This article expounds the importance of the maritime sector in the world’s economy.
The maritime sector is the unsung hero of the world’s economy-responsible for virtually every aspect of the economy; it is an aspect that requires more projection by the media than it is presently accrued. Interestingly, a high chunk of the world’s trade is carried out by sea- The International Maritime Organization (IMO) posits that “maritime transport is essential to the world’s economy as over 90% of the world’s trade is carried out by sea, and it is by far the most cost-effective way to move en-masse goods and raw materials around the world”
This exposition unanimously entrenches the importance of this sector. Over the years, the sector has been treated unceremoniously and its consequential effects grossly disregarded by other sectors that are anchored around it, as well as individuals that owe their living and even livelihood to the maritime sector.
The maritime industry in every nation unarguably contributes immensely to the economic growth of the nation, rippling to the economy of the world at large. With over 50,000 merchant ships trading internationally with these ships registered in over 150 nations of the world, the maritime sector has contributed immensely to the unilateral as well as bilateral trades across continents.
The International Maritime Organization (IMO), a specialized agency of the United Nations (UN) boasts of 171 member states and 3 associates’ members, this statistics amplifies the colossal importance of this sector in the state of world affairs and the future of the world’s economy. Unlike every other industry, the maritime industry can be regarded as the most important; it is the pedestal through which other industries correlate, a cord that connects industries as well as countries, hence, making maritime the backbone of the world’s economy.
The structure entrenched by the maritime sector allows for the resultant effect of liaison as well as a unilateral and bilateral trade agreement between several countries, as 75% of the world’s surface is covered in expansive ocean and waters, leading to countries having vast oceans and seas as borderline indicators.
In its real sense, Maritime transportation (shipping) is largely similar to its land and air counterparts; however, it functions and operates largely by regulations and structures as stipulated by its regulatory body and associations. Remarkable, Maritime shipping is one of the most globalized industries in terms of ownership and operations.
Benefits of the Maritime sector to the world’s economy
This significantly important sector is the mainstay for the transportation of goods across geographical borders, with many countries and cities of the world relying on their seaports as an unrivalled source of revenue, the maritime sector globally accounts for 70% of the transportation requirements of the world and it is undoubtedly a major catalyst responsible for the socio-economic growth and international competitiveness amongst nations of the world giving rise to emerging and developing economies.
It is said that half of the world would starve and another half of it would freeze without maritime, therefore, the essential symbiotic trade relationship that revolves the world is through the maritime industry; this quintessential sector plays a high and monumental role in the socio-economic development of any country.
Maritime and transportation (shipping) of goods and raw materials is regarded as the artery of every economy without which, countries around the world would have been landlocked and battling crippling or stagnant economy, therefore, the maritime sector is of significant importance and greatly influences the growth and development of the global economy; according to Financial Intelligence, seaborne trade constitutes a large percentage of water transport (shipping) trade and it accounts for 60% of the total GDP of the 16 countries that make up the Economic Community of West African States (ECOWAS).
The International Maritime Organization (IMO) opines that “maritime activities has a key role to play in the alleviation of extreme poverty and hunger as it already provides an important source of income and employment for many developing countries, such as the supply of seagoing personnel and ship recycling, ship-owning and operating, shipbuilding and repair, port services among others”.
The maritime sector also allows for transporting natural resources and energy across various countries. This sector has afforded the economies of the world mammoth increase in energy and mineral freighting- for instance, there is a flow of petroleum from the Middle East to Europe, North America and Asia, areas that lack or have insufficiency of these raw materials through the maritime transportation (shipping).
Countries around the world have their trade activities ingrained in maritime; these economic boosting activities is centered around and embraces all the maritime-related business activities which take place within the country’s maritime environment-Some of these activities include offshore economic activities such as fishing, salvage, towage, underwater resources as well as on-shore economic activities such as seaport activities, maritime transport (shipping), ship construction, repairs and maintenance activities.
The maritime industry holds eminent positions in world trade relationships; trade in many countries around the world is embedded and are related to the maritime industry, through shipping. Therefore, shipping is regarded as the greatest boost to a nation’s socio-economic growth and development as raw materials can be transported around the world. Hence, major trade activities like haulage, docking, freight forwarding amongst others revolve around shipping.
Another essential benefit derived from this sector is the economies of scale advantage; making transportation of goods and raw material through the seaways the cheapest per unit of all transport modes, this gives the maritime sector the ability to hold sway a high level of authority in the development of the world’s economy.
The fate of the world’s economy without Maritime
In the absence of coastal lines across the world, that enhances and sustains trade, more countries around the world will be landlocked-landlocked countries have no territorial access to the sea, are daunted by limited border crossing and they are largely transit dependence.
The Global Facilitation Partnership For Transportation and Trade (GFP) posits that there are 31 landlocked developing countries (LLDCs) worldwide: 15 are located in Africa, 12 in Asia, 2 in Latin America and 2 in Central and Eastern Europe. According to the World Bank (1999), LLDCs are paying around 50 per cent more in transport costs than coastal countries, and they are encumbered with up to 60 per cent lower volumes of trade, a singular economic crippling factor.
Due to their remoteness, landlocked countries are dependent on neighbouring transit countries for their external trade and suffer from high trade transaction costs. The lack of coastal lines and sea trading in these landlocked countries births the resultant effect of huge transport costs, inadequate infrastructure and bottlenecks associated with importation and exportation of goods and raw materials and is a viral threat to their integration into the global economy, with the ability to impair and disrupt export competitiveness or the inflow of foreign investments, leaving these countries vulnerable both in security and in socio-economic development, yet marginalizing them in global trade.
According to GFP, the marginalization in global trade makes the landlocked countries experience a constant decline in the amount they contribute to developing countries share of global exports, thereby, in a way affecting other countries. Their proportion of developing country exports has fallen from an already small portion of 2.4 per cent in 1990 to only 2 per cent in 2000, representing a yearly decrease of 2.1 per cent. In contrast, the share accounted for by transit developing countries rose from 53 per cent to 60 per cent, which was an annual increase of 1.1 per cent. This trend attests to the marginalization of LLDCs that has been taking place in the world economy.
In 2012 the maritime sector contributed to the GDP of developing economies as such: India 28.1%, China 9.7% , Russia 5.9%, Brazil 2.8%, , S/Africa 1.3% , Nigeria 0.15%, this extrapolation by Financial Intelligence cumulates to the maritime sector being responsible for 47.95% of the developing economies GDP in the year 2012. In the same vein, the maritime sector also accounts for about 40% of the GDP of the European Union. This buttresses the fact that the economies of the world will be in shambles without the maritime sector.
Several countries and cities especially developing countries are awakening to the realization that there is absolutely no future for its socio-economic development without the maritime industry, hence, their participation in regulatory organizations and associations as well as their constant expansion and participation in various maritime businesses, which includes ship scrapping, ship registration, supply of seafarers, ship construction and ship owning.
Another salient reason why it is projected that there is absolutely no future for the socio-economic development of the world without maritime owes to the fact that 70% of the world’s oil is produced in regions where absolute usage of oil produced is not feasible, there is, therefore, an apparent need for transportation of these products to regions/nations in need of oil. According to statistics, over 80% of the global oil is transported by sea, while Nigeria employs only maritime transportation (shipping) to export its oil as a majority of oil exportation is done by sea.
The importance of maritime transportation (shipping) cannot be overemphasized; without it shipping and lifting of oil which generates high revenue for the oil and gas industry will be absolutely impossible, leaving the economy of such country in disarray and decadence; rippling to the economy of the world.
However, the maritime industry deserves and demands better accolades as well as exposure than it is presently accrued; it is also in high demand of innovative solutions and careful management systems, to ensure its sustainability as well as its viability.
The world and individuals need orientation and reorientation on the importance and the viability of the maritime sector, taking cognizance that live and livelihood is not just associated with shipping and the maritime industry; it is in the actual sense dependent on this industry.