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Maritime Transport Crisis / 1Hansj Public Disclosure Authorized 220 E= World Bank Discussion Papers Public Disclosure Authorized The Maritime Transp ort Crisis Public Disclosure Authorized HansJ. Peters Public Disclosure Authorized Recent World Bank Discussion Papers No. 162 Rural EaterptiseDevelopment ino China, 1986-90. AntiloniyJ. Ody No. 163 77c Balansebetnwen Publit and Pritha:eSector Alctivities in rte Deliveryof Litestock Scrvices.Dina L. Uniali. Gershon Fcder. and Cornelis de Haan No. 164 How Do NationalPoliies Affect UrT-runaGCro'th?: A RescarrchAqeudja. Williamii Easwcrly. Robert King. Ross Levinc. and Scrgio Rcbclo No. 165 FisheriesDevelopnieiit, rFishieries MitNanletiment, itdEcrin,alities. Richard S.Johnston No. 166 77w BuildineBlocks of Participation:Tr'stiu, 1tonttmi-11 Planninl. Michiael M. Ccnca No. 167 SeedSystern Development: 77le AppropriateRiles ,l?thePrivate and Pu1lic Sectors. Steventjaffec andJitendra Srivastava No. 168 Environ,nentalAl1naTenient and Urba.n l'uln erabiliry. Alcira Kreimcr 2nd Mohan Munasinghc. editors No. 169 Comrnon PropertyResouirces: A Mlissiuit'Dirnensi,on of DvelopnnnetSirate.qics. N. S. Jodhla No. 170 A azinisePtovincr as a ReJor7nL:xperimtant: 77TeCisC ofl-lainan. Paul M. Cadario.Kazuko Og%,w. and Yin-Kant Wen No. 171 IssuiesforIr!frastnriacnare Alanaaenent ini rht 1990s.Arturo Isracl No. 172 japancsc National Railways Privatization Study: TheEDxperience tfjapatn and Lessonsfor Developing Countries. Koichiro Fukui No. 173 Tic LivestockSector in EasternE-uroipe: Constrai,ats and Opportunities. Cornclis de Haan. Tjaart Sehilihorn Van Vcen, and Karcn Brooks No. 174 AssessinigDevclopment Firnanice ltisrit:utio,s: A PublicInterest Analysis Jacob Yaron No. 175 ResoujreManagement aid PastoralIhistiiation Buildirin in rthe1l+st AJiitan Sahel. Nadarajah Shanmugaratnam. Trond Vcdeld. Annc Mossigc. and Mette Bovii No. 176 PublicatndPrivate Scaor Roles in A,jricu:huralResearch: hieorir a,id Experience. Dina L. Umali No. 177 TheRegulatory Inpediments to ditePrivare Industrial Sctior Dzr'lopnerit in Asia:A ComparativeStudy. Deena Khatkhate No. 178 China:Reorminrg Itnergoverinuncrcal Fiscal Relations. Ranigopal Agr%vala No. 179 NipponTekgraphl and Telephone Privat ization Study: Excperienci ofJaparn and Lessonsfor Detelopinq Cointries. Yoshiro Takcano No. 180 Chiiia's RefoionExperience to Date. Peter Harrold No. 181 ComnbatrinqAIDS and OtherSexuially Transmitted Diseases itt Africa:A Reviewof the WorldBank's .qenda for Aaition. Jcan-Louis Lamboray and A. Edward El]mcndorf No. 182 PrivatizationProblems at hIduistryLecvl: Road Hauilagc in Ceitral Euirope.Esra Bcnnathan and Louis S. Thompson No. 183 ParticipatoryDevelopme:tt and tihc WorldBatik: PotentialDirectionsfor Olaanc. Bhuvan Bhamnagarand Aubrey C. Williams. cditors No. 184 AiariinturalResearch in SouithmeAfrica: A FraincivorklforAcion. Andrew Spurling. Tcck Y. Pece Godwin MkaManga. and Christophcr Nkwanvania No. 185 Military Expenditureand Economic Der'elopnyent: A Syntposinn otn Researda Issues. Edited by Gcoffrev Lamb with Valcriana Kallab No- 186 Effdantcyand Substitzutioninl PollutionAbaeieienitt: T7iree Case Studies. Dennis Anderson and William Cavendish No. 187 77TeState Holding Cornpany: Issues andi Optiois. Anjali Kuniar No. 188 Indigenous Viewsof Land and tincE,nvironmenrt Shelton H. Davis. cditor No. 189 Poverty,Population, and the Em'ironmuent. Stcphcn D. Mink No. 190 NaturalGas in DevelopingCofntries: Evaluatig tliCBeatefits to tlhcEnvironiment. John Homcr (Continued on the inside back cover.) 2 2 IJ~v World Bank Discussion Papers The Manrtime Transport Crisis Hans J. Peters The World Bank Washington, D.C. CopynilghtO1993 The InternationalBank for Reconstruction and Development/lHEwORD BDANK 1818 H Steet, N.W. Washington, D.C. 20433, U.SA All rightsreserved ManuEacturedin the United Statesof America Firstprinting November 1993 t)iscusion Paperspresent resultsof country analysisor rescarchthat are circulatedto encouragediscussion and comment within &e developmcntcormrmunity. To present these resultswith the least possibledelay, the typescriptof this paper has not been prepared in accordancewith the proceduresappropriate to fornal printed texts, and the World Bankaccepts no responsibilityfor errors. The findings,interprections, and co-,clusionsexpressed in this paper arc cntirelythosc of the author(s)and should not be attnrited in any nanner to the World Bark, to iu affliated organizations,or to membersof its Board ofExecutive Directorsor the countriesLiey repreunt. The World Bank does not guarantec the accuracyof the data induded in this publicationanJ acceptsno responsibilitywhatsoever for any consequenceof their use. Any mapsthat accompanytuic text have been preparedsoley for the convenience of readers;the designationsand presentationof materialin them do not imply the expressionof any opinion whSoever on the part of the WorldBank, its afliates, or its Board or membercountries concerming the legal statusof any country, tertitory,city, or arca or of the authoritiesthereof or concerning the delimitation of its boundaries or its nationalaffiliation. The mateal in this publicationis copyrighted.Requests for pennissionto reproduceportions of it should be sent to the Office of the Publisher at the address shown in the copyright notiCe above. The Wordd Bank encouragesdissmination of its work and will nornally give permissionprompdy and, when the reproductionis for noncommercialpurposes, without askinga fee. Permissionto copy portionsfor classroom wseis grAnted though the Copynght Clarance Center, 27 CongressStreet, Salem, Mzassachustts01970, U.S.A. The complete bacldist of publications from the Wodd Bank is shown in the annual Index of Trblications, which contains an alphabeticaltide list (withfull ordering information)and indexesof subjects.authors, and countries and regions.The latestedition is availablefree of chargefrom the DistributionUnit, Ohice of dte Publisher,The World Bank, 1818 H Street, N.W., Washington,D.C. 20433,U.SA, or from Publications, The WoddXBank, 66, avenue d'lena, 75116Paris, France. ISSN: 0259-210X Hans J. Peters is principalmaritime specialist in the TransportDivision of the World Bank's Transportation,Water and Urban DevelopmentDcpartment. Library of Congress Cataloging-in-Publication Data Peters, Hansjflrgen. 1939- The maritime transport crisis / 1HansJ. Peters. p. cm. - (WorldBank discussionpapers ; 220) lndudes bibliographicalrefcrcnces. ISBN 0-8213-2714-3 1. Merchant marine. 2. Shipping. 3. Internationaltrade. I. Tide. 11. Series. HE735.P466 1993 387.5-dcZ0 93-41296 CIP ... Contents Foreword ................................ v Acinowledgements ............ ...........................vi Abstract ......... vii r. Introduction ........... 1 H. The Intenational Marime Transport Industry at Present ............. 3 M. Developmentsin the nteational Seatrade Markets ................. 6 IV. How the MaidtimeTransport Industry Copes with VobHle Seatrade .... 11!... V. The Principal Issues in Maritime Trnsport .............. 19 A. RegulatoryInterventions ....................... .. 19 B. The Aging InternationalFleet .............................. 21 C. MaritimeTransport as a Threatto the Environment ................ 24 VI. Corcting World MerchantFleet Deficiencies ....... .. ............ 27 A. The Demandfor Newbuildings............................. 27 B. The Demandfor Repair, Upgrading,and Conversion ............... 31 C. The Demandfor TonnageDemolition ......................... 32 VI. The Fincing Dilemma .................................... 35 VII. ConcludingObservations ................................... 40 Annez ExpectedDemand for Shipbuilding,Tomnage Demolition, and Vessel Repair and Conversionduring the Period 1993- 2000 .... ....... 41 Glossaryof NMaitimeTerms .......................................46 Foreword Morethan three-quarterof the world's trade volumeis movedacross the oceans. Almostevery product in today'smarket has been transportedby sea at somestage betweenits raw materialsource and fmnalsale. Industrializedand developingeconomies alike depend on maritimetransport to further their economicdevelopment. Technologicalprogress has enabledthe maritimetransport industry to enhance its performance potentialto unprecedentedlevels. As shippersstarted to revamp their manufacturingand marketing practices,ocean carriers sought new ways to meettheir clients'changing demand for transport. Today, many of these carriers offer door-to-doortransport services and assumefull responsibilityfor supply chainmanagement. Unlikein the past, competitivemaritime transport is now availablein all corners of the world. The supplyof tonnagefor transportingdifferent conmnodities outstrips the demandfor sea transportby substantialmargins. Thus all countries,regardless of their status and location,have access to efficient maritime transportservices. Unfortunately,the global realities are different. A large number of countriesmainuins policiesto protect their nationalfleets through cargo reservationand a variety of subsidyschemes. Theeconomic and socialcosts of suchpolicies are substantial. Adherenceto maritime protectionismusually undermines trade performance,especially in the case of developingcountries. Withinthe contextof transportsector dialogues with its borrowingmember countries the Bank addressestrade perfornance issues that are relatedto nationaltransport system inefficiencies. Quite frequcely, such inefficienciesare rooted in distortingregulation and inadequaLemaanagement of maritime t-ansportservices and infrastructure. In order to establisha basis for
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