to industry in association with Australia's mercantile navy capacity. Commercial imperatives drive private investment in the distribution industry and there is no apparent influence on those imperatives from a defence point of scrutiny. This is made the more mystifying in light of the mounting practice of Navy outsourcing a number of its earlier traditional errands which necessitate maritime skills and expertise. These include ship provedoring, port management, crew schooling and during life vessel support services. (Gwilliam M, 1993, p. 89) The Australian shipping business believes it should and would support a defence obligation in a defence urgent situation but in the nonattendance of any discernable interest from administration in this regard, it is not an issue that influences the shipping industry's investment behaviour. (Goss O, 1977, p. 68) REFORMS IN THE MODERN ERA The Government provided economic assistance to the Australian shipping business and announced that it would regard maritime strategy issues. In December 2001, the minister concluded that the Australian shipping industry's disputation is subject to an anti-competitive regulatory government. (Gill K, 1982, p. 92) The Australian seaborne job amounted to 564.6 million tones in 2001/02, 506.6 million tones of exports and 58.0 million tones of imports. Forecasts propose that Australia's yearly exterior maritime trade may grow up by 268.6 million tones to 815.5 million tones in 2010/11. (Muller G, 1983, p. 79) Despite ongoing growth in the seaborne trade, the responsibility of Australian-flag shipping in servicing Australia's imports and exports continues to reduce, declining by 5.5 per cent sandwiched between 2000/02 and 2001/02. The marketplace share achieved by Australian-flag shipping is merely 1.4 per cent. (Pallis A, 2007, p. 95) The yearly Australian interstate and intrastate sea freight amounted to 52.0 million tones in 2000/2001. Nonetheless, despite an escalating interstate and intrastate sea cargo task, the share of the household transport task undertaken by interstate and intrastate shipping has progressively declined, dropping from around 40 per cent to around 25 per cent above the last 15 years. (Pallis A, 2007, 98) There were 54 Australian flag vessels in June 2002, a decline of 24 over a decade. The standard age of the Australian convoy is about 15 years. In addition, there were 36 vessels operated from Australia but flagged offshore. (Francis T, 1975, p. 97) POLICIES Focus on Niche Markets Representations from Australia's vessel owners and operators compose it clear that the future for Australian transport is to be found by focusing on niche markets, where excellence, reliability and specialized skills are called for. In these markets Australia has the prospective to compete effectively. To be triumphant, the impediments that make it uncompetitive must be detached. The deletion of these impediments should not lead to the misuse of Australian workers, but result in securing the future of Australians betrothed in the maritime segment. (Gwilliam M, 1993, p. 92) Reduction of Shipping Costs The anticipated economic impact of plummeting the cost of Australian shipping is by introducing some foreign squad and amending existing policies which would serve up to offer greater self-assurance in the prospective of Australian shipping. (Marsh B, 1992, p. 78) The effects of reductions in Australian manning costs is about $1 million per ship for all intercontinental vessels and a 10 per cent decrease in other working costs for all vessels. Assuming that this would result in the retention of an extra 9 vessel in 2010, the modeling demonstrates that trade investment, the nominal exchange rate, the gross domestic product and wellbeing would all amplify. (Muller G, 1983, p. 80) Balance of Payment In relation to the crisis of balance of payment, a share in the abroad transport would be advantageous and aid the financial system overall, with a percentage of the enormous transport worth flowing back to Australia. (Pallis A, 2007, p. 100) Increment of Australian Shipping An augment in Australian shipping would lead to an augment in local ship repair, ship building and indemnity and ship administration, with clear benefits to employment and the economy. (Unesco, 1949, p. 98) Use of a Merchant Marine A healthy mercantile maritime is required to be capable to make accomplished mariners to squad their pilot and harbor services are requisite in their roughly 70 ports. Moreover, a sturdy merchant maritime would offer a source of partially trained employees to assist crew their fleet in time of war. (Gill K, 1982, p. 99) Use of Sea Transport Encouraging the use of sea transport over road freight would advance the policy of plummeting greenhouse gas emissions. This is because the current policy settings dishearten the use of shipping over land transfer despite ships being a far more environmentally welcoming form of transport. (Gwilliam M, 1993, p. 95) Reduction of Fuel Consumption Vessel owners to continuously scrutinize ways of reducing fuel utilization. For instance, replacing old vessels with new tonnage ensures significantly greater fuel effectiveness. (Goss O, 1977, p. 73) Environmental Intelligence Systems The Royal Australian Navy (RAN) should expand a range of cutting edge ecological intelligence systems in order to support forecasting conditions essential for the manner of marine operations. (Marsh B, 1992, p. 94) Technology This will offer opportunities for the RAN to amplify the speed, meticulousness, reach of ships and lethality, airplane and artillery systems, but the propagation of reasonable technology will also offer similar opportunities to prospective adversaries. Elasticity, training and survivability will be the key factors in maintaining the periphery. (Francis T, 1975, p. 102) Development in substance sciences are anticipated to be momentous in that, in an attempt to diminish maintenance costs, the expansion of improved resources and coatings with increased potency and sturdiness will facilitate more efficient preservation procedures. (Stopford M, 1997, p.99) Warship Design Growth in the warship design will help to contour the future of RAN potential, teaching and doctrine. Given the escalating emphasis on the safety of nationwide and intercontinental shipping and cargoes, future warships require to be designed with escort and outlawing duties in mind. RAN warships ought to be able to maintain swiftness with merchant ships, particularly the more rapidly vessels such as container and passenger ships, and to scheme around such ships. This will influence the design of hulls and propulsion systems. (McConville J, 1999, p. 73) Warship design and acquirement processes will turn out to be leaner and faster with prospective advantages arising from superior flexibility to gather the demands of precise operations, timeframes, and condensed research and development. (McConville J, 89) Risk Policy Sea control minimizes danger but does not eradicate it. Control of the sea ought to be limited in place and in time. The required extent is determined by the task to be done. The scale of control required should depend upon the level of risk acceptable in the context of the task necessary to be done. Ships and airplane must be regarded as apparatus for the operational chief officer that can be risked and lost in skirmish, thus risk aspect should be measured as a recommended strategy for Australian merchant transport. (Marsh B, 1992, p. 97) Enhanced ship routeing methods for reducing risk silhouette include exploring deeper water routes, less challenging routes, better traffic separation and elimination zones in elevated risk areas. (Francis T, 1975, p. 105) Better communication flanked by merchant ships and small craft is viewed as necessary to diminish the risk of crash or collision evasion induced foundation. Fishing boat crews need to be mindful of merchant ship's limited maneuverability and sea room due to draught constraints. (Evans J, 101) Fishing Vessel Data Amalgamation of additional traffic information such as fishing vessels, into vessel Reporting System will offer a better traffic picture. An incorporated service will advantage all vessels participating in the scheme and make all vessels conscious of their respective positions and movements. (Engineers M, 1971, p. 88) Government Policy I recommend that the administration should endorse the flying of the Australian flag rather than flags of inconvenience. (Pallis A, 2007, p. 100) Conclusion Indeed Australian merchant shipping is a worldwide leading power in the merchant shipping. With the above suggested policies, Australia will continue to be the leading superpower worldwide. REFERENCE LIST Engineers. M (1971) Marine Engineers Review, Institute of Marine Engineers Publishers. Evans. J (1990) Quantitative Methods in Maritime Economics, Fairplay Publishers. ISBN: 1870093313. Francis .T (1975) Maritime Policy and Management, Taylor & Francis Publishers. Gill. K (1982) International Research Centres Directory, Gale Research Co. Publishers. ISBN: 0810304708. Goss. O (1977) Advances in Maritime Economics, Cambridge University Press. ISBN: 0521212324. Gwilliam. M (1993) Current Issues in Maritime Economics, Springer Publishers. ISBN: 0792320484. Marsh. B (1992) Resources and Environment in Asia's Marine, Taylor & Francis Publishers. ISBN: 0844817082. McConville. J (1995) Shipping Business and Maritime Economics: An Annutated, Mansell Publishers. ISBN: 0720121809. McConville. J (1999) Economics of Maritime Transport: Theory and Practice, Witherby Publishers. ISBN: 1856091627. Muller. G (1983) China as a Maritime Power, Westview Press. ISBN: 086531098X. Pallis. A (2007) Maritime Transport: The Greek Paradigm, Elsevier Publishers. ISBN: 0762314494. Papadakis. N (1984) International Law of the Sea and Marine affairs, Brill Archive Publishers. ISBN: 9024728150. Stopford. M (1997) Maritime Economics, Routledge Publishers. ISBN: 0415153093. UNESCO (1949) International Social Science Journal, UNESCO Publishers. Wang. J (2007) Ports, Cities, and Global Supply Chains, Ashgate Publishers. ISBN: 0754670546. Read More