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nsport costs have progressively decreased in the last 50 years. Ships having become bigger in size; greater efficiency at ports and more efficient organization of shipping operations have all contributed to lowering of transport costs on account of the economies of scale and better and higher quality of service. This has led to an increase in the demand for sea transport.

3.7 Globalization:

On account of globalization markets around the globe have increased in size and have progressively become bigger. Many homogenous trading blocs like the European Union (EU), North American Free Trade Agreement (NAFTA) and the Association of Southeast Asian Nations (ASEAN) have been established. These have facilitated increased cross border trade and barriers to the free movement of goods have been systematically reduced. This has also promoted the demand for shipping.

3.8 Dispersed manufacturing:

In the past Japan was the biggest manufacture of durable consumer goods. Later on with economic prosperity the costs of manufacturing went up so other centers like Taiwan and South Korea were established. Today China is the biggest manufacture of consumer goods and one third of the world’s container traffic goes to and from China. A future manufacturing hub is Vietnam. Since these low cost manufacturing centers are developing further and further away from the major consuming areas the demand for shipping is going up as the ton miles go up.

3.9 Increased global demand for commodities and consumer goods:

With increased economic prosperity, the low cost manufacturing centers of the world are investing heavily in their own domestic infrastructure. This leads to an increase in global demand of raw materials such as iron ore and coal. This newfound wealth of developing countries is also playing an important role in increasing the demand for shipping. It is predicted that the purchasing power of certain Asian countries will soon surpass that of the USA and Western Europe.

3.10 Demographic shifts:

Today the world’s population is concentrated in Asian countries. India and China are the two most populous countries in the world. Other South Asian countries are also catching up. On the other hand the industrialized countries of Europe and North America are having aging populations. Although Asian countries are still producers of commodities in the not too distant future these areas may become more consumers based. So the demand for shipping in the future will definitely be focused on Asia.

3.11 Technology:

Technological advancements in navigational equipment, less friction hulls, less polluting and more efficient engines and better propulsion systems have all contributed to making shipping safe and more environmentally friendly. This has in turn increased the demand for shipping services.

3.12 New legislations to increase safety and to reduce environmental pollution:

With high profile maritime accidents like the Exxon Valdez, Prestige and Erica incidents the governments of the USA and Europe have passed mandatory legislations to phase out single hull tankers for double hulls. This has increased safety but on the other hand has resulted in the scrapping of single hull tankers which in turn reduces supply and therefore increases demand for shipping.

3.13 Congestions and delays: