Our aim in this chapter is to sketch the economic framework of the shipping industry.
Like the street map of a city, it will show how the different parts of the maritime
business fit together and where shipping fits into the world economy. We will also try
to understand exactly what the industry does and identify the economic mechanisms
that make the shipping market place operate.
We start by defining the maritime market and reviewing the businesses that
are involved in it. This leads on to a discussion of the demand for international
transport and its defining characteristics. Who are its customers, what do they
really want and what does transport cost? The overview of the demand is
completed with a brief survey of the commodities traded by sea. In the second
half of the chapter we introduce the supply of shipping, looking at the transport system
and the merchant fleet used to carry trade. We also make some introductory comments
about ports and the economics of supply. Finally, we discuss the shipping companies
that run the business and the governments that regulate them. The conclusion is that
shipping is ultimately a group of people – shippers, shipowners, brokers, shipbuilders,
bankers and regulators – who work together on the constantly changing task of transporting
cargo by sea. To many of them shipping is not just a business. It is a fascinating
way of life.