Different ports have different trading regulations and restrictions. Therefore, the port agent should inform the principals with up-to-date information. The port agent should have a great practical knowledge of appropriate port trades and the maritime environment in which they operate. Understanding the origins of cargoes, and the cargo routes should be of excellent support when examining the geography of trade. Shipping professionals should develop an enquiring mind and learn about the location and activities of ports, the cargoes, and their shipping terms, as they all can assist to build up an awareness of the geography of trade.
Factors That Affect Maritime Trade:
- Navigation Restrictions
- Political Restrictions
- Port Restrictions
- Labor Restrictions
- Economic Restrictions
- Environmental Restrictions
1- Navigation Restrictions
Maritime trade may be affected by the weather, and an example is a block of ice that prevents voyages at certain times and seasons of the year. For example, navigating to and from the Great Lakes is affected between January and March in most years, as is navigating to the Northern Baltic, while voyages to and from Hudson Bay are achievable only between July and October. Recently, navigating through the Northern Sea Route of Russia has become possible in the summer with icebreaker assistance. Sailing in ice requires ships to be ice-strengthened. Normally, the shipowner must pay an Additional Insurance Premium or risk the ship’s insurance to be announced void if the ship is damaged in ice. Furthermore, the hazard posed by roaming icebergs should be considered. Depending upon the severity of the winter and the speed of thaw, icebergs are a severe threat to the ships.
Monsoon Storms, Hurricanes, Cyclones, and Typhoons should be examined. Monsoon Storms, Hurricanes, Cyclones, and Typhoons are predictable, however, it is likely to be caught off guard when the strength of these forces is so severe that it extends its area of destruction to areas usually unaffected. Therefore, not only is the voyage itself dangerous but also port installations such as port cranes may be damaged.
Earthquakes and Tsunamis may damage ships and ports.
Earthquakes and Tsunamis may cause perpetual environmental modifications such as dramatically changing water depth in an affected port. Full hydrographic surveys of the Earthquakes and Tsunamis affected areas and publication of updated charts may take years to develop.
Major Canals and Waterways That Affect Maritime Trade:
- Panama Canal
- Suez Canal
- St Lawrence Seaway (Great Lakes)
- Kiel Canal (Skaw)
Cape of Good Hope (COGH), Magellan Strait (Cape Horn), Malacca Strait, Lombok Strait, and Sunda Strait, Strait of Hormuz, Red Sea, Gulf of Aqaba, Torres Strait, Great Barrier Reef, Pentland Firth, Dover Strait, English Channel, Strait of Gibraltar, Dardanelles Strait and Bosphorus Strait are important areas that affect the maritime trade. All charter parties that are concerning any of these canals or waterways should include clauses in which the shipowners or ship operators confirm that the ships fairly fit local requirements and have proper fittings. In Panama Canal and Suez Canal, it is important to incorporate the Panama Canal Gross and Net Registered Tonnages, and Suez Canal Gross and Net Registered Tonnages which differ from the usual NT (Net Tonnage) and GT (Gross Tonnage) upon which transit tolls are based.
In the dry cargo business, important points for ship delivery and redelivery:
- Ushant (France)
- Dakar (West Africa)
- Douala (West Africa)
- Cape Passero (Sicily)
- Cape Finisterre (Spain)
- Baton Rouge (Mississippi River)
- Muscat (Persian Gulf)
- Dondra Head (Sri Lanka)
- Rosario (Argentina)
- Santa Fe (Argentina)
2- Political Restrictions
In the shipping business, due to the unpredictability, the political restriction is probably traders’ and shipowners’ most feared restriction. For example, the impacts on global trade of the regime change in Iran in 1979. Iran-Iraq war followed by Iraq’s invasion of Kuwait. Politics not only affect trade through conflict but also mismanagement of the countries may affect the shipping markets. Ukraine, formerly known as the breadbasket of Europe, became a net importer of grain for a while. Now, Ukraine is once again a major grain producer and exporter. The imposition of sanctions by the UN (United Nations) has dramatically restricted seaborne trade with various maritime countries at different times.
Some maritime nations’ ports are not popular calling points, because of the likelihood of repercussions that may affect ships and shipowners. Therefore, shipowners list some political exclusions in time charter parties. In voyage charter parties, shipowners have to be cautious in fixing cargoes to or from these countries. Political situations are continually changing and any country list would pretty soon be out of date. Nevertheless, it is worth quoting a few cases where the political situation is long-standing:
Israel: Calling at Israel ports may cause to be blacklisted by some Arab countries. Usually, charterers in Arab countries negotiate and insert in charter parties an Arab Boycott Clause under which the shipowner endorses that their ship is not boycotted or blacklisted by Arab states as a consequence of previous calls at Israel ports.
Cyprus: Greek-flag ships have been prohibited by the Greek government from trading to TRNC (Turkish Republic of Northern Cyprus) ports. Therefore, the Greek government is not willing to permit ships to call at Greek ports after trading to TRNC (Turkish Republic of Northern Cyprus) ports. Likewise, Cyprus-flag ships are not always welcome to trade ports in Turkey.
Syria: Liberian-flag ships and ships owned by Liberian companies are not welcome in Syria. Many Greek-flag ships that are welcome are owned by Liberian companies, which prevents them from trading with Syria.
Furthermore, it is crucial to be aware of port name changes and language sensitivities. For example, the former Saigon is now Ho Chi Minh City, the Germanic Swinemunde is known today by its Polish name, Swinoujkie. Iranians favor the gulf to be called the Persian Gulf (PG), whereas Bahrainis favor the gulf to be called the Arabian Gulf (AG). In recent years, piracy has become a significant problem off the coast of Somalia and West Africa. Pirates attacked many ships because there was no effective government in these countries. Unlike the piracy for ransom model used by Somali pirates, in West Africa, crime and corruption opened the way for gangs to conduct brutal attacks on ships.
3- Port Restrictions
Numerous ports have restrictions and common examples of such port restrictions are provided below.
Safi Port (Morocco): has a harbor bar that makes it very difficult for ships of deeper draughts to enter the port when Atlantic Ocean roller waves are predominant.
Douala Port (Cameroon): is a neap port and tidal levels fluctuate. At certain times, a ship may be blocked from berthing for some days because of inadequate water.
Genoa Port (Italy): has an air draught restriction which is not a physical restriction. This restriction is commanded by the port authorities because of the danger of aircraft overflying the port area when flying to and from Genoa airport.
Butterworth Port (Malaysia): berthing preference is granted to gas tankers. Therefore, a partially discharged or loaded ship may have to leave the berth in favor of the gas tanker.
Port restrictions are not simply dimensional. The hours when ships are worked by port labor, holidays should be acknowledged. BIMCO (Baltic and International Maritime Council) announces a calendar listing national, local holidays, and port working hours.
Port costs range broadly. The port charges in some countries are subsidized to attract traffic. On the other hand, some ports have to be effective and profitable. The port costs differ enormously, often not only between neighboring countries but also between ports in the same country.
Freight Tax can be notably high in some countries. Freight Tax is imposed on the recipient of the freight (shipowner or ship operator), not the party paying. Freight Tax may be deducted at source under local law. Furthermore, there are Bilateral Tax Agreements between nations over the imposition of Freight Taxes so that not all shipowners and ship operators are obligated to pay Freight Tax, or shipowners and ship operators oblige to pay only a part of the total cost that ships of non-approved countries have to pay. Most Freight Taxes are imposed against the Ship’s Flag, however, some countries charge Freight Tax against the Recipient Country of the Freight. BIMCO (Baltic and International Maritime Council) issues a publication on global Freight Taxes and Freight Tax Exemptions every year. But, BIMCO (Baltic and International Maritime Council) publications can only be as current as the time of compilation, which implies that the information can simply be many months out of date. Although online BIMCO (Baltic and International Maritime Council) publications can be updated promptly, the most reliable reference for a shipowner or ship operator would be to ask a local agent.
Main Shipping Routes
Shipping practitioners should know about main commodities and main shipping routes. In the exploration of commodities and alternative commodities, the industrialized nations are continually exploring and researching. Whale oil is an example of a commodity that has disappeared fast. Oil and other petroleum products have gained prominence ever since the 1900s and new oil deposits are continuously being explored. Likewise, natural gas has been discovered in various places. Shipping practitioners should learn the origins of maritime transportable commodities. Main maritime commodities:
North America: Coal, Grain, Fertilisers, Oil Products, Forestry Products, Manufactured Goods, Scrap.
South America: Coal from Colombia. Ores and Soya from Brazil. Fruit, Vegetables, Nitrates, and Copper from Chile. Meat and Grain from Argentina and Uruguay. Oil from Venezuela and Brazil
Australasia: Metallic Ores, Non-Metallic Ores, Natural Gas, Coal, Sugar, Hardwood, Logs, Livestock, Wool, Fruits, Leathers, Meat and Grain.
Africa: Oil and Gas from Libya and Algeria. Bauxite from Guinea and Ghana. Oil from Nigeria. Iron ore from Mauretania and Liberia. Phosphate Rock from Senegal. Potash, and Nitrates from Morocco. Coal from South Africa.
India: Iron Ore, Animal Feedstuffs, Manufactured Clothing, Metal Products, and Petroleum Products.
Middle East: Crude and Refined Oil from Saudi Arabia. Natural Gas from Qatar. Fertiliser from Jordan.
Japan: Manufactured Goods.
South East Asia (SEA): Coal and Ores from Indonesia. Hardwoods, Oil, Rice from Thailand.
China: Animal Feed, Steel Products, Clothing, and Manufactured Goods.
Russia: Natural Gas, Oil, Oil Products, Softwoods, Coal, Metals, and Grain.
Europe: Manufactured Goods, Grain, Coal.
Researches explain that crude oil from the North Sea between the United Kingdom and Northern Europe is a very light crude with some sulphur content. The North Sea oil deposits are small in comparison to the Middle East oilfields, which produce heavy crudes that are rich in by-products. The industrialized countries consume the majority of the world’s traded materials. Japan and China import much of Australia’s iron ore and coal. European countries and the United States import much Middle East oil.
The United States, Australia, Canada, Argentina, Russia, and Ukraine export grain to all the nations that are unable to grow enough grains. Japan and Europe are the major grain importers and consumers. While most European countries grow substantial amounts of grain, they still have to import particularly hard wheat from North America that is fundamental for bread-making. Fertilizer is imported by the industrialized countries, where the agricultural area is a scarce resource and so needs to be enriched for the highest productivity. The heavy basic manufacturing industry has been shifting to China, while the old-established industrialized countries of Europe and North America have focused more on high-value technological commodities and light industry. The old-established industrialized countries of Europe and North America have diminished their raw material demands for heavy industry. The old-established industrialized countries of European and North American research and investment is being utilized to medical supplies, pharmaceuticals, aircraft assembling, and the service industries of finance, insurance, tourism, shipbroking.
In recent years, developing countries aim to derive the highest value from their natural resources. Brazil has long been exporting large amounts of iron ore to Europe and China. Now, Brazil is beginning to utilize iron ore to produce and export steel. Furthermore, Brazil has also lately discovered large reserves of offshore oil. Brazil has been both extracting the oil and planning to refine the oil so the country can export higher-value refined products rather than cheap crude oil. Another example is Mauritius, which used to export raw sugar in bulk. Now, Mauritius refines sugar and exports the higher-value commodity in containers.
4- Labor Restrictions
Australia, New Zealand, and Scandinavian countries with strong labor protection rules affect maritime trade. These countries are havens of the International Transport Workers’ Federation (ITF). International Transport Workers’ Federation (ITF) is an international organization to which several national transport unions are affiliated. International Transport Workers’ Federation (ITF) was established to support seafarers to secure earnings and living conditions at certain levels. Now, International Transport Workers’ Federation (ITF) is seen as endeavoring to reduce the employment of seafarers from low-cost nations to sustain earnings rates. International Transport Workers’ Federation (ITF) sets its employment terms and demands that shipowners globally comply with them. Especially, International Transport Workers’ Federation (ITF) concentrates on ships that are registered in Flags of Convenience (FOC) countries. International Transport Workers’ Federation (ITF) states that the work conditions of the seafarers aboard such Flags of Convenience (FOC) ships are usually unacceptable. In Australia, New Zealand, and Scandinavian countries, the International Transport Workers’ Federation (ITF) is backed by local port operator unions. These unions can hold ships until the seafarers’ wages and living conditions are improved to International Transport Workers’ Federation (ITF) specifications, including any back pay to which the International Transport Workers’ Federation (ITF) states the seafarers were entitled. Therefore, Flags of Convenience (FOC) ships frequently avoid calling at ports in Australasia, Scandinavia, and Finland. While still strong in Australia, New Zealand, and Scandinavian countries, the International Transport Workers’ Federation (ITF) has experienced some setbacks in legal cases brought by concerned shipowners, with the result that the organization is less able to impose its will on shipowners. International Transport Workers’ Federation (ITF) has its roots in the sports industry, and port workers form a considerable proportion of its membership. Dockworkers have favored being more aggressive than seafarers and are relied upon to boycott ships and shipowners targeted by the International Transport Workers’ Federation (ITF). International Transport Workers’ Federation’s (ITF) Dockworkers Division launched a Port of Convenience (POC) campaign in 2006. The Port of Convenience (POC) campaign was directed at ports that had attempted to obtain a competitive advantage by compromising on fields such as safety, wage levels, and employment agreements. A primary strategy of the Port of Convenience (POC) campaign is its focus on developing union forces within the ports and terminals run by the Global Network Terminal operators. Global Network Terminal operators are terminals operated by global chains such as AP Moller-Maersk, Hutchison, DP World, and PSA.
Another union requirement in Australia, Finland, and certain ports of Scandinavia, is that dry cargo ships must be outfitted with Hold Ladders that conform to a plan and dimensions specified by the Waterside Workers’ Federation. According to Waterside Workers’ Federation’s Hold Ladders requirement every 6 meters in the Hold Ladder, a Resting Platform must be built. This is not always required for bulk carriers to have Hold Ladders of that design given that cargo holds are completely clean and are loading on bulk cargoes that can be poured into those holds. Nevertheless, if there is any problem with cargo holds that requires operators to descend into the cargo holds, operators will descend into the cargo holds only if the hold ladders conform to the approved design. Australasian waterside unions are extremely powerful and demanding. For bulk carriers that are discharging in Australia, it is almost clear that the unions will insist upon cleaning holds after discharge. This incurs a substantial cost, far more than would usually be paid to the ship’s seamen.
5- Economic Restrictions
The geography of trade is affected by the currency reserves available, trading surpluses, and deficits which determine a country’s policy on import and export promotion and restriction. Previously, media made regular reference to Third World debt. The interim moratorium on repayments and other restrictive factors then drove banks worldwide to write off substantial amounts of debt. Now, The media concentrate on the effects of the economic collapse of 2008 and following economic strategies and belt-tightening measures in Europe and the United States.
International credit control will be considerably tighter in the future than in the past, with loans and open credit arrangements provided to peculiar countries through the auspices of the IMF (International Monetary Fund). Therefore, credit controls are anticipated to restrain national economic and fiscal policy, which will in turn directly affect the geography of trade.
6- Environmental Restrictions
Environmental matters will be of increasing importance in the future. Commercial whaling has been diminishing. Sweden forbids the importation of tropical hardwoods other than from plantations with an active programme of re-afforestation. Furthermore, numerous companies in other countries perform voluntary environmental restrictions.
Technology will discover substitutes for various natural products, which will soon affect the amount of those commodities that are shipped. A changeover from coal-fired power generation to nuclear energy will lead to considerable tonnages of coal being substituted by tiny amounts of uranium. Countries are replacing the more conventional fossil-fuel-fed power plants with clean resources. Offshore windfarms, tidal energy, biomass, and RDF (Refuse Derived Fuel), and SRF (Solid Derived Fuel) have all generated a new sort of derived demand for shipping. New types of tonnage such as wind turbine installation ships have generated new opportunities in the shipping businesses. Additionally, environmental restrictions come into action when considering the technology of the ship itself. Stringent controls on ship emissions and ship construction will ultimately mean that older non-eco ships will be unable to trade in some regions of the world. But, if the available technology is not able to meet these environmental demands, then commodity traders will have to discover alternative ports and perform the transport chain by other means. Under the auspices of the IMO (International Maritime Organization) and Annex VI of the Marpol Convention, some regions of the sea have been declared ECA (Emission Control Area) in which the amounts of Sulphur Oxides and Nitrous Oxides permitted in the exhausts from ships’ engines are more rigorously checked than elsewhere. The first ECA (Emission Control Area) was placed in the Baltic Sea, which was quickly followed by ECA (Emission Control Area) in the North Sea and the English Channel. In August 2012, a new ECA (Emission Control Area) around the coast of the United States and Canada became effective. The European Union has also prompted a regime whereby the use of anything but low-sulphur fuels in port is banned. More ECAs (Emission Control Areas) are anticipated to be set in place soon.