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The Globalisation of the Maritime Industry

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    The Globalisation of the Maritime Industry

    Introduction

    It cannot be denied that the maritime industry plays an important role in today’s financial system and commerce. It holds key areas in the complex networks that operate worldwide economy. But is it truly a globalised system? This paper will attempt to answer this question and show that the maritime industry has become a key component of trade worldwide. It will also show how the issues affecting this industry add to its global characteristic.

    The Maritime Industry Amidst Globalisation

    Globalisation affects many aspects of today’s trade and commerce. To determine how the maritime industry has become closely interlinked with globalisation, one must look back into history. During the early years, trade was done only in small areas (Geyer, 2006, p.4). It was done by merchants travelling by foot or by using four-footed animals or by riding small ships. It was a time-consuming activity. However, advances in technology during the 1800s led to a fast evolution and development in the maritime industry. This, in turn, made trading a much more lucrative and noticeable activity. The spread of globalisation was not far behind. It can be said that globalisation began through international pioneering activities such as the start of trade between countries. The maritime industry even became a tool for colonization, when countries managed to subjugate other cultures through their advanced maritime technologies. The end of World War II ushered in the start of globalisation by persuading countries to follow specific financial structures and societal standards. The use of computers became popular in the latter part of the 20th century. Innovative technologies for communicating progressed in leaps and bounds during this time as well. Because of these globalisation became a by-word in many studies. It became practically synonymous with maritime activities, which made it easy for cargoes and information to pass through any channels all over the world. Globalisation also became more visible as financial systems all over the world became more connected.

    To continue a smooth operation, businesses worldwide rely heavily on the maritime industry to carry materials across international channels. These multinational companies rely on the industry’s special nature of providing vehicles and services that can reach any point in any country in the whole world (Lerda, 2002, p.57).

    Thedoropopoulos (2006, p.8) surmises that it is this viable character of the maritime industry that ensures that its key role in the world’s economy will only continue to intensify as finances and commerce become even more globalised and companies become even more united. This is because the maritime industry is a continuously expanding industry in the global trade necessitating a wide variety of pertinent manufacturing methods for its services so it can continue its operations.

    Thedoropopoulos (2006, p.9) points out that the maritime industry has eleven key areas and activities that are essential to its operations. These are transportation of goods through shipping, construction of ships, maritime apparatus, overseas activities, routes within a country, searching measures, harbours, nautical services, catching fish, boating, and naval activities. Thedoropopoulos adds that the World Marine Market has categorized secondary areas such as marine explorations, handling of products from the sea, reusable power from the oceans, teaching and instruction related to marine life and activities, studies and expansions, safety measures against insurgency or hijacking acts, tools used for deep explorations, ocean life.

    About 90% of trade worldwide is made possible only through the efforts of the maritime industry (Anderson 2008, p. 12; Väyrynen, 1999, p.55). This number will probably go up as countries worldwide develop even more mutually dependent policies of trade. If schemes such as the unobstructed transfer of information through modern technology are put into place to solve the glitches the industry faces, then the maritime industry may play an even bigger part in the operation of the financial systems in the near future.

    For Chua (2006, p. 29-32), maritime industry is the backbone of the financial system worldwide. It is a clear representation of what a successful international industry is today. It is such a key component of today’s international market that if any insurgent organization manages to suspend any areas of this industry’s operations, the financial system of the whole world will be thrown into chaos. For example, if pirates strike a segment such as leisure travel tours, which carry thousands of people from different countries, or even ordinary harbours, which are business centres will cause many deaths and will have financial consequences.

    Chua (2006, p. 29-32)points out that cargo ships that deliver goods are usually owned by conglomerates, staffed by workers from different countries, transporting merchandise from another country while passing through the seas and channels of still another country, heading for the harbour of a country totally disconnected from all the others. This shows just how global one cargo ship is. What more if one looks at the bigger picture and traces the complicated international system used by the maritime industry.

    Shipping has developed a very strategic place in the world market today. Various companies now have international dealings. Because of this, these companies rely on shipping to maintain their operations and to keep the international partnerships strong. And it is not just companies that rely on shipping. Stopford (1997, p.2) notes that the maritime industry has become a medium for trade between many countries. This has led to an astonishing development of trade and commerce. Shipping today is among the most successful businesses worldwide. He points out that if one examines the financial aspects of the maritime industry, the examination will inevitably lead to an examination of the financial and political systems of the whole world. One needs to recognize that there is an interconnection between events in the international economy and politics sectors and the growth of the maritime industry. Looking at commerce done via the oceans of the world, one can surmise that this industry is at the top level of the financial system of the whole world.

    For example, companies dealing with ships have only one thought when they hear of some even that has international impact, for instance the Chernobyl explosion in Russia or another hike in the prices of petroleum products. The leaders of these companies will immediately gleefully think about how this international event will influence shipping. If one looks at history, one can see that a lot of shipping companies became rich because of some of these international events. Events in politics have especially resulted in bringing in the money to shipping companies. One can deduce from this that there has always been a correlation between the political events in the world and the rise of the maritime industry (Stopford, 1997, p.2).

    According to a report by the International Labour Office or ILO (2001, p.22), shipping is regarded as an international industry because of its especially singular work of transporting goods from one country to the other. Despite this important characteristic, shipping is still plagued by the problems brought about by the internationalization of the financial system worldwide. These problems have led to the many modifications from the 1970s to the 1990s, which have affected and changed shipping as a business worldwide.     A key transformation is the development of an international need for workers employed for maritime jobs. The ILO considers this as a symbol that shipping is truly a pioneer international business.

    The maritime industry is affected by international issues and, in turn, affects a fair number of global issues as well.

    Regarding regulations and issues of safety, Väyrynen (1999, p.55) points out that the United States Law of the Sea was the conference that created the standards and regulations of authority in shipping activities. These standards and regulations allowed liberty for ships to sail through any big oceans and through the waters of all countries involved in the maritime industry. This important conference resulted in unblocking the routes used by maritime transportation. Because of it, ships can now transport cargoes through the seas anywhere in the world.

    Meanwhile, the International Maritime Organisation (IMO) is the governing body that devises regulations on damage to vehicles and goods, issues of pollution. The two key regulations used by the IMO are the International Convention for the Safety of Life at Sea and the International Convention for the Prevention of Pollution from Ships (Väyrynen, 1999, p.55). These regulations, which are implemented worldwide, are needed to control the access to ports anywhere in the world and to standardize the prices for maritime activities so that all shipping companies are guaranteed the same rights.

    Lerda (2002, p.60) agrees that without these universal regulations ventures in the world market would only show and fuel the harmful facets of globalisation.

    Despite all these efforts, Creel (2000, p.13-14) points out that many players in the maritime industry are still worried about the practice of competition and issues of safety. Businesses need to implement efficient international procedures if they want to sustain an advantage in the world market. This is in response to the escalating internationalization in shipping activities worldwide. If businesses do not implement such procedures, then they must content themselves with playing only in small markets. The worst case would be is that businesses which do not implement innovations to meet the changes in the maritime industry will be forced to close their operations. Some countries even want to impose extreme regulations to safeguard and improve the maritime companies based in their own territories. This perhaps is a response to the changing systems used by the maritime industry today. The industry is now moving away from the use of the established method of conferences that would decide on the duties and rates used by players in the maritime industry. The more popular method is to solicit the allegiance of members to the treaties development through dialogues across the trades within the industry. This method entails working on larger issues and volunteerism from the members. This method has its own economic and safety issues, however.

    According to a report by the Organisation for Economic Co-operation and Development (2005, p.51), at present, the economy of the production of ships is reaching astonishing heights. Even countries with developing economies in the construction of ships have grown to be extremely good players in the global scene.

    According to the Equipment International Labour Organization (2000, p.136), Asian countries like Japan and the Republic of Korea have become the primary builders of new ships now sold in the market. Japan is also one of the leading countries buying new ships. Other countries include those from Western Europe and the United States. These countries have the playing power to have ships built according to their country’s specifications. Whether ships will have recyclable materials or safety instructions will depend on these powerful players.

    However, despite this apparent good news, shipbuilding is still facing challenges among which are constant congestion in the world’s waters, assistance from various organizations of authority including governments, and costs of materials worldwide (OECD, 2005, p.51). These foreseeable problems can only be solved through strong collaboration between nations which construct ships. Bodies that design regulations in countries which have developing and developed economies need to look for ways to maintain a level playing field for competing businesses while implementing the essential changes that will respond to the problems stated.

    Another international issue facing the maritime industry is that of environmental protection and sustainable development. Tsinker (2004, p.5-6) points out that globalisation will only lead to the expansion and upgrading of harbours that are existing today and to the creation of even more stations and ports all over the world. The marine industry must pay attention to the programmes that will prevent pollution and damage not only to the marine ecosystem, but to land and seashore ecosystems as well.

    Employment of maritime workers is another issue that has become global in scope. According to the report of the Equipment International Labour Organization (2000, p.136), besides direct hiring, many companies under the maritime industry contract out and make use of outsourcing for their employment needs. For example, in the construction of ships, majority of the mechanism and gears come from companies of different countries but the finishing work is done in another country. This means, from start to finish, the construction of one ship is done by employees from different parts of the globe. Another example would be Polish and Romanian companies constructing apparatus for bridges and then shipping these initial materials out to Hamburg where outsourced employees will put together the final product. Many companies are also taking advantage of the lower labour charges of countries like Japan, Republic of Korea, Taiwan, and China. Compared to these countries, wages of workers from Europe and the United States are high.

    Fisher and Ponniah (2003, p. 73) point out that the maritime industry follows an international regulation on key stipulations for employment. However, considering the harsh and extremely competitive and global nature of the industry, these stipulations are quite moderate and minor.

    Christodoulou-Varotsi and Pentsov (2007, p.10) enumerate the risks that maritime employees face. Some of these are brought about by nature, by technology and by society. The sea as a force of nature brings with it fluctuating and intense temperature and humidity. These may have an unfavourable effect on the health conditions of workers. There are also risks of ships sinking in the middle of voyages due to typhoons and huge waves. The living and working conditions of employees on board ships also affect their health. The number of hours that employees must work, the state of equipment given to them, accommodations, general health conditions—these all have an impact on a worker’s condition. There are also risks brought about by technology. There have been reports of disasters brought about by faulty machines and equipment. Some workers have developed severe and life-threatening diseases because they were exposed to toxins and other caner-inducing substances from faulty machineries. Deaths due to these risks have also been reported.

    This is why Christodoulou-Varotsi and Pentsov (2007, p.10) advocate for the provision of protective equipment for all workers, the establishment of fair regulations regarding working hours and safety of all maritime workers.

    Fisher and Ponniah (2003, p. 73) suggest the development and implementation of a more significant agenda for employment of seafarers. This agenda should involve a more international standard of negotiation for salaries and compensations of workers. Moreover, groups supervising the rights of workers must on an international level must be set up to monitor and offer assistance to all seafarers worldwide.

    Conclusion

    Looking at the history, features, and issues regarding the maritime industry, one can see that it is one of the truly globalised industries today. One can see that the growth of the maritime industry is a consequence of and a precondition for the growth of international trade. The growth of the maritime industry comes from the increasing demand for goods. Meanwhile, the increased demand for goods to be shipped across the world has come about because of the innovations in and services of the maritime industry (Parameswaran, 2004, p. 22-23). This mutually exclusive relation is active and visible across the world. When one studies the companies behind the maritime industry, one must look into small enterprises, but into multinational conglomerates and economies of various countries. This is because this industry provides service to countries of all the continents in the world. Because of this inherent international capacity for service, the maritime industry enjoys a vital role in the operation of the world’s economy and in the relations between countries.

    References

    Anderson, D.A. (2008). Oil Security and the Necessity for Global Cooperation. Small Wars Journal, p.12

    Christodoulou-Varotsi, I. & Pentsov, D.A. (2007). Maritime Work Law Fundamentals: Responsible Shipowners, Reliable Seafarers. Berlin: Springer, p. 10

    Chua, S.P.H. Maritime Security: Possibilities for Terrorism and Challenges for Improvement. Pointer Journal of the Singapore Armed Forces; 32, 2; pp.29-32

    Creel, H.J., Jr. (2000). Maritime Services: Staying Competitive in a Global Market. Economic Perspectives. USA: Diane Publishing; 5, 3; pp. 13-14

    Equipment International Labour Organization (2000). The social and labour impact of globalization in the manufacture of transport equipment: Report for Discussion at the Tripartite Meeting on the Social and Labour Impact of Globalization in the Manufacture.  Geneva: International Labour Organization, p. 136

    Fisher, W.F. & Ponniah, T. (2003). Another World is Possible: Popular Alternatives to Globalization at the World Social Forum. London: Zed Books, p. 73

    Geyer, H. S. (2006). Global Regionalization: Core Peripheral Trends. Massachusetts: Edward Elgar Publishing, p. 4

    International Labour Office (2001). Review of Relevant ILO Maritime Instruments. Geneva: International Labour Organization, p. 22

    Lerda, V.G. (2002). Which “Global Village”?: Societies, Cultures, and Political-Economic Systems in a Euro-Atlantic Perspective. Connecticut: Greenwood Publishing Group, pp.57-60

    Organisation for Economic Co-operation and Development (2005). Trade and Structural Adjustment: Embracing Globalisation. Paris: OECD Publishing, p.51

    Parameswaran, B. (2004). The Liberalization of Maritime Transport Services: With Special Reference to the WTO/GATS Framework. Berlin: Springer, pp. 22-23

    Stopford, M. (1997). Maritime Economics. UK: Routledge, p. 2

    Tsinker, G.P. (2004). Port Engineering: Planning, Construction, Maintenance, and Security. New Jersey: John Wiley and Sons, pp. 5-6

    Väyrynen, R. (1999). Globalization and Global Governance: Medical Ethics in Conflict with Religious Freedom. Maryland: Rowman & Littlefield, p. 55

    Thedoropopoulos, S. (2006). Cluster Formation and the Case of Maritime Cluster. Paper Presented at the International Conference “Shipping in the era of Social Responsibility”. Argostoli, Cephalonia, Greece, 14-16 September 2006, pp. 8-9

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