Effect of Globalization on International Ocean Transportation

GLOBALIZATION ON INTERNATIONAL OCEAN TRANSPORTATION
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Table of Contents
Abstract3
Introduction4
History and Characteristics of a Globalized Economy5
Characteristics of the International Ocean Transportation Industry7
Globalization on International Ocean Transportation10
Literature Review13
Results and Discussion18
Conclusion21
References24
Abstract
The demand and the need for a regularly growing economy that avails products for consumer’s products currently remains the source of every business venture in the entire surface of the globe. The economy in this context is required to nestle a globally competitive market that allows for connections anywhere in a bid to achieve the benefits of trade. The bourgeoisie through its expansion and utilization of the world global markets has resulted in the development of a cosmopolitan market that embraces the production and consumption of goods across the globe. Globalization has extensively been supported and expanded by the development and advancement of modern international transportation systems. From the large container ships to the small delivery trucks, it is important to understand that the whole distribution network remains an important element that closely integrates and links the production and manufacturing activities with the global markets.
However, the genesis of the 21st century brought with it a series of challenges to the role of international ocean transportation within the global economy. The capacity of several segments of maritime transport systems has immensely been stretched in a manner that has seen additional demands that tie up long distance transportation modes. On the other hand, the congestion of many several international ocean transport terminals such as ports has received delays and unreliable deliveries with this resulting in an acute need to improve the marine transport network, notably, those that are directly linked to the major gateways of the global economies. The long trends of the growing energy prices and costs are considered as another element that is likely to impose significant adjustments to the international ocean transport systems not forgetting the environmental impact of this mode of transportation. This paper concentrates on addressing the dualistic role of international maritime transport as a pro-active agent of globalization including the positive and adverse effects of this development.
Introduction
Ocean transportation has over time been considered as a significant human activity throughout history, with particular inference to instances where prosperity remains wholly dependent on international trade. In other words, the aspect of international ocean transportation is considered and referred to as one of the primary stakes of globalization, an aspect that is coupled with international standardization approaches, communication, and the liberalization of trade markets (International Maritime Organization, 2004). Given this, it is essential to point out that the trends of globalization are heralded as a beneficial element for global stability and sustainable development. In this case, it is imperative to detail that globalization integrates the production, distribution, and consumption of goods across different borders, hence creating a unified market.
Faced with the higher consumer demands for quality products, organizations are obliged to make decisions as to the benefits of a globally recognized brand that produces better products that are relatively priced, worthy of the increased security measures, differences in process and quality standards and the potential of waiting longer for the delivery times; aspects impacted by all the ends of ocean transportation (International Maritime Organization, 2004). The increase in sea transport methods and container ships is evidence enough to prove that companies have embarked on the need to embrace the prospects of globalization on international ocean transportation in a bid to meet the growing consumer demands for on-time delivery of quality products, a path that necessitates the need to better infrastructures and dependable delivery approaches. Globalization in regard to these aspects is perceived as an aspect that positively and negatively impacts the stability of international economies, including the environment and sustainable development. This paper consequently seeks to establish the impact and effects of globalization on international maritime transport systems.
Keywords: Containerization, Globalization, Maritime Transportation, International, Ocean Transportation, Maritime, Trade, Tariffs, Economies, Vessels.
Research Question:
1. What are the some of the positive and adverse effects of the dualistic role of international ocean transportation as a pro-active agent of globalization?
2. In what ways would economies benefiting from international ocean transportation harness the benefits of globalization in enhancing the future of global trade
History and Characteristics of a Globalized Economy
The globalization of business is perceived as a dynamic end product of both the historical and current events. The introduction of the General Agreement on Tariffs and Trade (GATT) in 1947 saw the introduction of globalization to the world that would later change the face of trade. This enabled several transnational corporations to restructure their business prospects globally as from the recent developments that have taken over the transport, information, and communication industries that triggered foreign direct investments (Lawrence, & Crutzen, 2009). Several governments, therefore, profited from the formation of global international agreements and alliances, with the most prominent and influential entity considered being the United Nations that was established between 1945. However, the North American Free Trade Agreement (NAFTA) impacted the aspect of global trading within the manufacturing industry by heavily reducing trade barriers and tariffs, hence encouraging trade between different nations.
In 2015, it was established that there were close to one hundred and twenty thousand vessels utilized primarily for ocean transportation. On the other hand, it has been revealed that close to 46,000 vessels within the ocean transportation industry were mainly used in the transportation of goods an aspect that accounts for up to 4% of the use of fossil fuels internationally in a year. According to sources, ships are structured in a manner that uses residual fuel that is considered as low in quality, hence reducing the costs related to the transportation of goods. This, therefore, remains a key element in the reduction of fuel costs, thus leading to an overall reduction in the cost of shipping. Nations that engage in the marketing of these fuels accrue several benefits from the transportation of cargos by the ships. Currently, the United States is considered to presently contribute 18.5% of the global maritime fuels, a figure that is equivalent to the fuel volumes that are marketed by Singapore (Lawrence, & Crutzen, 2009). Given this, it is imperative to acknowledge several nations that engage in the marketing of fuels are primarily motivated by the profits generated from the products in as much as such fuels are hazardous to the environment. This is evident in the fact that large section fuels used by vessels contain impurities such as sulfur and other metals that are lethal to the environment. An augmentation of this can be depicted in consideration of the fact that a large section engines that are used by ships are designed to allow the burning of residual fuels, an aspect that has made several of the ship operators are focused on the use these fuels unless there are legal policies established that force the use of other fuels.
Globalization has further driven innovations and developments within the transportation sector. The development of containers for the shipping of goods through the ocean currently allows several shipping companies to transport bulky products in an efficient way, hence decreasing the outstanding cargo related costs. Additionally, the improvements in the transport industry have turned the world into a small global village, thus enabling the process of trade through the inclusion of technology. Communication and information processing through the use of electronic devices have immensely reduced the size of the world into a global village, thus easing the constraints of time in providing goods and services in different markets. Globalization, as detailed by Black (2013) is also characterized by the ever changing trends in institutional organization and structural patterns that shift at a faster pace within the nature of the world economic order. Most noticeable is the expanding significance of multinational organizations (MNC’s), the roles of non-governmental organizations (NGO’s), and regional trade alliances.
As hierarchical structured production and distribution of goods give away greater flexibility and independence in locational decision-making, a greater demand for responsiveness for international freight and passenger transportation remains on the rise (Black, 2013). The maritime transport system has therefore benefited from the shifts in the high-tech modification of vessels as well as the commodity production and trends that directly link the manufacturers of final products to the consumers in as much as this aspect poses problems with congestions and under-utilization of the maritime transport system.
Characteristics of the International Ocean Transportation Industry
The demand and need for international ocean transportation are considered as a function of the global supply and demand for primary finished products and commodities. Given this, the condition of the world economy, which essentially determines the level of international trade, remains a primary element in ocean shipping demands (Dicken, 2011). It is, therefore, important to consider that the advent of globalization has immensely influenced the demand for transportation, hence influenced by seasonal variations in the production and consumption of goods, currency exchange rates, and the shifts in interregional trade patterns.
Ocean transportation is primarily comprised of two major commercial markets: the tramp and liner. Tramp vessels as established by Dicken (2011) are mainly contracted to shippers on a need basis in that they do not have regularly scheduled routes. These ships are in most cases deployed by their owners in situations where they can get the greatest profits. Most of the tramp vessels are designed to carry dry bulk goods such as coal, grain, ore, or fertilizers. On the other hand, liner shipping market comprises of carriers that provide services over a fixed period and route schedules. Vessels within this market are developed to carry containerized cargos that include agricultural products such as hay, meat, high-value special grains, and horticultural shipments.
The management and operation of bulk and liner vessels vary significantly. Liner vessels, as opposed to the bulk vessels, are designed in such a manner that allows the ships to carry containers that are uniform in size, function, and shape of a variety of cargos. Additionally, this ocean container carrier is legally bound to the carried container after the discharge of goods in a country: with part of the ocean container carrier’s operational costs requiring the carrier to follow the vessel through an inland transportation system to the final destination (Dicken, 2011). Besides this, the bulk ocean carriers are designed in a way that requires no extra responsibilities and costs associated with the inland transportation system.
The container phenomenon is perceived to have begun in the 1950’s, with this invention developed during this time to allow the sailors to save their time and money through the use of marine shipping vessels designed to transport their products to different markets. Containers, therefore, reduce the needs for handling products several times between diverse modes of transportation. Less handling results in the transportation of higher-quality products upon arrival at the final destination. Hoyle & Knowles (2011) points out that container has been developed in a manner that provides product segregation, an approach that allows buyers to specify the types and quality of goods that they require. Containers are also known for their capacity to provide added reliability and safety during the transportation process, thus highly reducing the deterioration, pilferage, and exposure of products to different elements during transportation. Globalization has consequently made it possible for shippers to develop containers that facilitate just-in-time delivery of goods, which reduces the related inventory costs and increases efficiencies of production processes.
Currently, most marine containers are designed in a standard length of either 20 or 40 feet long. The movement of these containers is often described regarding equivalent units. An ocean container carrier is therefore considered as a company that provides maritime transportation services for containerized cargos on vessels under fixed itineraries and regular schedules. Recent efforts and developments in international ocean transportation have seen the integration of separate transport systems through the use of two different modes (Hoyle & Knowles, 2011). This is currently referred to as intermodal transportation, an approach that enhances the economic performance of the carriage industry and systems through the use of respective modes in a productive manner. This clearly establishes that different economies use maritime shipping and rail transport systems for long- distance transportation of goods, with the efficacies of trucks making it possible for local distribution of the goods. Globalization has, therefore, made the entire transport system a whole, rather than a series of different parts and stages, with each market conducting individual operations through separate sets of documentations and rates.
The emergence of an intermodal transportation system was therefore brought about by technological advancements. This saw the development of techniques that would be used in transferring freight from one mode to the other through an intermodal transfer system. An example of this is evident in a piggyback that allowed truck trailers to be placed on rail cars, and light aboard ships where river barges were placed on a sea-going ship (Hugill, 2009). However, it is significant to note that the container is considered as the major modern development that permits the handling of goods between different modal systems. Constrainers have therefore become the most significant component for maritime and rail intermodal transportation, thus enabling these transport systems to interact closely by conferring significant cost saving measures and time. Hugill (2009) clearly points out that globalization has seen the transformation of major ports into container ports, with the construction of new container transshipment infrastructures. The infrastructures are developed to provide accommodation to containerships that are solely structured for the purpose of carrying stacked containers. Freight rates are historically based on the ocean carrier’s established tariffs. Tariffs are considered as documents published by the carrier company with the aim of setting forth the applicable rules, charges, and rates of the movement of goods. The documents are established in a way that sets up a contract of carriage between the consignee, the shipper, and the carrier.
Globalization on International Ocean Transportation
The international ocean transport system has undergone considerable pressures to support the growing demands and needs of international trade, including the globalization of production and consumption. The achievement of this aspect could not have been possible without the considerable noted technical improvements that permitted the transportation of larger quantities of freight and people from one economy to the other in a faster and efficient way. Considering that container and intermodal transportation approaches currently improve the efficiency and effectiveness of global distribution, a growing demand, and share of cargo required to move globally has seen the advent of containerization (Hugill, 2009). This clearly establishes that the element of international oceanic transportation is an enabling factor that is not only necessary in causing international trade to occur, but as a means through which the prospects of globalization could not have occurred without.
As a result of the geographical scales of the global economy, the circulations of several international freight flows occur over several models. This has resulted in the establishment of effective sea transport chains that service these needs and demands and reinforce the essence of transportation modes and terminals within strategic localities. International trade, therefore, necessitates the need to distribute infrastructures that have the capacity to support volumes and extent of goods. The advancement of technology has therefore resulted into two transportation modes that specifically support international trade and globalization: with these modes considered as maritime and air transportation. However, Rodrigue et al, (2009)point out that road and railways only account for a marginal share of international transportation considering the fact that they are perceived to be above the national and regional modes of transport services.
The growth of maritime transportation as a result of globalization has consequently been fueled by many issues. First, it is essential to establish that the increase in mineral and energy cargoes that are derived from the growing demand for industrial products and industrializing nations such as Japan, Europe, and North America have a positive impact on maritime transportation. Secondly, the elements of trade liberalization and division of production approaches influenced by globalization have resulted in the additional need for long distance trade, hence supporting maritime transportation (Rodrigue et al, 2009). Thirdly, the major innovation and improvements in shipping and maritime terminals have enhanced and facilitated the flow of freights that are containerized from one nation to the other.
As established in this paper, the insurgence of international maritime transportation systems finds root in the aspect of globalization, an aspect that has enhanced the development of vessels utilized in the transportation of cargo. However, currently, special emphasis is currently driven to creating vessels that are fuel efficient in a bid to reduce the related transportation costs. Ocean transportation, in this case, has over time been considered as a significant human activity throughout history, with particular inference to instances where prosperity remains wholly dependent on international and interregional trade. Globalization, the process, is concisely defined as an economic phenomenon that involves the increase of cooperation and unification of different regional and international economic systems, an aspect that integrates the expansion of growth in investment, capital flows, and international trade. This has therefore resulted in an increase in cross-border social, cultural, and technological exchange methods (Rodrigue, et al, 2009). Transportation is therefore considered as one of the largest and visible but vital components of a global economy, an aspect that is justifiable by its input in supporting a wide array of movements of freights between nations and passengers. Given this, it is important to establish that the considerable diversity, affordability and the availability of products in the global economy wholly depend on the capacity to ensure that they are transported to different markets. Close to ninety percent of the worlds of the world goods are currently transported through the international ocean transportation system, with over seventy percent as containerized cargo.
In as much as containers and boxes were long used in transporting goods through the use of trains, trucks, horse-drawn cart, and ships, this process was considered as inefficient through the Second World War as a result of the labor required to load and unload the containers during their transfer from one mode of transport to the other. However, this process was streamlined following the emergence of globalization that saw the development of intermodal, international ocean transportation system that made use of standardized containers and vessels that facilitated an efficient transfer of goods between trucks, ships, and trains within specialized terminals.
The globalization of trade and production is currently perceived as the defining characteristics of this era. This is demonstrated by the scale of economic activities remains impressive as the speed of technological ...