“Environment Issues in Maritime Supply Chains”

Author: Robert Sanga

Abstract

Environmental issue in maritime supply chains raised up due to global warming. This phenomenon needs to be investigated. In fact, there have been a lot of investigations about it. This essay will cover up the use of ship and shipping industry in general, then go on to the supply chain system and the effect it has toward the environment. Conclusion will be made with some suggestions for improvement and transforming shipping industry into environmental friendly medium of transport.  

Keyword: Environment, Shipping, Transport & logistics, Supply Chain system.

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Introduction

The Oxford dictionary (2017) defined the environment “the natural world, as a whole or in a particular geographical area, especially as affected by human activity.” This definition explains environment as the natural world which consists of the air, land, sea and all the living things on earth. This natural world of environment can be greatly affected by different activities created by nature itself and human, including animals.

Maritime activities have to deal with transporting goods and passenger through ship from port to port. Professor Umar Burki (Supply Chain Management, 2017) explained in one of his lectures that “a supply chain is dynamic process and involves constant flow of information, products and exchange of assets.” In other word, maritime supply chain has a broader definition since it has to do not only with transporting raw material, finished goods, products and passengers but also the require information’s as well.

There are different ways of transporting products from one place to another. It can be done by using pipeline, airway, seaway and roadway. Seaway transport by using ship as medium of transport is commonly used since ancient time. It’s suitable when it comes to transporting large amount of goods for a long distant transport. Airway and roadway are much quicker but way too expensive in compare to seaway for transporting large amount of goods.

Shipping plays a very important role in global supply chains system. For this reason, the demand for shipping keeps on increasing each year. This essay will try to answer the question on the effect of shipping toward environment. In doing so, it will takes a look at different type of ships, their trading routes and come up with recommendation to reduce the negative impact of maritime to the environment.

Ship and Trading Routes

Catherine Bjune (Ship Operation, 2016) explained that shipping is one of the oldest medium of transport systems. It’s considered to have been used for more than five thousand year. Since then there are different type of ships which were designed and operated. There had been a lot of development and innovation made toward shipping.

Professor Kenn Steger-Jensen (Supply Chain Management, 2017) had rightly pointed out in one of his lectures that “the typical cost of transporting a 20 foot container from Asia to Europe carrying over 20 tonnes of cargo is about the same as the economy airfare for a single passenger on the same journey.” As such, there is no other good alternative medium of transports in comparison to the seaway transport for transporting large amount of goods from one continent to another.

There are varieties of goods being transported through ship. These goods can be mainly classified into raw material or finished goods.  Transporting those goods across continents has great effect on the environment. It’s a part of supply chains system. It’s good that we have a good transport system but this come with a price which needs to be addressed nationally and internationally.

Ship is basically use for trading whenever and wherever there is a demand for it. Ship owner can register their ships to any particular country, even to landlocked countries such as Pakistan and Nepal. After registration, the ship can then be used to trade. The ship then has to follow the rule and regulation of the flag state.

Ship Overseas (2017) has group international ships into six groups. These are 1) Cargo ship, 2) RoRo (Roll on Roll Off), 3) Tankers, 4) Passengers ships, 5) Fishing vessel, and 6) High speed craft. It’s important to identify those groups and their function as well.

It’s cargo ship which transports all the major daily use consumer goods around the globe. These goods can be such as food, furniture, clothes and machinery. RoRo (Roll on Roll Off) type of ship is basically use for transporting the vehicles as rolling on and rolling off the vehicles from the ship is much quicker with RoRo ship than any other type of ships.

Tankers ships are for transporting liquid products such as oil and different chemicals in large quantities. The size of the ship depends on the product which the ship is designed to transport. For example, the Compressed Natural Gas (CNG) vessels carrying gas from Arabian Gulf to Asia must have the capacity of carrying at least one hundred thousand tons.

Passenger ship, fishing vessel and high speed craft have some limitation in their activities and operations. For instance, cruise ships are basically use for leisure while fishing vessels have to follow the limit granted by the authorities in fishing the fishes from the ocean. And high speed craft are not that much use in transporting passengers since airline took over as medium of transporting passenger’s for long distant after the Second World War was over in September, 1945 (US Centennial of flight commission, 2017).

The above mentioned six groups of ships have different trading routes for both national and international level trading. It’s beneficial for a company to outsource their production at a place where they can easily access raw materials. Wages and cost of production play a crucial role for most of the European, American and Australian companies in outsourcing their companies to Asia, Africa and Latin America.

As a result of increase trading between different companies and from continent to continent, there is significant increase of third-party logistics (3PL). Yue Wu (2012) explained 3PL as external companies / suppliers which provide a range of logistics services to their clients, such as transportation, warehousing, distribution, and so on.

Canal like Panama and Suez were constructed as to reduce the long distant in transporting goods. Classes and sizes of ships were designed in accordance with those canals. Crude oil tanker like Panamax, Aframax, Suezmax have the capacity of carrying more than one hundred thousand Deadweight Tonnage (DWT) of crude oil (Maritime Connector, 2017). Canal has contributed new trading routes between underdeveloped, developing and developed countries.

Effect of Shipping toward Environment

Most of the modern ships are run by different type of fuels which are harmful for the environment. CO₂ emission and other harmful substance such as sulfur oxides (SOx), nitrogen oxides (NOx), particular matter (PM) from the ship are not only harmful to human health but also to marine environments (Poulsen, Ponte and Lister, 2015). These emissions are more harmful to those who are living in cities closed to the ports (Toxic shipping, 2013).

Moreover, there is always risk of accident with the ship due to bad weather or human error. A container ship and a big tanker ship accident could easily result disaster to the environment. Even gigantic ship like “Titanic” sank in the Atlantic Ocean on 15.04.1912. The ship was considered to be unsinkable but it sank because of the iceberg colliding (History of Titanic,  2017). Such accidents were not very common but it had happened and continues to happen even to these days.

The International Maritime Organization (IMO) was founded in 1948 for safety, security and environmental performance of international shipping (IMO history, 2017). It has adopted important conventions like International Convention for the Safety of Life at Sea (SOLAS, 1974), International Convention for the Prevention of Pollution from Ships, (MARPOL, 1973) and International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW). These conventions had helped in reducing both pollution and accident but it’s not an easy task to control all the negative environmental effects of shipping.

Recommendation

It’s no doubt that shipping is the bloodline of world trade. Without shipping the import and export of goods on the scale necessary for the modern world would not be possible (International Chamber of Shipping, 2017). However, all these benefits come with a price on environment and human.

Therefore, it’s recommended that there should be a checkup system for all the IMO member countries in implementing all of the conventions of the organizations. Paris Agreement, 2015 should be honor by underdeveloped, developing and developed countries so that all those legally binding climate deals are achieved. Both consumers and ship owners should work together toward achieving greener and environmental friendly ships. Third party logistics (3PL) provider should works toward giving a better integrate and effective logistics system. More research should be made in order to use more on cleaner fuel like Liquefied Natural Gas (LNG), Compressed Natural Gas (CNG), wind power and even battery ships.

Conclusion

In answering the question on “the effect of shipping toward environment” this essay has covered topics on different type of ships and their functions, trading routes and pointed out some effects of shipping toward the environments and made some recommendation for improvement. Professor Umar (2017) has rightly concluded in one of his lectures that environmental upgrading is not likely to make substantial difference unless it is supported by clear, stable and enforceable global regulation.

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References

Bjune, Cathrine (Autumn 2016). Ship Operations: Master in Maritime Management, HBV Publishing, Horten.

Climate Action (Retrieved 30.03.2018, from the website: https://ec.europa.eu/clima/policies/international/negotiations/paris_en

History of Titanic (Retrieved on 28.03.2017) website address: http://www.historyofthetitanic.org/100-years-titanic.html

IMO History (Retrieved on 30.03.2017) website address: http://www.imo.org/en/About/HistoryOfIMO/Pages/Default.aspx

Maritime Connector (Retrieved on 30.03.2017) from website address: http://maritime-connector.com/wiki/ship-sizes/

Oxford living dictionary, Oxford University Press (Retrieved on 17.03.2017) at https://en.oxforddictionaries.com/definition/environment

Professor Burki, Umar (Spring 2017), Supply Chain Management lectures notes, University of Southeast Norway.

Professor Steger-Jensen, Kenn (Spring 2017), Supply Chain Management lectures notes, University of Southeast Norway.

Paulina Golisnka & Carlos Andres Romano (August 2, 2012), “Environmental Issues in Supply Chain Management – Main Challenges” (Retrieved on 17.03.2017) from the website: http://www.europeanfinancialreview.com/?p=1568

Rene`Taudal Poulsen, Stefano Ponte, Jane Lister (December, 2015) «Buyer-driven greening? Cargo-owners and environmental upgrading in maritime shipping” Geoforum, journal homepage: www.elsevier.com/locate/geoforum

Ship Overseas (Retrieved on 18.03.2017) from website address: https://www.shipoverseas.com/blog/6-different-types-of-international-ships/

Toxic shipping (2013), documentation broadcasted first time at NRK on 22. 02. 2017, website address: https://tv.nrk.no/program/KOID28004013/giftig-skipsfart

US Central Flight Commission (Retrieved on 25.03.2017) website address: http://www.centennialofflight.net/essay/Commercial_Aviation/PostWWII/Tran26.htm

Yue Wu (2012), “A duel-response strategy for global logistics under uncertainty: a case study of a third-party logistics company” (Retrieved on 01.04.2017) from website address: http://onlinelibrary.wiley.com/doi/10.1111/j.1475-3995.2011.00839.x/full

"Importance of ship registration"

By Robert Sanga 

- Ship registration means registering a ship into a particular State. A ship belongs to particular country by registration. A registered ship is protected by the law of the State. Details of ship build, ownership and mortgage enter into the flag states where the ship is register. Every State maintains registers in which particulars of merchant vessels possessing the nationality of that State and flying its flag are entered. A country registering a ship issues “Certificate of Registration” which can be effectively use as a “ship’s passport” permitting entry/departure from the worlds ports (Cathrine Bjune, 2016).

There are several importance’s of ship registrations. A ship possessing no nationality – a stateless ship- enjoys no protection in international law. She is unable to engage in lawful trade since ports will deny entry to her. The United Kingdom Merchant Shipping Act 1995 provides that clearance or transire shall not be granted for any ship until the master has declared to an officer of customs the name of the nation to which he claims she belong. If a ship attempts to proceed to sea without such clearance or transire, she may be detained until the declaration is made. Furthermore, a stateless ship is liable to seizure (Richard Coles and Edward Watt, 2009).

Right to fly national flag and the attachment of legal jurisdiction over ship and crew is one of the important factors to be considered when choosing a flag for a vessel. By having those two main important rights, a ship is automatically entitles to other rights. Among other factors, right to diplomatic & naval protection, right to fish in territorial waters and engage in coastal trade (Cabotage) are very crucial for the ship. This can make a different in shipping business. For example, a ship register in Indonesia have the right to Offshore operations in Indonesia meanwhile, a ship register in Africa does not have such right in Indonesia.

It’s important for a ship owner to check up about the beneficial outcome of registering a ship in one particular country. That’s because the other parties than owners have an impact on the choice of flag. Both the commercial and technical charterers can have a certain benefit by a ship registration at the particular country. Ship registration has great effects for the administration, employees for commercial or technical part of the ship and for the passengers as well.

If a ship is registered at one of the economic sanction countries by the international communities, then it will not be possible to be trade with certain part of the world. For example, in the past few decades, Burma/Myanmar was economically sanctioned by the US & European countries. That was because the military regime had created over six decades of civil wars and human rights abuses. As a result, it was not possible for Western countries to trade with a ship registered in Burma. This had a great impact not only for the ship owner but also for all those who like to trade with that country.

The registration fees may vary from country to country as well. The requirements for registering a ship are not the same either. Norwegian owner of a ship may choose to register the ship in Norway or any part of the world. There is no limit for a place of registering a ship as long as it’s register at one particular choice of country. Even landlocked countries like Pakistan and Nepal have the right to have ship register in their countries.   

There are several effects on ship registration. That’s because ship registration is done under a public law function as opposed to its private law function (Richard Coles and Edward Watt, 2009). The following important points are among the public law functions:

(a) The allocation of a vessel to a specific State and its subjection to a single jurisdiction for the purposes, for example, of safety regulation, crewing and discipline on board;

(b) The conferment of the right to fly the national flag;

(c) The right to diplomatic protection and consular assistance by the flag State;

(d) The right to naval protection by the flag State;

(e) The right to engage in certain activities within the territorial waters of the flag State – for example, coastal fishing or trading between the ports of the flag State (cabotage);

(f) In case of war, for determining the application of the rules of war and neutrality to a vessel.

Registering a ship in one particular country means that a ship belongs to the land of registration. This implies that the ship has to follow the rules and regulations of the country of registration. Any legal issue that may arise will have to deal with the law of that country. A ship sailing in the high sea will be bound to the law and order of the country where the ship was registered.

It’s possible to have a double register a ship. This has to be done at those countries when open registration is accepted.  Examples of “Open registers” countries are Panama, Liberia, Marshall Islands, UK and Red Ensign group. There are several reasons why ship owners may choose to register dual registration. For example: A ship registered under Singapore flag can be registered simultaneously under Indonesia flag. This may be done because a) accent to cabotage or fishing rights privileges, b) avoidance of trade sanctions and keeps the original mortgagee bank happy. 

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Reference:  

Bjune, Cathrine (Autumn 2016). Ship Operations: Master in Maritime Management, HBV Publishing, Horten.

Richard Coles and Edward Watt. (2009). “Factors influencing the choice of flag” Ship Registration: Law and Practice, 2^nd Edition