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Challenges Faced by Marine Industry

Transportation keeps the global economy moving. Sea connect every continent in the world. The world that we know would not function without ships carrying commodities and goods. Shipping is considered as a backbone of globalization and international trade. Around 90% of the world trade is carried through ships. The shipping sector plays an important role in the national economy, but it remains relatively poor in condition.

Today, the shipping industry is still facing a hard period due to macro economic conditions. Most of the shipping entities are struggling to survive these difficult times. There is a list of challenges like political uncertainties, low cargo rates, overcapacity on container ships, piracy, demand for reducing emissions and exploring new cost saving routes through the Arctic seas that is plaguing the shipping industry. There are some other challenges that shipping industries are facing today :

1. Low demand and oversupply :-

Oversupply has been a major worry in the shipping industry. Demand from China, the world’s largest importer of bulk commodities is slowing down, more quickly than expected. And pouring to the existing woes is the delivery of ships whose orders were placed before the financial crisis. Vessel capacity growth continues to outdo demand that causes low freight rates and affects the market. On the other hand, vessel valuations have dropped and prices for scrap metal remain very low. As a result, many vessel owners have preferred to hold on to their ships in wait for a better future.

2. Security Threat :-

Maritime piracy and maritime terrorism are known threats to global shipping. Piracy, Terrorism and Illicit trafficking are problems that afflict all of us associated with maritime trade, and argue for a more comprehensive solution.

Not only armed robbery, the latest security threat to the maritime industry comes from hackers. Automated and technologically advanced ships have become vulnerable to cyber attacks with hackers being successful in accessing the GPS, AIS – marine Automatic Identification System, and ECDIS – Electronic Chart Display and Information System (a system for viewing digital nautical charts).

3. SOLAS complaince :-

The new regulation which requires vessel operators to load only those packed containers with Verified Gross Mass (VGM) declared by the shipper, has added to the growing concerns of the shipping industry. There are still operational challenges to deal with and the full impact of the regulation is yet to be known.

4. Environmental Regulations:-

The shipping industry is currently in state of unease as there are important enviornmental regulations that will soon come into force. These regulation depends heavily on new technologies that are either not completely reliable, or that have not yet been universally approved despite the approaching deadline. There is a growing concern over the impact of global shipping activities on the environment – greenhouse effect and danger of aquatic life.

5. Labour disputes and job cuts :-

Who hasn’t forgotten the month long West Coast dockworkers slowdown that brought shipping business to a standstill in February 2015? Or, another incident in Dec 2015 when the Maritime Union of Australia (MUA) held the ship of global mining giant Alcoa hostage for two months, disrupting the operations of the port of Portland? Time and again, labour disputes and strikes have disrupted the shipping industry; and created huge gaps in profitability and product rollouts. The shipping rates increase and the supply chain becomes more overloaded.

Reference From : pridel.com

Three hazards of shipping by sea and how to avoid them :

i. Weather Hazards :

Some of the most dangerous weather-related threats to shipping by sea are hurricanes, squalls, typhoons and tropical cyclones. All of these types of storms can cause serious harm to, or even completely sink, cargo vessels. While hurricanes, typhoons, and tropical cyclones tend to occur in different parts of the world, they all feature violent wind, torrential rain and surging waves. Hurricane winds can be so powerful that they reach 160 miles per hour. It’s not exactly the kind of situation you want to be transporting cargo in! Even famous ships are not immune to the incredible power of hurricanes. In 2012, the HMS Bounty, a ship used in movies such as Pirates of the Caribbean, was sunk in Hurricane Sandy off the coast of North Carolina. Sadly, two crew members died during this incident.

How to avoid :

– Use the strongest and most seaworthy ships possible. Modern container ships are designed to withstand most storms. In fact, materials engineers now use computers to model the stresses on ship hulls. Once they get the information, they create steel able to withstand the measured stresses. This technique of generating extremely strong reinforced steel, along with using older engineering strategies, such as watertight doors, help to make modern ships very safe. However, they are not completely invulnerable to storms. Modern day container ships are also very large, which can help them ride out the intense waves during storms. In fact, the world’s largest container ship, the CSCL Globe, is so large it can carry over 19,000 shipping containers ! Size can definitely be a factor when it comes to safety.

ii. Geographic Hazards :

Geographic hazards include anything on the seascape that can harm vessels, aside from the weather. Examples include coral reefs, icebergs, sandbars and other spots that are risky to navigate. Most people have heard the famous story of the Titanic, the gigantic passenger ship that sank in the North Atlantic after striking an iceberg.

While major advances have been made since this incident happened in 1912, such geographic dangers are still a threat. For example, on January, 13, 2012, the Italian cruise ship Costa Concordia struck a sandbar off the coast of Tuscany, Italy and keeled over on its side. Part of the ship was submerged. Several people died, many were injured and millions of dollars of damages to the company were accrued. In addition to coral reefs, sandbars, and icebergs, canals such as the Suez and Panama can be a problem.

How to avoid :

Plan and navigate with extreme caution. Most of the time, if something goes wrong in terms of geographic hazards, it is due to a lack of planning or flawed navigating. For example, the Panama Canal can only support container ships with 4,600 containers or less. So if your ship contains 4,800 containers, you’re going to need to find an alternate route. Modern navigational technology such as GPS can also be used to steer ships clear of known sandbars and coral reefs. Furthermore, it’s of the highest importance that ships’ crews and officers are properly trained, and perform professionally.

iii. Technological Hazards :

Technological hazards are anything that can go wrong with the ships, or their equipment. This can mean structural problems, engine issues, navigational equipment failures, etc. In 2009, an entire crew of 28 people had to be rescued by the U.S. Coast Guard from the container ship APJ Suryavir, when its engine failed in poor weather south of Alaska.

If the Coast Guard didn’t intervene, it could have been disastrous.
Another important technological hazard is the loss of shipping containers during voyages. Such incidents can create significant financial losses, as well as potentially damage the ship, or other ships that pass by later on. The World Shipping Council estimates that 675 shipping containers are lost at sea every year. That’s a lot of merchandise!

How to avoid :

Thorough inspection of equipment before ships set sail is key. In addition to complying with federal regulations and inspections for safety, shipping companies can also use the services of companies that specialize in inspecting, testing and certifying cargo ships-such as Intertek and Bureau Veritas-to make sure all is well before they set sail. Keep equipment up-to-date. Just as it’s important to inspect ships before they depart, it’s also critical to keep all equipment up-to-date.

Reference From :tradeready.ca

Challenges facing from Economic Point of View :

The global maritime industry has presently been reeling under the impact of the ongoing economic crisis. It is expected to experience a few years of decline due to the overcapacity of ships, and a substantial reduction of shipment, resulting in a drop in tariffs. Overall, the shipping industry is witnessing a new trend of consolidation. Smaller companies, which are asset heavy, are merging with larger organizations in order to survive these difficult times. Observations indicate that the prospect of considerable improvements in trade volumes before the end of 2010 is unlikely.

Challenges facing from Development of Maritime Regulations :-

Most companies in this domain are struggling with the problem of positive cash flow. The major challenges facing the shipping industry not only stem from the economic standpoint, but also arise from strict enforcement of emission regulations and increasing safety and security issues. The Rotterdam rules are expected to replace the old Hague, Hague-Visby, and Hamburg rules. These regulations will provide fresh and fair legal rights to shippers and other cargo-interested parties. Shipping lines and terminal operators will be exposed to new legal claims system for damages, stolen goods, and shipment delays. The criminalization of seafarers is a prominent issue clouding the industry landscape. Seafarers are subjected to severe penalties and punitive charges for acts that have nothing to do with criminal negligence.

How Maritime Industry Cope with those Challenges :

Under the current circumstances, collaboration shows the way forward. Additionally, companies must look internally to eliminate non-value adding activities. Removing “non-value-added” waste or “Muda” from their value chains and focusing on customer satisfaction, which assumes greater importance during these testing times, has the potential to help companies to stay out of the red. Port authorities and operators must optimize utilization of existing capacities rather than building new ones and dealing with excessive idle capacities. Ramping up infrastructure capabilities to cater to regional needs will eventually lead to profitable operations.

Reference From : ukessays.com

Knowledge sharing is also important to the shipping industry, experts said.

– According to Claus Hemmingsen, chief executive officer of Maersk Drilling and chairman of Danish Shipowners’ Association, the need of more knowledge sharing is necessary, even in a sea transport business with fierce competition.

– “There are a lot of common interests in the shipping business. We need to share more and start to think shipping on planet Earth more as a collective,” Hemmingsen said.“There is a gap between regulators and shipping industry. We need to improve that,” he added.

Reference From : hellenicshippingnews.com

NOTE : This article is mostly compile from the information collected from various sources.

Reference :

https://www.pridel.com/blog/challenges-troubling-shipping-industry/

https://www.ukessays.com/essays/economics/challenges-faced-by-the-shipping-industry-economics-essay.php

http://www.pacmar.com/story/2013/10/01/features/maritime-security-current-threats-and-implications/184.html

http://www.hellenicshippingnews.com/global-shipping-industry-faces-challenges-experts/

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