Water Transportation
SIC 4400
NAICS 483
Industry firms transport freight and passengers on the open seas or inland waters. The freight segment is also commonly known as the merchant marine. Maritime transportation companies also furnish such services as lighterage, towing and tugboating, and canal and marina operation. For further information about water transportation vessels, see also the article entitled Shipbuilding.
Merchant fleets of every nation carry merchandise between ports throughout the world in direct competition with each other. Intermodal ships (those involved in goods delivery using two or more transport modes) primarily consist of containerships, roll-on/roll-off (ro/ro) vessels, and container/barge carriers. General cargo ships include breakbulk vessels, partial container ships, and other ships designed to carry non-containerized cargo. Primary U.S. operators include CSX (Sea-Land Service Inc.), American President Lines (APL), and Seabulk International Inc.
According to the United Nations Conference on Trade and Development (UNCTAD), 6.17 billion metric tons of goods were shipped by sea in 2003, an increase of 3.7 percent over 2002. Oil tankers and dry bulk carriers made up 72.9 percent of the world fleet, continuing to increase over previous years. The average age of a ship was 12.5 years, with 27.7 percent of ships being 20 years or older, and general cargo ships having the oldest average age of 17.4 years. Most markets showed increases in the volumes transported during 2003. The volume of crude oil increased by 3.4 percent and bulk products, including iron ore and coal, increased by 9.1 percent.
Using data supplied by Lloyd's Register, UNCTAD reported that of the 30,228 ships registered by January 31, 2003, Greece was the world leader in terms of the number of vessels domiciled there, a term for where the parent is located, accounting for 19.52 percent of the world's shipping vessels. This was followed by Japan with 13.60 percent, Norway with 7.57 percent, China with 5.77 percent, the United States with 5.54 percent, and Germany with 5.31 percent.
According to 2003 U.S. Maritime Administration statistics (MARAD), there were 416 total ships in the U.S. merchant fleet, with 13.3 million combined deadweight tons (DWT). The majority were tanker ships, with a total of 110, followed by 87 container ships and 64 ro/ro ships. By 2004, the total combined fleet of the world's top twenty countries was 28,650 vessels, with a combined DWT of 821.7 million.
Steamship lines worldwide have employed various means to improve their productivity, increase sailing frequencies and port coverage, and reduce costs. Common methods have included vessel sharing agreements, slot and terminal rationalization arrangements, and the introduction of new technologies. Shipping lines also relied on shipping conferences, or groups of carriers that service particular trade routes, to facilitate cooperative arrangements and establish rates, although the importance of such conferences had begun to decline. Conferences lessened the need for individual lines to build new ships when serving new routes. Intra-industry cooperation also enabled steamship lines to overcome the double hurdle of overcapacity and declining world petroleum demand.
Cargo vessels constitute the largest component of water transportation. Depending on their design, they may haul general cargo (finished and unfinished goods), dry bulk, or liquid bulk. These vessels are structured as common carriers—vessels available for public use to provide transportation for passengers or cargo—and operate on regular time tables and port rotations.
Containerized vessels are designed to be highly efficient. Containers used to haul cargo need less labor and time to load and unload than breakbulk (noncontainerized) vessels. The containerized category encompasses intermodal ships, including roll-on/roll-off (ro/ro) vessels, and container/barge carriers. Ro/ros make it possible for cargo stored in containers to be passed over ramps through doors in the ship's sides while cars, trucks, and other vehicles could be driven on and off the vessel's aft (rear) end.
The five trade lanes that account for the vast majority of U.S. international ocean liner shipments are as follows: U.S.-northern Europe, U.S.-Asia, U.S.-Mediterranean, U.S.-South America, and U.S.-Australia. These trade lanes have varied in their characteristics. Containerized shipping was concentrated in three trade lanes: Asia-North America, Asia-Europe, and Europe-North America. The northern Europe and Asia trades have been the largest, in both volume and value.
Some commodities, such as dry bulk like grain, lumber, cement, potash, coal, ore, etc., cannot be containerized and therefore are shipped in vessels specially designed for those cargo types. Many have special hoisting devices that assist in unloading. Liquid bulk such as crude oil and refined petroleum is transported in tankers, which require special features such as cofferdams separating the tanks to prevent leakage, expansion trunks, mechanical venting, and steam heating to reduce oil viscosity in cold weather.
Beyond vessel design, a prominent feature of international liner shipping is the existence of carrier conferences, an affiliation permitted in almost all countries. The characteristics of concerted activity and partial immunity from competition and antitrust laws are common to such conferences worldwide. However, every nation regulates conference activities in different ways, and U.S. regulation of conferences in ocean shipping is, to an extent, unique. Members of a conference enter into an agreement under which they agree to fix and maintain rates to be charged by the members of the conference.
Most nations recognize the conference system but differ in their respective laws and regulations. The European Union gives antitrust immunity to conference carriers alone. In Europe, conferences are free to organize themselves as their members see fit and may limit membership. By limiting membership, closed conferences are better able to control capacity and thereby to exert greater influence over rates. Australia provides partial antitrust immunity and exempts only rate-fixing, pooling or apportioning of business, cargo restrictions, decisions on conference membership, loyalty agreements, and practices essential to the conference service and of overall benefit to exporters. Likewise, Canada grants conference carriers block antitrust immunity. Independent carriers, though, are subject to competition laws. As in Australia, Canadian policy holds that discussion agreements between conferences and independents are illegal. Japan has granted the broadest exemption in that all ocean transporters, liner and non-liner in both domestic and foreign trades, receive blanket antitrust exemption. Although the United States continues to recognize the existence of conferences, since the passage of the Ocean Shipping Reform Act of 1998 (OSRA) conferences operating in the United States have lost much of their commercial power. They can no longer require members to adhere to conference rates and cannot place restrictions on the service agreements members negotiate. In addition, conferences cannot require members to disclose the rates they charge.
The International Maritime Organization (IMO), an agency of the United Nations, began in 1958 when it was determined that there was a need for an international body to regulate safety in the shipping industry. In 1960, the IMO created a new version of the International Convention for the Safety of Life at Sea (SOLAS), and in 1973 created the Convention for the Prevention of Pollution from Ships covering accidental and operational oil pollution, and also pollution by chemicals, goods in packaged form, sewage, garbage and air pollution. However, how these conventions are implemented varies from country to country.
Transportation of goods over water, as ancient as civilization, did not come to full fruition as an industry until explorers, seeking new trade routes for cargo, opened all-sea routes from Europe to Asia and the Americas. To accommodate increased trade volumes, large merchant ships had to be built. Spanish carracks, which held some 1,600 tons of cargo, and later, galleons, became the forerunners of the full-rigged ships that dominated trade between the seventeenth and nineteenth centuries.
The nineteenth century saw the invention of the clipper ship. Carrying both passengers and cargo, these ships became known for their speed, some traveling as fast as 18 to 20 knots. Even with the introduction of the steamship in the mid-nineteenth century, some clipper ships continued, for a time, to post the fastest speeds. By late century, however, clipper ships began to be replaced with Britain's adaptation of iron-hulled steamships.
The introduction of the steamship in the nineteenth century radically transformed ocean shipping and led to the creation of steam-powered liner systems. By the twentieth century, mechanically propelled vessels had replaced nearly all sail-powered cargo ships. With the exception of wind-driven dowhs and junks in Africa and some Asian nations, by 1960, almost 60 percent of all commercial ships were powered by diesel engines, 30 percent by steam turbine, and the rest by steam-reciprocating engines. Nuclear power, which proved impractical for commercial purposes, came into use in military ships in the 1960s.
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