Maritime System of Business - Essay Example

Executive Summary The rationale behind maritime shipping revolves around an understanding of the overall operation of sea business. The Market cycles and transactions are many and involving. For instance, issues of freight rates have to be determined in the maritime transport. The market return of this kind of transport must be determined.A business institution like the maritime transport needs some evaluation through critical analysis. The achievement of this market analysis will provide a critical cost benefit program. There is a felt need or necessity to make forecasts. All business documents and transactions recorded require a carefully done analysis and accounting for appropriate recognition. This is especially so since the business can be affected by the global recession of yester years. A documented life history of the maritime business transaction needs to be evaluated. The design of the ship plays a critical role as part of an acquisition arrangement (Pallis, 2007). Introduction There are many objectives attained through sea trade. Issues of freight rates have to be determined in the maritime transport. The market return of this kind of transport must be determined. This ought to be achieved so that a critical cost benefit program can be instituted (Pallis, 2007). Sea mode of transport is common in many nations across the world. Bulk goods dominate this market. With the emergence of aviation, passengers are not common in the mode of transport. Its considerable advantage over the air is that it is a cheap mode of transport. It is used over the sea, canals, lakes and even across the river but it is slow compared to other modes hence it is not friendly to perishable goods (Force, 2006). The reliance on water has been directly unpractical for nations that are land locked. Being land locked means that the country connection to territorial waters is minimal. The European colonial powers were among the first nations to establish connections in the marine trade. This achievement dates back since 1450 AD with the opening up of the Atlantic, Pacific and the Indian Ocean that brought about the expansive sea trade. This brought about the element of voyages for discovery by that time. The trend has continued in a progressive way. This positive movement in the trend shows a realized economic gain because of this trade. A survey carried out in the year 2006 showed that 86% in terms of volume and 70.1% in terms of value of the global trade was water born. The capital outlay in the investment forms the greatest challenge with the maintenance cost accounting for half of the annual cost. It is evident that few players control the industry. Demand and Drivers for Maritime Transport Sea business and transport is popular due to its reliability. Its popularity is also attributed from less risk associated with the mode of transport. This is especially so if goods are not perishable. Its costs are relatively cheaper as we have already indicated. Aquatic time heavily relies on transporting heavy & bulky containers which aviation could not. Maritime can be an economic driver to a nation that is serious in setting the right mechanism and has the water masses. Maritime is a mobility service guided by the forces of demand and supply (Gibson, 2007). The trade operates on a contractual agreement between the country that owns the water or the sea and the ship owners. The access-focused contracts allow the ship across the country waters to the appropriate destination. After the route access obtains grant, the transporting company secures a contract to transport good from the owners or passengers. All contracts are treated at the admiralty jurisdiction view on the basis that they are fully relating to the maritime nature. This means no contracts that are not wholly involved in the sea industry gets recognition under the maritime law. All the maritime executors’ and contracts are treated as such and any breach of the rule will give the injured party claim for damages. Agency contracts are also handled accordingly. In addition, other maritime contracts depend on an equitable rationale. There is the contract on the leasing of containers. Contracts are also established that relates to a mixture of both maritime and non-maritime matters. Transportation is a service that cannot be postponed and hence it must be provided when needed. The capacity of infrastructure must support the needs. Supply in these industries refers to the capacity build to support the demand. Demand is expressed in terms of the number of people, volume of goods or tons in relation to timelines and available space. The relationship between supply and demand is that of asymmetric but reciprocal. Supply can exist without relevant measure of demand but there cannot be demand without relevant supply. Governments set infrastructures in a way that they will exist regardless of the low demand. At times even with the set infrastructure, a demand to match the supply may never be met due to deficiency in social economic changes and other factors. It is also measured in the number of people in a given kilometer or ton per kilometer. Operation of Maritime System Sea transportation has several components that are closely linked together which include privately owned public and jointly owned properties. The market is the main determinant of the investment in the system development. The investment revolves around building of vessels; inter modal connections, vehicles and the system users (Force, 2006). Each of these components is equally complex. To manage this there has been some advancement in technology that has led to IT related systems like (AIS) Automatic Identification System, (VTS) Vessel Traffic Services and many more are useful in efficient coordination of services within the industry. The system works in tandem to ensure safety of people, cargo and the operating environment. The elements in a system are all the objects involved in moving of cargo, which include seaports, waterways equipments and traffic arrangements. The transport system can be divided into various sub processes, which build up the process. The sub-processes can further be divided into sub-processes. The processes are all based on economical, organizational and environmental constraints. Industry Players The key players in this industry are Governments due to the massive investment involved in the set up and maintenance of working systems. However, individuals can undertake Ownership and flagging. It is the duty of governments to regulate them for purposes of uniformity and proper management. Ownership is different from flagging. A person from a certain nation can own a ship. This ship is then flagged under another person from another country. Since the mid-1990s there has been experienced several mergers and strategic alliances. This is the situation since the leading twenty corporations controlled an estimated market share of around 20% compared with the 2003 statistics. The statistics show that the twenty largest carriers control 58% of the entire market. The ocean sailing ships had been involved in the trade though at a long period in time. Other stakeholders like treasure ship, submarines and steamboats have been cruising the waters. There are other nautical stakeholders consisting of large shipping line proprietors, the government agencies and concessionaries. These have come together in a bid to establish appropriate rules governing the nature of maritime business (Pallis, 2007). The transport system establishes in a way that favors the operation of the business from an economic point of view. The players focus in an improvement strategy. The performance of the overall trade will improve drastically. The advantages of the ports concession have been looked at through an establishment of the appropriate laws. These laws are aimed at the protection of the investor’s interest. All bottlenecks are aimed at being eliminated drastically to avoid possible problems associated with the contractual regulation. Possible institutional framework has been determined and institutionalized. The reasons behind these frameworks are to establish an ownership platform in the overall management of the operation at the port. There has not been any private investor management at the port possible due to the technicalities involved in the sector. Intervention of this industry is inevitable. This usually comes from the less developed countries. The developing countries have developed a need to intervene in the maritime company. This is mainly geared for political and economic purposes. This is observed in a view aimed at contributing o the economic welfare. The government as a key player engages in measures aimed at ensuring that small players in the industry gets recognition in their maritime industry in their initial stages of development. Presence of a restrictive transport at the sea provides an opportunity of the developing countries to benefit from the policies put in place. Policies aim at the protection mechanism where the general economy benefits from the operation of the local merchants (Stopford, 2009). Port Terminals A terminal is a point where goods or passengers are dispersed. Port terminals provide docking services, crucial for passengers and goods. Cargo aimed for transport have to be assembled at the terminals before they are loaded on a ship for onward shipping to another terminal where they will be offloaded. The location of the terminal is obviously to offer services to a concentration of people who need the service. They must be as well accessible to people and other terminals at minimum cost to the providers. It should also be in a position to offer growth prospects. There are many transactions involved at the point and it is thus particularly beneficial to ensure proper running of this facility. Many terminals are bureaucratic in their operations and this has led to inefficiency in receiving and releasing of goods. Without proper control, the handling of the cargo might proof unmanageable. It is of considerable concern to employ the best personnel in terms of managerial and decision making expert system. Drawbacks There are many compelling reasons why there interests from government and other investors in the industry. However, it is characterized by serious shortcoming to the mode of transport: The recurrent attacks by organized groups such as pirates on goods on transit even when under severance. It is a slow mode of transport where the mode is not friendly to perishable goods. It is also a high investment venture, hence only Governments are the best placed to invest which result to monopoly and ultimately inefficiency and mismanagement. Lastly to the land locked countries, they cannot communicate well to the rest of the world due to reliance on water which cannot be reversed by man. The success or fail of the maritime business is a critical factor that requires a lot of consideration. The decline of marine business depends on the policies made by the stakeholders. Some of the Policies made are poor. This definitely affects the business largely. It is, therefore, necessary to ensure appropriate policy framework emanates from the appropriate body. Conclusion The financial nature and performance practiced by the shipping industry has a lot of effects both positive and negative. Many transactions are involved in the normal operation of a shipping business. These operations have to be in compliance with the maritime laws of admiralty jurisdiction. Various choices surround the purchasing and acquiring the ship. This must be put in to consideration not forgetting the financier of the source of capital. References Force, R, Yiannopoulos, A & Davies, M (2005). Admiralty and Maritime Law, Volume 1. Washington D.C: Beards Books Force, R , Yiannopoulos, A & Davies, M (2006). Admiralty and Maritime Law. Washington D.C: Beard Books Gibson, W (2007). Religion and the Enlightenment, 1600-1800: Conflict and the Rise of Civic Humanism in Taunton. Wahington D.C: Peter Lang Pallis, A (2007). Maritime Transport: The Greek Paradigm. London: Elsevier Parameswaran, B (2004). The Liberalization of Maritime Transport Services: With Special Reference to the WTO/GATS Framework. Hamburg: Springer Stopford, M (2009). Maritime Economics. Washington D.C: Taylor & Francis Read More