H.P. Drewry Offers 125- Page Study 'Governments And Dry Bulk Shipping'

Globally the structure and organization of the international shipping industry is undergoing fundamental and in many instances rapid change. This change has been manifest during the late 1970s by geographical change in both the flag and ownership of tonnage and by the increasing encroachment of government into the operations and control of shipping services.

The UNCTAD Code of Conduct for the Liner Trades has almost been ratified by the requisite number of states, and there is a gathering momentum from the UNCTAD Secretariat to regulate the dry bulk trades in a similar fashion and at the same time phase out flags of convenience. Legislation to mandatory enforced cargo sharing within the dry bulk trades has been promoted in the belief that the existing structure of international dry bulk trades prevents free entry and thus inhibits the growth of the developing nations' dry bulk fleets, and also that the existence of FOC fleets provides unfair competition to emerging developing countries' dry bulk fleets.

During the 1970s, the developing countries' dry bulk fleets (including combined carriers) increased from 2.9 million dwt in 1970 to 20 million dwt by 1980—this represents an increase from 4.7 percent to 11.0 percent of the world fleet — this has been achieved without recourse to introducing widespread dry bulk cargo reservation. This significant increase in the drybulk fleets of developing nations was due to state-sponsored vessel acquisition programs in a very few countries, e.g., Brazil and India, and vigorous activity in the secondhand market, e.g., China PR. African countries had negligible bulk fleet acquisition during the 1970s.

Those countries which did acquire fleets appear to have had little difficulty in obtaining cargo both in their domestic trades and in the cross trades.

The purpose of the 125-page survey "Governments and Dry Bulk Shipping" is to analyze the role of developing nations in the dry bulk trades and in dry bulk shipping.

The developing countries have varying degrees of influence and importance in the world dry bulk trades, and are generally exporters of industrial raw materials and importers of foodstuffs, and there is very little trade between developing countries. The survey analyzes in detail the volume and patterns of the dry bulk trades for the major and minor bulks utilizing 1978 base data which may be summarized as follows: changing voyage patterns and vessel productivity, shipping demand expressed in tonmiles is expected to increase by 38 percent, but only a marginal increase is expected in developing countries shipping demand because the largest increases in seaborne trade are expected to occur in the coal trade and in particular the steam coal trade where the major exploited reserves are in developed nations and the largest consumers are also in the developed industrialized world.

The survey analyzes the effect on dry bulk shipping demand of developing countries implementing mandatory cargo sharing measures.

The overall effect will be to decrease vessel productivity and thus increase dry bulk vessel demand. For example, if a goal of a 40 percent share is achieved by 1985 (which is unlikely) the net effect would be an additional developing country fleet requirement of 20-million dwt at an estimated cost of $5.5 billion (1980 prices).

The survey also considers and compares the economic criteria of shipowning between developed and developing nations, and also considers a number of alternative strategies to mandatory cargo-sharing in order to assist some developing countries to realize their justifiable shipping aspirations which would mean a gradual increase in developing countries' dry bulk shipping operations — as has happened during the 1970s. The developing countries have already made remarkable progress throughout the 1970s in developing dry bulk fleets — by and large this has been achieved without recourse to cargosharing schemes. Perhaps changing cost structures have been one of the most important influences in the flag restructuring of the world fleet which has taken place.

More and more countries are negotiating the sale of their exports on a CIF basis (e.g., Brazil now sells 40 percent of iron ore exports to Japan on a CIF basis). Also the mere fact that UNCTAD is seriously discussing dry bulk sharing schemes has already had a significant effect on the attitude of shipowners and raw material consumers in the developed world and, even if UNCTAD proposals do not get any further, these owners and consumers are now acting in a more benevolent and sympathetic manner to the maritime aspirations of the developing nations.

No. 23 in a series, this survey "Governments and Dry Bulk Shipping" is available, post-free, from H.P. Drewry (Shipping Consultants) Ltd., 34 Brook Street, London W1Y 2LL, priced at £110 in the U.K., and US$265 overseas.

Other stories from May 1981 issue


Maritime Reporter

First published in 1881 Maritime Reporter is the world's largest audited circulation publication serving the global maritime industry.