Seaborne Trade: What You Need To Know

If you think about it, most if not all of the items in your house either arrived by cargo ship or will be sent off on a cargo ship for export. This goes to show just how important seaborne trade is. 

When the Covid-19 Pandemic hit, seaborne trade was among the industries most impacted by the pandemic. According to UNCTAD, the volume of international seaborne trade fell by 4.1% in 2020.

In today’s article, we will be discussing how modern seaborne trade developed, the most important shipping routes, and the most important shipping ports. 

In doing so, we hope that you can get a greater understanding of the importance of seaborne trade as well as why access to shipping should be a key factor when deciding where to outsource production.

History of Modern Seaborne Trade

Seaborne trade has been a staple of human society from the days of antiquity. For the most part, the process was very simple and saw few major innovations. The most significant innovation in recent memory came about after the Second World War.

According to the Conversation, the US Armed Forces began the development of containers during the Second World War as a means to transport vehicles, armaments, and materiel more efficiently. Malcolm McLean built upon this concept in the 1950s, creating the earliest form of containers.

In doing so, goods could be transported more easily and at reduced costs, as goods can be kept in the relative safety of containers which require fewer workers to unload (the process is now automated). As a result, these containers helped cut unloading costs from USD $5.86 to just USD $0.16 when first introduced in 1956.

Consequently, seaborne trade exploded. In 1980, containers carried approximately 102 million metric tonnes of goods. In 2017, containers carried 1.83 billion metric tonnes, mostly from one end of the Pacific Ocean to the other or from Europe to Asia. On the topic of the global shipping fleet, according to Statista, the shipping fleet jumped up from 4,966 in 2011 to 5,534 ships in 2021. 

Important Shipping Routes

The most important shipping lanes used by these ships, argues Vox, is the Strait of Malacca. As the shortest route between the Pacific and Indian Oceans, approximately 40% of world trade traverses the strait which encompasses the waters of Singapore, Malaysia, and Indonesia. Another important shipping lane is the Panama Canal which connects the Pacific and Atlantic Oceans. 

However, while 15,000 ships pass through the canal annually, the canal is limited by its narrowness which only allows 30 to 40 ships per day. This same issue plagues the Suez Canal which saw the ship “Ever Given” grounded in the canal. The Suez Canal sees approximately 12% of global trade traverse its water, in addition to approximately 30% of global container traffic. 

According to the New Zealand Ministry of Foreign Affairs and Trade, this equates to approximately USD $1 trillion worth of goods annually and/or USD $3-9 billion worth of goods per day. “Over one billion tonnes of cargo was shipped through the canal in 2019, four times the tonnage transiting the Panama canal during the same period.”

Three other significant shipping routes revolve around the English Channel, the Strait of Istanbul, and the Danish Strait, writes the shipping-logistics company ArcBest. 500 ships traverse the English Channel daily, 48,000 ships traverse the Strait of Istanbul annually, and 70,000 trips travers the Danish Strait annually.

Key Shipping Ports

International trade’s reorient towards the East is evident not only in shipping routes currently used by shipping companies but is also evident in the most important shipping ports. The following are the most important ports in 2016 according to ArcBest.

Evidently, no American or European ports were in the top ten most important ports. However, for reference, here are the busiest ports in the United States in 2016. Statistics for United Statesports were provided by ArcBest.

For reference, the largest ports in Europe were found in Rotterdam, Antwerpen, Hamburg, Amsterdam, Algeciras, Marseille, Valencia, and Trieste. These statistics were provided by the European Commission’s Eurostat.

Statista, for the most part, corroborates these various statistics. Below is a chart on the largest container ports based on throughput (the quantity of goods delivered to a specific client in a specific period of time).

Evidently, international seaborne trade is vital to modern society. Without them the vital goods we need to thrive and prosper would simply be out of reach. However, it can be argued that Singapore is among the most important trading routes and ports. 

If you recall, Singapore borders the Malacca Strait and is at the same time the second-most important port. As a result, when considering which country to outsource production to, Singapore should be a prime candidate owing to the ease in which goods can be shipped off after production. If you are interested in outsourcing to Singapore, Kusu can help get you started.