Shipping economics and market dynamics

Shipping Economics definition of the dry bulk carrier should start from the particular elements forming the concept, dry and bulk. Bulk cargo is "a shipment such as oil, grain, or one which is not packaged, bundled, bottled, or otherwise packed and is loaded without count" or, simply put, "commodities carried in bulk." In this sense, there are two types of bulk carriers, dry bulk carriers and liquid bulk carriers. The former refer to such goods as grain, ore, minerals, etc., practically anything that is not liquid. The liquid bulk carriers are generally referred to as tankers and are used for crude oil.

In terms of general requirements that ports have in order to be functional and, even more, competitive, there are several things worth mentioning. First of all, we need to look at any port as a business, a business where availability, higher technology, the legislation of the country where the port is located, etc. all play the same role these factors of the external environment play in any other company operating in the international economy. The growth of the seaborne trade has provided numerous opportunities for ports, but the competition has also become stronger. This is manifested in "lower tariffs and lower ports time" competition. Port competition is also a serious cause for the risk of overcapacity.

To ensure its effectiveness, any port is required to have and operate some basic facilities. First of all, public safety facilities are most necessary if we consider the large variety of goods that generally enter any port. Here I am referring not only to law-enforcement facilities, but especially to emergency response, fire and rescue facilities (we need to be aware of some of the tragic disasters that have happened in the case of some liquid bulk carriers).

Second of all, sewerage facilities, referring to the "control, prevent, or contain a threat to public health or the environment." In the case of dry bulk carriers, given the high degree of risk provided by possible environmental accidents (although the public is more familiar with pollution caused by liquid bulk carriers, the dry bulk carriers do almost the same amount of damage), facilities meant for environmental prevention. Environmental themes range from climate change due to carbon dioxide emissions to waste management and, of course, the environmental accidents I have previously mentioned. Any respectable port will have additional facilities for environmental protection when handling dry bulk carriers.

Third of all, we should mention the general operational facilities that a port needs to have and that need to be adapted in the case of dry bulk carriers due to the general characteristics of this type of transport. I will give several examples in this sense. For example, in the case of grain, the port needs to have warehouses and other storage facilities where the goods can be deposited in dry conditions, with no humidity and optimal temperature.

Contrary to the bulk cargo, goods that are transported with a container ship are stored and bundled in containers, loaded and transported thereafter on the ship. Given the fact that this type of transport is somewhat different from the one previously described, the rules governing the two, as well as the facilities requirements for ports and harbors are also different.

The world container fleet grew by an average of 10.6% in the period 2000-2004, with the deadweight tonnage rising by an average of 9.3%. This meant that at 1st January 2004, the fully cellular container fleet numbered some 3,036 ships out of the total cargo fleet of 16,487 ships. The chart below shows the evolution of the world container fleet, in terms of number and tonnage, taking as reference (1996 = 100) the year 1996. As we can see, the increase is spectacular, ranging from 3 times to almost 8 times.

In the container shipping activity, land plays an important part, as related to the port facilities and requirements we have been discussing. This is mainly in terms of storage. For example, many theoreticians have estimated that "the portion of inland costs in the total costs of container shipping would range from 40 per cent to 80 per cent," with other parts (Hastings, 1997) pointing out towards 42 per cent of overall costs. As other have pointed out, ports need to be prepared to handle the carrier industry special characteristics, in terms of "frequency, punctuality, reliability and geographical coverage" (Slack, 1996).

Further more, ports need to be able to keep down the landslide costs, in close connection with some of the things I have previously mentioned when referring to dry bulk cargo and transportation. The competition, brought about by the growing demand and growing numbers of competitors, is more and more significant and ports need to be able to offer the best services at the lowest prices. This means operability, flexibility and productivity at low landslide costs.

The container shipping industry, due to the cost challenge and necessity that every carrier is facing, is currently facing a concentration phase, where many of the international carrier choose vertical integration solutions in order to cut down on costs and gain a cost advantage. This means that many are becoming interested in some of the terminals on the routes that they operate, this trend being quite common in Europe. Below we have a table representing this growing trend. As we can see, MAERSK has significantly invested in terminals in Rotterdam (largest port in Europe), with participations in Bremen and Gioia Tauro.