In response to a discernible realignment of international maritime interests in recent years, the shipping industry has undergone several formidable changes in technical development, economic infrastructure and operational procedures. 

Some of these changes have had negative effects, whereas others have undoubtedly strengthened the industry’s overall foundation.

First and foremost, international shipping is presently making a weak recovery from probably the worst economic slump in its long history. Although shipping economists tell us that this slump, like previous similar downturns, has been largely self-inflicted due to overbuilding, inaccurate economic forecasts and an over-cooperative financial lending sector, the result was, nevertheless, an industry with a precarious economic base. 

As a result, a large part of the world fleet lay idle or taken out of service altogether, with even scrapping prices reaching all-time lows. 

The Suez Canal closure arrived conveniently at a time when ship construction technology had just produced the supertanker. 

The world’s energy hunger quickly demanded larger and larger tankers. The very large crude carrier (VLCC) and the ultra-large crude carrier (ULCC) rapidly followed. 

Oil companies and shipowners realised enormous profits, often being able to recover that cost of a VLCC in one or two high-revenue voyages. 

The world’s shipyards, particularly those in Japan, the Federal Republic of Germany, Sweden and Spain, could not keep up with the demands even by greatly expanding their facilities. 

In a few years, the world fleet had been swollen by the addition of a new group of giant vessels which, as will be noted later, had their problems. 

Energy-economic forecasts continued to be optimistic even though Overton’s ageing was readily apparent.  

The first oil crisis of 1973, however, sent oil prices soaring within a period of a few months. 

Despite greatly increased costs, the shipping boom continued for a little while as a stunned industrial world examined alternative sources of energy and conservation. 

Strangely, even at this stage, more large tankers were being built. 

However, in a comparatively short time, the tanker industry collapsed like a house of cards. 

Cargoes: a lessening demand for petroleum cargoes. The great ships were out of work, and laid up wherever possible. 

Fortunes that had been made quickly were just as quickly lost, and major lending banks suddenly became reluctant shipowners through foreclosure actions. 

Even though petroleum prices have dropped considerably since the mid-1970s, the tanker industry has never recovered, and the demand for oil from traditional exporting areas has decreased sharply, as too many tankers continued to compete for too little cargo. 

At the same time, new sources of energy were developed that needed less or no sea transport because of the development of overland and undersea pipelines, and smaller feeder vessels. 

However, one new source of energy, liquid natural gas (LNG), would provide the industry with a new direction. 

The transport of this substance required innovative new technology and very expensive vessels that would cost between US$100 and US$250 million. 

LNG was seen immediately as a viable alternative to oil, and a mini boom in LNG carrier construction resulted. 

Of course, as oil prices fell, LNG became less competitive in price, and the demand for LNG vessels lessened. 

Further, fortunes were lost. 

In addition, many states found LNG near their coasts that was accessible by pipelines and, thus, did not require LNG to come from Algeria or Indonesia. 

The 1973 energy crisis also resulted in considerable changes in bulk trade. 

Several states decided to return to coal as an energy source. 

This led to a considerable demand for power coal, particularly from North America. 

The VLCC technology was quickly transposed into large bulk-carrier construction, and a new generation of very large bulk carriers was developed. 

There were also several positive changes in the industry. 

The development of the cellular container vessel, now in its third generation, totally revolutionised the carriage of general cargo at sea. 

Through the provision of rapid door-to-door service with minimum handling the freight container made traditional methods of general cargo carriage at sea obsolete. 

On the other hand, freight containers require high capital investments. The ships were large, fast, and expensive and the container system, because of its intermodality, also required very considerable infrastructure investments in ports, terminals and ancillary equipment. 

For most developing states, the cost of entering the container trade was prohibitive, and they were thus relegated to continuing in the outdated break-bulk trade. 

However, overbuilding in the container trade resulted again in some bankruptcies, mergers and takeovers by major container lines. 

The world fleet is not expected to expand greatly in overall tonnage but will increasingly diversify and specialise in areas such as container carriers, cruise vessels, petroleum and chemical product carriers, ferries and fishing vessels. 

However, a new energy crisis may increase the demand for tanker tonnage and rejuvenate the offshore oil sector. 

The shipping industry will, at the same time, continue to be under pressure to protect the marine environment, and to improve the transit passage of merchant vessels. 

*Dr Moses Amweelo is a former minister of Works, Transport and Communication. He is a part-time lecturer at the International University of Management and the University of Namibia. He earned a doctorate in Technical Science, Industrial Engineering and Management from the International Transport Academy (St. Petersburg, Russia).