International shipping services and the regulatory framework

Shipping has been crucial to the growth of the world economy for two related reasons. First, as world production expands, international transportation services are required to carry many raw and intermediate goods to manufacturing plants and finished goods to consumers. Second, shipping is a more cost-effective method than land and air transport for moving most bulk goods between states. Without inexpensive, efficient oceanic transportation, world trade would not have grown as fast as it has because higher transportation costs lessen opportunities for exploiting comparative and competitive advantage.

While the importance of international air transport has grown markedly in recent years, with passenger travel and priority mail now almost entirely handled by the aviation sector, shipping continues to dominate the movement of most goods internationally. In the late 1980s, about two-thirds of all international trade by value (and 95 percent by weight) was transported by ship. It is thus not difficult to appreciate how vital world shipping is to international trade and commerce. Shipping is also in itself an important industry — earning about $140 billion annually and employing one million individuals in the late 1980s. The shipbuilding industry earns another $20 billion annually.

The growth of international shipping has been steady and dramatic over the past two centuries.