Maritime Commerce
Unit- I
Presented by
M.Selva Rani M.E, (Ph.D)
Asst.Professor
Unit I
• UNIT1-HISTORY OF MARITIME TRADE IN THE WORLD
AND IN INDIA. – 9 HRS
• Developments- current seaborne trade of the world:-
composition and direction of cargoes – different types
of ships which carry them Indian shipping
development: India’s merchant fleet – role of shipping
on national economic development--- role of
government – India’s shipping policy manning –
business and cargo management; statutory regulations
affecting shipping companies doing business in India.
Introduction to Maritime Trade
• Maritime trade has been the backbone of global
commerce since ancient times, facilitating the exchange
of goods, culture, and ideas across continents. The
earliest evidence of organized sea trade dates back to
around 3000 BCE, with civilizations like the Egyptians,
Phoenicians, and Greeks developing maritime routes.
• Over centuries, maritime trade evolved, connecting the
Mediterranean, Indian Ocean, and later the Atlantic and
Pacific Oceans. This extensive network not only enabled
economic growth but also fostered cultural exchanges,
technological advancements, and the spread of religions
across distant lands.
Ancient Maritime Trade
Evolution of Global Maritime Trade
• During the Middle Ages, Arab traders dominated the Indian
Ocean, linking Africa, the Middle East, and Asia. The Age of
Exploration in the 15th century marked a significant shift,
as European powers like Portugal, Spain, and later Britain
and the Netherlands established global maritime empires.
• This period witnessed the rise of transatlantic trade, driving
economic and colonial expansion that reshaped the world
economy. Maritime trade became a critical component of
the Industrial Revolution, as it facilitated the movement of
raw materials and finished goods across continents,
accelerating global economic integration.
Maritime Trade in Ancient India
• India's maritime trade history dates back to the Indus
Valley Civilization (2500 BCE), with trade routes extending
to Mesopotamia, Egypt, and Persia. Indian ports like
Lothal, Muziris, and Bharuch were thriving centers of
commerce, exporting spices, textiles, and precious stones.
• The Chola dynasty further expanded maritime influence,
establishing trade networks with Southeast Asia and
China, making India a pivotal player in ancient maritime
trade. These interactions not only boosted economic
prosperity but also contributed to the spread of Indian
culture, language, and religion across Asia.
Chola Dynasty Trade
Chola Dynasty Trade Network
India's Role in Modern Maritime Trade
• In the colonial era, India's maritime trade was
controlled by the British, transforming cities like
Bombay, Calcutta, and Madras into major ports. Post-
independence, India developed a robust maritime
infrastructure, with key ports like Mumbai, Chennai,
and Kolkata facilitating international trade.
• Today, India is a vital hub in global shipping,
contributing significantly to maritime trade through its
strategic location and extensive merchant fleet. With
ongoing investments in port modernization,
digitalization, and green shipping, India aims to further
enhance its role in the global maritime economy.
Current seaborne trade of the world
• Seaborne trade remains a critical component of global commerce, facilitating
the transportation of approximately 80% of world trade by volume.
1.Overall Growth Trends- Global seaborne trade is projected to grow by 2.1% in 2024,
reflecting a modest recovery driven by increased demand for energy commodities and a
gradual stabilization of supply chains
• Containerized trade, which saw a decline of 3.7% in 2022, is expected to rebound by
1.2% in 2023 and further accelerate to 3.2% annually between 2024 and 2026.
2. Major Sectors- 1. Energy Trade: The trade of crude oil, refined petroleum, and liquefied
natural gas (LNG) has surged due to increased demand for energy security and the transition
to cleaner energy sources. This sector is expected to grow steadily, driven by higher
consumption in Asia, particularly China and India. 2.Dry Bulk Commodities: This segment,
encompassing goods like iron ore, coal, and grain, faced challenges in 2022 due to
disruptions in Ukrainian exports and high energy costs. However, 2023 saw improvements,
with grain shipments growing by 3.8% and minor bulks by 1.9%. Future growth will depend
on geopolitical stability and economic recovery in major markets.
Current seaborne trade of the world
3. Shifts in Trade Routes
• Trade distances for bulk commodities and refined oil have increased
significantly. For example, the average distance for grain shipments rose
from 5,574 nautical miles in 2002 to 7,251 in 2022, indicating a shift in
the geography of trade towards longer routes.
4. Environmental and Regulatory Impact
• The shipping industry is increasingly focused on reducing its carbon
footprint, driven by stricter regulations and a growing environmental
agenda. This shift is encouraging investments in low-carbon technologies,
including LNG-powered vessels and wind-assisted propulsion
Composition of Cargoes
• Containerized Cargo (27% of Seaborne Trade)
Containerized cargo primarily consists of manufactured goods, consumer products, and semi-
finished industrial items. Key products include electronics, machinery, textiles, and foodstuffs.
Top Routes:
– Asia (particularly China, South Korea, and Japan) to North America and Europe.
– Intra-Asian trade has also grown significantly, driven by regional production networks.
• Dry Bulk Cargo (40% of Seaborne Trade)
Dry bulk includes commodities like:
– Iron ore: Primarily exported from Australia and Brazil to China, Japan, and South Korea.
– Coal: Exported from Australia, Indonesia, and Russia to China, India, and Japan.
– Grain: Major exporters include the U.S., Brazil, and Ukraine, with destinations in Asia,
Africa, and the Middle East
• Liquid Bulk Cargo (30% of Seaborne Trade)
Liquid bulk cargo mainly comprises oil, liquefied natural gas (LNG), and chemicals.
Key Routes:
– Middle East (Saudi Arabia, UAE) to Asia (China, India, Japan).
– U.S. to Europe and Latin America.
• Specialized Cargo (3% of Seaborne Trade)
Includes automobiles, heavy machinery, and temperature-sensitive goods like pharmaceuticals
and perishables.
Direction of Cargo Flows
Global cargo flows are shaped by the economic, industrial, and demographic characteristics
of different regions.
• East to West:
– Manufactured goods dominate the trade from Asia (China, South Korea, Vietnam) to
North America and Europe.
– The U.S. and European Union are major importers of containerized consumer
products.
• West to East:
– Raw materials and energy resources flow from resource-rich regions like Africa,
South America, and the Middle East to Asia, supporting the manufacturing industries
in China, India, and Southeast Asia.
– LNG from Qatar, Australia, and the U.S. is increasingly directed toward Asian
markets, particularly in response to Europe's diversification of energy sources.
• North-South Trade:
– Agricultural exports from North America and Europe are directed towards Africa and
Latin America.
– In return, tropical agricultural products such as coffee, cocoa, and fruit are shipped to
Europe and North America.
• Intra-Regional Trade:
Intra-Asian and intra-European trade are among the fastest-growing segments, driven by
regional economic integration and shorter supply chains
Emerging Trends in seaborne trade
• Shift in Energy Trade:
With the global push for renewable energy, traditional fossil
fuel flows are being replaced by LNG and hydrogen exports,
especially from the U.S. and Middle East to Asia and Europe.
• Impact of Geopolitics:
– The Russia-Ukraine conflict has altered grain and energy flows,
with Europe seeking alternative sources for natural gas and oil.
– Africa and Latin America are emerging as key suppliers to Europe
and Asia, redirecting global flows
• Sustainability:
Environmental regulations are influencing shipping
patterns, with an emphasis on shorter routes and lower-
emission fuels.
Types of Ships in Indian Shipping and
Their Development
1. Bulk Carriers
• Purpose: Transport large quantities of unpackaged dry goods, such as coal, iron
ore, grain, and cement.
• Role in India: Vital for supporting India's steel and power industries, as they
import large volumes of raw materials from countries like Australia and Brazil.
• Development: The Indian government is encouraging domestic shipbuilding of
bulk carriers through subsidies and the "Make in India" initiative.
2. Oil Tankers
• Purpose: Transport crude oil and refined petroleum products.
• Role in India: Given India's high dependency on imported crude oil, these vessels
are critical for ensuring energy security. Major import routes are from the Middle
East to India’s ports.
• Development: India has focused on increasing its oil tanker fleet to reduce
dependence on foreign vessels, supported by tax incentives and financial
assistance for Indian shipping companies
Types of Ships in Indian Shipping
3. Liquefied Natural Gas (LNG) Carriers
• Purpose: Transport LNG at cryogenic temperatures.
• Role in India: LNG carriers are essential for importing natural gas, particularly
from Qatar, the U.S., and Australia, to meet India’s growing energy demands.
• Development: India has increased investments in LNG infrastructure and is
collaborating with global shipbuilders to construct LNG carriers domestically
4. Container Ships
• Purpose: Transport standardized containers carrying consumer goods,
electronics, textiles, and machinery.
• Role in India: These ships are crucial for India's export-driven sectors,
connecting ports like Jawaharlal Nehru Port (JNPT) and Chennai to global
markets.
• Development: India's container fleet is expanding, with private operators and
public sector initiatives focusing on modernizing port facilities and enhancing
container handling capacity
Types of Ships in Indian Shipping
5. Coastal Vessels
• Purpose: Serve domestic trade along India's vast coastline, transporting
goods between Indian ports.
• Role in India: Coastal shipping is essential for decongesting roads and
railways, offering an eco-friendly alternative for domestic logistics.
• Development: The government has implemented a coastal shipping policy
to promote indigenous vessel construction, reduce logistics costs, and
increase the use of coastal vessels for domestic trade
6. Ro-Ro (Roll-on/Roll-off) Vessels
• Purpose: Transport wheeled cargo such as cars, trucks, and heavy
machinery.
• Role in India: These vessels support the automotive industry, especially
for exports from manufacturing hubs in Chennai and Gujarat.
• Development: India is expanding its Ro-Ro services to facilitate faster and
more efficient movement of automobiles and reduce carbon emissions in
logistics.
Recent Developments in Indian Shipping
1. Expansion of Port Infrastructure
• India is making substantial investments in port infrastructure to enhance its
maritime trade capacity. A major project is the development of six mega ports by
2047, including the ambitious Vadhavan Port on the west coast. This port will
have a deep draft capable of handling ultra-large container vessels (ULCVs) with
capacities of up to 24,000 TEUs (twenty-foot equivalent units). The project aims
to position India as a significant hub in the global shipping network by reducing
reliance on transshipment ports like Colombo and SingaporeTransLogistics
2. Boosting Connectivity and Trade
• To strengthen its role in global supply chains, India is focusing on integrating its
ports with rail and road networks. For instance, the Vadhavan Port is strategically
located near the Western Dedicated Freight Corridor and the Delhi-Mumbai
Expressway, facilitating seamless cargo movement across the country and
enhancing trade efficiency
3. Increased Foreign Investments and Collaborations
• India is attracting foreign investments in port operations and shipping services.
Collaborations with international players aim to modernize port facilities,
improve cargo handling capabilities, and increase maritime trade volumes. The
government is also providing tax incentives to shipowners and promoting public-
private partnerships (PPPs) to accelerate infrastructure development.
Recent Developments in Indian Shipping
4. Technological Advancements
• The Indian maritime sector is embracing digitalization and automation to enhance
operational efficiency. Technologies such as blockchain for cargo tracking, AI-
driven logistics management, and smart port solutions are being implemented to
optimize supply chain operations and reduce turnaround times at ports.
5. Sustainability Initiatives
• India is aligning its shipping industry with global environmental standards by
adopting green shipping practices. This includes the use of low-sulfur fuels,
development of electric and hybrid vessels, and implementation of energy-
efficient technologies to reduce the carbon footprint of maritime operations.
6. Policy Reforms
• The government has introduced regulatory reforms to ease maritime business
operations, streamline customs procedures, and address challenges related to
financing and insurance in the shipping sector. However, industry experts highlight
the need for greater recognition of shipping as a mainstream industry to attract
more investments and reduce financial constraints
Role of Shipping in National Economic Development
1. Facilitates International Trade
• Shipping enables large-scale trade by transporting raw materials, intermediate
goods, and finished products across global markets. Around 80-90% of global
trade by volume is carried by sea.
• Countries with efficient shipping industries can lower their cost of trade, making
their exports more competitive in global markets and fostering economic growth.
2. Reduces Transportation Costs
• Shipping is the most cost-effective mode of transport for bulk commodities and
long-distance trade.
• Economies of scale achieved by larger vessels reduce unit transportation costs,
which helps lower the price of imported goods and enhances domestic
economic stability.
3. Creates Employment and Boosts Ancillary Industries
• The shipping industry generates direct employment for seafarers, dockworkers, and
port operators and indirect employment in shipbuilding, logistics, and finance.
• It also fosters the growth of related industries, such as ship repair, maritime
insurance, and freight forwarding.
Role of Shipping in National Economic Development
4. Promotes Regional and Coastal Development
• Coastal shipping supports domestic trade by linking industrial hubs with regional
markets. It also reduces the burden on overland transport networks, improving
overall logistics efficiency.
• Development of ports and maritime infrastructure contributes to regional
development, attracting investments and enhancing connectivity.
5. Enhances Economic Resilience
• Shipping ensures the steady flow of essential goods, including food, energy,
and industrial inputs, helping nations withstand supply chain disruptions.
• A robust shipping industry can also support disaster relief and humanitarian
efforts by providing logistical support during emergencies.
6. Supports Sustainable Development
• The adoption of green shipping technologies and sustainable practices reduces the
environmental impact of maritime transport, contributing to long-term economic
sustainability.
• Investment in cleaner fuels, energy-efficient vessels, and digital technologies can
enhance the industry’s resilience to future environmental and economic challenges.
Role of Shipping in National Economic Development
7. Enhances Export Competitiveness
• A robust shipping industry enables countries to transport goods efficiently, reducing transit
times and shipping costs. This enhances the price competitiveness of exports, allowing
domestic industries to penetrate new markets and expand their global reach.
• Countries with efficient maritime logistics can attract foreign direct investment (FDI) as
multinational corporations seek reliable export and import routes.
8. Supports Domestic Manufacturing and Industrialization
• Shipping facilitates the import of raw materials and intermediate goods essential for
manufacturing. It also enables the export of finished goods, supporting the industrial
sector's growth.
• Access to affordable maritime transport can lower production costs, encouraging industrial
expansion and technological advancement.
• Eg- Hyundai, kia, Toyota
9. Strengthens National Security and Strategic Interests
• A strong merchant fleet contributes to national security by ensuring the uninterrupted
supply of critical resources such as food, fuel, and defense equipment during conflicts or
emergencies.
• Maritime power projection through commercial shipping also supports a nation’s
geopolitical influence in strategic regions.
Role of Shipping in National Economic Development
10. Boosts Government Revenue
• The shipping industry contributes to government revenue through taxes, port duties, and
service fees. Increased maritime trade leads to higher customs revenues and stimulates
economic activity in port cities and coastal regions.
• Investments in maritime infrastructure often yield significant returns through increased
trade volumes and job creation.
11. Fosters Technological Innovation
• The shipping industry drives technological innovation in shipbuilding, logistics, and port
operations. The development of smart ports, autonomous ships, and blockchain-based
supply chain management systems enhances efficiency and transparency.
• Investing in maritime technology also boosts local research and development (R&D),
fostering innovation across other sectors.
12. Supports Environmental Sustainability
• Maritime trade promotes a shift from more polluting modes of transport, such as road and
air, to a more fuel-efficient and environmentally friendly alternative.
• Investments in green shipping, including the use of LNG-powered vessels and energy-
efficient port infrastructure, help reduce greenhouse gas emissions and align with global
sustainability goals.
India’s shipping policy manning
• India's shipping policy on manning governs the employment, qualifications, and working
conditions of seafarers aboard Indian-flagged vessels. The policy aims to ensure that
Indian ships are adequately staffed with competent personnel while maintaining safety,
efficiency, and compliance with international maritime regulations.
1. Regulatory Framework
• India’s manning policy is governed by:
• The Merchant Shipping Act, 1958: Provides the legal framework for the registration,
training, and employment of seafarers on Indian ships.
• Directorate General of Shipping (DGS): The primary authority responsible for
implementing and monitoring manning regulations, issuing Circulars and Orders related to
crew management.
• International Maritime Organization (IMO) Conventions: India adheres to
international standards like the International Convention on Standards of Training,
Certification, and Watchkeeping for Seafarers (STCW).
2. Key Objectives
• Promote Indian Seafarers: Prioritize the employment of Indian nationals on Indian-
registered vessels to enhance local employment.
• Ensure Safety and Competence: Maintain a well-trained and competent workforce to
ensure the safety of life at sea and environmental protection.
• Compliance with International Standards: Align manning policies with international
regulations to facilitate global trade and maritime operations.
India’s shipping policy manning
3. Minimum Safe Manning Document (MSMD)
• Every Indian vessel is required to carry a Minimum Safe Manning Document issued by
the Directorate General of Shipping, which specifies:
• The minimum number of crew required for safe operation.
• The qualifications and experience necessary for various ranks (officers, engineers,
ratings).
• The manning levels based on ship type, tonnage, and area of operation.
4. Categories of Seafarers
• Indian shipping policy categorizes seafarers into:
• Officers: Navigational and engineering officers responsible for the ship's operation and
safety.
• Ratings: Crew members who assist officers and perform operational tasks.
• Cadets and Trainees: Entry-level personnel undergoing training to become officers or
ratings.
India’s shipping policy manning
5. Crew Nationality and Composition
• Indian-flagged ships must employ a majority of Indian nationals as crew
members.
• Foreign nationals may be employed under specific circumstances, such as a
shortage of qualified Indian seafarers, but only with prior approval from the
DGS.
6. Training and Certification
• Seafarers must undergo training at Directorate General of Shipping-approved
institutes.
• Certification must comply with the STCW Convention, ensuring that Indian
seafarers are internationally recognized and employable.
7. Welfare and Working Conditions
• The policy mandates adherence to the Maritime Labour Convention (MLC), 2006,
which ensures:
• Fair wages and timely payment.
• Reasonable working hours and rest periods.
• Adequate onboard accommodations, food, and medical care.
• Protection against unfair dismissal and avenues for dispute resolution.
India’s shipping policy manning
8. Challenges and Future Directions
• Skill Gap: Addressing the shortage of highly skilled officers and engineers.
• Automation: Preparing seafarers for emerging technologies and automation in
shipping.
• Global Competition: Enhancing the employability of Indian seafarers in the
international maritime sector.
Business and Cargo Management in
Shipping
Business and cargo management in the shipping industry refers to the efficient planning,
coordination, and execution of activities related to the transportation of goods by sea. It involves
managing the movement of cargo from origin to destination while optimizing cost, time, and
resources.
Key Aspects of Business and Cargo Management
1.Cargo Planning and Scheduling
– Route Optimization: Selecting the most efficient and cost-effective routes.
– Vessel Utilization: Maximizing the capacity utilization of vessels to increase
profitability.
– Cargo Consolidation: Combining multiple smaller shipments into one to reduce costs.
2.Cargo Documentation
– Bill of Lading (B/L): A legal document issued by the carrier to the shipper, acting as a
receipt and title of goods.
– Cargo Manifest: Lists all the goods carried on a vessel and provides information for
customs clearance.
– Import/Export Licenses: Required for certain types of cargo depending on regulatory
requirements.
Key Aspects of Business and Cargo Management
3.Cargo Handling
• Stevedoring: The loading and unloading of cargo at ports.
• Storage and Warehousing: Temporary storage of cargo at port warehouses
or bonded warehouses.
• Containerization: The use of standardized containers to facilitate efficient
handling and reduce cargo damage.
4.Risk Management
• Insurance: Cargo insurance covers losses or damages to goods during
transit.
• Safety and Security: Ensuring compliance with safety regulations and
implementing measures to prevent theft, piracy, or damage.
5.Customer Relationship Management (CRM)
– Maintaining communication with shippers and consignees to provide updates on
cargo status.
– Resolving customer issues related to delays, damages, or documentation.
Statutory Regulations Affecting Shipping
Companies in India
Key Statutory Regulations
1.The Merchant Shipping Act, 1958
• The primary legislation governing the shipping industry in India.
• Covers ship registration, crew certification, safety standards, and maritime labor rights.
• Mandates compliance with international maritime conventions like SOLAS (Safety of
Life at Sea) and MARPOL (Marine Pollution).
2.Directorate General of Shipping (DGS) Regulations
• DGS, under the Ministry of Ports, Shipping, and Waterways, issues circulars and
guidelines for ship operators.
• Regulates manning, vessel safety, and training institutes for seafarers.
3.Customs Act, 1962
• Governs the import and export of goods through Indian ports.
• Requires accurate documentation for customs clearance.
• Imposes duties and tariffs on cargo based on its classification and value.
Statutory Regulations Affecting Shipping Companies in India
4.Indian Ports Act, 1908 and Major Port Authorities Act, 2021
• Regulate the administration and management of ports in India.
• Ensure safe and efficient port operations, including cargo handling and storage.
• Provide guidelines on port charges, berthing, and pilotage services.
5.Foreign Trade Policy (FTP)
• Issued by the Directorate General of Foreign Trade (DGFT), it outlines export and import
procedures.
• Includes incentives for shipping companies involved in international trade, such as duty
drawbacks and tax exemptions.
6.Goods and Services Tax (GST)
• Shipping companies are required to pay GST on services such as freight, warehousing,
and handling.
• GST rates vary based on the type of service and whether it is domestic or international.
Statutory Regulations Affecting Shipping Companies in
India
8.Labour Laws and Maritime Labour Convention (MLC), 2006
• Ensure the welfare of seafarers, including fair wages, working conditions, and
access to medical care.
• Compliance with the MLC is mandatory for Indian-flagged vessels engaged in
international trade.
Challenges Faced by Shipping Companies in India
• Regulatory Complexity: Navigating multiple laws and regulations can be challenging
for shipping companies.
• Port Infrastructure: Congestion and inadequate facilities at some ports can lead to
delays.
• Environmental Compliance: Meeting stringent environmental standards requires
significant investment in technology and equipment.
• Taxation and Tariffs: Frequent changes in tax policies and customs duties can impact
profitability.
