Shipping is critical to the global economy, but according to experts like Victor Restis and others, the industry is in desperate need of an overhaul in order to prevent a major crisis. Find out why the shipping industry remains stuck in the past and why it’s going to take more than simply spending money to fix things.
The Impact of Globalization
For many, the concept of globalization is synonymous with modern day transport and trade. Transportation is well-known as a necessary function for any type of business operation, but when you look at global trade, you can see that it would be nearly impossible to conduct business without transportation.
As the world economy becomes increasingly dependent on globalization for its success, the need for reliable shipping has never been greater. If anything, this should mean that shippers are spending more than ever before in order to ensure that goods arrive quickly and safely.
However, things aren’t going as well as you might expect. In fact, according to Port Technology, “the total number of containers moved by water has been declining for three years now and is at the lowest level since 2005.” This decline could be part of a trend that experts have called “irrational” and claims is putting our global economy in danger. But what does this mean for shipping? Why exactly is this happening? And what can be done to fix it?
The Shipping Crisis: What’s Causing It and How to Solve It
According to industry insiders, there are several major problems with today’s shipping industry that need to be addressed immediately if we’re going to avoid having another crisis on our hands.
The biggest issue is that the industry simply isn’t ready for today’s supply chain demands. As experts have said, the shipping industry is not prepared for this mega global shift in demand. During times of major economic growth, shippers are seeing their needs increase exponentially. They want to be able to send more goods over shorter periods of time, but they can’t do that when there aren’t enough ships or captains to meet these demands.
Unfortunately, the problem goes even deeper than that and has a lot to do with some major changes in consumption that we’ve seen in recent years. For example:
- Globalization and ‘Factory Asia’ – The rise of China and other Asian countries has significantly impacted consumption patterns throughout the world, especially in Europe. As a result of the increased consumer demand on the other side of the globe, we’re seeing companies move their manufacturing facilities to places like China and Vietnam, where labor is cheap, and worker productivity has increased significantly.
- Shipping Issues – There’s no denying that shipping plays an important role in today’s economy. Not only does it make it possible for consumers to purchase goods from all over the world, but it keeps manufacturers working as well by making raw materials available quickly and easily. Unfortunately, however, shippers aren’t able to keep up with this growth. Even if they could meet these demands (or at least come close), there are still major issues related to ship technology that prevents them from doing so.