Economic Impact of Maritime Trade
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Economic Impact of Maritime Trade
Introduction
Maritime transport is a universal mode of transportation utilized for both international and domestic trade. Maritime transport involves the movement of goods and passengers using sea and ocean vessels. Also, maritime transportation is fundamental for the sustainment and support of foreign economic relations; hence it plays a pivotal role in the transportation of goods internationally. The use of maritime transport is founded on its cost-effectiveness in transport large quantities of raw, bulky or fragile products internationally in large masses. Despite the rising challenges associated with its use, maritime trade has proven to be a significant contributor to the growth and development of world economies. Consequently, the use of maritime has experienced a substantial increase in use credited to the mega ports globally as illustrated by the image below.
The statistical illustration above shows the quantity of loaded goods in international maritime trade from 1980 through 2017. In 2013, the global maritime trade volume amounted to around 9.9 billion metric tons of goods loaded.
Similar to other modes of transport, maritime is characterized by specific features. The most significant feature is that maritime involves transportation along the seas or oceans waterways for connecting the world (Bueger 2015, p. 159). Another aspect characterizing maritime transport is that the waterways used to require no infrastructure and acts as a natural path in contrast to modes of transport on land such as railways which have to be artificially made to facilitate transportation. .Lastly, ships are the only vessels capable of transportation sustainable goods to the points of destination.
Importance of Maritime Trade and the Maritime Transportation System
Maritime transportation is the foundation of international trade and world economies. As no single country is self-sufficient, maritime trade ensures that the benefits accrued to trade and commerce are spread evenly through exportation and importation. As Ascencio et al. (2014, p. 446) note that for many countries, maritime transportation is a means of access to essential products such as food materials. In addition to food, goods such as electronics and clothing are conveniently transported via maritime transportation. As such, maritime transportation acts as a supply chain conveyance that facilitates the importation of goods as well as the export of goods for on a sustainable scale for the modern world which would otherwise be impossible in its absence.
Maritime trade and transport have significantly contributed to the growth of cities along the ports. One of the attributes credited to the growth of towns near the ports is the creation of jobs. In doing so, people’s lives are improved through the employment creation for a means of income. Ascencio et al. (2014, p. 447) note by raising the living standards of the coastal population, a country’s economic agenda of reducing the number of people living in poverty is streamlined by association. Job creation through maritime trade and transport has allowed millions of people globally to achieve comfortable living statuses hence enabling the global achievement for the 2030 Agenda for Sustainable Development by reducing the number of people living below their means.
Maritime transport has also been convenient due to its ability to substitute, or in other situations to compliment different modes of freight transport. For instance, Bueger (2015, p. 160), products such as oil can only be transported via trucks, railway or pipelines on land and only via shipping for international trade. Oil is a bulky product that has no alternative for international transportation; hence, maritime transportation compliments land modes of transport. In other instances, maritime is the only means of transport such as in fishing. Fishing is a significant economic activity in some economies such as Japan as it is a means of extracting seafood which is the typical household food in Japan. As such, through maritime transportation, seafood is obtained in bulk for the consumption and exportation purposes hence generating additional foreign income for the country.
Similarly, maritime technological advances in cargo handling and shipboard as well as containerization have the delivery of consignments in raw and semi-raw condition from where they were found or grown to manufacture facilities. Ascencio et al. (2014, p. 445) suggest that rather than palletize grains, minerals, and other commodities, dry bulk cargo ships were designed to deliver closer to the final market. The modern and developed measures have also considerably condensed sizes of crews and long-shore employment requirements, in turn also reducing the per-unit cost of ocean freight carriage. Another significant importance of maritime transport is availing of essential goods cheaply to the markets. Maritime is the most cost-effective mode of transport for en masse transportation of raw materials, mass articles, and commercial goods. In doing so, maritime transport modernizes foreign trade through profit generation from the foreign currencies acquired from exportation and importation.
Challenges Associated with Port Security
Maritime transport utilizes the intermodal container to transport cargo aboard commercial sea vessels, therefore, revolutionizing the movement of freight within the maritime transportation industry. However, the use of containers has predisposed the maritime transportation industry to various security risks (Bueger, 2015, p. 160). Some of the port security challenges posed are terrorism facilitation, cargo theft, and fraud, the smuggling of stowaways and drugs, bribery and extortion. Bueger (2015, p.162) notes that security issues rampancy has evoked action from concerned authorities leading to the establishment of constitutional measures. For instance, in the U.S, the law established the U.S. maritime security system. U.S. maritime security system tasks federal agencies, port authorities, and U.S vessels to facilitate vulnerability assessment test for the development of security and contingency measures that will help in the identification and prevention of impending threats.
The Impact of Economic Dependency on Maritime Transportation
The economic dependency on maritime transport directly affects the regional, local, and national economies. For instance, coastal cities are heavily dependent on the income generated from the ports in various ways (Ascencio et al., 2014, p. 445) observe that. The primary source of employment in coastal regions is from the ports. Ascencio et al. (2014, p. 448) also adds that an instance where trade wars can escalate between nations, the coastal cities will experience a significant reduction in the flow of income. One of the main consequences is the reduction in purchasing power due to unemployment. Consequently, unemployment will then cause stagnation or a more probable recession in the economic development of the region. Social vices such as drug use, theft and robbery, and prostitution will then experience significant rises. As such, economic dependency on maritime transport and trade can be detrimental.
Economic development is dependent on infrastructural growth, which is mainly funded by the taxes paid by corporates and citizens. Monios and Wilmsmeier (2015, p. 126) observe that when the trade wars between nations occur thus reducing the exports and imports and consequently loss of jobs, the economic development is frustrated through the reduction of taxes collected from activities generated and supported by maritime trade and transport. For that reason, as Monios and Wilmsmeier (2015, p.130) note, the government experiences budget deficits hence an overall national stagnation of economic growth and development. The price of goods and services then increase to facilitate growth in the tax collected. Maritime trade and transportation dependency can also cause the price of products to rise through the withholding or delay of raw material. When raw materials are delayed, product prices increase due to the market shortage.
References
Ascencio, L. M., González-Ramírez, R. G., Bearzotti, L. A., Smith, N. R., & Camacho-Vallejo, J. F. (2014). A collaborative supply chain management system for a maritime port logistics chain. *Journal of applied research and technology*, *12*(3), 444-458. www.scielo.org.mx/pdf/jart/v12n3/v12n3a10.pdf
Bueger, C. (2015). What is maritime security?. *Marine Policy*, *53*, 159-164. www.sciencedirect.com/science/article/pii/S0308597X14003327 .
Monios, J., & Wilmsmeier, G. (2015). Identifying material, geographical and institutional mobilities in the global maritime trade system. *Cargomobilities: Moving Materials in a Global Age. Abingdon: Routledge*, 125-148. www.researchgate.net/profile/Jason_Monios/publication/264540431_Identifying_material_geographical_and_institutional_mobilities_in_the_global_maritime_trade_system/links/54cf9d990cf24601c094abec/Ide…
