Importance of World Shipping and Sea-borne Trade
To understand the importance of shipping in our lives, we only need to look at the diverse types of goods we use everyday. From the mouse to the computer screen, the shirt on your back and shoes on your feet to the fuel that powers our vehicles and factories around the world every day, what we now call basic necessities of modern life are brought to us by world trade. Some 90%¹ of world trade is transported by sea. In 2006, seaborne trade reached over 30 trillion² ton-miles (an increase of 49% compared to trade in 1996).

The three main types of goods transported by sea are dry bulk, oil and containerised cargo. Dry bulk accounted for 38%² of the world’s seaborne trade in 2006. Oil trade formed the second largest type of cargo accounting for 36%² and containerised cargo contributed 15%². These trades are carried by more than 20,000³ merchant ships to various ports around the world, leading to a global cargo throughput of 14.8 billion² tonnes and container throughput of 440 million² TEUs⁴. The operation of these ships generates an estimated annual income of about US$630 billion² (S$1.05 trillion) in freight rates within the global economy. That’s about 5 percent of total world trade.

Looking ahead
In recent years, the world has seen the centre of maritime gravity moving to Asia. Asian countries’ share of world seaborne trade increased to 39%⁵ in 2006 (compared with 31% in 1996) and where nearly half of the world’s merchant fleet is domiciled in Asia⁵. 13 of the world’s top 20 ports⁵ are also located in Asia, handling around 36%⁵ of the world’s containers. Three of the world’s largest shipbuilding nations are in Asia accounting for 90%⁶ of global market share.

Besides the growth of the world’s port operations, shipping and shipbuilding have also contributed significantly to the global economy through its demand for supporting services such as ship financing, marine insurance, maritime legal and arbitration services, maritime education and research & development (R&D) etc. The global shipping portfolio of commercial banks is estimated to be about US$ 272 billion⁷ in 2006. Currently, the market capitalisation of the 182 public shipping companies listed on 35 exchanges is about US$ 359 billion⁸ and major Asian exchanges (comprising Hongkong, Singapore and Tokyo) account for as much as 34% of the global value. Risk management tools such as trading in forward freight agreements (FFAs) has also grown significantly with notional value of contracts rising from US$ 7 billion in 2002 to US$ 56 billion⁹ in 2006.

With Singapore strategically positioned within Asia, we are well placed to leverage on these growth opportunities. To this end, Singapore will continue working towards developing well-integrated business infrastructure and conducive business environment, skilled manpower and advanced maritime R&D and technology in support of the continued growth of the Singapore Maritime Cluster that serves global needs.

Useful links:
- International Maritime Organisation www.imo.org

¹Source: International Maritime Organization (IMO), http://www.imo.org/
² Source: UNCTAD Review of Maritime Transport 2007
³ Source: ISL, http://www.isl.org
⁴ TEU: Twenty-foot equivalent unit. The standard length of a container and the unit used to express the container carrying capacity of a ship
⁵ Source: UNCTAD Review of Maritime Transport 2007
⁶ Source: ISL based on LR/Fairplay
⁷ Source: www.ifsl.org.uk
⁸Source: www.clarksons.net/ Shipping Intelligence Network Article: Public Shipping’s Great Leap Forward – The Full Story by Dr Martin Stopford
⁹Source: Baltic Exchange/Forward Freight Agreement Brokers’ Association