Maritime Policy – Greenwich Maritime Centre

An exhilarating expansion: the world merchant ship fleet’s heady growth over the past decade

Richard Scott

Visiting Lecturer, Greenwich Maritime Institute and MD, Bulk Shipping Analysis

Vigorous enlargement has been one of the most prominent features of the world fleet of merchant (commercial) ships in recent years. During the past decade, from 2003 to 2013, the entire fleet almost doubled in size. It was a remarkable achievement involving vast capital investment. Shipowners in many countries participated, although just a small number of shipowning nations remained at the top and together continued to be the dominant players.

Bulk carriers, tankers and container ships comprise the majority of the global merchant ship fleet’s cargo capacity. Much of the growth has been concentrated in the three sectors. Other significant vessel types are gas carriers, multi-purpose and general cargo ships, ro-ro (roll-on/roll-off) vessels, car carriers, refrigerated vessels, cruise ships and offshore service vessels: some of these categories also have seen notable increases.

Expansion in the fleet as a whole has decelerated in the past few years. But it remains brisk and there are clear signs of a continuing upwards trend, although prospects for different ship types vary widely. What are the salient points and why did such a huge enlargement happen in a relatively short period? This article examines the changes and looks at key influences and indications of future developments.

Flamboyant figures

At any point in time, focusing on what happened in the ten years just completed is often a statistical convenience. It is a period of sufficient length to enable trends and patterns to be identified which would not necessarily be apparent in a shorter period. The 2003 to 2013 decade proved especially notable, however. Precisely within this timescale, annual growth in the world fleet of ships accelerated greatly to a rapid average rate, compared with many preceding years when relatively slow increases were recorded.

By the end of last year, the capacity of the world merchant ship fleet, measured in deadweight tonnes, had reached 1,690 million dwt, according to statistics compiled by Clarksons Research. Ten years earlier, at the end of 2003, the total was 873m dwt. The difference between the two figures, 817m dwt, represented a 94 percent increase, resulting from average annual 6.8 percent rises. For comparison, in the four immediately preceding years, fleet increases averaged 2.6 percent annually, and for three years before then the average was 1.3 percent.

Looking at individual fleet sectors classified by ship type, it is clear that growth rates varied quite widely, reflecting differing circumstances (especially trade trends). Among the three largest sectors, comprising at the end of last year well over four-fifths of the world fleet’s entire deadweight capacity, bulk carrier and container ship fleet growth was the fastest. Over the past decade average annual expansion in both categories was about 9 percent. For tankers, a much less rapid but still brisk rate of just over 5 percent was seen. Within the group of other ship types, a noteworthy performance was achieved by the LNG (liquefied natural gas) carrier fleet, averaging 12 percent annual rises.

What were the main influences? Annual capacity changes, upwards or downwards, are mainly caused by the balance between two elements. Firstly, the volume of new ship capacity being introduced, known as newbuilding deliveries. Secondly, the volume of scrapping (recycling) of old or obsolete, inefficient vessels. Ship losses resulting from accidents are a very minor influence. Another element, which has been prominent in some past years, is conversions from one ship type to another, such as tankers converted to bulk carriers.

Within the entire world merchant fleet of all ship types, newbuilding deliveries from shipbuilding yards started to gain momentum in 2003, when 55m dwt was recorded, compared with 46-51m dwt in each of the previous three years. There then followed a remarkably strong acceleration, peaking eight years later in 2011 when 167m dwt was seen, based on Clarksons data. It was a lagged response to the massive ordering which had occurred earlier, with new ships being delivered several years after orders had been placed. Subsequently an abrupt precipitous fall occurred, to 109m dwt in 2013.

Scrapping began to decline in 2003, when 28m dwt of all types of ship was recorded, slightly below each of the two preceding years. In 2005 to 2007 it was very low, at 6-7m dwt annually. Then there was a rapid acceleration to 34m dwt in 2009 and a peak 59m dwt in 2012. This pattern demonstrated again how quickly, sometimes immediately, demolition sales respond to changing shipping market conditions and perceptions (latterly, a sharp deterioration). The scrapping total last year fell back to 48m dwt.

Looking at world fleet composition by shipowning nationality, it is evident that throughout the 2003 to 2013 period, four shipowning nations were dominant: Greece, Japan, China and Germany. Together they consistently comprised almost one-half of the world total, based on UNCTAD statistics. At the decade’s beginning, fleets owned by investors operating in these countries (identified according to the location of the true controlling interest, where the parent company is situated) comprised 46-47 percent of global fleet deadweight tonnage. A few years later the four countries’ proportion rose to 49-50 percent, where it has been maintained.

Although the aggregate proportion changed only slightly over this ten-year period, there were changes in individual countries’ world fleet shares. Top contributor Greece’s share declined after 2003, from 20 percent down to the current 15 percent. Japan’s second position rose by a couple of percentage points to peak at 16 percent, from where it has fallen back to about 14 percent in the past two years. China’s share rose solidly, doubling from 6 percent in 2003 to 12 percent in 2013, rapidly overtaking Germany in the past two years to become the third largest shipowning country.

Perplexing productivity

Ships’ tonnage statistics, whatever measurement is chosen, do not provide an accurate picture of the cargo-carrying work or transportation service performed, however. What is revealed by tonnage statistics is only how much weight or volume can be lifted by ships at a particular point in time, a snapshot view. Actual cargo-carrying work done over a period depends upon ships’ productivity: how efficiently they are operated. That requires much more complicated calculations and there are no comprehensive statistics available for the global fleet as whole.

The amount of cargo carried by an individual ship or fleet of ships within any period, such as twelve months, reflects numerous factors. These factors vary greatly over time and among different trades. Periods when the ship is moving ‘in ballast’ (empty) between loaded voyages, a typical feature of employment in the oil or dry bulk trades, vary substantially. Loaded and ballast voyage duration reflects a ship’s average speed, which is influenced by market conditions and can be modified by the operator. Slow-steaming at below ‘normal’ speed drastically reduces a vessel’s carrying capacity in a specific time period. Delays, often caused by congestion, and idle waiting time in ports or at canals also affects voyage duration. Some cargoes do not fill the entire ship (part-loading). Also, ships periodically are unavailable because of maintenance and dry-docking.

All these well-known aspects influence how productively a ship is employed. Only very rough calculations can be made, relating seaborne trade volumes within each sector to relevant ship deadweight capacity, deriving a ratio: cargo tonnes per deadweight tonne. But this ratio is not always a reliable guide. One main reason is that it is sometimes impossible to identify accurately from available figures which ship types are carrying the cargoes. For instance, large quantities of many minor dry bulk shipments may not be carried by bulk carriers. Consequently, when transport capacity statistics are required, ships’ deadweight (or another tonnage measurement) is usually used, despite imperfections as a measure of cargo carrying capability.

Inspired investment?

Capital investment in new ships is an indicator of fleet growth potential. During the past five years, 2009 to 2013, global investment in newbuilding vessels (based on Clarksons Research data) is estimated at $475 billion. Last year’s total was the highest annual amount, within the period, at $127bn. For individual shipowning countries, this indicator of capacity being added is only partial, because second-hand acquisitions, often a sizeable fleet development component, are not included.

Among the largest shipowning countries already identified, owners based in China spent the biggest sum on new ships in the five-year period, at about $53bn, although owners in Greece were almost at that level, with just under $52bn. Japan’s total was nearly $33bn, while Germany’s figure was much lower at about $14bn.

These enormous investment commitments are reflected in orderbook volumes. Ship orders of all types at shipbuilding yards around the world, measured at year-end, reached a peak at the end of 2008 at 619m dwt, which was more than 400 percent higher when compared with the volume on order six years earlier. Typically, the largest part of an orderbook is scheduled for completion within the following twenty-four months, but orders often stretch out over three or four years ahead. A significant comparison also, emphasising the vast extent of the very high end-2008 peak total, is that it was the equivalent of 51 percent of the existing world fleet’s size at that time.

Five years later, at the end of 2013, the world orderbook had shrunk by almost half to 318m dwt, representing a comparatively low 19% of the now much larger existing fleet. Over the period of five years there had been additional ordering, but newbuilding deliveries from the greater earlier orderbook had outpaced contracts added, resulting in orderbook shrinking. Contracting in 2009 to 2013 had added 537m dwt, while newbuilding deliveries totalled 705m dwt. Also contributing to the orderbook reduction were many cancellations and postponements.

Full speed ahead, or slow-steaming?

Some spectacular new ships have joined the fleet in the past few years. One prominent example is the ‘Triple-E’ series of container ships being introduced by Danish company Maersk, each capable of carrying 18,270 TEU (twenty-foot equivalent unit, the standard capacity measurement used in the sector). These giants, 20 of which have been ordered, are the largest container ships constructed so far, more than twice the size of the biggest container ships existing only a few years ago. Another example is the vast 35-ship fleet of 400,000 deadweight tonnes ‘Valemax’ ore carriers which Brazilian mining company Vale has almost completed introducing, including some chartered long-term from other shipowners. These goliath vessels carry more than double the cargo of a typical large 180,000 dwt capesize bulk carrier commonly used in iron ore trades.

The Maersk and Vale ships, and many others, have been designed for use in specific trades where huge volumes of cargo moving, and extensive contractual commitments, probably guarantee more or less full employment over their lifetimes. By contrast, a great number of ships, especially those built for the bulk trades, do not have long-term employment arranged, and their profitability remains heavily dependent upon evolving shipping (freight) market conditions. What are their prospects?

To begin answering this question, a brief look at some fundamental global shipping market features is needed. It is evident that shipping markets are cyclical, reflecting a continuous adjustment process, which aims to balance demand for seaborne transportation services with the supply of services. One key aspect is how participants attempt to anticipate events. Dynamic players try keeping one step ahead, enabling maximum benefits to be derived from any changes in market circumstances, upwards, downwards or sideways. Considerable risk-taking is often involved, based in many cases upon deep and detailed analysis and sound assessments of the interaction of market influences or, in other cases, based upon sheer speculation.

Reflecting shipping market characteristics, particularly in the bulk sectors, decisions on massive capital investments can be made and implemented relatively quickly. Compared with major capital expenditure in other industries, shipping investment often does not entail numerous years of planning and obtaining necessary official approvals. In the bulk trades investment can be a virtually instantaneous activity. That perception of the decision-making process may not be entirely accurate, however, because quick decisions are often based upon lengthy continuous assessments of prospects.

How these characteristics profoundly affect events has been illustrated dramatically in the past few years. In 2009, immediately after global shipping markets plummeted, ordering of new ships also fell steeply to about one-fifth of the volume (in deadweight tonnage) seen at the peak two years earlier when markets were very strong. Then, in the next year, 2010, despite an already vast orderbook resulting from the long previous freight market boom, many shipowners sensed market recovery. Newbuilding orders in that year bounced back rapidly, increasing by almost three-fold. Several years later, in 2013, another huge ordering surge was unleashed when many owners had renewed optimism that the long-awaited market recovery was approaching. The 2010 ordering surge is already having a large impact on global fleet growth, with resulting additional excess capacity delaying the rebalancing of supply with demand.

Currently, over-capacity is still a problem in the three main sectors – bulk carriers, tankers and container ships – to varying degrees. It seems entirely possible that this feature could persist for some time ahead. Continuing a trend seen since 2008, the gap between demand for ships, and the supply of ships, is still wide, leading to mainly subdued markets with low freight rates. Global seaborne trade’s overall growth and demand for shipping services has largely recovered from the setback following the 2008 global financial crisis and its aftermath, an exceedingly severe world recession. Trade has been increasing at a robust pace. But the world fleet of ships and transportation capacity provided (mostly) has been expanding too quickly.

Maritime piracy: Why definitions matter

Lisa Otto

Industry stakeholders and government officials from various countries met in London on 23 and 24 September to discuss maritime piracy in in West Africa under an inative organised by the America-based Oceans Beyond Piracy. With piratical act in the Gulf of Guinea rendering these waters some of the most dangerous in the world, threatening economic and security imperatives in the region of geostratefic importance; this issue was the focus of the discussion.

Following the meetings, in a conversation with one government official in attendance, the question of defining piracy was raised and the wide range of definitions varying in scope were highlighted. It was, however, decided that these interpretations had sufficient commonality for any fine -tuning to be set aside.

This, in my opinion, is an oversight and one that challenges how the problem may be approached. To provide background here, it is worth noting how piracy is defined, and why events in West Africa occur on the periphery of this definition.

International law under Article 101 of the United Nations Law of the Sea of 1982 holds that piracy is any violence, detention or depredation that take place on the high seas, is perpetrated for private gain, and gain, and occurs between at least two vessels. Much of this definition is based on law used to combat piracy during the so -called golden age in the 17th and 18th centuries, as well as an interpretation emanating for the Harvard Draft, compiled by academics in 1932.

In West Africa acts of piracy predominately take place in territorial waters, and have been perpetrated for motives that enmesh private gain, through organised criminal activity, with political grounds and forms of protest. On this basis, and unless expressly defined as piracy under the domestic law of the country in whose waters these acts take place, the internationally accepted definition can really not be applied here. In short, the use of the word piracy to describe these acts is mostly inaccurate and constitutes a misnomer. Nonetheless, scholars, government institutions, oil majors and shipping companies tend to refer to acts of robbery- at – sea and associated crimes as piracy, often for ease of reference.

While this approach make the phenomenon perhaps easier to categorize, what it fails to acknowledge is that the acts in West African waters present distinct model of piracy, which, although having similarities to other manifestations of the phenomenon, presents itself in a unique way. Of course, the word that we used to describe things are of utmost importance because they inform the way in which we understand them, and also often attach automatic assumptions and expectations. The key to being able to address piracy successfully is then in understanding differences within the phenomenon and appreciating the idiosyncrasies at play in various maritime domains.

Questions of piracy are further complicated by a dearth of domestic legislation in affected West African countries, which stems from sea-blindness- the failure to appreciate the sea as a political and economic domain that requires securitising. Not only does a legal framework often not exist under which prosecutions can take place, the lack of such framework underscore a shortfall in understanding amongst the various officials whose job it now becomes to tackle maritime insecurity in the Gulf of Guinea. Moreover, the international definition is this also inadequate to serve as guidance for these countries in building their own understanding and addressing piratical acts in their territorial waters.

As this is a problem that is affecting numerous countries within the Gulf in Guinea sub- region (although mainly emanating from Nigeria), states are also likely to take different routes to solving this definitional problem when attempting to construct framework for countering piracy . While there is a regional appetite for cooperation amongst states, this may in itself present a stumbling block in what routes regional platforms may have for their collective security.

There is an impression that due to the difficult nature of the task of fine- tuning definitions to be more inclusive of various manifestations of piracy, alongside the struggle in achieving consensus, it is considered too onerous a task, and one for which attendees at these September meetings simply did not have the enthusiasm.

The question of definition may seem a minor element of the issue at hand and consideration of being clearer on the words we use may be considered trivial, but is it important that there at least be some attempt at getting these basics right – once an understanding on what the problem, and could present an opportunity for streamlining of definition and method, bolstering a coppertative approach, which will go a long way towards achieving a shared vision on immediate and long- term actions to be taken.

Nigeria and Piracy: the Evolution of a Complex Problem; A seminar by Lisa Otto

Hosted by Lisa Otto

Biography

Lisa Otto holds a MA in International Peace and Security from King’s College London’s War Studies Department, which she achieved with Distinction, as well as BA and BA Honours degrees from the University of Johannesburg. She is now pursuing doctoral studies in Politics under the auspices of the SARChI Chair in African Diplomacy. and is currently conducting visiting research at the GMI. Her doctoral study investigates the evolution of maritime piracy in Nigeria.

Lisa’s research interests include non-traditional threats to security, particularly in Africa, as well as African foreign policy and engagement at the regional and international levels. Before returning to UJ to begin her doctorate, Lisa worked with the Institute for Security Studies and the South African Institute of International Affairs. She has also worked on projects with Transparency International, the African Union, Corruption Watch, and the European Commission, and has conducted field research in Finland, South Africa, Kenya, Mozambique and Ethiopia.

Topic

Nigeria and Piracy: the Evolution of a Complex Problem

Abstract:

While piracy is certainly not a new predicament off West Africa’s coast, it is one that has certainly become more punctuated in recent years, particularly off the shores of Nigeria. Piracy there challenges our traditional understanding of the crime, taking on a more domestic nature, and one that tends to centre on the region’s thriving oil industry. It is with the legacy of this industry too that it finds its origins, which, enmeshed with defining features of the Nigerian state (corruption, neo-patrimonialism, poverty, and criminality), has come to pose a significant threat to economic and security imperatives in Nigeria and the sub-region. Actors tasked with tackling the phenomenon have been implicated in the crime itself, rendering it an exceedingly complex problem to solve. This presentation will unpack the nature of piracy in Nigeria (and by extension West Africa), offering insight into underlying causal factors of the crime, how it plays out on these troubled waters, and what efforts are being taken to bring it to an end.

For more information on getting to the venue click here

The twenty-second New Researchers in Maritime History Conference will be hosted by the University
of Greenwich in the historic Old Royal Naval College. The conference provides a unique opportunity
for emerging scholars to present their work to a supportive audience in one of the world’s most
iconic maritime settings.

Applications to present will be accepted from both research degree students and by independent
scholars. The organisers welcome contributions that address all aspects of maritime history.

Paper Proposals

Those wishing to offer a paper should please complete the from http://tinyurl.com/qglnfg5. The deadline is 12th January 2015.

Delegate Registration

Anyone interested in attending the conference without presenting a paper is warmly invited to register via our booking site . http://newresearchersmaritimehistory2015.eventbrite.co.uk

Registration Information

The registration fee includes a welcome reception including keynote address on the Friday evening;
lunch and refreshments throughout the day on the Saturday plus conference materials.

£35 standard fee; £30 student fee; presenters attend for free.

Contact the conference secretariat at: +44 (0)20 8331 7612 or maritimehistory@gre.ac.uk

World maritime trade’s powerful upswing in the new millennium (mainly thanks to China)

by Richard Scott,

Visiting Lecturer, Greenwich Maritime Institute and MD, Bulk Shipping Analysis

It could be called ‘the China decade’. World seaborne trade maintained a four percent average annual rate of growth during the past ten years, slightly better than the previous ten-year average. This achievement was especially notable in the light of the global economy’s evolution, featuring a wrenching severe recession. But trade growth at that rate would have been impossible without China’s super-size contribution.

During the past decade, from 2003 to 2013, in numerous highly visible ways, global maritime activities which already had been penetrated were then dominated by China’s presence. This pattern is still ongoing, and signs suggest that it will continue for many years ahead. One of the most important aspects of the trend is the phenomenal expansion of China’s seaborne trade, especially imports.

Other countries contributed rising import demand to world trade as well, but none as spectacularly as China. Until 2008, the global economy as a whole was advancing at a robust pace, providing a broadly favourable backdrop for seaborne imports into most areas. After the 2009 recession, economic activity picked up again, although beyond the initial rebound many countries struggled to make further progress against prevailing headwinds. These were difficult circumstances for trade to resume brisk and sustained expansion, yet that is what happened: world seaborne trade as a whole averaged over four percent growth in 2011 to 2013, returning to its ‘normal’ trajectory.

Goliath task for the shipping industry

Commercial shipping’s existence is mainly related to transporting cargoes. Rapid expansion of trade in goods explains why the world fleet of ships saw such strong growth over the past ten years. The huge trade enlargement recorded was remarkable, since this period included the global ‘Great Recession’ in late 2008, continuing through 2009, following the world financial crisis. That slump was widely seen as the most damaging setback for the world economy since the Great Depression in the 1930s. Global economic activity contracted, world seaborne trade was badly weakened and, unusually for an individual year, 2009 saw an actual decline in annual trade volume.

A few statistics emphasise how the pattern of trade evolved in the past decade. In 2003, world seaborne trade – including dry bulk commodities, oil, liquefied gas, manufactured goods (mainly container shipments) and all other cargoes – totalled 6,676 million tonnes. Ten years later, in 2013, the overall total reached an estimated 9,914mt, based on Clarksons Research calculations, cumulatively a 48.5 percent rise. Looking at individual years, a break in the trend is immediately evident. In 2009 there was a four percent reduction from the previous twelve months, followed by a swift ten percent bounceback in 2010. The general pattern was very positive including, significantly, the latest few years of the period up to 2013.

That is the broad picture, but the development pattern among the individual cargo sectors differed markedly. What is abundantly clear is that dry bulk trade made the biggest contribution to the overall advance. Global dry bulk commodity movements, which comprised 2,453mt (37 percent of the total) in 2003, expanded by seventy-six percent to an estimated 4,309mt in 2013, raising their share of the total to 43 percent. Container shipments also grew rapidly, rising by ninety percent, reaching 1,524mt. The second largest sector, oil (crude oil plus processed oil products) was a laggard, growing by a relatively modest twenty-one percent to 2,834mt over the ten years’ period.

A large part of this expansion, particularly in the dry bulk sector, was attributable to China’s multiplying appetite for imports. An especially valuable contribution to the global seaborne trade trend was seen in 2009. As already mentioned, trade declined in that year, but the downturn might have been much worse than actually occurred. A huge jump in China’s dry bulk commodity purchases, completely opposite to the pattern elsewhere, prevented a much greater overall decline.

Sea trade in the ten years ending 2013 as a whole was strengthened by many other countries needing increasing imports. A particularly substantial volume of imported cargo movements was added in Asia, alongside China’s additional volumes. Numerous countries in this region, including India, South Korea, Taiwan and smaller buyers, greatly raised purchases of dry bulks, oil, gas and manufactures. Further cargo import quantities were contributed by countries elsewhere around the world.

Figures for seaborne trade compiled by UNCTAD (United Nations Conference on Trade and Development) emphasise how the Asian region led global cargo movements growth. Roughly four-fifths of the entire growth in trade recorded during the period from 2003 to 2012 (currently the latest year for which these statistics are available) was attributable to extra imports into Asia. Another feature, related to the remaining approximately one-fifth of trade growth, is evidence of a reduction in Europe’s imports, a decreasing tendency in North America and a flattish trend in Japan. By contrast both the Middle East area, and a group of all other countries together, showed considerable imports increases.

The real giant awakes

China’s share of global seaborne trade has risen enormously, resulting from its imports growth comprising a very large proportion of world imports growth. As well as providing more cargoes for a greatly increasing China-owned fleet of ships, this upsurge benefited many independent shipowners in numerous countries and, through part of the period, proved highly profitable. Since 2008, however, variable overcapacity in world shipping markets has suppressed earnings for shipping investors.

In the early 2000s, China’s imports of all cargoes – dry bulks, oil, gas and manufactured goods (mostly container shipments) – comprised 5-6 percent of the world seaborne trade total. Global import demand then was still dominated by European countries, Japan and other Asian countries. Starting in 2003, rapid and sustained expansion in China began. Within ten years, a relatively short historical period, a dramatic transformation had occurred. This resulted in China’s share of world seaborne trade expanding almost fourfold from the early millennium, reaching an estimated 20.4 percent in 2013.

The giant’s emergence as an economic powerhouse affecting the world had occurred earlier. In a memorable comment attributed to him, the famous nineteenth century French Emperor Napoleon Bonaparte foreshadowed the eventual impact when he suggested that China’s awakening would shake the world. But such a cataclysmic event was a long time coming. It started happening in 1979 when China’s paramount leader, Deng Xiaoping, began opening up the economy to world trade, bringing the country’s extended ‘slumber’ to a close.

By the 1990s successive reforms had enabled the Chinese economy to achieve many years of very rapid expansion. Because this development was partly based on export sales, particularly manufactured goods, China became a major and then dominant supplier of these products to the world market. There were huge consequences for the maritime scene: seaborne trade patterns in the container shipping sector changed greatly. The world’s new ‘workshop’ became solidly established. But an even larger impact on global maritime trade was still some way ahead, in the new millennium.

During the early 2000s China began focusing on additional external raw materials and fuels supplies amid rapidly expanding industrial output. More agricultural products were also needed. Although domestic resources of many commodities were widely available, these were insufficient in volume and sometimes in quality as well. Industries including steelmaking, power generation, aluminium smelting, and animal feed manufacturing started placing much heavier emphasis on seeking supplies from foreign sources. The strong advance in quantities imported was the result.

Growing annual seaborne imports into China also formed rising percentages of the upwards overall global trade volumes trend. Statistics illustrate how significant this pattern has been for the global shipping industry, which now depends upon China for a substantial proportion of its bulk carrier, tanker and other ship employment. In 2003 China’s seaborne imports totalled just under 500 million tonnes, within a global total of 6,680mt. By 2013 the China volume had risen to 2,026mt within a global 9,914mt total. These Clarksons Research figures emphasise China’s significance for shipping companies, indicating that, during the 2003-2013 period, annual world seaborne trade rose by 49 percent, while within this volume China’s element increased by 305 percent.

The figures quoted here underline how world seaborne trade has risen greatly, and how a large part of that expansion reflected China’s much more rapidly growing imports. From the angle of additional ship employment created, this point is reinforced by looking at the percentages showing what proportion of growth in world seaborne trade volume during the ten years’ period was comprised of China’s expanding imports. It then becomes even more abundantly clear why global shipping industry players are so intently focused on how Chinese industry and agriculture is progressing, the implications for imports, and the evolving relationship between ‘home’ domestic commodity output and import demand.

As already outlined, global seaborne trade grew substantially from 2003 to 2013. Arguably the most spectacular positive feature during the period was that almost one half (47 percent) of the expansion was contributed by additional imports into China. For dry bulk commodities, the contribution was even larger, and therefore even more striking. China’s extra imports of these commodities (raw materials, fuels, other bulk industrial products, soyabeans and other bulk agricultural products), formed fully two-thirds or 66 percent of overall world seaborne trade growth within the sector. Consequently, shipping industry participants are still transfixed by the China theme.

In a range of key individual trades – iron ore, steam coal (used mainly in power stations), soyabeans, bauxite/alumina, nickel ore, crude oil – China has become either by far the biggest importer or one of the biggest. Expanding Chinese import volumes have been, or in some cases continue to be, the main component of global growth in large-scale trades. Shipowners, charterers, brokers and analysts as well as many others are therefore always looking for any clues about key influences: how demand for the products made by relevant industries are developing, what impact there will be on output levels, and what other factors will determine how much raw materials and other inputs will change as a result.

Among individual commodities, iron ore imports into China experienced, over the past ten years, one of the most dazzling performances ever seen in the long history of global maritime trade. China’s iron ore imports have become gigantic, employing a vast armada of bulk carriers, after rising well over five-fold, from 148mt in 2003 to 820mt in 2013. As a result, these now have a dominant role in world seaborne iron ore movements (one of the largest commodity trades), comprising about two-thirds of the total. Moreover, the 2014 China volume could exceed 900mt. Another example of a large volume trade is coal imports, which rose steeply by over seven-fold in the past five years, from 44mt in 2008 to 327mt in 2013. Crude oil and products imports into China by sea in the past ten years also increased robustly, more than doubling from 114mt, to 293mt last year.

A galloping horse

What seems clear is that China will remain a prominent part of global seaborne trade, and probably a key contributor to its growth, over many years into the future. That is not just a wildly optimistic appraisal. Certainly the country’s economic activity is slowing, and the trend may persist, consistent with a maturing economy. This feature reflects the switch of emphasis, from a demand viewpoint, towards consumer spending and away from capital investment (especially infrastructure projects) and exports. Looking at the economy’s supply side, a switch from manufacturing towards services is foreseen. But, while these forces will restrain production of goods with high raw materials content, further growth in imported natural resources and energy is likely.

The Year of the Horse, 2014, in China seems set to prove another period of increases in many commodity imports, and that trend may continue in the medium term at least. There are positive indicators, although the earlier gallop may be moderating towards a fast trot. Nevertheless, there are also reasons for caution or uncertainty about the outlook. Several questions arise. How rapidly will the economy grow in the years ahead? What, precisely, will be the relationship between economic activity and seaborne trade? Is growth in import demand for commodities likely to continue outpacing production increases in dependent industries? How will foreign purchases of agricultural commodities evolve? Answers involve a complex range of factors which are far from easy to assess reliably.

Also relevant to the general picture of world maritime trade’s progress is the contribution of other prominent players around the globe. A detailed examination of export suppliers is beyond the scope of this article. As import generating areas, other Asian countries, and Japan and Europe as well as the USA are particularly significant. Also, some emerging economies in the Middle East, South America and Africa are becoming more prominent influences. Currently the advanced economies group (mainly Europe, USA and Japan) is still having difficulty shaking off the long term debilitating effects of the 2009 recession and its problematical aftermath, with adverse implications for seaborne trade. Until there is a stronger import purchases trend in these countries, world seaborne trade’s great reliance and concentrated focus on China will persist.

One of the Seven Engineering Wonders of the World: The Panama Canal

Dr Chris Ware

One hundred years ago today ( 15 August) the Panama Canal was opened to traffic, no longer would vessel have to round Cape Horn against prevailing Westerly wind instead they would transit the 49 miles from Atlantic( Caribbean) to Pacific. The idea not new would only be realised at the end of the 19^th Century when first the French sort drive a series of cuts and locks across the Isthmus, this first effort would end in Bankruptcy and a large death total, upward of 22,000 died from fever.

It would be the United States which would, in 1904, take over the project and take a lease on a strip land across Panama, and complete the work by 1914.This allowed the American’s to move the Warships from the Atlantic to the Pacific and allowed the increasing trade of the West Coast of the US to follow East and vice versa. Now the Canal is being widened and there is talk that Nicaragua is looking to build a canal. % 25 percent of the world tonnage is built to Panamax standard, ships which can transit the Canal, however less than 2% per year actually do so, the remodel Canal will allow large ships with better hull forms to be built and run. If the Pharos of Alexandria and the Colossus of Rhodes were wonders of the ancient world, the Panama Canal stand as one of the engineering wonders of the 20^th century and beyond.

The World International Studies Conference – summary report

By Lisa Otto

Visiting Researcher – Greenwich Maritime Institute

D.Phil Candidate – University of Johannesburg

The World International Studies Conference, convened 6 – 9 August at the Goethe University in Frankfurt hosted a maritime security panel series, entitled Maritime Securityscapes. This saw three panels and two roundtables discussing a variety of maritime issues.

The three maritime security panels comprised discussions on contemporary piracy, non-state actors in maritime security, and the securitisation of the maritime; while the two roundtables discussed lessons from the Contact Group on Piracy and off the Coast of Somalia, and the future of maritime security studies.

This initiative has been to the great credit of Christian Beuger of Cardiff University (and formerly of the GMI), who put in a lot of work to propose, put together and coordinate this panel series, effectively bringing together the small but flourishing group of researchers in the field of maritime security studies.

Lisa Otto, a visiting researcher at GMI who attended the conference and presented a paper there, now offers a snapshot of some of the interesting discussions made on the various maritime security panels.

* * *

Lessons from the Contact Group on Piracy Off the Coast of Somalia:

This roundtable was perhaps one of the more interesting discussions had by maritime security experts in attendance and discussed the successes and failures of the CGPCS and interrogated whether there were opportunities to transfer lessons learned to address piracy in other regional contexts.

The CGPCS was established to address a finite problem, and came about in response to inertia or slow-moving responses to the piracy problem off the Somali coast. Given United Nations resolutions on the matter, the scope was there for the creation of such a body, essentially legitimised by the United Nations.

The discussants agreed that the CGPCS’ successes came primarily as a result of its limited geographic and sectoral focus, and the informal nature of its structure, engaging a large number of state and non-state stakeholders. This meant few barriers to entry for stakeholders, limited red tape, all the while granting ownership and legitimacy to this uncommon exercise in global governance in the eyes of the 600+ stakeholders involved.

These, however, are also described as being the characteristics responsible for the Contact Group’s weaknesses, as large membership created a duplication of efforts.

Nonetheless, several positive outcomes resulted from the CGPCS including shared awareness between multi-national forces present in the Gulf of Aden, as well as the Best Management Practices manual, the maritime security centre for the Horn of Africa, and multi-national agreements for prosecution.

Currently, questions abound regarding what to do with the mechanism now that piracy off the coast of Somalia has declined dramatically in recent years. Speakers noted that pirates may still be present in Somalia, albeit dormant at present, which raises the risk for a great resurgence of piracy there should naval forces present there leave.

One suggestion put forward, was the establishment of a small secretariat that could act as a meeting point for stakeholders, which could convene when necessary to address threats and concerns related to maritime security, and sea piracy in particular. Furthermore, capacities will need to be transitioned, such that functions currently performed by international partners may be taken over by local institutions, who are then supported in their efforts by these partners.

As for the transferability of idea and template of the CGPCS, discussants and participants noted that lessons and successes in this instance are not likely to be applicable in other geographical settings where piracy currently presents a problem to the differing contexts in which they occur. In Somalia, one was dealing with a failed state and a threat within international waters, which thus rendered the issues within the remit of the international community to respond to. In other regions of the world, West Africa for example, the breadth of piracy crosses the waters of various territories, affecting states that may be weak but are certainly not failed. Furthermore, in this instance, the threat does not emanate from the high seas but from territorial waters, placing the concern under the jurisdiction of individual sovereign states rather than the international community.

Ultimately, while the initiative of the CGPCS has been widely considered as a success, it seems that this is unlikely to be duplicated in other contexts.

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Look out for further installments this week for more insight into current debates in maritime security studies, as discussed at the WISC Conference.

Bangladesh ferry capsizes, 100 unaccounted for

A ferry with about 200 passengers on board capsized in Bangladesh on Monday in a river southwest of the capital, Dhaka, and about 100 people were unaccounted for, the chief of the district administration said.

Low-lying Bangladesh, with extensive inland waterways and slack safety standards, has an appalling record of ferry accidents, with casualties sometimes running into the hundreds.

Overcrowding is a common factor in many of the accidents and each time there is an accident the government vows to toughen regulations.

Mohammad Saiful Hasan Badal, deputy commissioner of Munshiganj district, said about 100 passengers had been rescued from the vessel after it went down in the Padma river.

Two women had been taken to hospital and died and the remainder of those on board were unaccounted for, he said. There was a possibility some had swum to the riverbank

“Most of the passengers were coming back to the city after celebrating Eid al-Fitr,” Saiful told Reuters, referring to the festival marking the end of the Ramadan fasting month.

Teams from the Inland Water Transport Authority, fire brigade and the army were helping with the rescue about 30 km (18 miles) southwest of Dhaka.

The stretch of river where the ferry sank was deep and the weather was bad meaning there was no sign of the boat under the choppy water.

Survivor Mohammad Suman told Reuters two of his brothers and a sister were missing.

“We were five altogether and I and another survived by jumping from the ferry,” he said.

In March 2012, a ferry sank near the same spot, killing at least 145 people.

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The art of teaching war- have you booked your place???

July 22nd 6pm with wine reception

At The Old Royal Naval College, Greenwich

booking email: l.hattersley@gre.ac.uk

How do you force someone to fight for you – to go to war? This and other questions will be addressed at a free public lecture by a military expert and University of Greenwich academic.

Professor Chris Bellamy is Director of the university’s Greenwich Maritime Institute, in the Faculty of Architecture, Construction & Humanities. An award-winning author and former defence correspondent at The Independent, Chris is also an expert on Russia and the former Soviet Union. His views have been widely sought by media over the current tensions between Russia and Ukraine.

Don’t try this at home…: Teaching War, 400 BC to the present takes place at the university’s Greenwich Campus on Tuesday 22 July 2014 at 6pm.

Chris says: “Warfare – the use of violence for political ends – is as old as recorded history and, some would argue, is the ‘dark side of civilisation’. Warfare requires communities organised on some scale and a measure of authority to force people to participate in an exhausting, terrifying, arduous and often tedious activity which runs against many of our natural instincts.

“From the beginnings of recorded civilisation the communities most successful in armed conflict triumphed through better organisation, equipment, training, tactics, and the conceptual component – an intellectual understanding of the nature and processes of warfare. To win in battle, and in warfare more generally, training and education are key.”

Technology, technique and science all feature strongly in the history of war. Examples developed and explored by Chris during his 13 years as a teacher at the Defence Academy of the UK at Shrivenham reveal that, until relatively recently, one combatant seldom had a decisive technological edge over another. It was discipline, training and technique– how they used it – that determined success.

Chris has taught these ideas to students, including many serving members of the armed forces, for many years. He will present a number of case studies, including analysis of the leap from mechanical energy – bows and arrows and catapults, to chemical energy – guns and rockets. Chris will also discuss the importance of indirect fire – artillery firing at targets which those manning the guns cannot see.

Without this development in technique the First World War, the start of which is being commemorated this year, could not have happened as it did. Yet very few historians understand what indirect fire is, or mention its decisive role in shaping the fighting on land, particularly on the Western front.

Don’t try this at home…: Teaching War, 400 BC to the present. University of Greenwich Maritime Institute, presented with the Centre for the Study of Play and Recreation. Tuesday 22 July 2014, 6pm until 7.30 pm. Room 080, Queen Anne Court, University of Greenwich, Old Royal Naval College, SE10, 9LS. To be followed by a wine reception.

All are welcome to this free lecture but to book a place for the wine reception, please contact the Greenwich Maritime Institute on l.hattersley@gre.ac.uk

This lecture precedes the 36th Annual Conference of the International Standing Committee for the History of Education, Education, War and Peace, to be held at the Institute of Education, University of London, 23–26 July 2014.

Mary Clare Martin, Ewa Sidorenko and Leticia Fernandez-Fontecha Rumeu, of the Department of Education and Community Studies, will be speaking on a panel at the ISCHE conference, entitled Survival, Pain and Memory: recovering experiences of war, peace and education in Spain, Poland, Gibraltar and Britain, 1902-1950.

China moves oil rig from dispute areas with Vietnam

China says the oil rig that sparked a major diplomatic row with Vietnam by drilling in disputed waters has finished work and is being removed.

In a statement, China National Petroleum Corp (CNPC) said it would now assess the data collected by the rig.

China moved the rig into waters near the Paracel Islands – which Vietnam also claims – in May.

The row over the rig led to clashes between ships from the two nations and major anti-China riots in Vietnam.

Vietnam’s coast guard told Reuters news agency that the rig was now moving away towards China’s Hainan island.

Coast Guard Chief of Staff Admiral Ngo Ngoc Thu said the rig had been moving since late on Tuesday. A senior fisheries official also confirmed that the rig was under way.

The news that the rig was moving came in a CNPC statement carried by China’s state-run Xinhua news agency.

“Signs of oil and gas were found in the operation,” Xinhua quoted the statement as saying, and CNPC “will assess the data collected and decide on the next step”.

China moved its Haiyang Shiyou 981 oil rig into South China Sea waters west of the disputed Paracel Islands in early May, an action the US described as “provocative” and “aggressive”.

Government ships from China and Vietnam then clashed there on several occasions, bumping and exchanging water cannon fire as Vietnam sought to block Chinese drilling operations.

Vietnam also saw three days of anti-China unrest during which angry workers targeted foreign-owned factories in some areas, leaving at least two people dead and dozens injured. Several factories were burned down or damaged.

Both nations claim the Paracel islands and in 1974 fought a brief but bloody war over them.

The introduction of the rig came amid broader tensions between Beijing and South East Asian nations over the South China Sea.

China’s maritime territorial claims overlap those of several of its neighbours and in recent years it has sought to assert these claims in a more muscular fashion.

Ties with Hanoi and Manila have been particularly badly hit. The Philippines is currently taking China to an international court over the issue.

A statement by China’s Ministry of Foreign Affairs spokesman Hong Lei on the rig’s removal pointed out that “the Xisha [Paracel] Islands are integral parts of China” and that the drilling operation was in “indisputable” waters which fell within China’s jurisdiction.

China “firmly opposes Vietnam’s unjustified disruptions” to operations, he added.

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