WELCOME TOThe Netherlands MaritimeInstitutes of TechnologyOur vision is to be a leading maritime institute offering education, training and consultancy services for Malaysia and the region.

"Excellence with a Purpose” is the underlining philosophy of all the programs offered to the individuals and the maritime industry.

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT)Wholly owned & operated by

Maritime Intelligence Sdn. Bhd. (867557-P)

General Line: +607-218 2020Fax: +607-227 1818 

E-mail: enquiry@nmit.edu.my

“Excellence with a purpose”

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

MODULE OUTLINE• 14 Lecturing + Tutorial Sessions (Face-to-face)

• 1 Quiz (10%) lesson 1- 4 Week 5

• 1 Test (15%) lesson 1- 9 Week 9

• 1 group assignment (25%) Week 8

• 1 Final written examination (50%)

Total = 100%

17/10/12

INTRODUCTION TO

SHIPPING ECONOMICS AND

FINANCE

DISSCUSIONS• WHAT IS SHIPPING?

• HOW IT (SHIPPING ACTIVITIES/ BUSINESS) CONTRIBUTE TO WORLD ECONOMY?

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

CHAPTER 1:

• SHIPPING & IT’S FUNCTIONS

• DEVELOPMENT OF SHIPPING

• VARIABLES IN WORLD SEABORNE TRADE

• STRUCTURE OF CARGOES

• ADVANTAGES & PITFALL OF SHIPPING

• INTERNATIONAL TRADE & IT’S EVOLUTION

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

WHAT IS A SHIP?

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

THE SHIPComprises of two parts: the hull and the machineryHull = the shell of the ship designed for a particular trade as

specified by ship owners

Now, the tendency is to have large open holds with automated hatch covers

Concerns: speedy handling of cargo and faster turnaround time of vessel

MAIN FEATURES

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

THE GLOBALIZATION OF THE WORLD

ECONOMY

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

FREE FLOW OF GOODS• The result of the treaty known as the General Agreement

on Tariffs and Trade (GATT)

• The Uruguay Rounds (rounds of negotiation) of member states formed after WW ll further reduced trade barriers and established the World Trade Organization

• The decreased then enabled firms to view the world as their market

• Also enable firms to base individual production activities at the optimal location for that activity while serving the world market from that location

10

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

Development Of Communication Information And Transportation

• Development of the microprocessors has enabled the growth of high powered, low-cost computers

• Global communication have also been enhanced by developments of satellite, optical fibre, wireless technology and now the internet and World Wide Web

• Negotiation can also be conducted via video conferencing. Money and all documents required can be transmitted over the web

• Also development in the transportation technology. commercial jet aircraft, super freighters and containerization that have simplified greatly shipment of cargoes of products worldwide

MRI2304

Effects of the Suez and Panama Canals on Travel Distances (in nautical miles)

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000

London - Bombay

London - Singapore

New York - San Francisco

Liverpool - San Francisco

New York - Sydney

via Cape of Good Hope via Suez Canal via Magellan Straits via Panama Canal

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

WHAT IS SHIPPING?

MOST IMPORTANT TRANSPORT

CARRY BILLIONS OF TONNES OF GOODS

CONTAINERIZATION

• TANKERS • BULK CARRIERS• CONTAINER SHIPS

• Trade Routes

• Global Cargo Shipping

SHIPPING AND CLIMATE CHANGE

The Growth Of The Global Merchant Fleet According To Type Of Vessel

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

• The most carbon-efficient mode of transportation and produces fewer grams of exhaust gas emissions for each ton of cargo transported than air, rail, or road transport.

• In addition, new International Maritime Organization regulations establish strict standards for vessels NOx, SOx, and particulate matter emissions.

• The millions of containers that are used around the world are now 98 percent recyclable!

LOW ENVIRONMENTAL IMPACT

SHIPPING AND CLIMATE CHANGE• Of all modes of transportation, ships are unbeatable in

terms of efficiency.

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

MODERN SHIPS - Large, Fast And Highly Specialized

SIZE

SPEED

DESIGN

SPECIALIZATION

AUTOMATION

• Marine innovations are:

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

TYPES OF VESSELS

19

General Cargo Ships• A shipping specialists.

• A large proportion of the goods they transport are awkwardly-shaped and bulky, and do not fit into standard containers.

• Their cargo includes heavy goods and project cargo for major building projects such as power stations, offshore installations and mining. Some pieces of cargo weigh more than 1000 tonnes.

CARGO VESSEL/SHIP

21

Oil Tanker• The capacity of the global oil tanker fleet is

huge• This makes oil tankers the most important

cargo ships in the global fleet next to bulk carriers.

• Interestingly pollution from tanker accidents has reduced considerably in past decades, despite the increased volumes of oil transported.

• This can mainly be traced back to improvements in shipping technology. 

Oil Tankers

fb: Elly Ilyani Lecturer 23

Bulk Carriers• Bulk carriers, like oil tankers (huge capacity)• These ships transport goods such as ores, coal

and cereals. • The principal routes for ore shipments are from

South America to Europe and Japan as well as from Australia to Japan.

• The major shipping routes for coal are from the major exporters of Australia and South Africa to Western Europe and Japan.

fb: Elly Ilyani Lecturer 24

Cruise Liner• The total capacity of passenger ships and cruise

ships, accounting for only one per cent of the global fleet, is relatively small.

• Nonetheless the sector is booming and has become a lucrative and growing business for tour companies.

• Despite the economic crisis the major shipyards are continuing to build bigger and increasingly elaborate ships.

fb: Elly Ilyani Lecturer 25

Container Ship• The container shipping industry has grown

considerably in importance over past decades.• Standard container sizes have led to significant

savings of time spent on unloading and transferring cargo to trucks and rail.

• In terms of capacity per ship, container ships left general cargo ships behind long ago.

Container Vessel/Ship

27

A cargo is instructed to carry containers for

20 or 40 footers, and the delivery involved

is part of International Business

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

EVOLUTION OF MERCHANT FLEET

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

STRUCTURE OF CARGOES

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

ADVANTAGES OF SHIPPING

1. Shipping is the most efficient, secure and safe means of transporting more than 90 percent of global trade.

2. For vast majority of cargoes like fuel, food, component parts, commodities and finished goods there is simply no viable alternative other than shipping.

3. Shipping is the least environmentally damaging form of commercial transport while taking into consideration the productive value of the activity.

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

4. Any form of transport other than shipping to move some 90 percent of global trade would be unthinkably high while taking into consideration both the economic and environmental costs.

5. Shipping is a very positive force for sustainable development. The imports and exports that generate global trade are all carried by sea and developing countries like Bangladesh can, and do, become major participants in the industry itself, generating income and creating wealth in the process.

ADVANTAGES OF SHIPPING

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

DISADVANTAGES OF SHIPPING

1. Ships can create serious environmental issues such as oil pollution or marine pollution either through accidents or poor operating practices by dumping wastes at sea or using harmful paints or coatings on ships’ hulls.

2. Even though ships produce less CO2 emissions compared to airfreight or other transports, still regulations and capacity-building measures need to be developed and implemented to reduce the emission. Otherwise shipping might pose threats to the global environment.

3. Leakages of oil, noxious liquid substances or garbage thrown to the sea water might become a threat to several aquatic life forms if not properly regulated.

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

THE KEY SHIPPING ROUTES• There is a relatively small number of principal transport

routes:

JapanShanghaiSingaporeHong KongUnited States

Europe and East Asia

East Coast of the United States

fb: Elly Ilyani Lecturer 33

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

LIST DOWN SHIPPING ROUTE THAT VULNERABLE

TO PIRATE ATTACK

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

THE KEY SHIPPING ROUTES

Bottlenecks

Straits of Dover, Gibraltar, Malacca, Lombok and Hormuz, and the Cape of Good Hope at the southern tip of Africa.

• Traffic builds up in these areas, making ships vulnerable to attack by pirates.

fb: Elly Ilyani Lecturer 35

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

IMPLICATIONS FOR THE GLOBALIZATION OF

PRODUCTION AND MARKETS1. Technological innovations had made possible for firms to manage a globally

dispersed production system

2. Communication technologies have enabled Hewlett Packard to increase integration of its globally dispersed operations and to reduce the time needed for developing new products

3. Internet and WWW has created global electronic market places for diverse products

4. Transportation technologies – has reduced the cultural distance between countries and has brought about the converge of consumer taste and preferences

5. At the same time, global communication and global media are creating a worldwide culture

fb: Elly Ilyani Lecturer 36

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

WHAT IS INTERNATIONAL TRADE?

• International trade is the exchange of capital, goods, and services across international borders or territories.

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

EVOLUTION OF INTERNATIONAL SEABORNEBUSINESS

As maritime serves the world trade, any changes in• trading activities development in ship design & operation• International law and convention • Evolution of cargoes packaging• Economical condition (market cycle, depletion of natural/semi final goods)

have direct repercussion on shipping and port

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

1. Liner shipping connects countries, markets, businesses and people, allowing them to buy and sell goods on a scale not previously possible.

2. Is responsible for millions of existing jobs and plays a crucial role in stimulating new jobs.

3. Contributes hundreds of billions of dollars to the global economy annually thereby increasing gross domestic product in countries throughout the world.

4. As the lifeblood of global economic vitality, ocean shipping contributes significantly to international stability and security.

SEABORNE AS GLOBAL ECONOMIC ENGINE

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

TO BE CONTINUED

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my

www.nmit.edu.my

Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818  E-mail: enquiry@nmit.edu.my