Lesson 1: Global Economic Trends and politic in Maritime Industry

Lesson 1: Global Economic Trends and politic in Maritime Industry

Course outcome:
This course Trends, Issues and Breakthrough in Maritime Industry
(ELECTIVE 1) will thoroughly familiarize students with the mandatory
minimum requirements for knowledge, understanding, and proficiency in
Table A-II/1 and III/1 of STCW 2010 Code for the function for both Officers
in Navigational watch and Marine Engineering on ships 500 gross tonnage or
more and propelled by main propulsion engine of 750 kW or more by
providing the detailed knowledge to support the Navigational and Marine
Engineering practice at the Operational Level.
Learning outcome:
At the end of the lesson the student should be able to:
 1. Discuss the global economic trends, and politics in the maritime industry
Introduction:
The expertise and research issues covered by the Standing Committee on Marine Environment
are diverse. Because the committee is unable to examine all prospective study topics that fall
under its purview, members of the committee picked the subject areas that appear to have the
greatest urgency or far-reaching implications. This e-circular summarizes the primary study
areas and explains why they are significant. 

Learning outcome 1 Topics

Topic 1: Global Economic Trends and politic in the maritime industry
 

 Topic 2: Demographic, and emerging technology in the maritime industry

 

   Topic 3: Environmental impact of the maritime shipping industry and

maritime industry issues.
   Topic 4: Breakthrough in the maritime industry
Learning objectives:
Marine vessels are a significant source of air pollutants that are associated
with environmental, health, and climate change impacts.
 

Topic 1:The Global Economic Trends in the Maritime Industry

Introduction:
The expertise and research issues covered by the Standing Committee on
Marine Environment are diverse. Because the committee is unable to
examine all prospective study topics that fall under its purview, members of
the committee picked the subject areas that appear to have the greatest
urgency or far-reaching implications. This e-circular summarizes the primary
study areas and explains why they are significant. 
Shipping has been an important human activity throughout history,
particularly where prosperity depended primarily on international and
interregional trade. In fact, transportation has been called one of the four
cornerstones of globalization, along with communications, international
standardization, and trade liberalization. Due to a number of technological,
economic, and sociocultural forces, only the rare country can keep itself fully
isolated from the economic activities of other countries. Indeed, many
countries have seen astonishing economic growth in the recent past due to
their willingness to open their borders and markets to foreign investment
and trade. This increased flow of knowledge, resources, goods, and services
among our world‟s nations is called “globalization”, formally defined as “the
development of an increasingly integrated global economy marked especially
by free trade, free flow of capital, and the tapping of cheaper foreign labor
markets.” If it materializes, global economic growth in 2018 and 2019 will be
highly beneficial for the container shipping industry, BIMCO said in its latest
macroeconomics shipping market outlook. With global long-term growth
projected to rise only moderately in the coming years, it is essential that
nations implement structural reforms to unleash any additional growth
potential, the report says. As explained, improving the economic growth
potential through structural reforms supports productivity, and thereby
improves the medium and long-term derived demand for the shipping
industry.
The International Monetary Fund (IMF) expects the US tax bill to generate
plenty of activity after hiking the growth for the US by 0.4 percentage points
for 2018 to 2.7%, and by 0.6 for 2019 to 2.5%. They estimate that half of
the upward revision for the global growth projection for 2018 and 2019 will
be driven by US output and the positive effect it may have on its trading
partners.

 
For shipping, a possible boost in investment will lead to higher demand and
increased trade, if it is not absorbed by inward-looking policy requirements,
according to BIMCO. For the container shipping industry, the economic
picture in the US is said to be favorable with a possible pick-up in wages
boosting consumer demand.
In the outlook, BIMCO said it has been quite some time since
macroeconomic development has looked this positive and as supportive of
shipping.
 Political events can undermine the development, but 2018 appears to bring
fewer economic growth “derailing” events compared to 2017. The most
important factors to potentially derail growth is likely to be the US midterm
elections in November, the renegotiation of NAFTA, and the negotiation of
the Brexit deal. Notwithstanding, the sustainability of the all-important
Chinese economy, according to the shipping association.
For sustained economic growth, the political deals resulting from these
events need to decrease the number of trade barriers and ensure regulatory
alignment. This will help to encourage potential growth as restrictive trade
measures can discourage
trade flows and have negative knock-on effects on economic growth and job
creation, BIMCO concluded.
 As of 2016, three trends will describe a maritime industry in 2017: 1) An
increased volatility of demand; 2) A sustained but uneven global recovery;
3) A restructuring of the maritime supply.  This text presents an analysis of
these trends.
 New external factors
Variability of the risk makes the demand for transport less predictable. In
2016, several factors triggered this instability, including fluctuations of
exchange rates, slowdown of the Chinese economy, lower oil prices, and
difficulties of the European economy.
 

In 2017, recovering of American and European economies is well engaged.

Despite a slight slowdown of the GDP of the United States in the last quarter
of 2016, one can anticipate a still dominant position of the U.S. dollar will
continue in 2017. The impact of a strong U.S. dollar boosts U.S. imports. In
return, other external events to the industry are related to the international
political situation. The intention of Donald Trump to review several
agreements of free trade (NAFTA and the transpacific Partnership), the vote
on the Brexit inducing the exit of Great Britain of the European Union are
some examples. The rise of protectionism could have the effect of
undermining the global economic recovery.                                                 
TRENDS SHAPING                                                 Commodity supercycle in
global maritime industry FIVE
   

   a.)
Commodity Super cycle, is no longer super, with most of the developing
world in a slowdown, IHS is
forecasting a prolonged weakness in commodity prices over the next decade.
Prices of Oil, Iron Ore, and Crude Oil are likely to remain depressed for the
next few years. For most shippers, the 5 – 10 years of slow growth ahead
translates into depressed rates for shipping, particularly DRYBULK shipping.
Accentuating the price weakness is that most fleets
– with the exception of PANAMAX FLEET Coal and Grain Cargo Vessels – are
fairly young, leaving little room to reduce capacity. As a result, a very
painful and lengthy rebalancing of capacity may be in store. One exception
to these trends is Tanker shipping, which is expected to stay strong in the
short term. During the first half of 2015, the sector saw an increase in
freight rates as the low price of crude oil encourage emerging economies to
burn oil instead of coal. Very Large Crude Carriers (VLCC) on the Middle East
Gulf – Far East route were charging
$60,000 per day in April 2013. Positive revenue growth is anticipated for the
remainder of the year as long as oil prices remain low.
 Although lower prices will spur more oil consumption in short term, IHS
expects overall global oil demand growth will average just 0.6 % per year
through to 2040. This is because the link between economic growth and oil
demand will weaken as the world adopts alternatives to hydrocarbon fuel
and enhances vehicle fuel efficiency.  China's slowdown slows down
shipping, China has contributed to the end of the commodity Supercycle.
The recent deceleration of China’s economic growth is affecting many
domestic industries, with implications for the global maritime economy. The
excess in industrial capacity, housing inventory, and debt are expected to
dampen China’s domestic demand in 2016. As a consequence, the
construction industry is sinking deeper into recession. At the same time,
slow and unstable global economic growth means that China will not be able
to export its way to recovery. From 3% in 2014, IHS forecasts that China’s
GDP will sink to 6.3% in 2016, before a modest rebound in 2017.
Dry bulk shipping will be hurt as China’s demand for commodities shrinks.
Before the slowdown, China imported 70% of the world’s seaborne iron ore
and 20% of its coal. With China’s construction industry in the doldrums, the
steel mills’ demand for coking coal and iron ore has declined sharply. Coking
coal imports declined by 12% in September 2015, compared with September
2014, contributing to a year-on-year drop of 17.9% in January-September.
Even with the recent news of mine closures in China in response to the
availability of superior, low-cost imports-iron ore exported from Brazil and
Australia is of higher quality and is much cheaper than domestic production,
there i

s little chance of a return to 5-8% yearly growth in

b.) China’s demand for foreign iron ore. Instead, demand for seaborne
imports will simply stabilize, allowing for the possibility of modest to slight
growth. To date, government-controlled steelmakers in China have been
able to find buyers abroad as prices fall rather than scaling down production.
However, anti-dumping rules are expected to push the industry to cut back
production. This is causing a disconnect in the shipping industry between the
expectations of owners and charterers for three-to-five-year spot rates.
New-building prices suggest that freight rates will drop further. While the
larger Asian Shipyard appears stable,    smaller shipyards may be
vulnerable,
particularly those that specialize in the dry bulk and offshore vessel markets.
Adding to difficulties for shipping is the decline in seaborne imports of
thermal coal to China, due in part to the substitution of land-born coal
sourced domestically as well as from neighboring Mongolia. Such shift in coal
sourcing is driven in part by the relocation of thermal power stations West to
Inner China, in order to reduce pollution in China’s big cities in the East. The
growth of nuclear and alternative energy sources has also reduced demand
for shipborne imported coal from Australia and elsewhere overseas.  The one
bright spot for Chinese shipping is the container trade, which is expected to
grow. Volume on the routes to the Western United States is expected to rise
8% in 2016 and on the European routes, 6% buoyed in part by growing
demand for cheap oil and petroleum.
    c.)Lifting of Iranian Sanctions: A positive for Shipping
 
Iran and the P5+1 nations – China, France, Russia, the United Kingdom, and
the United States, plus Germany – reached a nuclear agreement, known as
the Joint Comprehensive Plan of Action (JCPOA), on 14 July. The heart of the
agreement is that Iran will curb its nuclear program in exchange for some
sanction relief. The European Union and

the United Nations Security Council endorsed the agreement on 20 July, and
Iran has formally adopted the nuclear agreement. All signatories to the
JCPOA officially “adopted” the agreement on 18 October, which triggered
Iran’s JCPOA 
commitments. Most analysts expect certain EU and US sanctions against
IAEA verification that Iran has met its JCPOA commitments. The lifting of
some sanctions is expected to add about half a million barrels of oil a day to
the global supply by the end of 2016. Iran’s re-entry into the oil export
market won’t help tankers' operation directly, because most of the oil will
likely be shipped in National Iranian Tanker Company carriers sidelined in
the Persian Gulf while sanctions were imposed. While adding a half-million
barrels a day does not add much to the global
supply – Saudi Arabia and the United States both produce 10 million barrels
per day, those extra barrels should further depress already weak oil prices;
inflating near-term demand for oil, gas, and petroleum products; and
helping global shipping overall.
 

 d. Big Data, less drama

In addition to the lower volatility expected in commodities, shippers will soon
benefit from higher-resolution crystal balls as they make their forecasts. The
increased availability of shipping data and advances in Big Data analytics is
providing shippers with greater visibility into market and pricing trends and
are helping minimize the dramatic boom- and bust cycles that have
traditionally plagued the industry.
 One example is the Big Data analytics provided by the Automated
Identification System: a constellation of satellites that keeps track of ships
at sea and gives analysts significantly more insight than the previous
systems into are operating, loading, and discharging cargo. The availability
of such data-driven analytics improves tactical decisions, allowing decision-
makers to choose optimal routes, considering weather conditions, fuel
consumption, and piracy risk. As analysts integrate this information with bills
of lading, shipping strategists gain a clear understanding of how trade routes
are evolving over time.
By itself, Big Data analytics can’t end the industry’s cyclical nature or
remove all geopolitical uncertainty. However, it will allow players to act in
ways that mitigate their risks and transform many of their challenges into
opportunities, a positive overall for shipping.
  e. Long-term Demographic Ships
Shifts in Global demographics and population growth rates, coupled with
long-term economic growth rates, coupled with long-term economic growth
in developing markets, will have implications for the maritime sector over
the course of the next decade.
 
The middle class is growing in the emerging economies of Asia, Africa, and
Latin America. As disposable incomes increase, demand also rises for
imported products, which drives growth in demand for imports of
commodities and finished goods. Consider India, where economic growth is
expected to steadily climb to 7.9% by 2017, up from 7.3%
in 2014. India’s consumer spending accounts for about 60% of the economic
growth. 
With inflation receding and global commodity prices low, the real purchasing
power of Indian households will continue to improve.
One consequence for the maritime sector of a rise in consumer spending in
developing markets will be long-term growth opportunities for container
ships. More and larger container ships will require investments in ports, 
infrastructure, technology, and services to ensure that the flow of business
remains efficient. As the requirements for more technologically advanced
systems increase, the global shipping industry faces a serious challenge of
managing an aging workforce. Seafarers all over the world are getting older
because fewer cadets are being trained to replace senior officers. The
problem is most acute in the Asian shipbuilding sector. In Japan, about half
the
workforce is aged 50 – 60 years old, and there are few young graduates
joining the industry.
 

Shipping’s employment problem is that it is seen as low-tech compared with

industries such as aviation, automotive, and technology. To attract the next
generation to marine professionals, shipyards must become more
technologically advanced and innovative and seafaring must learn new skills
and integrate new technology. For instance, the automation of shipboard
systems allows for control to be performed onshore, requiring fewer
seafarers. While the era of the autonomous ship is years away, these
innovations have the potential to spark the imagination of a new generation
and help infuse new blood into the maritime industry.
The global impact of commodity prices in maritime industry Marine Industry
- Trends to impact in 2018
Owing to the rise of emerging countries, new consumer classes, and high
resource demand, the marine industry is set to experience the impact of
several trends and challenges. The central question is what it will be like?
Will it be an industry with multiple players, or will it be consolidated? Several
key trends in the Marine industry will impact the operations, but I believe
the future of the marine industry will depend on triangular interactions
between people, economies, and natural resources.
The world will continue its current growth momentum with some booms and
busts over the next twenty
 A shift to concern over resource limitation and environmental degradation
will see a desire for a more sustainable world being developed and equality
in wealth distribution. Governments will find common ground and
accelerated economic growth, within a framework of sustainable
development, which will
States act in their own national interest. There will be little effort to forge
agreement amongst governments for sustainable development and
international norms. This is self-interest and the zero-sum world with a likely
rise in protectionism and slower economic
 5 Global Trends to impact in 2018
 Increase in usage of mega-ships: New mega-ships keep outsizing older
models while emerging technologies boost efficiency and the sustainable
image of the marine industry. Ships have been getting bigger and better
over the past few years and this seems to be a continuing trend. Every year
new plans are created to outsize the currently available mega-ships and
apparently the sky is the limit. This trend is largely a result of
containerization and automation which enables the faster loading and
discharging of
 Long-term demographic shifts: Shifts in global demographics and
population growth rates, coupled with long-term economic growth in
developing markets, will have implications for the maritime sector over the
course of the next One consequence for the maritime sector is a rise in
consumer spending in developing markets. It will generate long-term growth
opportunities for container ships. However, larger container ships will require
investment in ports, infrastructure, technology, and services to ensure that
the flow of business remains efficient.
Growing acceptance and need for hybrid solutions: Innovations are made
each day that reduce the environmental footprint of We can also see a
growth in both acceptance and a need for hybrid solutions. The large interest
is connected to current as well as future emission legislation, but also to the
public sentiment for more ‘clean’ solutions. Hybrid solutions are not only friendlier towards
the environment, but in many cases also contribute to lower fuel costs as well as reduced fuel
consumption. Improvements to the engines, better propeller performance, and high-tech
coatings, as well as friction-reducing air cushions and even skysails, are reducing carbon and
sulfur emissions. These advancements are only the start, as further specialized methods are
pushing the maritime industry towards a green and environmentally friendly era.

Commodity prices: With most of the developing world in a slowdown, prices

for coal, iron ore, and crude oil are all likely to remain depressed for the next
few years. For most shippers, the 5-10 years of slow growth ahead
translates into depressed rates for shipping, particularly dry bulk shipping,
leaving little room to reduce capacity. Although lower prices will spur more
oil consumption in the short term, the link between economic growth and oil
demand will weaken as the world adopts alternatives to hydrocarbon fuels
and enhances vehicle fuel
Digitization: The increased availability of shipping data and advances in Big
Data analytics is providing shippers with greater visibility into market and
pricing trends and is helping minimize the dramatic boom-and-bust cycles
that have traditionally plagued the industry. The availability of such data-
driven analytics improves tactical decisions, allowing decision-makers to
choose optimal routes, weather conditions, fuel consumption, and piracy
risk. It will allow players to act in ways that mitigate their risks and
transform many of their challenges into opportunities.
With several positive trends, the marine industry will still face concerns
about the renewable fuel standard, access issues, and government
regulations. In addition, new innovations cannot be noticed from the last few
years due to minimal requirements from ship operators/owners and there
has not been any special application beyond offshore, tankers/containers,
cargo, fishing, passenger transport like cruise and yacht, and defense. At
some point, the industry needs to market to new customers. Without this,
the industry’s growth will hit a ceiling. The industry can see growth once the
regulatory and legislative issues are resolved.
 China shipping industry is slowing down affecting the global
maritime industry
 While it’s true that China’s annual GDP growth is the lowest that it’s been
since 1990, the slowdown from a 7.3 % GDP in 2014 to 6.9% in 2015 was
expected and isn’t very far off from economists’ predictions of around 7%.
So why does everyone seem so alarmed?
 It’s like the popular saying goes, “When China sneezes and the rest of the
world catches a cold.” The fact is, the rest of the world has long been highly
affected by the movement of China’s economy - which is the second largest
in the world.
 Analyzing China’s Decelerating Economy
 If one thing is clear, it’s that China’s consistent and extraordinary growth
patterns have begun to slow down. International markets have suffered
significantly due to the increase in the economic uncertainty of a country so
heavily relied upon for steady growth. In addition to the yuan (China’s
currency) dropping 6 percent since August of 2015, the country isn’t
purchasing quite as many commodities as it used to. For a country
previously known for buying metals, fuels, and crops to feed its expanding
economy, China’s purchase of raw materials has noticeably begun to slow.
With a decrease in imports and the worldwide slowing of exports due to
decreasing demand for oil, China’s customers just aren’t in a rush to
purchase right now. The overall result has been a slowing of activity at some
Chinese ports, and at various other ports around the world. The world’s
largest port, Shanghai International Port, reported an 18% decline from the
previous year’s sales, and the Shanghai Shipping Exchange’s containerized
freight index has plunged as well, dropping 27% since the beginning of
2015. Although container volume in Shanghai did grow 3.7% in 2015, this is
still a big drop compared to the 4.8% growth from the year prior. Affect on
Shipping Rates Chinese shipyards order totals decreased by 59% through
November of 2015, according to the China Association of the National
Shipbuilding Industry. Because of the lack of demand for oil and other
commodities from slowing growth markets like China, global shipping rates
have decreased somewhat. An oversupply of ships has also increased the
rate of decline. In 2015 alone, there was a 40% drop worldwide in new ship
orders, according to Clarksons Research, a London-based consulting firm.
China is considered a global leader in the production of ships, and therefore
the declining shipping rates have put something of a damper on the industry
as a whole. This is especially so in China, where Zhoushan Wuzhou Ship
Repairing & Building recently became the first Chinese government-backed
shipyard to go bankrupt. On the other hand, oil tanker operators have seen
an increase in orders for new tankers due to extremely low oil prices, with
new orders up 14 percent since last year. Also, due to slow trade operations,
ship and oil rig storage demand is high, and companies like International
Ship care in Malaysia are becoming a necessity.
What Does the Future Hold?
Experts say China’s shipping industry will continue to grow at a slower rate,
with an expected annual rate of less than 5% over the next 5 years, due to
the lack of demand for products and an oversupply of ships. However,
thankfully China’s slowdown has had minimal, if any effects on U.S. ports,
with the Ports of Los Angeles and Long Beach already off to a stronger than
expected start to 2016.
The lifting of Iranian Sanctions has a positive impact on the Global Maritime
industry
 With the lifting of sanctions Iran will be able to export as much crude oil to
the world as it can, or as much as it can find demand for. Before imposing
an oil embargo on Iran in 2012, one in every five barrels of Iranian crude
went to European refineries. Iran has been selling just over one million
barrels a day for the past few years, mostly to China, India, Japan, and
South Korea.
 Tehran says it will hike sales by 500,000 barrels the day after sanctions are
lifted and increase total exports to around
2.5 million barrels within the next year. This will push the price in only one
direction: downwards. The market is already flooded by cheap oil and there
will be many more barrels in the market than there are buyers.
 In order to win back its customers, Iran plans to offer discounts on prices
that are already the lowest in 11 years.
Iran's full return to the market could trigger a price war with its arch-rival
Saudi Arabia, which is trying to keep its own market share by selling under
the market price.
 
The lifting of Iran’s economic sanctions is most beneficial to Iran’s economy.
Its per-

capita welfare is expected to rise by

3.7 % mainly because of the lifting of the oil 
the embargo imposed by the EU and the liberalization of cross-border trade
in financial and transport services. Net oil importers gain while net oil
exporters lose as the world price of oil declined by about 13 % due to the
additional amount of oil sold on the global market in response to
the recovery of Iranian oil exports to the EU. In per capita terms, Israel is
the second-largest beneficiary of the lifting of Iran’s economic sanctions,
gaining almost 0.5 % in per capita welfare, while the EU and the US gain 0.5
% and 0.3 %, respectively. The losses are steepest for OPEC members,
especially the GCC countries which as a group are expected to lose 3.9 % in
per capita welfare. Per capita welfare for
other OPEC members and Russia declines by 2.8 % and 1.6 %,
respectively.   Overall, the world benefits most from the lifting of the EU oil
embargo and less so from other aspects of the sanction removal as Iran
accounts for a negligible share of the world’s non-oil trade.
Net oil-exporting countries lose mainly due to the deterioration in their terms
of trade. As many of them subsidize oil, the lower oil price will have a
compensating efficiency gain, but not enough to reverse the welfare loss.
Net oil-importing countries gain mostly because of improvements in their
terms of trade, but also because cheaper oil enables expansion of their
petrochemical production and because in most of these countries oil use is
taxed, so the interaction of existing distortions and structural change leads
to efficiency gains.  If major OPEC members limit the quantity of oil
produced and exported to support the world oil price, they will enhance
Iran’s gains, limit oil exporters’ losses, and reduce the gains to oil importers.
The world would be worse off as the reduction in oil exporters’ losses would
be insufficient to compensate for the reduction in oil importers’ gains.
 The results of the lifting of Iranian sanctions will greatly benefit the Iranian
petrochemical industry, as total output will increase by 12 percent. Other
countries will suffer losses, such as China and India, which both do not
currently abide by the international sanctions and continue to trade heavily
with Iran in a restricted market.  A shift in trade flows from Iran back
towards Western trade partners such as the US and EU are to be expected.
Other countries that once enjoyed good trade relations with Iran, such as
South Korea and Switzerland, will also benefit from sanctions’ removal.
Other than shifts in maritime traffic from Eastbound to Westbound routes,
the chemical tanker sector can expect both an increase in utilization and
freight rates, thanks to the removal of shipping restrictions on Iranian
cargoes and an increase in the global petrochemicals trade.  Additionally, the
chemical tanker sector will need to rethink its logistics, as restrictions
governing the carriage of hazardous goods result in cargoes that may not be
allowed to precede other cargoes aboard a ship. Luckily, the majority of
Iranian output is made up of relatively “easy” chemicals such as methanol
and xylene, which are approved by previous cargoes. This will allow for
increased opportunities for backhaul cargo carriage, resulting in fewer ballast
legs and greater ton-mileage for the sector. In short, the thesis finds that
the lifting of sanctions will benefit both Iran and sanctions-imposing
countries while hurting those countries that have taken advantage of an
artificially less competitive market. The reopening of the petrochemicals
market will also have a positive impact on the chemical tanker sector.
 The impact of digitization in the global maritime industry
 Every industry and every company perceive it and react differently. What
impact does digitization have on the maritime industry?
 Dr. Steffen Knodt: The ocean is covering more than 70% of the earth and
thereby all maritime industries related to the ocean space are very important
for the global economy. About 95% of all goods are transported by shipping
and the enormous marine resources on energy and food are essential for the
entire world. Offshore oil & gas with related subsea production systems are
already high-tech industries. Offshore wind is a major contributor to the
“Energiewende” in Germany. However, in recent years, the maritime
industry was impacted heavily both by low freight rates in container shipping
as well the low oil price.
 
This situation increases the need to reduce significantly the investment cost
for new 
projects and for the operational cost of existing assets. Digitization offers a
huge opportunity to significantly increase efficiency by introducing new
digital technologies and new business models. As in maritime it takes
relatively long and it is costly to qualify new equipment, a technology
transfer could take place for digital innovations from other industries and
some of the existing markets might even be disrupted by new players or
technologies.
 Due to the high importance of the maritime industry in Germany within a
total of 2,800 companies with 400,000
employees and a turnover of approximately € 50 billion, it became part of
the federal high-tech strategy and via the National Masterplan for Maritime
Technology NMMT it was linked to the Maritime Agenda of the German
government. It is therefore very reasonable, that also the bi-annual National
Maritime Conference in Hamburg on April 4th, 2017 focused on the
opportunities of digitization for the maritime industry. Upfront this
conference, a positioning paper on digitization in the maritime industry was
generated with focus areas for the upcoming years.  It already became
evident in the process towards this digitization paper that digital
technologies are of

rel
 a common understanding of digitization yet – some companies are already
very advanced,
while Vance for the entire industry in many different areas. A maritime
forum took
the place with representatives from industry, academia, associations,
politicians, and trade unions. The dialogue at this forum and the detailed
work afterward made clear, that there is no others need to catch up. For
example, operating in the deep sea requires remote or autonomous
operating vehicles with advanced sensor and communication technologies.
To a certain extent, this is comparable to space missions but under much
harsher conditions. On the other hand, in shipping, some transactions in the
logistics chain are not digitized yet and the connectivity of the vessels is
limited. So, the process for this positioning paper was very fruitful to start
thinking and working more horizontally across the entire maritime industry
with joint efforts.
Digital technologies are offering new ways of performing joint industry
projects. By sharing data, operators, suppliers, and service providers can
evaluate together how new technology can increase efficiency and reduce
cost, e.g. by introducing liquefied natural gas (LNG) as a new type of
environmental-friendly fuel or to monitor emissions during the voyage.
Another example is how drones could be used across the industry to monitor
and inspect assets or even deliver spare parts. As drones are totally new for
the industry, it makes a lot of sense to work closely together in an open
innovation setup. Testbed to be used across the industry will make
qualification more independent from running operations and thereby an
innovation ecosystem can emerge.
 Maritime security is a good example where such testbeds can boost digital
innovation. To gain real-time insight into the operation of a vessel or an
offshore wind park several data sources like satellite images from space,
airborne camera pictures, and shipping signals need to be in one system
that combines and presents data in real-time. A so-called “North Sea
Testbed” would enable scientists, industry, and start-ups to develop real-
time services across the entire value chain. Also, in the context of Industry,
such a test of the environment is crucial for maritime to enable cross-
industry innovation. Ideally, it can also be linked to one of the Digital Hubs
currently been set up across Germany or become a dedicated Maritime
Digital Hub of its own.
Digitization will disrupt some maritime industries
 The maritime industry can therefore benefit from digital technologies by
closer cooperation across the value chain even into onshore industries.
Sharing relevant data in a so-called “maritime cloud” will increase efficiency
and enable the internet of things on the sea with new services. More data
gathered from the ocean will improve simulation tools for voyage planning
and climate models. Offshore wind farms will be built, operated, and
maintained at a lower cost. Overall, by the huge size of the global maritime
industry digitization could improve also significantly its relevant carbon
footprint. Imagine, how much waste could be reduced by a synchronized
intermodal transport and logistics based on real-time demand by
autonomous technologies both for trucks and vessels. Harvesting marine
mineral
resources from the ultra-deep sea will require autonomous vehicles and will
supply crucial elements for high-tech products and batteries. Digital
technologies might even support solving one of the biggest challenges of our
time – plastic waste in the oceans. Large ocean garbage patches are a global
issue that already today seriously impacts the entire food chain. However,
the various new data-driven technologies like automated terminals, digital
twins, autonomous vessels, big data, predictive maintenance, blockchain,
drones, augmented and virtual reality or even 3d-printing will change the
way of working in the maritime industry. It is therefore very important to
consider also what that will mean for the large number of employees
working in this industry. Job profiles will change and will demand more
enhanced IT qualifications. A new business might need a different skillset, so
also this should be considered early in educating the next generation of
maritime professionals. The importance of naval well-educated Captains
should not be underestimated, as conquering the ocean will require still a lot
of human experience and knowledge – even in the digital world.     

  
   Politics in the global maritime industry
 Maritime Affairs and Security Politics in North-East Asia
 

As in any asset-oriented industry, also in maritime introducing new

technologies or innovations can be easily related to high development costs.
Especially, when full-size tests in real-life conditions are required.
Furthermore, third parties can set strong regulations on qualification and
documentation procedures increasing the cost even further. In general, this
leads to relatively long development times mostly linked to customer
projects where risk needs to be reduced and profitability must be ensured.
Innovation culture can be enforced by closer cooperation across the industry
already in the early phases when the cost of failures is relatively minor and
the potential for improvements is huge. The Chinese government has been
exploring various paths to find a direction that better suits China’s national
conditions during the past 60 years. Meanwhile, a series of political and
economic events and policy transformations have had different effects on the
port industry. This article attempts to ascertain how these events and port
policies have influenced Chinese port traffic through an empirical study on
data covering 1952–2009. The findings suggest that foreign trade has been
the prime driver of the throughput of Chinese ports. The increase in the
ports’ throughput has enabled an increase in domestic demand and the
urgent need for further port investment. Chinese port throughput has been
subject to multiple shocks. The Great Leap Forward is found to have had the
largest, but only a short-term impact. China’s accession to the World Trade
Organization, however, led to a long and exclusive effect on ports, with little
observed effect on the other variables. The reform of port governance is
shown to have had a more lasting positive effect on port throughput than
physical investment. However, these latter effects are minor, the economic
and political factors remain the primary driving factors of port throughput.
China will be among the biggest factors that shape the future of the energy
and maritime sector in the next five to 10 years, according to panelists who
participated in the Energy and Maritime Investment Conference organized by
research company IHS Markit, in partnership with Nikkei, in
Singapore.  Panelists mentioned China's increasing investment in regional
ports, which could change the landscape of shipping hubs in the region.
Turlock Mooney, the senior editor of global ports at IHS Markit, said China's
Belt and Road Initiative has driven investment in various ports in Southeast
Asia, including Myanmar and Malaysia.
Mooney said China has been taking a more "holistic" approach in port
development that extends beyond building port infrastructure to include
"digital and trade support platforms, and even residential and commercial
properties." In order to boost their geopolitical presence in the region, other
regional powers, including Japan, are boosting investment
ent in ports beyond their borders. Panelists had split views on whether
China's development in regional ports could hinder Singapore's status as a
trans-shipment hub. "I am very bullish on Singapore's future," said Jakob
Bergholdt, the chief financial officer of tanker company BW Group. He added
that investment in Singapore's ports in areas including automation is
"future-proof." Meanwhile, Johnson Chng, partner and managing director of
Silk Road Finance Corporation, which provides investment funds for Belt and
Road infrastructure projects, said he is "quite fearful" of how Singapore's
port operator will develop in the next five to 15 years. Chng said China's
investments in neighboring countries such as Indonesia, Thailand, and
Malaysia could "potentially disrupt Singapore's strategic strength and
position."Chinese companies are becoming a bigger threat to Singapore's
offshore and marine sector, which has been experiencing a downturn after
the slump in oil prices. Ding Li Ang, IHS Markit's Asia Pacific head of
research for upstream cost and technology, said in his presentation that
market shares of Chinese companies in jack-up rigs and offshore floating
platforms for oil and gas have been increasing in the last 10 years, putting
at risk a big chunk of revenues for the two biggest Singaporean marine
players, Keppel Corp. and Sembcorp Marine, under conglomerate Sembcorp
Industries. Port operators are also seeing increasing competition from
Chinese players. IHS Markit's Mooney said Chinese port operators such as
COSCO have been ramping up management of overseas ports in the last five
years, with the number already reaching roughly half the ports managed by
large global players. The shipping industry has seen consolidation in recent
years due to the oversupply of container ships against slack global trade
growth. BW Group's Bergholdt said China's import demand will be a key
driver for the shipping industry. As economic growth leads to a wealthier
population, more people will "buy different products [and] more [items] will
go into China. "The overwhelming share of international relations literature
focuses on two issue areas: The Geopolitics or strategic study of military
security, and the evolution and management of maritime territorial disputes.
While the relation between the US and China, including their interaction in
the East and South China Seas, are the main objects for the analysis of the
former, scholars usually approach the latter through the perspective of
International Law which assess the validity of claims and produce
sophisticated legal and technical solutions, or through analyses of diplomatic
strategies and tactics that are used to advance these claims.
Brexit: Britain exit from the European Union
 Implications for global shipping and sea trade
The buzzword for the post-Brexit landscape both in Europe and further afield
is ‘uncertainty. No one really knows the long-term effect that Brexit will have
on local and global economies. However, as the dust settles following the
referendum, market experts, industry analysts, and businesses are
assessing the position with cooler heads and so, whilst certainty may be a
little way off, more concrete predictions and assertions of intent are
beginning to emerge. This is evident daily in commentary and news from the
shipping and sea trade sector.
Global impact
The international shipping market is fueled by trade, which in turn depends
on the health of the global economy. The Brexit vote landed at a time when
the shipping market, particularly in certain sectors like bulk freight, was
already extremely challenging. The factors which have contributed to dry
bulk freight rates heading towards all-time lows in Q1 2016 reflect long-term
issues which would have persisted whatever the referendum result. These
factors include the oversupply of ships and the effect on global trade of the
rebalancing of the Chinese economy following the boom of the last decade.
 Sea trade in and out of the UK accounts for only a very small fraction of
global shipping activity and therefore an isolated post-Brexit slowdown in the
UK economy may be unlikely to impact dramatically on global freight
volumes. This is reflected in some of the bullish reactions we have seen from
industry players in recent weeks. Euronav’s chief executive was quoted in
Lloyd’s List as saying, on a conference call for analysts: “It should be largely
speaking something of a non-event in terms of impact on global trade for
crude oil.” For companies with income denominated in US Dollars, which will
be the case for many international shipping companies, it could be
temporarily beneficial, particularly if costs are in euros and sterling. Others
comment that potential constraints in available finance, arising from the
Brexit vote, may contribute to a longer-term upturn in the market, in terms
of helping address the current oversupply of vessels. The shipping industry,
particularly the dry bulk and container sectors, is facing other macro threats
to its existence in the longer term, which are completely unrelated to the
Brexit vote. The rise of the digital economy and more widespread use of
technology in logistics (for example drone deliveries) and the consumer
sector (for example 3D printing) may impact the long-term need for the
same volume of goods to be carried by sea.
UK impact
UK trade will clearly be impacted by the Brexit vote. We saw an immediate
effect on currency and share prices,

although there are signs that the market is settling down after the initial
post-vote furor. In terms of longer-term impact, there are some matters
which are already tolerably clear, for example, that any changes to the cost
of trade with the EU are likely to affect freight volumes at British ports.
However, the precise nature and extent of the effect on UK trade will depend
entirely on the form of relationship which is ultimately agreed upon both
with the EU and with other trading partners. With the new British Prime
Minister, Theresa May, looking to defer
triggering Article 50 until 2017, that form of the relationship remains pretty
‘uncertain’.
There are wider potential outcomes for shipping in the UK beyond the direct
effect on trade volumes. In terms of the UK offshore industry, for example,
trade winds reported recently that “when news of the UK’s decision to exit
the EU hit the offshore sector, most analysts agreed that the longer-term
damage for the sector would be from a possible slowdown in the world’s
economy. However, some warned the immediate and near-term effect would
be that oil companies would obviously put the brakes on much-needed
investment in the UK. The UK continental shelf (UKCS) is already suffering
from record low investment — at one-eighth, the value of the annual
average over the past five years
— and the nation’s oil-and-gas sector is on course to have lost up to
140,000 jobs by the end of this year.”
 There is also the UK’s position as a leading provider of maritime
professional services to consider. The marine insurance industry is pushing
hard to maintain the pass porting rights currently enjoyed between EU
member states, although whether this will be possible without full access
to . The single market (and the associated EU requirements for free
movement of workers) is set to be the key topic in negotiations. In terms of
other professional services, such as legal and shipbroking services, there is
some speculation that UK’s so-called “stability premium” may have been
affected by the vote. However, the
 

 UK’s long maritime history, the reputation of its courts (which rely on an
extremely well-established body of specialist case law) and institutions, and
the number of highly qualified individuals’ resident in the UK working in the
sector should help ameliorate any effect on this premium at least whilst
Brexit is negotiated. However, even if the premium remains intact the
professional services sector may be rightly concerned about services are
dealt with within negotiating future trade deals. Such agreements
traditionally focus on trade in goods and therefore may not be as
advantageous to the

services sector. The global shipping market is experiencing challenging

times, mainly due to factors that were set in train long before the Brexit
vote. However, the shipping industry is used to market cycles and draws
resilience from the fact that global trade cannot function without
international shipping. Regional issues like the Brexit vote certainly have the
power to impact the market, but if ultimately, they are not significant
enough to affect global supply and demand for physical goods and
commodities, they are unlikely to prove more than a drop in the ocean in
terms of their individual impact on the global shipping market.
The impact of the vote is bound to be felt more locally, in the UK and
European shipping industry. Particular markets, such as the UK offshore
market and the UK marine professional services market, will be watching the
negotiations unfold very carefully in order to evaluate both the issues and
also the opportunities that Brexit creates for them depending on the future
structure of relations both between the UK and the EU and the UK and the
rest of the world.
 The long-term demographic shifts in the global shipping industry
 Demographics in the Maritime Shipping industry
How do the goods of the world travel? Despite the proliferation of
technological advancements, an overwhelming 90 percent of everything we
consume still comes and goes on a ship, by sea. The maritime shipping
industry may be one of the oldest in the world, but the globalized economy
we enjoy would not exist without it
Here are some interesting facts and statistics about the worldwide maritime
industry:
S. Economy
In 2014, U.S. coastal ports accounted for 26 percent of the nation's $17.4
trillion economies.
 Cargo
Three and a half billion tons of cargo pass through Europe's
1,200 seaports each year.
 Container Ships
The biggest container ships can hold 745 million bananas in 15,000
containers. That's one for every European and North American!
East Coast Ports
The leading U.S. ports on the East Coast are located in New York and New
Jersey, accounting for 38 percent of North Atlantic trade.
 Exports
60 percent of the nation's export-bound grain is transported on inland
waterways. Farmers depend on an efficient water transport system to
compete and win against foreign producers.
Oceans and Lakes
Fourteen percent of U.S. counties that are adjacent to the coast produce 45
percent of the nation's GDP, with close to three million jobs (1 in 50) directly
dependent on the resources of the oceans and Great Lakes.
 West Coast Ports
The Port of Oakland occupies 19 miles of waterfront on the eastern shore of
the San Francisco Bay, with 665 acres devoted to maritime activities.
 Maritime Workers
The average salary for a maritime worker can range from $45,000 to
$65,000 annually.
 Worldwide
As you read this, there are at least 20 million containers crossing the world.
 A glance at global maritime trade: Shipping industry adapts to low cyclical
growth
The impact of slow current economic growth in world trade has led the
maritime industry to make adjustments in response to economic, political,
demographic, and technological trends. This is revealed in a study by IHS
entitled, “Trade and the Maritime Industry, Global Trends
2016”.  “Understanding these trends is key to improving the performance of
capital investment and operational efficiency and provides the foundation for
successful business strategies in the long term,” says the study, which
focuses on five elements: 1) prices of raw materials, mainly oil, coal, and
iron ore; 2) The impact of the slowdown in China; 3) The lifting of sanctions
on Iran; 4) The availability of data to design policies, and 5) The long-term
impact of demographic changes.
 Since 2015, the maritime industry had begun to adjust to the slow growth
tending, at least temporarily, to use container ships of 8,000 or less TEUs
(twenty-foot container equivalents) reversing the trend towards mega-ships
of 18,000 TEUs and more. In an analysis published in November 2015,
Drewry Maritime Research (DMR) noted in this connection that “Large ships
can be the center of attention, but their application is relatively limited
because of port restrictions and the (low) demand indicate that they are only
useful on a few routes”.“As physical constraints (for example, the expansion
of the Panama Canal) the average vessel size on major routes are overcome
and will continue to increase, some faster than others, but it is a gradual
process and in the meantime ships of less than 8,000 TEUs will continue to
be required on routes with lower volume, intra-regional and domestic routes
that cannot accommodate large ships,” added DMR . As in the recent study
by IHS, this provides for lower prices of raw materials for the next 5 to 10
years, a factor that will depress freight rates, particularly of bulk cargo
ships. The exception is the category of tankers, whose rates will remain at a
good level at least in the short term.  The slowdown in China has had serious
implications for the global maritime economy because of the impact it has
had on supplier countries for the decline in demand for raw materials.
Consequently, imports from the Asian giant will remain stable and at best,
record a slight increase. Conversely, the low and unstable global economy
has had the effect of reducing exports from China.
On the positive side, the lifting of sanctions on Iran will have a positive effect
on maritime trade, as it will for the industry, from increased access to
databanks and technological advances. This element will allow shippers
greater visibility of market trends and prices, helping to minimize the
adverse impacts of economic cycles that have traditionally plagued the
industry.
Finally, IHS evaluated the effect of demographic trends in the next decade.
According to the consultant, the middle class in the emerging economies of
Asia, Africa, and Latin America has been growing, which will impact the
demand for imported products and manufactured goods. The classic case in
India, a country with high demand, whose economy will grow 7.9% in 2017,
compared with 7.3% in 2014. In the demographic aspect, the maritime
industry has a problem of a labor force with a high rate of aging. The same
applies to the crews of ships because young people have lost interest in
seafaring due to the perception that technology is advancing at a slow pace
in the maritime industry. This poses a challenge to the shipyards to
incorporate high-tech ships of the future, in order to attract more young
people to inject new blood into the maritime industry. Meanwhile, the picture
is not clear for the time being for the shipping industry. Freight rates will
increase modestly over the next 18 months, while the rating agency Moody
predicted in June that the combined profits of the industry for 2016 will
decrease from 7% to 10%. The most affected segments are the transport of
bulk cargo and containers.
Source: The Bulletin Panama
 the increase in usage of mega-ships and its impact on the maritime
industry
 Mega container ships in the wider supply chain
As shipping absorbs ever-larger vessels, the supply chain business is
exploring the challenges. The successful handling of the CMA CGM container
ship Benjamin Franklin at both Los Angeles and Long Beach in recent
months showed the mega-ship would not necessarily bring new levels of
congestion to the industry. Yet not all carriers have been convinced that size

is everything. Speaking at the T

MP conference, Hapag-Lloyd CEO Rolf Habben-Jansen commented that
beneficial cargo owners are not insisting on mega-ships. “Why invest in
something that won’t cut end-to-end costs?” he asked.
This is no longer an idle question. HIS Maritime and Trade data shows that
four vessels of 14,000-18,000 Teu were delivered in 2013, with 14 in 2014
and a further 18 in 2015. Twelve more are expected to be delivered this
year with a peak of 25 in 2017 and 23 in 2018. Given there are a limited
number of ports and terminals able to receive these ships and handle as
many 10,000 containers from one call, mega-ships are challenging the very
supply chain they were ordered to serve. The reason for their popularity with
carriers is that cost is spread across more units of cargo; one crew, one
propulsion system, one hull but two or three times as many boxes as 10
years ago. However, the disadvantage is the pressure placed on land-side
operators to get cargo away efficiently before the next mega-ship arrives.
They will operate almost exclusively on the east-west routes, especially on
Asia to Europe/Mediterranean services and on the Trans-Pacific, as these
terminals have been scrabbling to in larger and faster ship-to-ship shore
gantry cranes and rubber-tired gantry cranes.  A contention issue for the
container business has been the need for shippers to provide carriers with
verified weights of both the box and its contents. According to a timetable
set by the IMO, all boxes are to be weighed and verified by July 2016. This
has caused a great deal of heat but not much light as the deadline
approaches.
 The reason for this regulation is the alleged widespread misdeclaration of
container weights, as revealed in various investigations following incidents at
sea. This issue is not confined to mega-ships but will affect all container
vessels and all terminals handling containers.
 The shipping industry in 2016 seems to be all about mega proportions. The
recently completed Panama Canal expansion will see more than 18,000 TEU
vessels enter into operation this year. These so-called mega-ships reduce
costs for carriers through fuel efficiency. But they also introduce new
requirements on ports, impact land-side operations, and can put stress on
the whole logistics chain of
Shipping lines are already reacting by forming shipping alliances. Will mega-
ports be the eventual consequence? In the following, we look at how mega-
ships are changing the ocean freight industry and re-shaping ports.
 Megaships: The Race Is On
The trend started years ago when major shipping companies raced to build
and operate large-capacity ships. Currently, the term ‘mega-ship is largely
used for vessels with a capacity of 18,000 TEU (or over). But the quest does
not stop there. 2016 saw sustained demand for large-scale vessels;
companies are already ordering the next generation of mega-ships. Major
maritime consultants agree that 24,000 TEU vehicles will be the new
standard and become operational in 2020.
 The Seaside Advantages of Large Vessels
The reasoning behind operating more and more mega-ships boils down to
their cost-per-slot supremacy. Large vessels can deliver more cargo in one haul.
That’s on top of reducing container shipping costs due to more fuel-efficient
(yet slower) sailings. The most important requirement for this is, of course,
that these mega-ships sail at full capacity.
 The Disadvantages are Land-Side
To stay competitive, mega-ships must be deployed on trade routes where
they contribute to an efficient logistics chain. In 2015, this was largely the
Asia-Europe routes. This resulted in a cascading effect on other trade routes,
as smaller and older vessels get re-deployed elsewhere. The limitations of
ports and landside operations inhibit the cost-savings of large-scale vessels.
A 2015 analysis by shipping consultant company Drewry showed shrinking
savings and
growing inflexibility due to large vessels. Big ship carriers often expect that,
for the sake of efficiency, terminals should be able to completely unload
mega-ships within a day. This imposes challenges on ports and stresses the
whole logistics chain has to bear.
 The increased demand on turnaround time has to be satisfied by ports.
Megaships introduce new levels of congestion and activity and require more
land, and more labor or higher automation (leading to possible loss of jobs).
Ports are the ones looking at how to finance the necessary
Megaships introduce costs that are likely to eat up savings. Additional costs include
dredging, quay walls, and infrastructure adaptations such as crane updates,
bigger yards or rail, and trucking
 Megaships bring times of high and low activity to ports. These forces new
levels of flexibility on the rest of the supply chain. During peak times,
demand and stress on labor and equipment are high, only to ebb off the rest
of the
Shippers and ports are at risk due to large vessels. Shippers need to rely on lines for
continued service. Ports fear losing large amounts of cargo business when
shipping lines or alliances change the port
 Mega ports: Evolution and Adaptation to Large
As we can see, ports bear a lot of the stress introduced by mega-ships.
Since shipping lines have made it clear that large-scale vessels are here to
stay, ports have to face new challenges and evolve or adapt. The following is
a brief overview of how ports in different regions are approaching the issue.
 United States of America (USA)
Ports on both coasts are seeing significant investments to handle post-
Panamax vessels: $30 million are going towards necessary dredging and
infrastructure improvements. Additional measures seek to address
congestion, throughput, and onward routing.
 
As of now, the best-equipped ports to handling mega-ships in 2016 include:

 
 

  West Coast: Los Angeles and Long Beach, Seattle-Tacoma, Oakland

 East Coast: New York and New Jersey, Savannah, Virginia (Norfolk),
Charleston

 Gulf Coast: Houston, Miami

Europe
European ports are game-ready for mega-ships. Spain’s Algeciras port is
already equipped with cranes to handle large vessels.
Already, in the first quarter of 2016, they cleared nearly 100 mega-ships.
The majority of those are called at the modern APM terminal. Second to that
is the semi-automatic TTI terminal.
Rotterdam and London are seeing the installations of new cranes, with
Rotterdam achieving a high level of automation as well in order to meet
turnaround requirements. In Marseille, renovations to the tune of $70 million
enter their final phase. Liverpool is constructing a new £300 million deep-
water container terminal, which is expected to be fully operational by the
end-2016. Other European ports ready to accommodate megaships are
Bremerhaven, Hamburg, Gothenburg, Aarhus, Wilhelmshaven, Antwerp,
Gdansk and Felixstowe.
 Asia
So far, only 20 ports in the world can receive 19, 0000 TEU vessels. More
than half are in Asia. That explains the large number of mega-ships nearly
exclusively deployed on routes to and from Asian ports: Yangshan, Dalian,
Xingang, Qingdao, Busan, Ningbo, Shanghai, Yantian, Tanjung Pelepas,
Singapore, Kwangyang, and Xiamen.
 
Required Measures
Large-scale vessels could very well be the nail in the coffin for upstream and
city ports unable to accommodate them. The most common measures
required to future-proof ports are:
 Ensuring water depth through dredging or locks
Enhancing length and strength of quay walls
Increasing crane and crane rail size
Increasing yard space
Improving container traffic, buffer capacity, and onward routing
Future investments and innovations will certainly concentrate on terminal
improvements with offshore ports and technology like the Sustainable
Integrated Next-Generation Advanced (SINGA) Port concept, which recently
won the Next Generation Container Port challenge.
 
The Relationship between Megaships, Megaports, and Shipping Alliances
This multi-way relationship is probably best described with the
paradigm “economies of scale”. From ships to ports to shipping lines, the
trend in the industry is to go bigger. With new large-scale vessels on order
already, a reversal of this process is out of the question.

Megaships bring more infrastructure costs as ports have to adapt.

Yet taxpayers and investors are the ones bearing these costs. Megacarriers
exert a huge power over ports as they can threaten to shift their cargo
elsewhere if they don’t receive favorable rates and conditions.  
How will a paradigm shift be possible, short of subjecting ship size to
regulation? Some lines assume that the advantages and disadvantages of
mega-ships will calibrate themselves with the next generation of 24,000 TEU
vessels. A feasible approach would be port pricing free from the grip of
alliances where lines pay for the terminal costs they incur. Discounts not by
volume, but for long-term loyalty, could also help mitigate risks for port and
terminal operators.
            Politics in Maritime Industry
  Politics in Maritime Industry
 Whatever happens with Brexit during 2019, a change is coming and of that,
we can be certain. Our role and responsibility here at the UK Chamber of
Shipping is to help our members understand what the change will or could
be and to help companies prepare
accordingly. To do so, we’ve been holding our Brexit Forum events every
quarter to keep our members abreast of the latest developments and to
allow them to feed into how we tackle Brexit-related issues. Meanwhile,
we’ve been holding stakeholder engagement meetings and engage regularly
and at a high level with all relevant departments of Government. Already,
our Brexit response has shown itself to be effective and the Chamber has
had a lot of input into the Government’s planning for a No-Deal Brexit.
Throughout 2018, the UK Chamber used its profile to warn the government
of the disruption that No Deal would cause to UK-EU supply chains and
economies. Policymakers have heeded our advice, as was demonstrated
when the Government revised its stance on Customs processes for ferry
operators.
 At the start of 2018, it looked as though the Government was looking to
make roll-on roll-off (RoRo) vessels subject to the same Customs processes
and responsibilities as deep-sea container vessels, declaring the import and
export of the goods being carried. But this model – as the UK Chamber was
able to highlight to policymakers – does not and cannot work as easily for
RoRo vessels as it does for containerships. Ferries usually don’t know what is
being loaded onto a vessel before it sails, as many trucks may only arrive at
the terminal a short time before the ship departs – sometimes as short as 30
minutes before – and is used to continuing their journey immediately after
the ship’s arrival.
Introducing new Customs declarations for ferry operators, which have had
no prior experience of such a process, would have therefore introduced a
huge risk to the flow of traffic through UK ports. It was an idea that was
never going to work, and the UK Chamber spent much of the first half of
2018 presenting this argument to the Government. It was rewarding, then,
for both the Chamber and its members when the Government recognized
they could not place the responsibility for Customs declarations on to ferry
operators. This is just one example of how the UK Chamber has been
working to minimize disruption and red tape on behalf of our members as
the UK exits the European Union. This work will continue to be top of our list
of immediate priorities for the time being, but now that 2019 is upon us we
also need to have a vision for the future. We need a game plan for how we
will turn the UK’s non-member status into tangible benefits for our nation’s
maritime sector. Our work has already begun.
The UK Chamber believes any future trade agreement struck between the
UK and other countries and trading blocs must explicitly include the UK’s
maritime sector. While respecting OECD shipping principles, future trade
deals should enable the UK to export its shipping and maritime services
expertise and safeguard seafarers’ access to jobs. In other words, any UK-
based seafarer, shipping lawyer, insurer, financier, or another maritime
service provider should be able to enjoy the same benefits and access to
international markets, talent, and freedom of movement as they have
enjoyed previously. There should be no fallout from Brexit that hinders their
ability to export their world-class expertise and services to an international
clientele. This is something we have impressed upon the Department for
Transport (DfT) and Department for International Trade (DIT) and for which
we will continue to lobby. Forging new trading relationships with countries
around the world presents a real opportunity for UK shipping. Too often, we
think of the UK’s shipping sector as simply being the ferries and feeder
vessels that go back and forth between Britain, Ireland, and the European
continent. But the UK is also home to a wealth of shipping companies that
carry trade that doesn’t even come near our shores. These companies have
chosen the UK as their home but operate internationally and form a vital
part of our shipping sector.
These companies are the ones that stand to gain the most from the new
trade deals the UK will strike with countries around the world. This is why we
need to have a vision for post-Brexit policies

 on trade and shipping and match that vision with long-term commercial
opportunities. In this way, we can ensure that UK-based carriers and
shipping service providers are able to benefit from these new trading
relationships for years to come. It is therefore of critical importance that the
UK strikes trade deals with nations that don’t already have a strong maritime
economy so that our companies can tap into these new markets. There is
limited upside for the UK shipping industry in forging trade deals with Dubai
and Singapore, for instance, because both regions already have strong
maritime sectors.
Nigeria, however, represents the sort of country where a trade deal including
a comprehensive maritime chapter could be beneficial. The country has a
thriving domestic shipping sector, but its international ambitions have never
quite reached fruition. There is significant scope for UK companies to prosper
in the Nigerian market and help the country modernize its industry and
make operations more efficient. Nigeria also happens to be the world’s
fourth-largest exporter of LNG and one of the world’s three most viable
exporters of ‘sweet’ low-sulfur crude oil. Demand for both these commodities
is expected to grow exponentially in the coming years. An effective trade
deal would reconnect the UK with an important trading partner and put UK-
based carriers in an advantageous position to be able to handle these
growing cargo volumes, or else provide ancillary services to exporters and
the Nigerian maritime industry. This is the UK Chamber’s vision for our post-
Brexit future. Change is coming but there will be opportunities for those who
have the vision to see them. We’re working with our members to do just
that.
 UK Maritime Pragmatism over politics
The chairman of Maritime UK calls on ministers to put "pragmatism over
politics" in preparing Britain for leaving the EU. The top figure in Britain's
£40bn maritime sectors has said liaising with the Government over Brexit is
like "banging your head against a brick wall". David Dingle, the chairman of
industry body Maritime UK, urged ministers to put "pragmatism over
politics" as he warned of a possible "meltdown" at Britain's ports on the day
the country leaves the EU. Speaking to reporters in central London this
week, Mr. Dingle called for an open-ended Brexit transition period and
expressed pessimism that technology or beefed-up infrastructure could fill
the absence of a new customs agreement with the EU. He insisted his
industry is "shouting loudly" about their concerns but suggested there has
been little response from ministers. "You do feel as if you are banging your
head against a brick wall," he said. "Until this Government can find a
resolution, we're going to have to go on banging our heads against a brick
wall."
Mr. Dingle added: "We are lost in politics and we want pragmatism over
politics."
 The UK's maritime sector comprises Britain's shipping industry and ports, as
well as services such as ship financing and manufacture, including the
building of superyachts. It is estimated to support close to one million jobs
and contribute around £40bn to Britain's GDP. Mr. Dingle was not gloomy
about the long-term prospects for the "strategically vital" maritime industry
after Brexit if the Government fulfills its stated ambition for the UK to
become a "great trading nation" outside of the EU. But he questioned if
Britain's infrastructure, such as already clogged-up road and rail links to
ports, would be "up to the task" of an increased export market - through
new post-Brexit trade deals - without efforts to tackle existing congestion.
The Prime Minister has repeatedly insisted the UK will leave the EU's
customs union once outside the bloc, leaving Mr. Dingle to warn about the
short-term consequences of Brexit without another resolution for customs
checks by March 2019. He explained how even a doubling of the time it
takes lorries to get through the port of Dover, from two
minutes to four minutes, could see permanent 20-mile-long motorway
queues in Kent. Mr. Dingle suggested the Government is "hoping for a
technology solution" to customs checks by next year but said that is
"unrealistic".
 

He added: "It seems equally improbable, in the current climate, that there
will be a political solution, that there will be an output of a 'deep and special
relationship', which will 
mean that those Lorries can continue to flow in an unimpeded fashion." Mr.
Dingle accused the Government of adopting a "[have] cake and eat it"
approach to a transition period, suggesting ministers want an interim deal -
which could see the status quo maintained in UK-EU relations - but also
"want to act as if we are completely out of the EU" during that time. He said:
"This gets mired in politics. Everyone believes in the principle that a
transition period is exactly what is necessary.
 

"What we hear coming from Brussels is that - despite the official statement
that the transition will last until December 2020 - actually in Brussels, they
will be pragmatic. “But, here, it is all getting dragged down by politics."
Mr. Dingle claimed a "transition needs to be as long as it takes to transition"
to a future UK-EU relationship, adding: "We believe that it is of such critical
importance that some of more political considerations may need to give way
to it."
 Impact of politics, economic events and port policies on the evolution of
maritime traffic in Chinese ports
The Chinese government has been exploring various paths to find a direction
that better suits China’s national conditions during the past 60 years.
Meanwhile, a series of political and economic events and policy
transformations have had different effects on the port industry. The increase
in the ports’ throughput has enabled an increase in domestic demand and
the urgent need for further port investment. Chinese port throughput has
been subject to multiple shocks. The Great Leap Forward1 is found to have
had the largest, but only a short-term impact. China’s accession to the World
Trade Organization, however, led to a long and exclusive effect on ports,
with little observed effect on the other variables. The reform of port
governance is shown to have had a more lasting positive effect on port
throughput than physical investment. However, these latter effects are
minor, the economic and political factors remain the primary driving factors
of port throughput.
Playing Politics with S. Ports
The Jones Act survives only because of narrow commercial interests. Who
actually benefits from the Jones Act, the 1920 law stipulating that all
maritime commerce between U.S. ports has to take place on ships that are
built, owned, and crewed by Americans?
 The American Maritime Partnership, a lobbying group, will tell you that the
act supports nearly half a million jobs and each year generates $10 billion in
taxes and $46 billion in additional U.S. output. Even if you take these
statistics at face value, they fail to allow for the jobs, taxes, and output lost
in the rest of the economy. What about the act's stated purpose - which,
together with other laws such as the 1936 Merchant Marine Act, is to ensure
that the
Does the U.S. retain a robust merchant marine and advanced maritime
sector for domestic commerce and times of war or crisis? That's no more
persuasive, once you note the steady decline of shipbuilding and the U.S.
oceangoing fleet o
ver the past five decades.
 In truth, the Jones Act survives because narrow commercial interests want
it to. A protectionist thicket has long surrounded U.S. commercial shipping
and shipbuilding. It has gradually hardened into a political wall impervious to
economic reason.
 resident Donald Trump spoke the truth in September: When asked whether
he would waive the act for Puerto Rico, he said the U.S. has “a lot of people
that work in the shipping industry that don’t want the Jones
Act lifted.” Those people are backed by a flotilla of senators and
representatives who are failing to put the broader interests of voters first.
They include the 60-odd members of the Congressional Shipbuilding Caucus,
one of the bigger and more active of such legislative groups. Filling their
coffers and bending their ears are the American Maritime Partnership; the
Shipbuilders Council of America; other like-minded industry groups; and
scores of individual shipbuilders, shipping lines, and labor unions. In 2016,
donors associated with sea transport coughed up more than $10 million in
campaign contributions -- the most since at least 1990 -- and spent almost
$25 million on lobbying.
 
The arithmetic of special-interest pleading is interesting. Consider New
Jersey Senator Cory Booker, whose $31,000 from sea transport groups put
him in the top 20 of Senate recipients in 2014. That winter, he blasted state
officials for failing to lay in salt for clearing roads. Without the Jones Act, an
available foreign-flag ship could have transported the salt from Maine for
$500,000; using slower U.S. barges caused the delay, and cost the
state $1.2 million. Booker and his fellow senator Robert Menendez, who had
unsuccessfully sought a Jones Act waiver, then chided those who “recklessly”
called for the act’s abolition. Nothing seems more perverse, though than
the vocal support given to the Jones Act by the congressional
 

 delegations of Alaska and Hawaii. Consumers in states held hostage to

relatively expensive U.S. seaborne commerce are the act’s biggest losers.
Maritime industries drive neither economy: In both Alaska and Hawaii,
shipbuilding and repair provided well under 0.5 percent of employment,
labor income, and output in 2013. Nonetheless, the Jones Act lobby has
been a
 reliable horn of campaign plenty: In 2016, Hawaii’s senators and two
representatives ranked in the top 20 recipients of sea-transport campaign
contributions, as did Alaska’s two senators.
        Looking from a wider perspective, the constitution of large business
groups
backing public sponsorship seems essential for developing nations while the
monopolies and family-based organizations should be eliminated or forced
into organizational transition after an initial industrialization stage.
Therefore, for action to take place, a monopoly/oligopoly of large business
groups is needed to establish an origin point of industrial development.
In the maritime industry, the East India Company is one of the oldest
examples of completing the transition. Rather than undergoing
transformation, the company encountered collapse. In the case of the
Japanese shipping industry, the transition is performed by Zaibatsu to
Keiretsu (Japanese network economy), but the Japanese shipping giants
retained their leading position in both the national and international arena.
NYK of Mitsubishi Group, MOL of Mitsui Group, and K-Line of Kawasaki Group
are flagships of their network of companies such as banks, heavy industries,
electronic firms, etc.
Government intervention is negatively correlated with the stage of
development. Undeveloped countries and developing countries strongly need
public-private partnerships, subsidies, public investments (especially marine
ports), and paternalism (for libertarians paternalism, Thaler and Sunstein,
2003). As development progresses, governments transfer their physical
instruments (maritime hard power) to industrial institutions for establishing
a self- regulative regime.
The maritime affairs in security policies in Northeast Asia
 Maritime Affairs and Security in Northeast Asia
Maritime disputes pose a great threat to stability and peace in Northeast
Asia, where regions are integrating economically. There is a great number of
unsolved marine issues, on topics such as maritime boundary delimitation,
territorial disputes, resources, and security. Many of the maritime disputes in
Northeast Asia are deeply rooted in the colonial history of the region and are
attributed to disparities in the interpretation of the 1982 UN Convention on
the Law of the Sea [UNCLOS]. The reshaping of international relations in the
regions in the post-Cold War period, particularly the situation on the Korean
Peninsula and the Taiwan Strait adds complexity. Northeast Asia is the most
dynamic and rapidly growing region in the world. A United Nation (UN)
survey indicated that over the period from 1960 through 2003, the average
economic growth rate which was more than double the
average growth rate of OECD countries over the same period. Remarkably,
the average growth rate of the three 

Northeast Asian countries are higher than those of the other Asian countries
which also have been experiencing faster economic growth than other
regions. The economies of the three countries combined account for
approximately one-fifth of the world’s GDP.
Northeast Asian countries, which geographically include China, Japan, South
Korea, North Korea, Taiwan, and Russia, are very closely linked to each
other in many aspects of international relations. With inter-state trade and
investment expanding, the region is becoming increasingly integrated
economically and is emerging as a global economic hub. Despite such
interdependence and economic integration, stability and
 
 
peace in the region is threatened by a number of potential conflicts, many of which are linked
to the unique geopolitical situation and the legacy of the colonial period. A notable trend is
regarded in the post–Cold War periods is that maritime disputes are increasingly becoming a
critical factor in determining international relations in Northeast Asia, whereas ideological
confrontation prevailed during the Cold War period.
While conventional security threats still exist, as evinced by military build-ups and North
Korea’s nuclear tests, maritime disputes are likely to militate against regional stability, given the
importance of the sea for Northeast Asian countries in terms of shipping lanes, resources, and
security.
 Out of a wide range of issues with respect to maritime disputes, conflicting sovereignty claims
to islands, maritime boundaries and resources are the most salient. Geographically, Northeast
Asian Countries are adjacent or opposite to each other in semi-enclosed seas, many of which
are less than 400 nautical miles wide, resulting in overlapping claims to maritime zones. Along
with the unique geopolitical situation, disparities in the interpretation of the 1982 UN
Convention on the Law of the Sea [UNCLOS] are attributed to maritime disputes. In the
addition, the reshaping of international relations represented by the rise of China to global
power, the particular situation on the Korean Peninsula, and the Taiwan Strait add complexity.

Characteristics of Maritime Disputes in Northeast Asea

Sovereignty Issues over Boundary Delimitation and Ownership of Islands
In the wake of the creation of the 1982 UN Convention of the Law of the Sea
[UNCLOS], which codified coastal states’ rights and responsibilities with
regard to claims of up 200 nautical miles of the Exclusive Economic Zone
(EEZ) and further extension up to 350 nm of their claims to the continental
shelf from the baseline, Northeast Asian countries have pursued the
extension of their maritime jurisdiction beyond their traditional 3 nm of
territorial waters. In terms of geography and proximity, Northeast Asian
Countries are situated opposite and adjacent to each other across enclosed
or semi-enclosed seas whose breadth is less than 400 nm wide. It was
inevitable that this caused Overlapping claims to maritime boundaries and
resources. Maritime boundary and territorial disputes in Northeast Asia can
be boiled down to the following points in general: one is over the ownership
of disputed islets, which is an issue of territorial sovereignty, and the other
one concerns maritime boundary delimitation from the baselines of mainland
coasts or from the disputed islands, and subsequently, the exploitation of
resources within these extended maritime boundaries that is, a combination
and sovereign rights.
 Baselines
Many of the straight baselines claimed by Northeast Asian Countries are
challenged on the basis that they do not meet the criteria of straight
baselines set forth in the LOS Convention and as such, they often serve as a
starting point of dispute where maritime boundary delimitation is concerned.
For China, for example, the waters enclosed by the new straight baseline
system do not have a close relationship with the land, but rather reflect the
characteristics of the high seas or the territorial sea. Of the 48 segments
that connect the 49 base points and range in length from 0.1 nm
to 121.7 nm, over half of the baseline segments are in excess of 24 nm in
length, with 3 

    the segments exceeding 100 nm. The Chinese coastline from the
Shandong 
Peninsula to the area of Shanghai is essentially smooth with no fringing
islands. Along this part of the coastline, there are few indentations that meet
the judicial bay criteria. In addition, neighboring countries argue that Bohai
Bay, whose mouth is 45 nm long, and Donald-day, a barren islet 69 nm
away from the coastline, do not conform to baseline requirements under
LOSC. South Korea has officially protested China’s straight baseline claim as
incompatible with the criteria of the straight baseline under the LOSC and
challenges China’s use not only of Don-Dao as a base point, but also other
base points north of Shanghai. 
As for Japan, there are 162 straight baseline segments that range in length
from 0.09 nm to 85.9 nm. Of these 162 baseline segments, about 72% are
less than 24 nm in length. But the remaining 28% exceed 24 nm, with over
10% of baselines being longer than 48 nm. Generally, the coastal of these
Japanese islands along which the straight baselines have been drawn does
not conform to the requirements called for in the LOSC. For the most part,
the coastlines of these Japanese islands are “neither deeply intended and cut
into” nor is there a “fringe of islands” in the immediate vicinity. South Korea
has claimed 19 straight baseline segments, beginning along its Southeast
coast, enclosing all the islands and rocks of its Southern and Western coasts.
Five of the segments are between 24 and 48 nm, and 2 segments exceed 48
nm, with the longest segment being 60.3 nm in length.
In the Western Channel of the Korea Strait, where Japan and South Korea
agreed to limit their own territorial seas to 3 nm, South Korea has narrowed
the high seas corridor by establishing a straight baseline in this area. North
Korea has not publicly declared its baselines on the East Coast and the West
coast, but its baseline on the East coast of North Korea is presumed to be
the straight baseline, whose distance is 245 nm long. The presumed to be
the straight baseline is the closing line of Dong Han and Kyung Sung
Bays. North Korea’s straight baselines do not meet the requirements for
drawing straight baselines in a bay whose distance between the low-water
marks of the natural entrance points of a bay should not exceed 24 nm. In
addition, North Korea’s straight baselines do not conform to the general
direction of

 the coast, and the sea areas within the baselines are not closely linked
either.
 
Maritime affairs have long been of concern for diplomats. In the period after
1945, often violent and even deadly fishery conflicts forced the Chinese,
Japanese, and South Korean governments to pay attention to the maritime
sphere. Whenever fishery conflicts escalated to critical levels and threatened
to disrupt foreign relations, governments set up and adjusted legal
frameworks due to the absence of diplomatic ties initially among non-
governmental
 fishery associations. Maritime territorial disputes are not new either.
Their roots lie in the post-war settlement, especially the 1951 San Francisco
Peace Treaty between Japan and the Allied Powers, an international legal
system whose design had been determined by the great power politics at the
advent of the cold war.
 
Whether by the intention of US policymakers or simply as a result of the
need for expediency, the lacking designation of smaller islands and islets
sovereign status at the time of treaty negotiations, combined with the
absence of major parties at the negotiation tables, became the seeds of
contemporary problems. Yet the imperatives of cold war geopolitics kept
these conflicts frozen. Throughout the post-war period, governments
prioritized diplomatic objectives including the mending of formal state–to–
state ties severed during wartime. Strong authoritarian leadership helped to
forged consistent policies in Beijing and Seoul, the separation of domestic
from foreign policies means that classic diplomacy was sufficient for reaching
formal compromise and informal consensus to postpone the resolution of the
most contentious issues. Thus, while the Dokdo Takeshima problem was no
official topic in the diplomatic normalization process and not mentioned in
the agreement between Japan and South Korea of 1965, normalization could
not have been achieved if it were not for the second secret agreement on
how to treat the territorial delimitation dispute.
 

Similarly, Chinese and Japanese leaders agreed to shelve the issue over
Diaoyu/Senkako in 1972 and, in the words of
Chinese Supreme leader Deng Xiaoping, leaves the issue for future, wiser
generations to resolve. 

Therefore, maritime territorial disputes remained dormant until 1990. By the

2010s, this situation had changed dramatically. Maritime disputes have
contributed disproportionately to a build-up of diplomatic tensions and the
deterioration of public opinion and have justified the reorientation of national
security policies. Struggles over
 

The Asia-Pacific region covers a vast area with numerous countries and 60
percent of the world's population. Its economic and trade volumes take up
nearly 60 percent
and half of the world's total, respectively. It has an important strategic
position in the world. In recent years, the development of the Asia-Pacific
region has increasingly caught people's attention. It has become the most
dynamic region with the strongest potential in the world. All parties are
attaching greater importance to and investing more in this region. With the
profound adjustment of the pattern of international relations, the regional
situation of the Asia- Pacific area is also undergoing profound changes. China
is committed to promoting peace and stability in this region. It follows the
path of peaceful development and the mutually beneficial strategy of
opening up and pursues friendly cooperation with all countries on the basis
of the Five Principles of Peaceful Coexistence. It has participated in regional
cooperation in an all-around way and taken active steps in response to both
traditional and non-traditional security challenges, contributing to lasting
peace and common prosperity in the Asia-Pacific region.
China's Policies and Positions on Asia-Pacific Security Cooperation
Currently, the situation in the Asia-Pacific region is stable on the whole, with
strong momentum for peace and development. The Asia-Pacific region is a
stable part of the global landscape. To promote peace and seek stability and
development is the strategic goal and common aspiration of most countries
in the region. Political mutual trust among countries has been strengthened,
and major countries have frequently interacted and cooperated with one
another.
 

To address differences and disputes through negotiation and consultation is

the major policy of countries in the region. Regional hotspot issues and
disputes are basically under control. The region has secured steady and
relatively fast growth, continuing to lead the world in this respect. Regional
integration has gathered pace, with booming sub-regional cooperation. Free
trade arrangements in various forms have made steady progress, and a new
phase has emerged for dynamic connectivity building. However, the Asia-
Pacific region still faces multiple destabilizing and uncertain factors.
The nuclear issue on the Korean Peninsula is complex and sensitive; the
reconciliation process in Afghanistan remains slow, and disputes over
territorial sovereignty and maritime rights and interests continue to unfold.
Some countries are increasing their military deployment in the region, the
certain country seeks to shake off military constraints, and some countries
are undergoing complex political and social transformations.
 

Non-traditional security threats such as terrorism, natural disasters, and

transnational crimes have become more prominent. Asia's economy still
faces significant downward pressure as a result of its structural problems as
well as external economic and financial risks. As an important member of the
Asia-Pacific family, China is fully aware that its peaceful development is
closely linked with the future of the region. China has all along taken the
advancement of regional prosperity and stability as its own responsibility.
China is ready to pursue security through dialogue and cooperation in the
spirit of working together for mutually beneficial results and safeguard peace
and stability jointly with other countries in the region. First, we should
promote common development and lay a solid economic foundation for
peace and stability in the Asia-Pacific region.
 

Enhancing the convergence of economic interests is an important basis for

sound state-to-state relations. Common development provides a
fundamental safeguard for peace and stability and holds the key to various
security issues. Considerable achievements have been made in economic
cooperation. On this basis, we should accelerate the process of economic
integration and continue to advance the building of free trade areas and
connectivity as well as comprehensive economic and social development. We
should implement the United Nations 2030 Agenda for Sustainable
Development and narrow the developmental gap in the region so that all
countries and people of all social strata will enjoy the dividends of
development, and the interests of countries will be more closely
intertwined. Second, we should promote the building of partnerships and
strengthen the political foundation for peace and stability in the Asia-Pacific
region. Asia-Pacific countries have unique diversities.
 

Countries may become partners when they have the same values and ideals,
but they can also be partners if they seek common ground while reserving
differences. The key is to remain committed to treating each other as equals
and carrying out mutually beneficial cooperation. How major countries in the
Asia-Pacific region get along with each other is critical for maintaining
regional peace and development. Major countries should treat the strategic
intentions of others in an objective and rational manner, reject the Cold War
mentality, respect others' legitimate interests and concerns, strengthen
positive interactions and respond to challenges with concerted efforts. Small
and medium-sized countries need not and should not take sides among big
countries. All countries should make joint efforts to pursue a new path of
dialogue instead of confrontation and pursue partnerships rather than
alliances and build an Asia-Pacific partnership featuring mutual trust,
inclusiveness, and mutually beneficial cooperation.  Third, we should
improve the existing regional multilateral mechanisms and strengthen the
framework for supporting peace and stability in the Asia-Pacific region.
 

All parties concerned should adhere to multilateralism, oppose unilateralism,

further support the development of regional multilateral security
mechanisms, push for close coordination between relevant mechanisms, and
play a bigger role in enhancing mutual understanding and trust, and
expanding exchanges and cooperation in the field of security
dialogues. Committed to pushing forward the building of regional security
mechanisms, China initiated with relevant countries the Shanghai
Cooperation Organization (SCO), Six-Party Talks, Xiangshan Forum, China-
ASEAN Ministerial Dialogue on Law Enforcement and Security Cooperation,
and Center for Comprehensive Law Enforcement and Security Cooperation in
the Lancang-Mekong Sub-Region. China has actively supported the
Conference on Interaction and Confidence-Building Measures in Asia (CICA)
in its capacity and institution building and participated in the ASEAN-led
multilateral security dialogues and cooperation mechanisms. Within various
regional mechanisms, China has made a large number of cooperation
proposals in the field of non-traditional security, which have strongly
promoted relevant exchanges and cooperation. China will shoulder greater
responsibilities for regional and global security and provide more public
security services to the Asia-Pacific region and the world at large.
Fourth, we should promote the rule-setting and improve the institutional
safeguards for peace and stability in the Asia-Pacific region. To live together
in peace, countries should follow the spirit of the rule of law, the
international norms based on the purposes and principles of the Charter of
the United Nations, and the widely recognized rules of fairness and justice.
International and regional rules should be discussed, formulated, and
observed by all countries concerned, rather than being dictated by any
particular country. Rules of individual countries should not automatically
become "international rules," still less should individual countries be allowed
to violate the lawful rights and interests of others under the pretext of "rule
of law."
 

China has firmly upheld and actively contributed to international law, and
regional rules and norms. To practice the rule of law in international
relations, China, together with India and Myanmar, initiated the Five
Principles of Peaceful Coexistence in 1954. China has acceded to almost all
inter-governmental international organizations and more than 400
international multilateral treaties so far. China is committed to upholding
regional maritime security and order and enhancing the building of
institutions and rules. In 2014 China presided over the adoption of the
updated Code for Unplanned Encounters at Sea at the Western Pacific Naval
Symposium held in China. China and ASEAN countries will continue to fully
and effectively implement the Declaration on the Conduct of Parties in the
South China Sea (DOC) and strive for the early conclusion of a Code of
Conduct (COC) on the basis of consensus in the framework of the DOC. In
addition, China has taken an active part in consultations on setting rules in
new areas such as cyberspace and outer space, so as to contribute to the
formulation of widely accepted fair and equitable international rules.
 
Fifth, we should intensify military exchanges and cooperation to offer more
guarantees for peace and stability in the Asia-Pacific region. China faces
diverse and complex security threats and challenges, as well as the arduous
task of safeguarding national unity and territorial integrity. Building strong
national defense and armed forces that are commensurate with China's
international standing and its security and development interests is a
strategic task in China's modernization drive and provides a strong
guarantee for its peaceful development. China's armed forces provide
security and strategic support for the country's development and also make
positive contributions to the maintenance of world peace and regional
stability.
 

Sixth, we should properly resolve differences and disputes, and maintain a

sound environment of peace and stability in the Asia-Pacific region. Most of
the hotspots and sensitive issues in this region have been leftover from
history. To handle them, the countries in the region should follow the
tradition of mutual respect, seeking common ground while reserving
differences, and peaceful coexistence, and work to solve disputes properly
and peacefully through direct negotiation and consultation. We should not
allow old problems to hamper regional development and cooperation and
undermine mutual trust. For disputes over territories and maritime rights
and interests, the sovereign states directly involved should respect historical
facts and seek a peaceful solution through negotiation and consultation in
accordance with the fundamental principles and legal procedures defined by
universally recognized international law and modern maritime law, including
the UN Convention on the Law of the Sea (UNCLOS). Pending a satisfactory
solution to disputes, the parties concerned should engage in dialogue to
promote cooperation, manage each situation appropriately and prevent
conflicts from escalating, so as to jointly safeguard peace and stability in the
region.
 
The 21st-century maritime power politics in the Indian Ocean Region with special
reference to the Bay of Bengal
 The Indian Ocean, the third-largest ocean in the world, covers at least one-
fifth of the world’s total ocean area. It is delimited by Africa and the Arabian
Peninsula (the Western Indian Ocean), India’s coastal waters (the Central
Indian Ocean), and the Bay of Bengal (BoB) near Myanmar and Indonesia
(Eastern Indian Ocean). The ocean provides critical sea routes that connect
the Middle East, Africa, and South Asia within the broader Asian Continent to
the East and Europe to the West.
The Himalayas stand on its North – in fact, North of South Asia –thus
separating South Asia from China. Standing tall in the North, China
maintains a shadow pax Sinica in South Asia. As luck would have it, the
countries of the Indian Ocean Region (IOR) are politically divided or are
aligned differently. With few exceptions, there is hardly any inland
navigation. The scarcity of lines of land communication in the Eastern
Hemisphere has resulted in increased importance being attached to ocean
areas – trade commerce being the most critical variable and in particular to
the strategic choke points where the Indian Ocean is joined or adjacent to
other large bodies of water. The geopolitical features of the Ocean make it
susceptible to control at five main points: 1) the Cape of Good Hope at the
Southern tip of Africa; 2) the Bab-el-Mandeb Strait at the Southern end of
the Red Sea; 3) the Strait of Hormuz at the Southern end of the Persian
Gulf; 4) the Strait of Malacca between Malaysia and Indonesia, and 5) the
Sundra Strait between Java and Sumatra. Among these points, the first one
overlooks the shipping routes around Africa, the second guard the Southern
end of the Suez Canal, the third stand guards over the flow of oil from the
Gulf and the Arabian Peninsula, and the fourth and the fifth oversee the
seaborne traffic into the Indian Ocean from the Western Pacific.
Through some of these important strategic chokepoints, especially the
Straits of Hormuz and Malacca, 32.2 million barrels of crude oil and
petroleum are transported per day- more than 50% of the world’s maritime
oil trade. Nearly 40% of the world’s offshore petroleum is produced in the
Indian Ocean. The rising economies of East Asia are gradually becoming
richer and therefore, they need to secure their increasing energy resources.
These affect the vital sea lanes of communication (SLOC) in the Indian
Ocean, especially along with the strategic choke points in the Straits of
Hormuz and Bab – el- Mandeb. These are gradually becoming cluttered with
cargo ships, oil tankers, and patrolling naval ships.
 

That said, taking a cue from Mahan’s Sea-supremacy theory- details are
covered later- it may be formulated that attaining supremacy of seapower
and establishing land bases along the shorelines of different seas and bays
of IOR by different actors are giving rise to tensions and competition. It is,
therefore, difficult to predict if such developments are likely to provide
desired stability to the region as there are many active geopolitical players-
mostly in alliance or alignment modes-coming from opposite directions and
operating in the region with their spears and shields. It can be theorized that
balancing strategies coming from two opposite and competitive camps may
not contribute to a sustainable geopolitical milieu. That said, it appears that
there is a kind of departure, however, the core statement remains valid from
Mahan’s formulation in the case of the 21st Century IOR, especially as he
was looking for a state of stability.
 
The BREXIT implications’ in the global maritime industry
 Brexit: Implications for global shipping and sea trade
 
The buzzword for the post-Brexit landscape both in Europe and further afield
is ‘uncertainty. No one really knows the long-term effect that Brexit will have
on local and global economies. However, as the dust settles following the
referendum, market experts, industry analysts, and businesses are
assessing the position with cooler heads and so, whilst certainty may be a
little way off, more concrete predictions and assertions of intent are
beginning to emerge. This is evident daily in commentary and news from the
shipping and sea trade sector.
 Global impact
 The international shipping market is fueled by trade, which in turn depends
on the health of the global economy. The Brexit vote landed at a time when
the shipping market, particularly in certain sectors like bulk freight, was
already extremely challenging. The factors which have contributed to dry
bulk freight rates heading towards all-time lows in Q1 2016 reflect long-term
issues which would have persisted whatever the referendum result. These
factors include the oversupply of ships and the effect on global trade of the
rebalancing of the Chinese economy following the boom of the last decade.
Sea trade in and out of the UK accounts for only a very small fraction of
global shipping activity and therefore an isolated post-Brexit slowdown in the
UK economy may be unlikely to impact dramatically on global freight
volumes. This is reflected in some of the bullish reactions we have seen from
industry players in recent weeks. Euronav’s chief executive was quoted in
Lloyd’s List as saying, on a conference call for analysts: “It should be largely
speaking something of a non-event in terms of impact on global trade for
crude oil.” For companies with income denominated in US Dollars, which will
be the case for many international shipping companies, it could be
temporarily beneficial, particularly if costs are in euros and sterling. Others
comment that potential constraints in available finance, arising from the
Brexit vote, may contribute to a longer-term upturn in the market, in terms
of helping address the current oversupply of vessels.
 

However, not all commentators are as optimistic. Whilst there seems

generally to be agreement that the Brexit vote alone will not be hugely
impactful on world trade, the consequences could be amplified when
combined with other matters currently playing themselves out on the world
stage. Trade winds reported this week that Wells Fargo analyst Michael
Webber, who covers shipping stocks for the bank, said that the combination
of the rise of Donald Trump as the Republican nominee to the White House,
the Brexit vote, uncertainty around Italy's banks and the coup attempt in
Turkey could create "meaningful tail risk" for crude demand expectations in
the second half of the year. If this prediction is accurate, it is likely to impact
on demand for tanker shipping services and therefore freight rates. The
shipping industry, particularly the dry bulk and container sectors, is facing
other macro threats to its existence in the longer term, which are completely
unrelated to the Brexit vote. The rise of the digital economy and more
widespread use of technology in logistics (for example drone deliveries) and
the consumer sector (for example 3D printing) may impact the long-term
need for the same volume of goods to be carried by sea.
 

UK impact
UK trade will clearly be impacted by the Brexit vote. We saw an immediate
effect on currency and share prices, although there are signs that the
market is settling down after the initial post-vote furor. In terms of longer-
term impact, there are some matters which are already tolerably clear, for
example, that any changes to the cost of trade with the EU are likely to
affect freight volumes at British ports. However, the precise nature and
extent of the effect on UK trade will depend entirely on the form of
relationship which is ultimately agreed upon both with the EU and with other
trading partners. With the new British Prime Minister, Theresa May, looking
to defer triggering Article 50 until 2017, that form of the relationship
remains pretty ‘uncertain’.
 

There are wider potential outcomes for shipping in the UK beyond the direct
effect on trade volumes. In terms of the UK offshore industry, for example,
trade winds reported recently that “when news of the UK’s decision to exit
the EU hit the offshore sector, most analysts agreed that the longer-term
damage for the sector would be from a possible slowdown in the world’s
economy. However, some warned the immediate and near-term effect would
be that oil companies would obviously put the brakes on much-needed
investment in the UK. The UK
 
continental shelf (UKCS) is already suffering from record low investment —
at one-eighth, the value of the annual average over the past five years —
and the nation’s oil-and-gas sector is on course to have lost up to 140,000
jobs by the end of this year.”
There is also the UK’s position as a leading provider of maritime professional
services to consider. The marine insurance industry is pushing hard to
maintain the pass porting rights currently enjoyed between EU member
states, although whether this will be possible without full access to the single
market (and the associated EU requirements for free movement of workers)
is set to be the key topic in negotiations.
 

In terms of other professional services, such as legal and shipbroking

services, there is some speculation that UK’s so-called “stability premium”
may have been affected by the vote. However, the UK’s long maritime
history, the reputation of its courts (which rely on an extremely well-
established body of specialist case law) and institutions, and the number of
highly qualified individuals’ resident in the UK working in the sector should
help ameliorate any effect on this premium at least whilst Brexit is
negotiated. However, even if the premium remains intact the professional
services sector may be rightly concerned about how services are dealt with
in negotiating future trade deals. Such agreements traditionally focus on
trade in goods and therefore may not be as advantageous to the services
sector.
 shipping economy on course for recovery according to the global maritime analyst
 Outlook 2018: Shipping economy on course for recovery: analysts
Source: Business In Vancouver
  But the 2018 marine forecast for transpacific and other major shipping
trade routes also notes that full recovery from the dark days of 2015-16
depends on a     number of political, economic, and technological
factors.  Atop that list for Canada: uncertainty over the outcome of North
American Free Trade Agreement (NAFTA) negotiations, the street-level
impact of the Canada-European Union Comprehensive Economic and Trade
Agreement (CETA), and rapidly evolving technologies that promise to disrupt
global supply chains. There is also the China factor. “I know analysts have
been harping on about it for years,” said Transport Intelligence Ltd.
economist David Buckby, “but I think given what the Chinese government
has said following the 19th [Communist] Party congress – that it will be
switching focus from meeting long-run economic growth targets to other
objectives – coupled with recent comments on trying to manage down debt,
there is a real chance that Chinese growth will stutter.”
Buckby said the slowdown might not occur in 2018, but it will likely happen
over the next few years. “As the linchpin of so many global supply chains,
what affects China is going to impact the rest of the world. I don’t know
exactly when that’s coming, but when it does, I think it will adversely impact
global port volumes quite significantly.” McKinsey & Co.’s Container
Shipping: The Next 50 Years also points to warning signs about China’s
retooled economic development model. It estimates that the swing away
from exports of goods to a model based on consumption and services has
coincided with a drop in China’s real gross domestic product to between 6%
and 7% from more than 10%. Asia, and China especially, are major
containerized shipping drivers. Asia accounted for 64% of the world’s
container throughput in 2016, and McKinsey notes that China imported and
exported 52 million 20-foot equivalent units (TEUs) in 2015 compared with
13 million in 2000. It also maintained that China’s dramatic growth and the
resultant boom in container trade over the past three decades is unlikely to
be repeated elsewhere in the world. But John Murnane, a partner in
McKinsey’s travel, transport, and logistics practice, noted in an email
response to Business in Vancouver that in the near term, continued growth
in container-shipping demand is likely.
 

“The U.S. and Canada continue to grow strongly, and volumes in 2017
outpaced expectations. This is good news for all ports and terminals. We
expect 2018 to continue this strong volume growth.” Oxford Economics
agrees.
The U.K.-based economic research company raised its global GDP growth
forecast to 3.2% in 2018 from 2.9% in 2017 based on what it sees as a
continuing strong performance of the world economy and positive “omens
for 2018.” Its December 4 global outlook research briefing pointed to four
key reasons for that optimism: strong trade growth, low inflation, robust
emerging markets, and resilience to political uncertainty.
 

In a November brief, it also revised its world trade forecast up 0.5

percentage points to 4.2%. Oxford Economics’ forecast for Canada predicts
that exports will rise 2.9% in 2017 and 4% in 2018. It sees imports up 3.7%
in 2017 and 2.4% in 2018, but Canada’s GDP growth slipping to 2.1% in
2018 from 3% in 2017. The International Monetary Fund’s World Economic
Outlook, meanwhile, projects global economic growth of 3.6% for 2017 and
3.7% in 2018. In its 2017 nine-month financials, Hapag-Lloyd (ETR: HLAG),
the world’s fifth-largest ocean container company, noted that global
container-shipping volume from 2018 through to 2021 is projected to
increase between 4.8% and 5.1%.
 

However, disruptive technology will continue to complicate the market for

Vancouver’s Seaspan Corp. (NYSE: SSW), the world’s largest independent
charter owner and manager of container ships, and other companies that
service the container-shipping industry. For example, McKinsey noted that
advances in robotics and 3D printing using metals, ceramics, and other
materials could shrink supply chains by localizing manufacturing and
eliminating labor cost gaps in other parts of the world. Miniaturization, it
added, could also reduce container-shipping demand.
 
The United Nations Conference on Trade and Development’s Review of
Maritime Transport 2017, meanwhile, pointed to CETA and the economic
partnership agreement concluded between Japan and the EU in July as
positive developments for global trade and shipping. It added that the
growth of cross-border e-commerce could also drive long-term container-
shipping demand. However, it noted that a sustained recovery will require a
strong commitment to “coherent and coordinated multilateral policies.” It
also red-flagged the growing cybersecurity threats to world shipping supply
chains.
 

While Buckby agreed that CETA will benefit port volumes, he doubted that it
would significantly increase cargo through Vancouver and other Canadian
ports. “The dirty secret of many free-trade deals is that they don’t tend to
have a substantial economic impact, especially if they just address tariffs,
which tend to be low anyway, and don’t focus much on breaking down non-
tariff barriers,” Buckby added that port volumes would drop if NAFTA
collapses. “And even if it is successfully renegotiated, supply chains still face
disruption, thanks to possible changes to rules of origin.” A report released
in late November by A.T. Kearney, a global management consulting firm,
estimated that tariff increases in the wake of a failure to renew NAFTA could
cut retail sales in Canada by $17 billion and chop up to
$25 billion from retail sector gross margins.
However, the key challenge in 2018 for ports in B.C. and elsewhere in North
America, according to analysts, will be similar to what it increasingly has
been in 2017: how to handle larger containers ships. (See “Pinpointing B.C.
Port Infrastructure Priorities,” Business in Vancouver issue 1463; November
14–20). “This is relevant to both coasts,” Murnane said. “Liners are now
deploying up-to-13,000-TEU container ships to the U.S. West Coast. It is
beyond the capability of some smaller terminals to welcome and unload
these vessels.” The newly widened Panama Canal has also opened the way
for larger transpacific ships to reach East Coast ports directly. Infrastructure
and operations in those ports consequently face similar pressures. Murnane
pointed out that port productivity suffers because a mega-container ship can
take up to five days to unload. “Some ports are rising to the challenge and
investing, but smaller ports and constrained ports risk losing some mainline
services.”
 

According to Walter Kemmsies, managing director, economist, and chief

strategist of Jones Lang LaSalle’s (NYSE: JLL)
U.S. ports, airports, and global infrastructure group, container cargo traffic
to North America’s West Coast will continue to grow in 2018 but so too will
the migration of more transpacific container traffic to Gulf and East Coast
ports.
 
Among the reasons for that cargo diversion south and east, said Kemmsies:
West Coast port congestion and importers’ investment in building
distribution centers in the Gulf Coast area as ocean carriers launch direct
services to China, Japan, and other north Asian countries.

 
 Lesson:1  Exercise: 1
Instruction:
Read lesson 1, and study topics contents, Copy all the questions on a
separate piece of paper and find the correct answer which is found in the
topic content, and compare your answer to the correct answer key below.
Multiple choice questions:

1. This increased flow of knowledge resources, goods, and services among our
world's nations is called?
       (a.) Maritime industry  ( b.) Global economic  (c.) Globalization (d.)
Global development
    2. What do you mean by IMF?
        (a.) International world monetary fund      (b.) International monetary
fund
        (c.) International maritime monetary fund  (d.) International shipping
monetary fund
                                                       
     3. It materializes, global economic growth in 2018 and 2019 will be
highly beneficial for the?
        (a.) Oil tanker shipping industry (b.) Chemical tanker shipping industry
(d.) The bulk carrier shipping industry
        (d.) Container shipping industry
     4. According to BIMCO for the container shipping industry, the economic
picture in the U.S is said to be favorable with a
        possible pick up in consumer demand?   (a.)Global growth (b.)
Increase wages scale (c.) Decrease wages scale
        (d.) Wage boosting
     5. For shipping, a possible boost in investment will lead to higher is
called? 
       (a.) Demand  (b.) Claim  (c.) Require  (d.) Order
     6. In the outlook, BIMCO said it has been quite some time since has
looked this positive and as supportive shipping is called?
       (a.) Macroeconomic developer (b.) Marco economic  development (c.)
Macroeconomic developmental 
       (d.) Macroeconomic development
     7. The increased flow of knowledge, resources, goods, and services
among our world's nations is called globalization, f
         formally defined as?
        (a.) Growth (b.) Development (c.) Developer (d.) Develop
     8. What are the most important factors to potentially derail?
         (a.) Economic growth (b.) Economical Growth (c.) Financial growth
(d.) Economic growing
     9. Is the variability of the risk makes the demand for transport less
predictable is called?
         (a.) New international factor (b.) New Extention factors (c.) New
external factor (d.) Old external factors
    10. According to the shipping association, the sustainability of the all-
important Chinese is?
        (a.) Economic   (b.) Economist  (c.) Economizer (d.) Economy

Answer Key Exercise: 1

1. (c.) 
2.  (b.) 

3.  (d.)
4. (d.)

5. (a.)
6.  (d.) 

7.  (b.)
8. (a.) 

9. (c.) 
10. (d.) 
 Lesson:2  Exercise: 2
Instruction:
Read lesson 1, and study topics contents, Copy all the questions on a
separate piece of paper and find the correct answer which is found in the
topic content, and compare your answer to the correct answer key below.
Multiple choice questions:

1. The rise of protectionism could have the effect of undermining what global?
       (a.)Economic industry (b.) Economic recovery (c.) Economical recovery
(d.) Economic discovery
    2. Is it no longer super, with most of the developing world in the
slowdown is called?
       (a.) Common supercycle (b.)Accommodation supercycle   (c.)
Commodity supercycle (d.) Communal supercycle
    3. One of the exceptions to these trends is called?
       (a.) Bulk carrier (b.)Grain cargo vessel (c.)Container vessel (d.) Tanker
shipping
    4. The recent deceleration of china's economic growth is affecting many is
called?
       (a.)International industries (b.) Domestic industries (c.)Private
industries (d.)Corporate industries
    5. How many percent of china imported the world's seaborne iron ore and
20% of its coal?
       (a.) 70%  (b.) 60% (c.) 50% (d.) 40%
    6. What country is exporting coal to China as one of the alternative
energy sources and elsewhere overseas?
        (a.) Singapore  (b.) Australia (c.) India (d.) Brazil
    7. The one bright spot for Chinese shipping is called?
        (a.) Bulk trade (b.) Chemical tanker trade (c.) Oil tanker trade (d.)
Container trade
     8. What is the meaning of JCPOA?
        (a.) Joint comprehensive plan of action (b.) Joint comprehensive
planning of action (c.) Joint  plan comprehensive of action
        (d.) the comprehensive joint plan of action
     9. The overall demand for oil, gas, and petroleum products helping global
shipping. Saudi Arabia and the United State both produce,           how many
million barrels per day do they produce?
         (a.) 12 million barrels  (b.) 11 million barrels (c.) 10 million barrels
(d.) 15 million barrels
     10. What do you call the big data analytics provided to keep track of
ships at sea?
        (a.)Automated Identification System (b.) Automatic Identification
System (c.) Automated data Identification System
        (d.) Automated recording Identification System
 Answer Key Exercise:2
1. (b.) 

2. (c.)
3. (d.) 

4. (b.) 
5. (a.) 

6.  (b.)
7. (d. ) 

8.  (a.)
9. (c.) 

10. (a.)
 Lesson: 2 Exercise: 3
Read lesson 1, and study topics contents, Copy all the questions on a
separate piece of paper and find the correct answer which is found in the
topic content, and compare your answer to the correct answer key below.
Multiple choice questions:

1. What is the meaning of VLCC?

       (a.) Very large crude carriers   (b.) Very larger crude carriers  (c.)Very
long crude carriers  (d.) Very Udge crude carriers
    2. What date that the European Union and United Nations security council
endorsed the agreement?
       (a.) 23 July             (b.) 22 July           (c.) 21 July                   (d.) 20
July
    3. On what date that all signatories to the joint comprehensive plan of
action officially adopted the agreement which triggered Iran's            JCPOA
commitments?
        (a.) on 20 October     (b.) on 19 October     (c.) on 18 October         
(d.) 0n 17 October
     4. In what year that the lifting of some sanctions is expected to add
about half a million barrels of oil a day to the global supply by the end of the
year?  (a.) 2013  (b.) 2014  (c.) 2015  (d.) 2016
    5. What kind of solutions need innovations that reduce the environmental
footprint of ships?
        (a.) Hybrid solutions  (b.) Crossbreed solutions (c.) Mix solutions (d.)
Short term solutions
    6. In the Indian Ocean region with special reference to the Bay of Bengal.
What do you call these politics?
       (a.)Marine power politics (b.) Maritime power politics (c. ) Maritime
power political (d.) Maritime powder politics
    7. What do you call being the most critical variable and in particular to the
strategic choke points?
       (a.) Trader commerce  (b.) Trader commercial  (c.) Trade commerce 
(d.) Trademark commerce
    8. The geopolitical feature of the ocean makes it susceptible to control at
five main points. What is the number three of this point?
        (a.) The Strait of Arabia at the southern end of the Persian Gulf (b.)
The Strait of Hormuz at the southern end of the Persian Gulf
        (c.) Singapore strait  at the southern end of Malacca (d.) Stanbol strait
at the Northern end of the back sea
    9. Who is the name of the Analyst of the trade winds reported this week
that wells Fargo Analyst?
       (a.) Michael Webber   (b.) Michael Jackson  (c.) Michael Vebber  (d.)
Michael Bolton
   10. What is the name of the canal that has also opened the way for large
transpacific ships to reach East coast ports directly?
        (a.) Keel canal  (b.) Song of Saigon canal (c.) German canal (d.)
Panama canal
  

ANSWER KEY EXERCISE :3

1. (a.) 

2. (d.) 
3. (c.) 

4. (d.) 
5. (a.) 
6. (b.) 

7. (c.) 
8. ( b.)
9. (a. )
10. ( d.)