Political Events And Shipping Demand
1.0 Introduction
Modern shipping is the life-blood of the world; without it, much of the demand for imports and exports would not be met. In 2006, world seaborne trade was estimated to have reached 30,686 billion ton-miles, having grown by 5.5% over the previous year. Despite the prevalence of air transport, up to 90% of world trade is carried over the oceans in humble ships.
The demand for seaborne trade is driven primarily by the world economy; various industries produce the goods that need to reach different parts of the world. In its most recent World Economic Outlook , the International Monetary Fund (IMF) forecasted global growth of 3.9 per cent for the rest of 2008, lower by 0.2 per cent from the previous month’s estimate. In spite of the dip, the world economy is still growing annually, led by the emerging markets that are hungry for resources to fuel their growth.
Beyond the economy, there are several other factors that determine demand for shipping. This paper seeks to evaluate the role of political events and its impact. In addition, it seeks to look into which commodity is most affected by such incidents.
In his book, Maritime Economics, Martin Stopford writes that ‘no discussion of sea transport demand would be complete without reference to the impact of politics’. In the following paragraphs, this paper will address the main types of events that affect shipping demand both positively and adversely.
2.0 Political events that have affected shipping demand the most
2.1 Opening-up of the Chinese economy
The accession of China into the ranks of the World Trade Organization (WTO) and Beijing winning the bid to host the Olympics in 2001 were events that had large political motivations and caused a tremendous rise in demand for shipping. Since then, China’s economy has seen astronomical growth. In order to fuel this development, the country has increased both its imports and exports in almost every...
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