It is important for all practitioners in shipping business to remind themselves on a regular basis that the demand for shipping is a Derived Demand.
If merchants, international traders, buyers and sellers reduce their level of business, the demand for shipping reduces.
We have seen this effect only too clearly in recent years with trade recessions affecting significant areas of world trade. The effect of these recessions on shipping business have frequently been compounded by the fact that they occurred when there was, in any case, an over-supply of merchant shipping. We will be checking some of the mechanisms of international trade, so at this stage we are only concerned with those generalities which directly impinge upon shipping six (6) sub-divisions:
- Dry Cargo Chartering
- Tanker Chartering
- Sale & Purchase
- Ship Management
- Port Agency
- Liner Trades
Perhaps the first point to make, to those who are agents of shipowners, is that knowing about and having sympathy with the international traders’ problems should in no way be construed as disloyalty to one’s principal. It goes without saying that if your principal is the international trader such as a charterer, knowledge of how his business works is vital.