Maritime Trade and Transport - HWWI

3.3. Determinants of maritime trade
A close relationship exists between the development of maritime transport and world trade.
Technological changes in sea shipping have led to considerable increases in capacities in sea
transport and have thus vigorously spurred the expansion of world trade. Especially significant
here are the introduction of container shipping, the use of new handling and warehousing
technologies, and the application of modern information and communication technologies.
Conversely, the expansion of international trade has resulted in an increase in demand
for transport services, whereby a large share of this demand falls to sea shipping. The development
of international trade thus has a considerable influence on seaborne trade. Unclear,
however, is to what extent seaborne shipping will profit from this in the future.
How the transport volume is shared by the various carriers depends on numerous factors,
whereby competition between the various carriers can only exist if this is permitted by
geographical factors. If one considers a country like Japan, for example, which is completely
surrounded by water, for all intents and purposes the only types of transport available for
foreign trade are by sea and air. The competition between these two carriers is not especially
intense, due to the fact that their main emphases are so disparate. Sea shipping has clear ad -
vantages over air transport if large amounts of goods are to be transported at relatively low
cost. Air transport, on the other hand, is characterized by its ability to deliver the merchandise
quickly.
This means that maritime transport is primarily used to ship bulk goods when time is not
of the essence, while air transport is employed primarily for lightweight goods for which time
is an important factor. This does not mean, however, that there is absolutely no competition
between these two carriers. In a comprehensive empirical analysis, Hummels (1999) comes to
the conclusion that air transport costs declined substantially in the second half of the last century.
On the other hand, technical progress in sea shipping led to a reduction in the time
required for the transport rather than to a decrease in freight rates. As an explanation, Hum -
mels suggests the fact that air transport has been able to expand more than cargo shipping.
Just the same, no major shifts in the market shares are to be expected in the future. This ap -
plies to bulk goods, in any case, but also to a major portion of other goods, in terms of transport
volume or transport capacity.
Since approximately 70% of the earth’s surface is covered with water, and since maritime
shipping offers considerable cost advantages in many sectors, it is not surprising that shipment
by sea generally enjoys an outstanding position in interregional trade. In intercontinental
trade, especially, opportunities for using land-based carriers are very limited. Competition
exists – if at all – among carriers that service the hinterland areas. In contrast, the relationship
that exists between ocean shipping and carriers responsible for transport connections in
32 Berenberg Bank · HWWI: Strategy 2030 · No. 4