Shipping, Merchant

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Shipping, Merchant

Merchant shipping is a service industry that entails the deployment of vessels to serve the needs of seaborne trade. As such, the scale and character of the shipping industry is conditioned to a large extent by the volume, composition, and spatial distribution of cargoes that are carried across the seas, along the coasts, and through inland waterways in their passage between points of production and consumption. These demands are met by merchant shipowners who invariably invest in the business of shipping to earn a return on their capital, an objective they seek to attain by combining various resources. Although the shipowner's entrepreneurial abilities, managerial skills, and access to market information are vital, a shipping venture also depends upon the recruitment of an appropriately skilled crew and the quality of its work at sea. The other principal resource that the shipowner supplies is the vessel itself, the character and effectiveness of which is determined by the technological capabilities of the economic, social, and political contexts in which the shipowner operates.

Vessels of countless types and functions have been employed over the last 600 years, but three periods of comparatively intense change in vessel technology can be discerned. The first of these so-called "shipping revolutions" occurred in the fifteenth century, when improvements in navigational knowledge, hull construction, rigging, and the addition of a third mast gave Europeans the ability to cross the Atlantic. Innumerable incremental technological developments took place over the next four centuries, but the wooden-hulled, three-masted, fully rigged sailing ship which conveyed Columbus to the New World in 1492 remained in principle the vehicle which carried European goods, culture, and people across the globe until the second half of the nineteenth century. Then, a second shipping revolution took place. This involved the gradual replacement of wood by iron, and then steel, as the principal material in the construction of hulls, and the transition from wind power to mechanical propulsion through the successive development of simple, compound, and triple-expansion marine engines. Such innovations combined to enhance considerably the efficiency and safety of shipping, which greatly reduced the costs of sea transport and facilitated the integration of South America, Africa, Asia, and Australasia into the international market economy, which had hitherto focused on the North Atlantic basin.

Gradual improvements in the propulsion, navigational equipment, and capacity of ships ensued until the 1960s, when merchant shipping entered another period of revolutionary change. This transition entailed more than just an increase in the efficiency and operational range of vessels. While there was a great increase in the size of many types of ship, and new forms of specialized cargo vessels—liquid gas and chemical tankers, container ships, bulkers—were introduced, the "modern shipping revolution" also impacted on the location, configuration, and functioning of ports. Central to this transformation was the packing of cargo into standard units—pallets, road and rail trucks, and containers—that were lifted directly onto, or driven straight into, the vessel. Such "unitization" greatly expedited the flow of cargo from land to sea transport by eliminating the need to "break bulk"; that is, the time-consuming (and expensive) need to unload a multiplicity of man-sized cargo units from road or rail vehicles, store them in a warehouse, and then remove them to the ship's hold. But it required gantry cranes rather than stevedores, deep-water termini instead of city-center docks, and space to landward for marshalling standard cargo units as opposed to storing an array of assorted cargo types. In essence, it entailed the substitution of capital for labor and the relocation of port activity. As a consequence, by the mid-1980s cargoes were being conveyed in fewer, much larger, and more specialized vessels, and their movements between land and sea were now much swifter and conducted mainly in estuarial ports linked to hinterlands by trunk roads and railways.

Technological change is both a function and a facet of the market forces that have shaped merchant shipping over the centuries. Moreover, as it has long since been organized and regulated by states which have sought to protect or enhance their trading and sea-transport interests in a competitive international market, shipping has also been influenced by political factors. In the long run, particular countries have dominated the provision of merchant shipping in certain epochs. Portugal and Spain, for instance, were preeminent among Europe's shipping nations in the late fifteenth and sixteenth centuries. Having led the reconnaissance of the Atlantic, the Iberian powers not only augmented their well-established short-sea commerce with transatlantic colonial trades, but also endeavored to monopolize the supply of shipping required to service this activity. This was difficult to sustain, however, for the Iberian empires were far-flung and poorly equipped to repel the commercial and predatory encroachments of other states. The Dutch were the most active in this respect, especially after the Revolt of 1568 added a sharp political edge to their economic rivalry with Spain. Favored by their location at the trading crossroads between the Baltic, southern Europe, Germany, and the British Isles, the shipping interests of the emergent Dutch Republic expanded rapidly in the late sixteenth century. By the 1620s Dutch shipowners had cornered the market in Europe's "carrying trades"—the transport of goods between foreign states—and therefore deployed the lion's share of Europe's merchant tonnage.

Dutch hegemony bred resentment in nations whose imports and exports were delivered in vessels that generated income and employment for the United Provinces. Political intervention in the form of "Navigation Laws" was deemed to be the remedy for this situation. Enshrined in legislation, and policed by navies and coast-guards, this "mercantilist" strategy was implemented independently by various European powers, most notably Britain (England until 1707), France, Sweden, and Denmark. It was designed to reserve a nation's colonial and coasting trades for its own merchant fleets, and to channel such commerce through its own ports where customs duties could be levied. This strategy was deployed most effectively by Britain. Though the Navigation Laws passed by Parliament from 1650 onwards led to tension, and ultimately to revolution, in the North American colonies, they served to foster Britain's colonial trades and shipping interests. Indeed, by the 1690s the British merchant fleet had eclipsed its Dutch counterpart in terms of tonnage registered, a lead that widened as the eighteenth century progressed.

By this measure, Britain remained the leading shipping nation until the 1960s. In the midst of this long period, it was here that the key technological innovations—marine engines and metal hulls—that comprised the second shipping revolution were developed and most effectively adopted. From the 1860s, steam-driven, iron-hulled ships carried coal and manufactured goods to all regions of the globe, with food, raw materials, and manufactures conveyed back to feed the people and factories of the first industrial nation. Boosted further by the introduction of steel hulls and triple-expansion engines in the 1880s, the British merchant fleet—much of which had been built in British shipyards—accounted for 60 percent of the world's tonnage in 1913. In that year, this fleet carried 53 percent of the United Kingdom's considerable foreign trade, 80 percent of British intraimperial trade, and 25 percent of the world's carrying trade. World War I significantly weakened Britain's shipping interests. With over 2.5 million gross register tons lost to enemy action, and still more requisitioned by the state, British shipowners lost market share to emerging shipping nations such as Japan, Greece, Norway, and, most importantly in the short term, the United States. This set the pattern for the next fifty years, with Britain's persistent relative decline given added impetus by the tonnage and market losses of World War II and the vigorous growth of the Japanese and Greek fleets during the 1950s and 1960s.

Since 1966, when Japan eclipsed Britain as the premier shipowning nation, the global shipping provision has altered significantly, a change triggered by the profound technological and structural innovations of the modern shipping revolution, and accelerated by a steep fall in demand for tonnage following the oil crises of 1973 and 1975. In the volatile market of the 1960s and 1970s, cost reduction was the means to survival. Increasingly, this entailed unitization and the deployment of modern specialized vessels, many of which were registered in "flag of convenience" countries such as Liberia and Panama, where comparatively lax regulations regarding ship safety offered significant savings. "Flagging out" also relieved shipowners of the obligation to recruit highly trained, comparatively expensive seafarers from their own countries. This delivered major reductions in labor costs, and precipitated the displacement of Western European and North American seafarers by workers from low-wage countries in Southeast Asia, Africa, and Eastern Europe. Whereas Britain, the Netherlands, and other "traditional" shipping nations were slow to respond, some states were much more adept at exploiting the vicissitudes of the tonnage and labor markets. Greek shipowners performed well in this context. At 80.1m deadweight (dwt) tons, their fleet was the world's largest in 1990, ahead of Japan (72.8m dwt), the United States (59.8m dwt), and Norway (45.5m dwt).

Such long-term shifts in the national composition of the world fleet suggest that merchant shipping is a volatile business. But they also highlight the essential vitality of the activity. While shipping was perhaps the first large-scale industry to exhibit capitalistic structures in fifteenth-century Europe, it will always remain a significant feature of human enterprise so long as the seas are used as a trading highway.

SEE ALSO Agriculture; Baltic Exchange;Black Sea; Board of Trade, British; Board of Trade, Spanish; Brown Family; Canada; Cargoes, Freight; Cargoes, Passenger; Compradors; Containerization; Cotton; Cunard, Samuel; Empire, British; Empire, Dutch; Empire, French; Empire, Japanese; Empire, Ming; Empire, Ottoman; Empire, Portuguese; Empire, Qing; Empire, Spanish; EntrepÔt System; Free Ports; Greece;Hanseatic League (Hansa or Hanse);Hong Kong;Indian Ocean;International Trade Agreements; Iran; Japan; Jardine Matheson;Lloyd's of London;Mediterranean;Mitsubishi;Mitsui;Navigation Acts;Norway;Onassis, Aristotle;Packet Boats;Panama Canal;Petroleum;Shipbuilding;Shipping, Aids to;Shipping, Coastal;Shipping, Inland Waterways, Europe;Shipping, Inland Waterways, North America;Shipping Lanes;Shipping, Technological Change;Ships and Shipping;Ship Types;Slavery and the African Slave Trade;South China Sea;Russia;Subsidies;Suez Canal;Tagore Family;Transaction Costs;Tung Chee-Hwa;United Fruit Company;United Kingdom;United States.


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David J. Starkey