Elements of the Maritime Industry

The maritime industry is composed of a wide range of activities, many of which are interrelated and interdependent. It can be divided into four major groups.

Maritime Shipping

The ocean side of the industry with the main purpose of performing the transport function or extracting oceanic resources. It is the only segment of the industry with primary sector functions.

• Fishing and aquaculture. One of the most ancient segments of the industry, supplying about 10% of the global protein input. Most commercial fishing takes place offshore and in designated high-productivity areas, such as the Grand Banks of Newfoundland. Still, the growth of aquaculture has transformed the industry and accounts for about 50% of the fishing output.
• Offshore energy and mining. Activities related to the extraction of energy (oil and natural gas) and mineral resources from the ocean. The first offshore oil platforms were set in the early 20th century, but it was not until the 1970s that large offshore structures were built to drill on the continental shelf, such as in the Gulf of Mexico, Alaska, and the North Sea. More recently, offshore wind farms have been deployed with ports serving as construction, assembly, and maintenance platforms for windmills. Mining the seabed is still in its infancy but represents substantial opportunities as the oceans may hold more than five times the amount of minerals than those available on land.
• Shipbuilding. The industrial activities of making and assembling ship components. China, South Korea and Japan are the major builders, using extensive shipyards to build large-scale ships. Specialized shipyards are also making LNG carriers, cruise ships, pleasure boats and navy ships. Shipbuilding is supported by a complex industrial ecosystem of manufacturers of engines, parts and components, and electrical systems.
• Ship scrapping (or ship breaking). Once ships have completed their commercial life, they can be scrapped and their metallic components recycled. The world’s largest ship scrapping yards are in India, Bangladesh, and Pakistan, which use the beaching technique with ships propelled ashore to be dismantled.
• Channels, canals, and maritime infrastructure. Built and dredged to improve navigation and connectivity, channels and canals are usually managed by an entity responsible for their construction, maintenance, and improvement. A channel (or waterway) usually follows a natural water body such as a river, while canals are artificially built entities, at times with locks. Tolls are commonly collected based on criteria such as tonnage, ship size, and ship class with the purpose of generating enough revenue to operate and maintain the infrastructure. The Suez and Panama canals are among the world’s most strategic canals, but other systems, such as the St. Lawrence Seaway, the Mittelland Canal in Germany, or the Houston Ship Channel play strategic roles. Another important form of oceanic maritime infrastructure concerns the networks of pipelines (usually offshore to shore) and transoceanic telecommunication cables.
• Carriers and shipowners. A carrier is a maritime company that transports cargo on behalf of its customers, either privately (for a single customer) or as a common carrier (for multiple customers on an open market). Carriers tend to own a large share of their fleet, but many lease ships from shipowners using the services of shipbrokers. A shipowner is an entity purchasing and managing ships to make them readily available for use on the leasing market.
• Repair and maintenance. Ships and offshore facilities require regular maintenance and repairs, often in specialized facilities such as shipyards.
• Recreational and cruises. With the growth in global standards of living, the recreational use of the oceans has increased with pleasure boats such as yachts and cruise ships the most salient examples. Cruise companies maintain a fleet of cruise ships allocated to itineraries on regional markets such as the Caribbean and the Mediterranean.

Ports

The land side of the industry allows the maritime realm to interact with the inland realm.

• Construction and maintenance. Construction and engineering firms are involved in the construction, repair, and maintenance of port facilities. These activities are highly capital-intensive in terms of infrastructure and superstructure and are usually considered mega-projects that take several years to complete.
• Equipment manufacturers. Ports and their terminals require a wide range of equipment, many of which are highly specialized for port use, such as cranes and cargo handling equipment (e.g. straddle carriers) designed to handle a single task. In this case, they are provided by specialized manufacturers catering to ports. Others are less specialized and more multipurpose, such as vehicles and forklifts. In this case, the equipment if provided as is or with small modifications to suit port operations.
• Port centric industries. Ports are important manufacturing complexes, particularly for activities with high material inputs such as shipyards, fish processing, petrochemicals, steelmaking, and automotive. These industries jointly benefit from the capacity to move and store heavy material inputs and outputs and the connectivity provided to global markets.
• Dredging. A wide range of activities involving the removal of materials to prepare for a new facility through land reclamation and to dig and maintain channels to a defined draft. Land reclamation allows additional land to be available, mainly for port development, but other facilities such as airports and urban land have also been developed.
• Port authorities. Ports are generally publicly owned and subject to ownership and oversight by a managing agency. They are responsible for port land operation, lease, marketing, and development but may elect to subcontract these services. Port authorities often lease terminals and real estate through concessions with defined terms and conditions.
• Terminal operators. An entity that is responsible for the development, management, and operation of a port terminal. Port terminals have a wide range of functions and specialized terminal operators. Terminal operators can own the facility or lease it as a concession from a port authority. Some sell their services on an open market while others are for the exclusive use of their owner. Terminal operators are usually part of a portfolio including operations in several ports along the same commodity, such as containers and cars.
• Inland carriers. Rail, truck, and barge companies carrying cargo to and from ports. They are important actors in granting access to the hinterland and entering port facilities either through gates (trucks) or dedicated facilities (rail and barges).
• Warehousing and distribution. A whole range of storage and distribution activities related to port traffic and support port-centric logistics. They can take the form of tanks (for liquids such as oil), silos (grains and chemicals), piles (minerals), stacks (containers), open spaces (cars), and covered facilities (warehouses and distribution centers). They usually act as buffers between production and consumption.

Management and Oversight

Several service activities involve managing the cargo carried by shipping lines and handled by ports. These range from cargo owners directly involved in booking maritime transportation to freight forwarders doing so on behalf of their customers.

• Regulators. The maritime industry is subject to international, national, and state regulatory oversight. Many concern safety and security issues as well as standards. At the international level, the International Maritime Organization (IMO) aims to adopt internationally recognized standards and protocols. Still, it does not have formal regulatory power, which is to be enforced at the state level.
• Customs. Maritime shipping is a highly globalized industry with large amounts of cross-border flows of cargo and passengers to a lesser extent. These flows are subject to the regulatory oversight of customs agencies, which monitor the enforcement of tariffs, duties, quotas, and sanctions. Customs perform cargo inspections at ports of entry to ensure that it complies with these regulations.
• Cargo owners. A wide range of activities, either on the production side (manufacturers) or on the distribution side (wholesalers and retailers), have a direct stake in the cargo transported by maritime shipping. As shippers, they determine the origin and destination of the cargo, underlining why maritime shipping and port operations are a derived demand. Some, particularly the largest, can directly organize the transportation of their cargo (own account), while others contract a third party to do so.
• Freight forwarders. Actors organizing transportation between the cargo owner (or shipper) and the carrier. This includes consolidating shipments, negotiating rates with carriers, and making sure that documentation, such as bills of lading and customs declarations, is filled.
• Third-party and fourth-party logistics service providers (3PL/4PL). They can perform freight forwarding services but tend to offer a more comprehensive range of services, including transportation, inventory management, storage, and distribution. While 3PLs own transportation and logistics assets such as ships and warehouses, 4PLs focus on logistical services, such as planning procurement and supply chains. Many carriers also offer 3PL and 4PL services.
• Shipbrokers and charterers. A range of actors acting as intermediates between shipowners and charterers. They often specialize in specific shipping sectors, such as tankers, bulk carriers, or containers, and negotiate with charterers on behalf of their customers. A charterer tries to find specific shipping opportunities (from shipowners or shipbrokers) and routes to deliver cargo on behalf of their customers or on open markets. Large shipping lines have shipbroking and chartering services.
• Banking. The maritime industry is transaction-intensive, commonly involving large sums, requiring banking to settle transactions and remit payments, particularly through letters of credit. The banking sector provides temporary loans and lines of credit to carriers.

Ancillary

The range of activities providing support services to maritime operations.

• Finance. The purchase, construction, and lease of ships, infrastructure (terminals), and superstructures (equipment) require a large amount of capital. A segment of the financial industry has developed to provide investment capital, often invested over long-term horizons. Some retirement and sovereign wealth funds are also investors.
• Insurance. The world’s oldest insurance products are related to the maritime sector (bottomry), particularly because of the unique set of risks involved. International law forbids any carrier to transport cargo without the ship and its cargo being insured against known hazards that may damage or even destroy a ship and its cargo. A branch of the insurance industry has been developed to cover carriers, operators, and cargo owners against losses. Since the industry is intensive in transactions and has multiple stakeholders (carriers, terminal operators), it is important to identify who is liable if an incident happens.
• Ship classification and registry. Ships are subject to rigorous technical and safety standards, and classification societies are responsible for certifying that new and existing ships meet these standards by issuing classification certificates. A ship can only be registered and insured if it has a valid certificate. A ship registry confirms its ownership and nationality and, therefore, its regulatory control (e.g. safety and labor conditions). About 70% of the world’s tonnage is registered in an open registry country, such as Panama and Liberia.
• Navies and coast guard. A specialized segment of the maritime industry with the core purpose of protecting national interests concerning security and safety. Navies project national power into international waters. The coast guard is responsible for maritime border control, inspecting ships for compliance, and the search and rescue of endangered personnel and equipment.
• Bunkering and stores. Maritime transport consumes large amounts of fuel, mainly Bunker C (marine fuel oil), and having sufficient fuel for a voyage is considered a fundamental element of seaworthiness. Bunkering can take place at a port (while the ship is docked handling cargo) or offshore (where the ship briefly stops). Due to its strategic location, Singapore is the most important bunkering station in the world. An expected energy transition will impact bunkering towards the use of other fuels such as LNG. Another component concerns the provision of supplies and equipment for ships (food, water, medical supplies, spare parts). In the cruise industry, stores, particularly food, are a substantial part of the operating costs since they are an important part of the cruise experience.
• Pilotage and tugs. Most ports, navigation channels, and canals require pilots to ensure reliable and safe navigation. A pilot is a trained individual with extensive knowledge of local navigation who boards a ship when entering the area under pilotage jurisdiction to assist the captain. Tugs are designed to assist ships with complex maneuvers within harbors. They also follow ships in the harbor and access channels to intervene if there is a deviation. Some push or pull barges for river and coastal navigation.
• Industry and trade groups. The maritime industry is represented by numerous international, national, and regional organizations regrouping interest groups such as port authorities, terminal operators, and carriers. Further, each cargo segment, such as bulk, petroleum, and refrigerated cargoes, also has representative interest groups. Some offer commercial opportunities for their members (networking between providers and buyers), while others are more actively involved in research, advocacy, and lobbying.
• Training and education. Institutions and agencies responsible for providing training and education for the vast array of skills required in the maritime industry. In particular, maritime academies provide training and certification for ship personnel. It also includes academic and commercial research and consultants geared to provide information and advice about specific issues. Countries such as the Philippines are substantial providers of maritime personnel.