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PPI Trade Facts

PPI | Trade Fact of the Week | May 25, 2005
Cargo Tonnage Has Doubled Since 1980


Editor's Notes: The PPI "Trade Fact of the Week" is a weekly email newsletter published by PPI's Trade & Global Markets Project. To sign up for a free subscription, click here. (Just make sure to check the box next to "Trade & Global Markets.")

Original links are included though some may have expired.


The Numbers:

1980
2003
Tons of Cargo:
3.7 billion
6.2 billion
Oil & Fuel:
1.9 billion
2.2 billion
Bulk Dry Cargo:
0.9 billion
1.5 billion
Other:
0.8 billion
2.7 billion

What They Mean:

About 90 percent of trade (by weight, rather than by value) moves by boat. In 1980, shippers recorded moving about 3.7 billion tons of cargo. Tankers, carrying oil and other fuels, accounted for 1.9 billion tons, or about half the total. Bulk dry cargoes such as grains, metal ores, and coal accounted for 900 million tons, while manufactured goods, foods, and other value-added cargoes made up the rest. By 2003, according to UNCTAD's most recent "Review of Maritime Transport," total cargo tonnage had grown to 6.2 billion tons. The shifting balance between oil, dry commodities, and value-added goods since then illuminates some of the recent history of trade:

  • Tanker cargoes accounted for little of this growth, with oil and fuel shipments rising from 1.9 billion to 2.2 billion tons.

  • Bulk dry cargoes rose faster, up from 900 million to nearly 1.5 billion tons.

  • Higher-value cargo boomed, nearly tripling from 900 million to 2.7 billion tons as manufactures replaced commodities as the most heavily traded goods.

More cargo means more ships and bigger ones. In all, merchant shipping tonnage has risen almost 50 percent, from 600 million to 850 million deadweight tons, since 1990. The International Shipping Federation reports 46,222 merchant ships on the water as of January 2005, employing 1.2 million people; they include 18,150 general cargo vessels, 11,356 tankers, 6,139 bulk carriers and 5,679 passenger ships, along with 3,165 container ships and 1,733 miscellaneous vessels.

Today's more fragile, higher-value cargoes, perhaps surprisingly, have not raised freight costs. UNCTAD's report says freight costs were 6.64 percent of the value of trade in 1980, and are precisely the same fraction now. This is because shippers have adapted to fragile cargo by building larger, more complex "fully cellular" container ships. (Just since 2002, the world fleet has added over 400 of these ships, while container production has risen to two million a year.) For a sense of scale, note that last year's cargo totaled not only six billion tons, but 270 million 'TEUs.' (TEU: "twenty-foot equivalent unit." A standard 20-by-8-by-8 foot container is one TEU.) Two hundred and seventy million TEUs is the equivalent of 5.4 billion feet, or a million miles of container.

Further Reading:

UNCTAD's annual shipping report, 2004:
http://www.unctad.org/Templates/
webflyer.asp?docid=5677&intItemID=3368

The port of Hong Kong, now handling 21 million TEU's a year, is the world's busiest. The Hong Kong Marine Department: http://www.mardep.gov.hk/en/home.html

Facts and figures from the International Shipping Federation:
http://www.marisec.org/shippingfacts/keyfactsindex.htm

An opposing view -- According to UNCTAD, Greece operates more merchant ships than any other country. (The Greek total is 3,112; Japan is second at 2,948, followed by Norway, Germany, China, and the United States.) Philosopher Plato, though, sharply criticized ships, observing in Laws that they have two bad qualities: (1) they enable soldiers to escape by sea rather than bravely dying as they ought to do; and (2) they encourage trade and so demoralize the citizenry. (Imported luxuries are diversions from the contemplation of virtue -- Plato cites perfume, incense, and purple dye in particular as commodities where imports ought to be banned altogether. Exports are just the same: "a great export trade, and a great return of gold and silver, have the most fatal results on a State whose aim is the attainment of just and noble sentiments.") He describes the ideal new state as a landlocked, stony one far from harbors, lacking wood and able to produce only enough things to feed and clothe itself. Plato did not choose to move to such a place. The Laws (see the opening passages of Book IV, and the final paragraphs of Book VIII, for arguments against ships and perfume):
http://classics.mit.edu/Plato/laws.html

Security: The 46,000 merchant marine ships are flanked by tens of thousands of smaller private craft, and four million fishing boats. And where there are ships, there are pirates. Today's pirates lack the firepower of large-scale "Golden Age" pirates like Edward "Blackbeard" Teach or Bartholomew Roberts (who commanded a small navy of three armed schooners and 400 men); but there seem to be many more of them, regularly armed with grenades, semi-automatic rifles and GPS systems. Even a big ship can be vulnerable to a surprise pirate attack, as information technologies have allowed crew sizes to shrink over the years. (Large oil tankers, for example, required as many as 50 crewmembers in the 1960s, and now can make do with crews of 20 or fewer.) The International Maritime Bureau in Kuala Lumpur, founded in 1981 to monitor piracy worldwide, reported 325 pirate attacks last year worldwide, including 93 among the outer Indonesian islands (noticeably down, however from 121 reported attacks in 2003), 37 in the Strait of Malacca, 28 off Nigeria, and seven in the Caribbean. Last week, though, was fairly quiet, with only two reports: one off Peru, and the other in the Strait of Malacca. The International Maritime Bureau's map of pirate attacks in 2004:
http://www.icc-ccs.org/prc/piracy_maps_2004.php

A standard pirate attack report sheet from the U.S. Coast Guard:
http://www.uscg.mil/hq/msc/security/
ssas%2Dpost%2Dincident%2Dreport.doc






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