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Posted: February 28th, 2022

Role of Logistics in Global Trade; Sea Ports and Shipping Companies

Role of Logistics in Global Trade; Sea Ports and Shipping Companies
Introduction

Our world is becoming increasingly smaller in all practical respects every day, thanks to technological advancements, the ease with which modern travel can be accomplished, the gradual disintegration of national borders, and the increasing frequency with which global bodies and international organisations call for additional actions to facilitate the free movement of people, goods, and services across borders.

As a result of the continued trend toward globalisation, there has been a growth in global or worldwide commerce. Generally speaking, international trade, often known as global trade, refers to all commercial flow between states and includes the buying and selling of products, services and capital as well as the movement of people over national borders. It may also include non-profit exchanges of goods, such as those provided to poor or distressed countries in need of assistance.

The amount of commerce is increasing.

At the moment, the sum of exports and imports from different countries accounts for more than half of world production. At the turn of the nineteenth century, this percentage was less than ten percent of the population. (1) Exports of manufactured products climbed from US$ 8 trillion in 2006 to US$ 11 trillion in 2016, according to a report published by the World Trade Organization entitled “Trends in World Trade: Looking Back over the Past Ten Years” (2). This is a positive trend, particularly for emerging economies, because it allows them to gain access to global markets and supply networks that were previously unreachable to them. Developing countries’ capacity to connect enterprises, suppliers, and consumers to global supply chains efficiently is critical to their ability to compete in global markets, according to a new study on trade logistics published by the World Bank and featured in the Economist Magazine: (3)

This exchange of goods takes place on a massive scale every day all across the world on an astounding scale. To give an example, according to a Wikipedia (4) page on international commerce, the three most traded exports in the world in 2015 were crude oil ($786.3 billion), automobiles ($672.9 billion), and refined petroleum ($605.9 billion). The transportation of just one of these three items, say crude oil, to the various destinations would necessitate the shipping of somewhat more than 117.3 billion barrels of crude oil loaded with gasoline. So, how precisely is this being conveyed then?

How to Deal with the Transportation Issue

Nowadays, the world’s supertankers have the capability of transporting up to 2 million barrels of crude oil. The transportation of that amount of crude oil alone would require around 58, 679 (fifty-eight thousand, six hundred and seventy-nine) of these to transport it around the world. At the time of writing, there are 11,000 oil tankers navigating the world’s oceans, according to www.planete-energies.com. Eighth, each tanker would be required to perform the work of five tankers, resulting in increased frequency of voyages and increased time spent on the sea lanes. (8) Keep in mind that regular tankers (as opposed to super tankers) often carry a far less load, and thus not all 11,000 tankers in the worldwide fleet are super tankers in the strictest sense. It is also important to remember that the oil comes from 98 (6) different oil-producing countries throughout the world, each of which has at least one operational seaport. It is customary for maritime voyages to take a long period. For example, a ship sailing from a European port to a US port may normally take 10–12 days, depending on a variety of variable circumstances, to complete the journey. (7)

If we assume the best-case scenario, this oil will depart from 98 seaports in over 10,000 tankers at any given time, travel between 200 and 8000 nautical miles, stopping in at least one other port in each of those countries along the way, and ultimately berth at the 197 countries around the world that require its precious cargo and that have at least one working port in each of those countries, a total of 197 ports in total. There are almost 10,000 ships in the world, bound for more than 100 marine ports and making pit calls along the way. Despite the fact that this hypothetical simulation is speculative, it is based on reasonable and conservative assumptions. This must also take into consideration the fact that the global demand for crude oil is expected to continue to rise year after year in the future. (9)

This is only applicable to crude oil in a given year. Factor in other goods such as grains (rice, corn, wheat, barley, soy beans), other foods (such as vegetable oil, potatoes, sugar, beef, poultry, and fish), cash crops (such as cashews, cocoa, and coffee), solid minerals (steel), aircraft, military armament and supplies, fruits and vegetables (such as canned tomatoes), processed foods (such as frozen vegetables).

These items are transported by aircraft, shipping vessels, railroads, and automobiles, and they are typically stored in containers, which are the conventional choice for transit storage in international trade and transportation.

In the words of […], “there are already over 17 million shipping containers in use around the world, and five or six million of them are currently being transported around the world on vessels, trucks, and trains.” They make around 200 million trips per year in total. There are approximately 10,000 cargo containers lost at sea every year, according to estimates. Almost one container every hour! That’s incredible!” (10)

It is essential that these containers and the contents they transport arrive at their intended destinations in good condition and on schedule. They must also be correctly traced during their journey, whether on land, at sea, or in the air. Additionally, both the sending and receiving parties must be brought up to date on a daily, if not hourly, basis on the progress of the transaction. International logistics is responsible for the smooth operations that make all of this possible and ensure that the world continues to run smoothly.

The Importance of Logistics in International Trade

Trade across national borders would be impossible if suitable logistics were not in place. Companies must ship finished goods at the lowest possible cost and in the shortest reasonable time in order to remain competitive in today’s world of little or no trade restrictions. This is due to intense international competition, which forces companies to ship finished goods at the lowest possible cost and in the shortest reasonable time. When it comes to receiving and delivering goods and products across a value chain, international logistics is responsible for managing the process from point of sale to final destination throughout the world. Taking care of commodities involves everything from handling to packaging to storage in transit to inventory to the payment of customs duties and taxes as well as the observance and compliance with local trade legislation.

In the field of international logistics, logistics service providers (also known as LSPs) are responsible. These companies include international freight forwarders (who may be 3PL or 4PL providers), shipping companies and brokers, airlines, local trucking companies and distant haulage companies, and courier companies. Many times, the likelihood of a particular manufacturing company remaining competitive is directly proportional to the efficiency of its logistical assistance. For this difficult operation of transporting “the right shipment from the right seller to the right buyer in the right condition at the right time,” logistics service providers rely on both human resources and up-to-date technology to complete their work. ICT, in particular, is quite beneficial in tracking shipments and keeping everything organised.

As a consequence of the efforts of logistics service providers, businesses can securely concentrate on the production of high-quality goods and materials while delegating to LSPs the complex duty of onward distribution to locations of consumer consumption. Logistics service providers rely on a diverse range of transportation modes, including air, rail, road, and marine freight, to ensure that this effort is completed flawlessly.

Shipment of goods by sea as a component of international logistics

In today’s world, sea freight is the most widely used method of carrying cargo throughout the globe. Merchant shipping, according to Wikipedia, is the lifeblood of the world economy, transporting 90 percent of all international trade via 102,194 commercial ships in a single year around the world. (11) Ships, barges, and other water-bound vessels are used to transport products across oceans and across continents. It has come to pass that the solely maritime terms “shipping” and “shipment” have become synonymous with the movement of goods from their site of origin to their point of consumption, regardless of the mode of transportation actually utilised to accomplish this. Several factors contribute to the desire for sea freight transit in international logistics. The most important of these are:

Large capacity or volume of cargo transported in a single journey

It is inexpensive or cost-effective.

Product relative safety is defined as follows:

Sea freighting is accomplished through the use of ocean-going vessels known as cargo ships. Cargo ships are designed to transport a large number of commodities across international borders. It is possible to find bulk carriers or cargo ships in a variety of sizes and configurations. Bulk carriers or cargo ships are primarily used to transport bulk or large cargo, RoRo (roll on roll off) ships are popular for transporting vehicles because the vehicles can simply be driven down at sea ports, and tankers are used to transport liquids such as crude oil and refined petroleum.

Container ships, which facilitate the flow of goods by keeping them in containers, multipurpose ships, which transport a variety of items, and refrigerated ships, which transport perishable cargo such as frozen chicken products, are examples of other types of ships. Coastal commerce vessels are not cargo ships, as is commonly assumed. They are smaller and have a shallow draught, thus they are essential for transporting products across a continent or throughout a general part of the world. Typically, they are referred to as coasters. Coasters can be configured to function as self-dischargers.

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Containerization

A common technique of freight transportation in which containers are utilised to safely store goods and machinery while in transit is referred to as containerized freight transportation. Containers are measured in terms of TEUs, which stands for twenty-foot equivalent unit (Twenty foot Equivalent unit) Twenty-foot (one TEU) and forty-foot standard containers are the most common sizes (2 TEU). (12) Eight feet six inches wide and eight feet six inches height are the dimensions of a standard shipping container. When it comes to containerization, it is effective because the system can accept a wide range of diverse items and machinery, which are first packed into containers before being loaded into the transportation vehicle. While containerization is conceivable utilising land transportation modes such as rail and trucking, sea freight is the definitive illustration of this method of transporting products across long distances.

Sea freight containerization is performed by loading containers onto container ships, which then convey the cargo. A huge container ship is capable of transporting a large number of containers in a single voyage. According to the website https://www.portinfo.co.uk/, A Maersk E-Class vessel, the Emma Maersk (the lead ship of the Maersk E-Class vessels), can transport roughly 15,000 TEU (13) or between 400 and 800 containers, depending on the size of the container. Containerization as a mode of shipment of cargo first appeared in the 1970s and is now one of the most common methods of transporting goods throughout the world today. Container ships are often enormous in size, with new and larger vessels being built virtually every other year, each one being larger than the one before it, and each one carrying more cargo than the one before it.

The OOCL Hong Kong, according to the company, is the world’s largest container ship at the moment. It is “the largest container ship ever built, and the third container ship to reach the 20,000 Twenty-foot equivalent unit (TEU) threshold.” She was constructed at the Samsung Heavy Industries, Geoje shipyard under yard number 2172, and she was delivered to the company in May of this year. OOCL Hong Kong has a capacity of 21,413 TEUs and will serve the route to North Europe from Shanghai, Ningbo, Xiamen, Yantian, Singapore, via Suez Canal, Felixstowe, Rotterdam, Gdansk, Wilhelmshaven, Felixstowe, via Suez Canal, Singapore, Yantian, Shanghai in a 77-day round trip.” “OOCL Hong Kong will serve the route to North Europe from Shanghai, Ningbo, (14)

Ports on the sea

Seaports serve the maritime or shipping business in the same way that airports serve the air transportation industry. Ships and other maritime vessels are routinely “put to” or come to a complete stop in sea ports all around the world. Whether a sea port is busy or not is determined by the volume of container shipments and cargo tonnage. China, Singapore, Hong Kong, the United States, the United Arab Emirates, and South Korea are among the countries with the busiest ports in the world.

The port of Shanghai in China is the busiest marine port in the world in terms of container transport volume measured in TEUs. For the fiscal year 2017, the Shanghai port handled around 40 million TEU containers carrying 736 million tonnes of cargo. (15) Every day, this equates to around 109,589 shipping containers. This port, which includes the Yangshan Deep Water Port and the Waigaoqiao Shipping Terminals, is operated by Shanghai International Port (Group) Co., Ltd and is located in Shanghai, China. Its website address is www.portshanghai.com. cn (16) Shanghai’s port is located on an island that is connected to the Mainland by a 32-kilometer-long sea bridge.

In 2017, the port of Busan in South Korea handled 20 million TEU containers, while the port of Dubai in the United Arab Emirates handled approximately 15.5 million TEU containers. In the same year, Singapore’s port handled around 33 million TEU containers, placing it second only to Shanghai in terms of container volume. (17) “Port Miami in the United States continues to be the world’s busiest cruise port, with more than 4 million passengers passing through the port last year.” (18)

Routes by Sea

Natural or manufactured channels used by ships and other water-bound vessels are referred to as shipping routes or shipping lanes. In the world of international trade, shipping routes are critical because they allow commercial vessels to reach their destinations more quickly and in a more secure manner. The following are some of the most frequently utilised maritime routes in merchant shipping:

The English Channel is a body of water that separates England from the rest of the world.

The English Channel is the most heavily used marine route on the planet. In addition to connecting the North Sea to the Atlantic Ocean, it is located halfway between England and France. The English Channel is 350 miles long, 20-150 miles wide, and 150-400 feet deep. It has a width of 20-150 miles and a depth of 150-400 feet. Every day, over 500 ships pass through the English Channel. As a result, it is one of the most heavily trafficked shipping lanes in the world.

In the Strait of Dover, which is the narrowest part of the English Channel and connects the Baltic Sea and the North Sea, approximately 400 shipping vessels pass through each day, transporting goods such as oil, machinery, grain and steel. The Strait of Dover is located at the narrowest part of the English Channel and is home to approximately 400 shipping vessels per day.

The Strait of Malacca is a waterway that connects Indonesia and Malaysia.

The Malacca Strait connects numerous Asian countries, including Malaysia, Taiwan, India, South Korea, Indonesia, China, Japan, and Singapore, and serves as a waterway between them. As of right now, it is the most direct route between the Pacific and Indian oceans. The Strait of Malacca is the world’s second-busiest sea channel, behind the Suez Canal. Every year, more than 83,000 vessels travel this route, accounting for over 40% of all world trade. (19) It is particularly well-liked for the transportation of crude oil.

The Panama Canal is a waterway that connects the United States to Central America.

Before the Panama Canal was established in 1914, ships had to make a 2000-8000 mile detour to enter either the Atlantic or the Pacific Oceans from either ocean before passing through the Panama Canal. The Panama Canal was built to reduce the amount of time it takes to transport goods between the two oceans. When travelling via the canal, tolls must be paid. Every year, more than 14,000 ships pass through the Panama Canal, or around 30-40 ships per day (19), making it a vital conduit for world shipping and trade.

In addition to the Suez Canal, the Bosporus Strait, the Strait of Hormuz, the Danish Straits, and the Saint Lawrence Seaway, there are several other major waterways to consider. (20)

Shipping Companies are a type of business that transports goods from point A to point B.

The world’s shipping corporations are ranked based on the total weight carrying capacity of their combined shipping vessels, which is measured in tonnes equivalent unit (TEU). The top three shipping businesses in the world are, at the time of writing, as follows:

A.P. Mller-Maersk is a Danish shipping company.

A.P. Mller-Maersk is a Danish shipping firm that specialises in container shipping. This part of Maersk Line is responsible for container transportation, and it has a fleet of 580 container boats, making it the world’s largest shipping corporation. 272 Maersk-owned ships with a total carrying capacity of 1.7 million TEU make up the fleet of the shipping company. In addition, as of September 2014, the fleet included 308 chartered boats with a combined capacity of 1.1 million TEU. As a result, its total capacity has increased to 2.8 million TEU.

Mller-Maersk is a Danish shipping company with its headquarters in Copenhagen. In the first nine months of 2014, the company’s revenues totaled $35.85 billion. Mller-Maersk employs 88,909 employees in 135 countries, according to its website. Arnold Peter Mller created the company in 1904, and it is still in operation today.

Mediterranean Shipping Company is a shipping company based in the Mediterranean Sea (MSC)

Mediterranean Shipping Firm is a shipping company based in Geneva, Switzerland, with a fleet of ships. Its fleet of 471 container ships has an intake capacity of 2.43 million TEU, which is the largest in the world. Its vessels travel around the world, calling at over 316 ports. It first opened its doors in 1970.

The Mediterranean Maritime Company (MSC) is a privately held shipping company. It has a presence in 150 countries and employs a total of more than 24,000 individuals.

CMA CGM Group is a multinational corporation headquartered in France.

The CMA CGM Group is France’s largest shipping firm by revenue. This company has a fleet of 428 vessels with a total capacity of 1.55 million TEU. The container ships travel 170 maritime routes and make regular port calls at 400 seaports across the world.

Jacques Saadé’s Compagnie Maritime d’Affretement (CMA) bought Compagnie Generale Maritime (CGM), a state-owned corporation that was privatised in 1996. CMA was created in 1978 by Jacques Saadé and acquired Compagnie Generale Maritime in 1978. As a result, the CMA CGM Group was formed. This corporation has operations in 150 countries and employs more than 18,000 people. It is headquartered in the United States.

Finally, I’d want to say

Sea freight is a critical component of international logistics, which serves the needs of global commerce. Its importance to world commerce continues to increase every year. As more and more economies open to the world market, and as technology and access to finance make poorer countries into manufacturing nations, volume of global trade will continue to rise, and so will the vital place of sea freight in trade and in the world generally.

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