Preliminary communication

Globalisation and Seaborne Shipping

Ivo Domijan-Arneri

Abstract

Shipping has a strong influence on the process of globalisation. One could say that shipping is an instrument of the globalisation process. It is because of shipping that the world is no longer the sum of isolated markets. The process of globalisation enables wide specialisation, an increase in production, economy of scale and global competition of the whole industry. There also exists an influence in reverse because globalisation itself is changing the shipping. Trade liberalisation enables outsourcing, i.e. dispersion of products and services on various geographical locations. The economic force behind outsourcing is the declining cost of input. The production is being located in places where the cost of input is most favourable. Since the trade within the shipping industry is one of the most liberalised segments of the industry, all of its components can be purchased, bought or contracted on the global level. It does mean that some functions and segments of shipping companies, such as technical and commercial management, crew and accountancy service, even the vessel’s registry, i.e. vessel’s flag, could be relocated and contracted to the special professionals elsewhere, outside the company and outside the borders of the country where a ship owner is domiciled. The appearance of outsourcing changes the conventional organisational structure of a shipping company into a modern one which is much more efficient and flexible. The dispersion of a shipping company’s functions, capital, ownership and vessel’s flag over the borders of domicile and real interests on vessels, resulting in equalisation and rationalisation of input costs of vessel’s operations on the global level. The final result is cheaper sea transportation.

Keywords

shipping; globalisation; specialisation; economy of scale; competition; management; outsourcing; open registry flags; liberalisation; input; organisation structure

Hrčak ID:

8118

URI

https://hrcak.srce.hr/8118

Publication date:

23.6.2006.

Article data in other languages: croatian

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