Business
4. Bulk Commodity Trades: 2007
4.6 A composite picture
Visualising the four major bulk commodity ocean trades in geographical perspective, as rather crudely sketched in Figure 6, a composite picture, one recognises immediately that a large portion of the cargo flow has been aimed at what should be carefully
Figure 5: Major grain trade routes, 2007
Figure 6: Major bulk trades, composite picture, 2007
branded as industrialised core regions within East Asia, Europe and North America. Europe and East Asia have been the two greatest bulk commodity importers. North America, while a net exporter of coal and grain, is, however, the recipient of huge quantities of crude oil from the Caribbean (esp. Venezuela), Africa, the Middle East and lesser sources. A sizeable portion of the coal and
grain trades has been between North America and Europe and between North America and East Asia, trades entirely within the northern hemisphere.
The world’s greatest oil producing region, the Middle East, is also in the northern hemisphere and practically athwart the main ocean shipping corridor from East Asia across the Indian Ocean, through the Red Sea and Suez Canal, to the Mediterranean and Western Europe. The largest tankers, however, must dip into the southern hemisphere rounding the southern edge of Africa to perform their transport task of carrying oil to Europe or to the US. (Figure 6 takes graphic liberties by assuming that the main volumes of bulk commodity ocean trade are not shipped via either the Suez or Panama Canals.) The southern hemisphere is not “neglected” by bulk carriers because South American, African, Indonesian and Australian supply sources are a very significant factor in bulk commodity ocean trade.
When one considers Venezuelan oil, Brazilian iron ore, Colombian coal, and Brazilian and Argentine grain, not to mention other somewhat smaller supply sources, South America has been an important contemporary exporter of all four major bulk commodities entering ocean trade. Australia, with its abundant mineral reserves and its grain fields, has been a significant supplier of three of the four main bulk commodities – all except oil. The commercial ties between Australia and Japan, enabling the shipments, especially of iron ore, were consolidated by long term contracts on purchases and shipments and Japanese participation in infrastructure developments to facilitate these trades (Manners, 1971, p. 317). China has more recently entered the Australian picture to become the most important iron ore procurer of all.
Figure 6 depicts origins, destinations and directions of seaborne bulk commodity movements which constituted 75% of the total volume of the crude oil, iron ore, coal and grain bulk trades and an even greater percentage of the tonne-miles in ocean transport. The voyage lengths in the oil and ore trades are apparent simply by noting the number of routes rounding the Cape of Good Hope on Figure 6 and understanding the limitations created by the mammoth size of some of the largest tankers and ore carriers. Of course, there are counterbalancing scale economies in transport which have made the megaships appealing to vessel operators. There is no visual expression in Figure 6 of the comparative tonnages of cargo flow on the various routes, nor is there a precise
picture of ocean tracks taken by the carriers. Most of the Suez and Panama transits have been “assumed away”, whereas, in fact, these canals have been on the itineraries of many smaller-size bulk carriers and have figured importantly on ballast voyages.
The composite picture is essentially a “laden voyage” picture. That is to say, ballast voyage segments are not shown and, of course, ships in ballast have contributed almost as much to the congestion of traffic lanes and to the incidence of accidents at sea as fully laden ships, although the latter are more of an environmental hazard if accidents do take place. One can deduce from available traffic data, much of which has been used above in composing the picture, that the main approaches to western Europe, Japan and the eastern coast of the US have been very heavily trafficked by ships, full or empty, serving the industrial core regions of the northern hemisphere that generate so much of the world’s oceanborne bulk trade. One can deduce, also, that there are traffic convergences at straits such as Malacca, Lombok, Hormuz, Gibraltar and Dover. One can imagine that there are convergences of full and empty ships rounding Cape of Good Hope and other promontories where the dangers of “hugging the coast” to shorten voyages can never be completely removed by traffic separation schemes.
The rough tracings of global bulk commodity trades reinforce the impression that the northern core industrial regions have been the main focus of market demand. And this might also reinforce the impressions conveyed by dependency theorists a few decades ago and voiced by the UNCTAD Committee on Shipping in the 1970s and 1980s, suggesting that not only the control of world merchant fleets, under whatever flag, but also the relevant supply and demand elasticities for the products exported favor the developed nations in the industrial core regions. As Alexander Yeats wrote almost 30 years ago: “The incidence (that is, the question of who pays transport costs in a trading transaction) of freight rates depends on the relative elasticities of supply and demand for the goods transported. Theoretical analyses show that the relevant elasticities are such that developing countries have borne a major portion of increased transport costs for both exports and imports” (Yeats, 1981, p. 2).
The patterns graphically presented in Figures 2, 3, 4, 5 and 6 suggest that there has been a great deal of empty space on ships steaming about the oceans, fully manned, consuming fuel, as they ballast to their next loading range. There
may be no way to eradicate this problem, but the next section of the chapter explores possible strategies by independent ship operators to ameliorate it.