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World Ship Types

Ships are mostly classified along the line of the functions they perform. Apart from military vessels, most commercial vessel classes can be along the following categories: cargo carriers, passenger carriers, industrial ships, service vessels, and noncommercial miscellaneous.

Cargo Carriers

These are vessels that are designed for the sole purpose of cargo transportation. For macro-identification, cargo ships can be distinguished by the type of cargo they carry. Fortunately, the superstructure design and construction of vessels for specific cargo type tends to be distinct. This means that it is easy to distinguish container, bulk and passenger carriers from each other by their unique appearances.

Container Carriers

Container carriers are primarily used to transport inter-modal containers at sea. The popularity of these types of ship had increased over the years due to the increased impact of shipping containers as the primary driver of globalization. The vessels are built with cellular grid of compartments below deck and above the deck. It is these grid networks that holds either standard 20, 40 or 45 footer shipping containers.

Container carriers are about the most popular type of vessels as the volume of container shipments increased considerably worldwide. About 90% of unitized cargo in world are shipped by container. The cargo carrying capacity of these types of vessels are measured in TEU (Twenty-Foot Equivalent- that is the number of 20 foot containers that the vessel can accommodate).

A container Ship.

RORO (Roll-on/roll-off) Vessels

Roll-on/roll-off vessels are ships that are designed to transport wheeled cargoes. These include cars, buses, trucks and construction/heavy equipment. These types of vessels are easily distinguished by large doors in the hull and external ramps that can open outwards and downwards to allow rolling of the wheeled cargoes between the port pier and the ship.

The interior of the vessel tend to resemble huge parking lot which are constructed at multiple layers within the deck in order to fully maximize its internal cargo carrying capacity.

A RORO Carrier.

General Cargo Vessels

Before the advent of Container carriers, these were the most popular cargo carrying vessels in the world. They are designed to carry all forms of unitized cargoes and these are designated by the type of packaging. These could include bags, palettes, crates, boxes, cartons and even shipping containers. Some of these type of vessels are fitted with deck cranes to facilitate unassisted cargo evacuation.

Tankers

Tankers are vessels designed to transport bulk liquid cargoes.Most of these cargoes include crude and refined petroleum products, liquefied natural gas, liquid chemical materials, vegetable oil etc. These types of vessels are constructed with multiple cargo holding tanks within the ship hull. The liquid cargo is loaded and unloaded through the use of series of pumps and pipes.

An LNG Tanker.

Dry-bulk Vessels

Dry bulk vessels are designed for the carriage of ore, coal, grain, fertilizer etc. Appearance wise, they tend to resemble container vessels without the trademark container cargoes. One of their main features are multiple large cargo hatches that covers the cargo compartments within the ship hold. Some bulk carriers have on-board cranes with bucket heads to offload their cargo volume while others without these might need ship side equipment for the same task. The cargo is mostly evacuated through the use of suction pumps, chain buckets etc.

Passenger Carriers

Most passenger ships fall into two sub-classes, cruise ships and ferries.

Cruise ships

Cruise ships are derived from the transatlantic ocean liners, which, since the mid-20th century, have found their services supplanted by jet aircraft. These ships are designed for large numbers of passengers on vacation. They are characterized by high superstructures of many decks with hotel-like, outlined rooms for passengers. In addition to this major social facilities that may be found onshore are replicated in the ships. These include casinos, shopping malls, dance clubs and theaters. Many cruise ships have stern ramps, much like those found on cargo-carrying roll-on/roll-off ships to facilitate passengers transfer.

Most of these cruisers are painted white because their routes lie in warm seas.

A Cruiser at sea.

Ferries

Ferries are small to medium sized vessels that designed to carry passengers and (sometimes) vehicles on hinterland waterways. The vessels are mostly made up of one or multiple decks. Ferries are not designed to be used in the rough, open waters of the seas like the big ocean going vessels but are designed for calmer waterways, mostly in urban areas, where large volumes of passengers need to be commuted daily.

Industrial ships

Industrial ships are vessels that are purpose built to carry out an industrial processes at sea. A good example is a factory ship that processes fish at sea. The final products include fillets, canned fish and fish meal. In the petroleum sector, industrial ships include floating oil drilling or production rigs and Floating Production Storage and Offloading (FPSO) vessels. These types of vessels are characterized by the specialized equipment they carry onboard for the extraction and processing of items of value at sea into a final product.

A circular FPSO being transported to sea.

Service vessels

Tug Boats

Tug boats are high powered vessels that are used in tugging or towing vessels.  This activity is mostly carried out in port approaches, navigational channels, harbors and inland waterways where the use of the ships propulsion might be damaging to surrounding facilities or the environment. Although Tug boats are relatively smaller when compared to ocean going vessels, they are primarily designed to provide towing capacities for the bigger vessels. Due to this factor, they carry more power to size ratio than any other vessel type.

Platform Supply Vessels (PSVs)

Platform Supply Vessels (PSVs) are specialized vessels that are designed to supply offshore oil and gas facilities. The primary usage of these vessels is supply of logistic support and transportation of goods, materials, equipment and personnel to and from these platforms. This broad class of vessels can be subdivided into offshore vessels (OSVs), crane vessels (CVs), offshore construction vessels (OCVs), well stimulation vessels(WSVs) etc.

An Offshore Supply Vessel.

Other Types of Vessels

Barges

A barge is a type of flat-bottomed vessel that is designed for transportation of goods on rivers and canals. They are broken into two major categories: those that are self propelled and those that need external power, either by tugs or pusher boats.

A Barge carrying bulk coal.

 

Siemianowka: A Cargo Hub That Is Waking Up

In the world of logistics, an obscure cause can trigger a resounding effect in a remote section of the world far away from the source of the phenomenon. This scenario is presently applicable in the stories of Khorgos and Siemianowka. The first thing to note is that the two towns are in different countries, Khorgos is in landlocked Kazakhstan while Siemianowka is located in Poland. The only common denominator between these two towns could be traced to trade.

The two serene towns are being thrown into limelight by the Chinese grand plan to open up the global trade routes through land and sea at a grand level never experienced before. Welcome to the Belt & Road Initiative. In the case of the two towns, we are specifically looking at the ‘Belt’ section of the global project. As part of the initiative, Khorgos is paying host to a massive inland Dry Port which would be serviced majorly by rail lines. (See Khorgos: The Gateway Dry Port)

Siemianowka came into the picture due to one critical reason: There exists two rail line gauges along the cargo route. While China utilizes the standard rail gauge, the rest of the eastern Europe countries, which would serve as conduit for the inland cargoes, uses the Russia gauge which ends in- guess what… Siemianowka, Poland. It is from this town that the standard gauge rail takes the cargoes the rest of the way to mainland Western Europe. Due to this innovation, the cargo transportation dynamics becomes simple, Chinese containerized cargoes are transferred from Russian-gauge trains onto Standard-gauge trains on the to journey, while the reverse is the case on the fro journey.

Piraeus Port: A Greek Miracle

To the Greek, the Port of Piraeus holds a historic significance and their choice in selling the controlling interest to the Chinese Government owned company, COSCO Shipping is turning out to be a good choice. The port had always been the largest port in modern Greece, serving as the source of supply for the industrial hub that grew out of Piraeus. It is the largest in terms of passenger traffic (third largest in the world) in continental Europe with traffic of about 20 million passengers annually.

The journey towards the privatization of the port started in 2008 when COSCO obtained a 35-year controlling right over two container terminals within the port. Then fast forward to 2019 and COSCO had got majority control over the administration of the port. The deal gave COSCO 67 per cent controlling right on the Piraeus Port Authority (PPA) for 418.9 million U.S. dollars. In addition to this, it would also be paying an annual fee to the Greek government for the period of the deal.

The after effect of the deal is not lost on independent observers as the fortune of the port has changed for good. The port is now rated to be the fastest growing container port in the world by PortEconomics. The port is now ranked 36th in the Lloyd’s list of the world biggest ports. It used to be at a dismal 93rd position in 2016. It is ranked seventh among Europe’s largest ports- it’s old position used to be 11th.

The hope for growth is very high with planned completion of works on Pier III. With this, the cargo capacity and the volume at the port is expected to climb higher to about 7.2 million TEUs in late 2019.

Khorgos: The Gateway Dry Port

The Chinese Shipping company COSCO has been at the forefront for the drive towards making the Belt & Road Initiative a reality. It has taken Chinese investments to different maritime countries through the funding of Port and logistics projects. Going through its project profile, one stood out as odd considering the huge capital resources voted for it. This is the Khorgos Gateway Dry Port in Kazakhstan. Kazakhstan is the largest landlocked country in the world with an estimated population of 18.3 million people in 2018.

Located in the far eastern region of Kazakhstan, about 15km to the Chinese border, is the KTZE-Khorgos Gateway- a massive logistics and industrial hub. The nearest ocean to the facility is more than 1,600 miles away. Instead of ships and barges, the Gateway is serviced by railway networks. The strategic importance of this location is not far fetched- it lies along the central land route of the new network of trans-Eurasian trade routes being championed by China; the Belt & Road Initiative (BRI). Its location enables it to handles transit cargoes that have left China to European countries such as Duisburg, Lodz, Hamburg etc.

Part of the unique landmarks at the port are the 7 giant Train Gantry Cranes specially positioned to horizontally transfer both 20- and 40 footer modular transport containers between the tracks of different railway gauges. The Chinese utilizes the Standard gauge while the Kazakhs utilize the Soviet gauge. It is estimated that the average transshipment time for the cargoes a fully loaded train to be transferred to another train is 47 minutes. Goods take about 15 days to move from China to Europe on the route while the same good might take about 45 to 50 days if transported by sea. Although the cost of transportation of a Shipping Container by rail overland is around 10 times as much as by sea, it is still viable for the transportation of high value goods that needs to be delivered on timely basis.

The Khorgos facility occupies 129.8 hectares of land and boasts of a total capacity of about 18,000 Twenty Equivalent Unit of containers. The zone has many other facilities; including storage, production, textile manufacturing, chemical and metal treatment. The facility also provide logistics, warehousing and storage services.

The day to day running of the Gateway is facilitated by the COSCO Shipping company alongside the Lianyungang Port Holdings Group Co., Ltd. (LPH) and the Temir Zholy (KTZ), the Kazakh’s national railway operator. The three went into tripartite agreement with COSCO Shipping and LPH jointly having 49% stake in the facility.

Intermodal (Shipping) Container

A shipping container (or intermodal container), is a large standardized metal enclosure, majorly in box shape, that is designed to be used for the transportation of cargoes across different modes of goods transportation. This means that the container could be loaded across ocean vessels, rail carriages, road trucks etc. The shipping container has been identified as the major facilitating influence for the concept of globalization. In addition to its primary role as cargo conveyor, it also serves other function such as cargo protection.

The modern shipping container could be classified by the following criteria namely:

Size, shape and purpose.

The size configurations of modern shipping containers are 20 ft, 40 ft, 40 ft high-cube, 45 ft high-cube, 48 ft, 53 ft and 60 ft. The standard heights for the container is either 8 feet 6 inches (2.6 m) or 9 feet 6 inches (2.9 m). The latter types of containers are called High Cube/Hi-Cube containers. The item is usually constructed as a utility steel box.

The modern shipping container have different design types based on the use it is meant for. This include the standard, general purpose container, refrigerated containers and tanks in a frame containers.

The general purpose container is the most common boxlike containers used in transporting consolidated numbers of unitized break-bulk cargoes.  Refrigerated containers are designed to be used in transporting perishable items such as meat, dairy products, fruits, vegetables etc. They are standard sized container boxes that have modular refrigerating units as part of the design. This is intended to keep items within its hold fresh during transit and storage. The tank in a frame containers are specialized tanks that are constructed to fit into a standard container sized frame with all the accessories such as corner castings with twist-lock mechanisms and forklift pockets at the base.

Although various types of containers were used in the transportation of cargoes in from the earlier 19th century, the modern iteration of the shipping container as known today started with trucking magnate Malcom McLean. In 1955, he bought Pan-Atlantic Steamship Company to create a container shipping corporation known as Sea-Land. The first Sea-Land containers have the following dimensions: 35 ft (10.67 m) x 8 ft (2.44 m) x 8 ft 6 in (2.59 m). The Sea-Land model was the progenitor of the modern shipping container. It was designed to have the basic features that are being seen today in modern containers such as basic frame with eight corner castings, corrugated walls designed for strength with the aim of withstanding stacking loads and twist-lock mechanism that is embedded in the corner castings.

In 2010, it was established that shipping containers accounted for 60% of the total world’s seaborne trade.

 

 

China COSCO Shipping: A New Mega-Shipping-Company Is Being Born

The story of China and trade dated back centuries. They have always tried to sustain their relevance in the global trade cycle. Despite being a communist state, the country, since 1948, has developed a novel idea of creating state owned enterprises to take care of diverse business interests both home and abroad. This has led to a long list of public corporations that are optimized for both trade and service.

One of the most popular among these enterprises is China COSCO Shipping Corporation Limited or simply COSCO. It is a group company that is engaged in various business sectors which include logistics, shipping, financial services and equipment manufacturing. It was formed out of the the merger between the COSCO Group and the China Shipping Group in January 2016.

COSCO owns a container carrier fleet with a capacity of 1,580,000 twenty-foot equivalent units (TEU) among other dry bulk and tanker fleet. This configuration allows the company’s vessel’s to call at most ports in the world. By volume, COSCO ranks fourth largest in the number of container ships and container volume handled around the world.

In the recent decade, COSCO has been at the forefront of the implementation of the Chinese grand plan of further expansion of world trade in the form of the Belt & Road Initiative (BRI). The company had been making numerous shipping and logistics acquisitions around the world. The list is endless:

  • 51% stake in Piraeus Port Authority, Greece
  • $6.3 billion bid to buy Hong Kong Orient Overseas (International) Limited (This will make it the world’s third largest container shipping company with a fleet of over 400 vessels).
  • 49% stake in Kazakhstan’s Khorgos Gateway Dry Port in conjunction with the Port of Lianyungang.

With its strategic acquisitions within the global cargo logisitics chain, it is a matter of time before COSCO overtakes the top three Container carriers; Maesk Line, Mediterranean Shipping, CMA-CGM; to become the number one container carrying liner in the world. It is of note that early 2019, the company received a $26.1 billion chit from China Development Bank towards strengthening it for further investments in the Belt and Road Initiatives.

Belt & Road Initiative (BRI) – The New Silk Route

Belt & Road Initiative (BRI) – The New Silk Route In 2013, China declared its ambition to re-activate the now defunct Silk Route through a modern and massive project that would connect it with more than 65 countries in Asia, Europe, Africa and the Middle East. The project is dubbed “Belt and Road Initiative” (BRI). This concept is alternatively known as “One Belt, One Road” (OBOR)” . The project is expected to cost between $4-8 trillion and would affect about 62% of the world’s population and 40% of its economic output. The major aim for the Chinese in developing BRI is to have a long term strategic influence in world trade, open up new trade markets for its goods and give it the cheapest and easiest way to export materials and goods. China had always been at the forefront of world affairs. One major area of its influence is trade. This is facilitated by its present state of development, population and wealth. One of the major idea that it was known for was the old Silk Route.

What Is the Silk Route? The Silk Route was a historic trade route that transverses from the Asian continent to the Mediterranean, passing through China, India, Persia, Arabia, Greece and Italy. It dated back to the 2nd century BC. Although diverse commodities were traded along this route, the predominant commodity was silk of which China had the monopoly as at that time. Other items that were traded spices, grains, fruits and vegetables, animal hides, wood and metal work, precious stones, and other items of value.

Silk Route 2.0 BRI would be made up of several network infrastructures. These include: Key among the specific projects to be implemented are: China has been facilitating these projects through various Chinese companies. The funding for the projects are provided by the government as either grants or loans, but most are provided as loans for the benefiting countries. To date, there had been cases where countries have defaulted in their payment and the Chinese companies have taken over the local facilities of the defaulting countries. In Pakistan, for example, a deep-water port in Gwadar is being funded by loans from Chinese banks to the tune of $16 billion. The interest rate on the loan is over 13%. This means that if Pakistan defaults, China could end up taking all sorts of collateral or outright taking over the project as it did in Sri Lanka. China had funded the construction of the Hambantota Deep Water Port up to the tune of $8 billion loan. When Sri Lanka was unable to pay up, it surrendered the controlling interest in the port to a state-owned Chinese company as a means of writing off the debt. The agreement had given the control of the port to China on a lease of 99-years. Currently, China has passed several milestones related to the OBOR project, including the signing of hundreds of deals since 2016.

Cargo Shipment Process

Cross border goods transportation has always been the bedrock of international trade. With the exponential growth of e-commerce, huge numbers of business outlets have developed international transportation as their lifeline. In order to carry out a successful shipment, several landmarks have to be achieved. In addition, the services of certain industry players have to be engaged too. Key among these players are shippers, shipping lines, booking agents, freight forwarders, consignee, customs house brokers etc.

Container Shipment Types

The dynamics of the choice of the shipment mode and method are determined by quite a number of factors. Principal among these are the cargo type, cargo size, profit consideration, acceptable window of time for delivery etc. In ocean freight business, the adoption of modular shipping container is considered as industry standard. For the shippers, two major options available. These are LCL and FCL.



LCL means Less than Container Load or groupage while FCL stands for Full Container Load. LCL transport is facilitated by a Non-Vessel Operating Common Carrier (NVOCC). NVOCCs reserve full containers from shipping companies based on traffic demand. They then proceed to offer space in the containers for small LCL shipments at a reduced rate compared to FCL shipping. For FCL, the shipper has an entire container at his disposal for loading cargo. Under this type of container shipment, goods and merchandise in a container are loaded and unloaded for a single consignee.

LCL option of shipment is adopted when the cargo is not large enough to fill the total internal space of the container. The shipper pays for the amount of space his cargo occupies. With this method, different cargoes from different shippers are consolidated into one shipping container to maximize the use of space and cost.

The shipping line is the company carrying you cargo at sea. They usually operate the cargo ships either on charter or full ownership. As a shipper, you are less likely going to have interactions with, receive documents from or have any correspondence with them. Freight forwarders, however, are the logistics provider you will likely be dealing with. They arrange the transportation of cargoes from shippers to consignees.

The shipper is the party that initiates the shipment of cargo at the point of origin. This could be the owner of the cargo, the factory of manufacture or the merchant that sold the product. The consignee is the receiver of the cargo; this again could be the buyer of the item from source or a buyer.



Five physical processes and two documentation steps in International Shipping

The seven steps of international shipping include: Export Haulage, Origin Handling, Export Customs Clearance, Ocean Freight, Import Customs Clearance, Destination Handling and Import Haulage.

Export Haulage

This is the first part in the transportation process. It involves the transfer of the cargo from the shipper to the freight forwarder’s location (likely a warehouse). For LCL shipment, the forwarder’s location would be an export consolidation center. The goods could possibly be transported by road (truck), rail or water.

Export Customs Clearance

Customs formalities must be carried out for every cargo leaving a country. This is done in order to certify that the cargo has met statutory regulatory requirements. The business of interacting with customs, usually called customs declaration is carried out by companies that have valid customs licenses. These are called customs house brokers. The process involves the development and submission of declaration documents to the authorities.



The export customs clearance can either be performed by a freight forwarder with a valid license or an agent appointed by the freight forwarder. Alternatively, it can be done by a customs house broker appointed directly by the shipper.

Origin handling

Origin handling covers all physical handling and inspection of the cargo from its reception at the originating warehouse till it is loaded on a ship. There are many steps carried out under origin handling by different parties. All these are coordinated by the freight forwarder, or an agent appointed by the freight forwarder. In short, when the cargo is received, it is inspected (tallied), planned for loading, consolidated with other cargo, stuffed into a container and moved to the port where it is loaded onto a ship.

While it is the freight forwarder that performs all cargo handling at the point of origin, the cost of the service can either be paid for by the shipper or the consignee. For example, if a consignee has decided to use Forwarder A for his import shipments, and agreed with the shipper that the shipper must pay for origin charges, automatically the shipper will buy origin charges from Forwarder A too. This situation can create some friction in case a shipper believes the price for origin handling is not at market levels, as they are forced to user Forwarder A in this case.



Ocean freight

The freight forwarder decides on a shipping line to perform the ocean freight from origin to destination in order to meet the required timeline for the shipment. The freight forwarder and the shipping line has a contract of carriage for the cargo, and the shipper or consignee in this case is not subject to any direct interaction with the shipping line.

The cost of the ocean freight will ultimately be charged to the shipper or the consignee. Ocean freight, however, is never the entire costs of shipping from port to port. There are multiple surcharges levied in the industry, such as bunker adjustment factor and currency adjustment factor, which will all be passed on to the shipper or the consignee.

Import customs clearance

Import customs clearance can typically begin before the cargo arrives at its destination country. As for export customs clearance, it is a formality where a declaration is developed and submitted together with relevant documents enabling authorities to register and levy any customs duty on the shipment. Import customs clearance is performed by the freight forwarder or an agent of the freight forwarder, or by a customs house broker appointed by the consignee.



The import customs clearance process must be completed prior to the cargo leaving a customs bonded area in the country of destination. Typically, that also means before the cargo leaves the destination warehouse of the forwarder or the forwarders agent.

Destination handling

As for the origin, cargo handling is also required in the destination before it can be released to a consignee. In short, destination handling includes transfer of the container from the ship to shore and from the port to the forwarder’s destination warehouse. It also includes un-stuffing of the container and preparation of the cargo collection by the consignee.

Import haulage

The final leg of the goods transportation process is the actual delivery of the cargo to the consignee. It can either be performed by the freight forwarder or a local transportation company appointed by the consignee. If this part of the transportation is being arranged by the shipper, it would normally make sense to use a freight forwarder which can also arrange for import haulage. The import haulage typically covers transportation to a specific address.



 

Port for Sale? Road for Lease? China is Buying…

Trade has always been driven by the dynamics of its logistics chain. At the backbone of this is transportation on land, air and water. For a nation to optimize its trade potentials it must fully develop these areas of interest. This fact is not lost to the Chinese people as it has continually done this over the years. With the largest and most modern ports in the world, China has become a master of trade and logistics and it has now started exporting it to the world in a big way. China is funding or buying up rail, road and seaport projects around the world at a level never seen before.

They started with the quiet acquisition of shares and controlling interests in major ports around the world. This was about a decade ago. Now the equation has changed. The whole initiative has been wholly formalized under the Belt and Road Initiative (BRI) and the spending spree has been expanded into rail, road, gas and energy projects. what seemed like uncoordinated purchases have been harmonized into a carefully thought out strategic plan.

The roll-call is endless:

China has moved from the funding and development of its local ports to that of foreign countries. It has been estimated that it had invested over $20 billion into seaports of other countries. China knows what it wants stepping into the future and its seriously going for it. The big one is nobody can stop it now, not even the United States- its greatest adversary.

2019-20 Coronavirus Pandemic: Looming Impact on World Trade

The 2019-20 coronavirus pandemic is the outbreak of coronavirus disease 2019 (Covid-19), which is a severe form of acute respiratory disease. The outbreak started out in Wuhan, Hubei, in mainland China in December 2019. The actual timeline in the disease’s trajectory from actual outbreak to reaching epidemic status in China is now a matter of dispute as there are evidences of coverup by the Chinese authorities. The outbreak, which was initially perceived as a local epidemic, soon exploded into a global pandemic and was designated thus by the World Health Organization (WHO) on March 11th, 2020.

By February of 2020, the epicenter of the pandemic had shifted base from China to Europe. Mediterranean Italy suffered the largest numbers of casualties- with about 25,000 deaths to date. The global focus is now on the United States as the death toll due to the pandemic rises. Projections have indicated that it would have the largest casualty when the whole drama ends. As at the last count, the global death toll had hit the 2 million mark.

The Effect on World Trade

It does not take the use of a crystal ball to see the immediate and forthcoming effects of the global pandemic on world trade. One of the obvious sign is that the world is heading towards serious economic recession. On the other hand, the long term effect on the fiscal and economic interests would start to take serious root in the third quarter 2020. The effect might take up to three years to slow down.

Globally, the full effects of the concerted efforts being made to combat the pandemic might not be felt until the end of the second quarter 2020. Most governments are already taking steps to limit the economic damage and prepare their citizens for long term recovery plans. Key among these are the stimulation of fiscal and monetary stimulus by governments.

Effect on Global Trade in Services

The first casualties in the trade world were the service industries. When the problem was at epidemic level in China, the country locked down entire regions, closing down huge transport services.

As countries began to close their borders and the infection spread to Western Europe and other continents, the global tourism industry became the first major casualty in the service sector. This came about as a result of travel bans and shutting down of tourist sites.

The global cruise industry was the next in line. Several services were active centers of covid-19 infection as the virus spread among the passengers. Most of these affected ships were not allowed to dock in order to stop the disease spreading to inhabitants of the port city. It is believed that after the ease on the current lock-downs, the industry might witness close-downs and takeovers.

The shutting down of the tourist services then took its toll on the airline businesses too. As the number of passengers dwindled, most of the airline operators began to shut down while some smaller/weaker ones closed shop totally.

In addition, all the other service industries that are connected to the airline business e.g. business travel and tourism, began to take their share of the collapse. World’s hospitality industry (Hotels, cafes, eateries etc).

The education system is one major service pool that is already feeling the effect as most educational institutions are firmly shut down.

Next in line is the world sports and entertainment industry. Globally, most major sport events were shut down. In the music industry, concerts and tours were cancelled. In the movie industry, cinemas were closed and movie premieres were postponed.

The banking industry would not be left out of the whole problem, as funds dry up and businesses slows down. Although this might not be evident until the initial part of the re-opening process by countries.

The only service industry that is fully functional, albeit at an alarming rate is the global health industry. The industry had been wholly overwhelmed by the global viral outbreak and had witnessed the loss of a large number of personnel.

Effect on Global Trade in Goods

The global trade in commodity items is highly dependent on timely projections. The intricate dynamics of demand and supply is used in planning for imports and exports. Most times the consumer items that are going to be used within a period are imported about a quarter earlier. This means that most of the cargoes being shipped across the oceans today were ordered during the pre-pandemic season. What this means is that the full effect of the pandemic is not yet being felt in the shipping industry.

The crude oil price might not pick up considerably for the next few months.

As the rate of unemployment rises as some industries downsize (other could close down totally), the buying patter of people would change. Currently, people’s demand is now focused on essential commodities that would guarantee their survival- mostly food items, drugs, personal protection equipment and general survival kits. This means that the demand for non-essential goods and luxury items would drop drastically. The ripple effect would be networked downsizing on the entire supply chain of these non-essential items.

China’s dominance as the main manufacturing hub of the world might start dwindling as countries transit towards localization- the local production of goods and services and relocation of centers to other countries. For example, Japan has earmarked US$2.2 billion out the total fund for economic stimulus package to assist its manufacturers relocate production outside of China. Other countries and companies might follow suit in order to reduce global over-dependence on one source of strategic goods production. The major beneficiaries of this move will be emerging economy countries such as Vietnam, Mexico, Brazil, India and South Africa.

The Chinese might respond to this by deliberately relocating their companies outside mainland China. This is to ensure that they still capture profits in the dynamic flow of the global economy.

In the shipping industry world, the effect of the pandemic on shipments, particularly the cargo liners might take some time (up to three months) to take effect. As recession creeps in and industries lay off workers, people’s savings would dry up. The demand for consumer goods would drop, leading to lesser demand for shipping services. Some of the existing services might merge, be taken over by bigger operators or simply go underground.

Plans by some countries to expand their port / cargo logistics system might have to be put on hold. This applies to global trade projects such as the Belt & Road Initiative (BRI). In the shipbuilding industry, the ongoing plans to construct container carrier of up to 26,000 TEU might be put on hold by the carriers in order to conserve funds.