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Economics Assignment Question
Write a critical review of the Shipping Industry
Economics Assignment Solution
EVALUATION OF THE STATEMENT
Historically, the transport of goods by way of shipment has been one of the important human activities. It has been one of the main drivers and engines of growth when prosperity and advancement depended primarily on international and interregional trade. In fact transportation along with communications, international standardization and trade liberalization has been identified as one of the main pillars of the process of globalization. As a result, many countries have witnessed growth in the past as a result of opening their borders and their willingness to indulge in international trade. Maritime transport is one of the key ingredients in fostering globalization.
The volume of international trade is profoundly influenced by maritime transportation costs. There are a number of empirical research in economics that have highlighted some sort of relationship between transportation costs and the geographical pattern of trade, production, industrial structure and income. The recent empirical work in international economics suggests that maritime transportation costs as an element of trade costs explain some sort of relationship in the field of international economics, like, for instance, the well-known home biases in consumption and investment and the excessive volatility of exchange rate. (Stopford, 2011)
International maritime transport and trade are influenced by a number of technological and economic trends. Some of these trends have altered costs, prices, logistic structures, supply chains and comparative advantage. These trends have redefined the trade competitiveness of the country and the level of integration into the global transport and trading networks. The developing countries are undergoing two structural transformations in the international trade and development. First, most of the developing countries are seen to be increasing their demand for economic growth, merchandise trade and demand for maritime economic services. Secondly, the increase in the supply of the maritime economic services has made it possible for the developing countries to greater market share in maritime business.
The modern trend in the linear shipping connectivity has evolved from the past trends. The modern ships have increased container ship sizes which reduces the number of carriers that has to be carried to the companies. This originates from the rise in growing demand and as well as supply and expansions of trade especially in manufactured goods. However, one of the pitfalls of the increasing demand is that it will squeeze out the smaller players and may promote an oligopolistic market structure. However, there are other climate change concerns and sustainability issues which would equally important consideration. (James J. Corbett, 2009)
There are a number of factors that have reshaped the transport policies and strategies of the future. It will be essential for the developing countries to implement sustainable freight transport. It will be important to reduce the sector's high oil dependency so as to increase its exposure to other forms of transport costs and also limit the extent of environmental degradation. It will be important for the developing countries as it would help them to make the transition to sustainable low carbon development path. It is important to understand that planning and design with respect to freight transportation will be needed to meet the challenges posed by infrastructure deficit and inadequate transport services. (David S. Jacks, 2008)
The rise in development and advancement has led to an increase in demand for consumer goods both from the developed and the emerging economies. And, this has fuelled the demand for maritime shipping business in the world. And this has led to changes in the way the shipping companies are now transporting goods from one place to another. For instance, special ships have been designed which makes it possible to transport oil in large amounts.. And this realization was instrumental in the development of large tanker vessels which drove the unit cost of energy transportation. (Hans-Dieter Evers, 2011)