Marine Logistics Industry Background:
International trade and commerce are the driving forces of the world economy. Now that the Internet is available globally, cycle times for transportation and shipping of raw materials and goods has been reduced significantly. Companies have started to source their raw materials, semi-finished goods from new countries and markets that they have never dealt with before. The availability of information on the Internet is beginning to result in aggressive marketing of traditional products and competitive pricing. All these growth prospects are direct indications that growth in ocean shipping is bound to play a very significant role in the coming years and as it has for centuries.
Around 8.5 billion tons, or 98% of world trade, is carried by sea. Coal, iron ore and crude oil predominate along with grain, rice, steel, timber, bauxite, phosphates and refined products of oil. These form the raw materials for the world's economy, fuels for industry and food for people.
Vast amounts of fuels, foodstuffs and fertilizers, construction materials and other raw goods are moved by sea. Half of these cargoes are energy related – oil, coal and gas. Container traffic is just over 10% by weight, but much higher in terms of value.
The Freight Market:
The freight market is huge and complex with ship owners, operators and Charterers at the mercy of fluctuating freight rates. Thousands of events can have an impact on the cost of sea transport and anyone moving bulk commodities operates in an extremely volatile environment. Seaborne trade is a vital link in enabling the global economy to function. The world relies on a fleet of ships with a finite cargo carrying capacity of deadweight tons to carry every conceivable type of product. From grain to crude oil, iron ore to chemicals, more than 8 billion tons of trade is transported by sea. World trade is dependent upon the availability of adequate shipping capacity.
Freight Rates can fluctuate due to a wide range of external variables, but it is fundamentally driven by the factors such as Demand and Supply for world Fleet, Commodity Markets, weather related seasonal pressures, oil markets, bunker prices, choke points such as Panama Canal, Suez Canal etc. through which ships have to pass to reach other countries, general market sentiment for a particular type of ships or conditions specific to a particular commodity class or currency issues pertaining to a specific country.