1.1. Shipping Services and Networks
The shipping industry is very international in character, particularly in terms of ownership and country of registry. For instance, a vessel may be owned by a Greek family or a Japanese corporation, and it may be flagged under another nationality. There are two types of registers, national registers, and open registers, which are often labeled as flags of convenience. Using open registers (flags of convenience) allows ship owners to obtain lower registration fees, lower operating costs, and fewer restrictions while meeting standards acceptable to shipping markets. As of 2021, about 72% of the global tonnage was registered under a flag of convenience, with Panama and Liberia being the most wide-spread.
Shaping maritime networks to increase profit
Carriers have the responsibility to establish and maintain profitable routes in a competitive environment. This involves three major decisions about how such a maritime network takes shape:
· Frequency of service. Frequency is linked with more timely services since the same port will be called more often. A weekly port call is considered to be the minimum level of service, but since a growing share of production is time-dependent, there is pressure from customers to have a higher frequency of service. A trade-off between the frequency and the capacity of service is commonly observed.
· Fleet and vessel size. Due to the basic maritime economics, large ships, such as post-Panamax containerships, offer significant advantages over long distances. Shipping lines will obviously try to use this advantage over their long-distance routes, keeping smaller ships for feeder services. In addition, a large enough number of vessels must be allocated to ensure a good frequency of service.
· Number of port calls. A route that involves fewer port calls is likely to have lower average transit times in addition to requiring a smaller number of ships. Conversely, too few port calls could involve difficulties for the cargo to reach inland destinations remote from the serviced ports. This implies additional delays and potentially fewer customers. An appropriate selection of port calls will help ensure access to a vast commercial hinterland.
As international trade depends on the provision of distribution and transaction, the demand for these services has increased substantially, leading to the growth of carriers, cargo owners, terminal operators, third-party logistics service providers (3PL), freight forwarders, and insurers.