TABLE 4
FROM:
Shipping, Policy and Multi-Level Governance
Michael Roe
BACK TO ARTICLETable 4. Globalisation, shipping and Type II multi-level governance
| Globalisation dimension of shipping | Creating the need for globalised policies for shipping | Evidence of Type II multi-level governance |
|---|---|---|
| International sourcing | Cargoes were once locally defined. Now options for shippers and industrialists are ever widening. For example, crude oil from Nigeria, Alaska, the North Sea. Coffee from the West Indies, Kenya and South America. Coal from Poland, Australia and the USA. Globalised sourcing is flexible to match market demand and prices. | Activity in international markets, by multi-national private or partially state-owned companies, commonly regulated by international and supranational authorities (eg WTO free trade regulation; EU competition policy). Regulations are enforced by national state and semi-state bodies (eg Ministries, Agencies). |
| Security | Since 9/11 security has become a major shipping issue. Terrorism is little constrained by international boundaries and shipping needs internationally agreed security measures. | International regulators (eg the UN IMO) in combination with nation states (eg USA) define security regulations for private ship-owners in the liner sector. Local (private and public) ports similarly regulated. |
| Information technology | IT has created an international and globalised market place for shipping using the internet for communications of all sorts – cargo and vessel details, weather, security information, logistics etc. Real-time data are available immediately and from any location. Domestically driven policies are unsuitable. | IT revolution has swept away any semblance of jurisdictional boundaries by opening up information and communication within and between all layers and actors. Information on markets for shipping services and products is available almost universally. |
| Fraud | Shipping is a widely used mechanism for international financial fraud including cash laundering. | Financial fraud ranges from the individual vessel to complete fleets. It commonly involves cross-border activity. It encompasses activities of states, companies and individuals. |
| Safety and the environment | Fundamental to all shipping policies at all jurisdictions, these are globalised issues and cannot be derived effectively at sub-international level. Alternatively sub-standard ship operators will take advantage of policy fragmentation. Environmental pressure groups are not nationally based but cross all jurisdictional boundaries. | Since the majority of ships and shipping-related companies trade internationally, safety and the environment become international issues. The large majority of the oceans are beyond state control and hence its safety and condition is an international issue. State and private organisations are involved. Sub-standard operators commonly abuse the flag state system by adopting registration in overseas locations. Environmental change recognises no jurisdictions. |
| Global business | Shipping is characterised increasingly by international companies crossing all continental boundaries especially in the liner sector. Offices and representatives are located worldwide, serving cross-country markets. Ownership and management is increasingly globalised rather than domestically based. | International companies can increasingly migrate between maritime clusters to avoid unacceptable conditions. Global, multiple-office locations provide flexibility in regulatory regimes. Joint ventures create operators with multiple domesticities. A 'home' office is retained solely for fiscal, political and/or publicity reasons. Meanwhile, domestic regulations require companies to understand local, regional and national demands. |
| Free Trade | The WTO continues to exert pressure on markets and increasingly shipping to liberalise thus lessening the impact of domestic policies. Policies towards subsidy and liner conferences are now set by international and/or supranational bodies (OECD, WTO, EU). | The WTO and its activities are wholly international. No shipping activity can ignore the regulation of trade by the WTO – and soon to include the shipping and logistics industry itself. Subsidy, liner conferences, cargo acquisition, logistics will soon be regulated by an international body but with impacts at all other jurisdictions. |
| Intermodalism | Seamless international cargo movement requires international policies for shipping (and related modes). Thus through container freight rates between the EU and the USA are subject to supranational law (from the EU) that affects USA domestic carriage competition and rates. | National laws will regulate safety and environmental issues; supranational laws regulate competition; international regulations dictate technical considerations. Operators may be international (shipping), national (rail) or even local (truck). Made more complex as supranational laws in one region may affect domestic activities in a country in another continent. |
| Load centres | Increasingly ports are becoming load centres with international shipping growing in size and serving fewer origins and destinations, but more countries. National policies become less relevant as (for example) Rotterdam serves Western Europe and Hong Kong the entire Far East. | Ports are nationally regulated in terms of employment, safety and environmental law. They are affected by supranational and national ports policies. They deal in international markets. Their labour supply is local. They may receive regional funding. They have mixed private/public ownership. They are subject to various pressure groups – environmental, planning, conservancy, etc. |
| Privatisation | There has been a notable trend of privatisation in ports and shipping worldwide, commonly with new owners coming from overseas. A recent troublesome example stemming from the increased internationalisation of port privatisation includes Dubai Ports (DP) (Dubai) attempted acquisition of port interests in the UK and the USA that caused substantial international disagreement. Increasing international port and shipping ownership requires international policies for regulation. | Although much has been completed, privatisation has turned a ports sector dominated by the state to one thoroughly private/public mixed – from full private ownership (UK) to the landlord model (Poland). Owners are increasingly (partially) international – for example Felixstowe (China), Ventspils (Belgium). Shipping companies from East Europe have been sold worldwide. Joint ventures in liner shipping cross jurisdictional boundaries. Once state-owned assets, based domestically, are now commonly run from multiple overseas locations. |
| Capital mobility | Shipping is perhaps the prime example of capital mobility. Finance for vessels is available worldwide; national policies must take account of international competition. | Capital for vessels and ports is available all over the world and commonly acquired from a variety of locations dependent on cost. National ship finance is required to be equally international. Both private and public capital is used. |
| Physical mobility | Shipping's physical assets – the ships – can be moved to new markets when needed. Only the airline industry compares with shipping's international physical characteristics although increasingly manufacturing is becoming more mobile as factories open and close across the world chasing an advantage. Such international activity requires international regulation and policies to prevent abuse of mobility in terms of safety, the environment and security. | Fundamental to the internationalisation of shipping is its physical mobility. It has no fixed location and some vessels never see their home port. Flag states can be moved at will chasing easier and cheaper regulatory regimes. Policies must take this flexibility into consideration. |
| Labour mobility, flags and crews | Largely a result of the capital and physical mobility of shipping, labour is also highly mobile. Crews and officers can commonly be sources from any country regardless of the activity of the vessel and consequently domestic policy is largely irrelevant with global economics controlling the industry. This has to be recognised by policy-makers or else domestic fleets and their regulation will become increasingly remote from nation states. Tonnage tax in the EU is a good example of policy-making at a supranational level accommodating the mobility of capital and labour in shipping while taking account of national preferences. | Labour can be sourced from wherever it is cheapest subject to minimum standards. Flag choice is completely flexible. Both labour and flag can be changed at will and hence jurisdictional boundaries are meaningless. National governments become involved through incentives to retain vessels to domestic flags – eg tonnage tax. Supranational authorities set the limits to uncompetitive practices offered to shipowners to attract vessels. International bodies set minimum standards for labour to ensure safety. Supranational authorities agree broad legislation to form a framework for safety. States pass specific legislation. |
| Shipping alliances | Substantial increase in shipping alliances particularly in the liner sector has created an industry dominated by intercontinental conglomerates operating in globalised markets. | Joint ventures and alliances are commonly international in character and operate globally. |
| Vertical integration | Shipping is becoming increasingly vertically integrated, with for example, major ports developing dedicated container terminals or even shipping companies owning port facilities – almost inevitably cutting across international boundaries. Other examples include truck and warehouse operation along with international logistics advice, freight forwarding and "global logistics solutions". | Vertical integration along the logistics chain is bound to increase the internationalisation of shipping activity and cross jurisdictions with varying degrees. Operation of rail trucks to feed to containers to ports for international services involves national, supranational and international considerations, public and private partners, and pressure groups and consumer representatives – all classic Type II issues. |
| Jurisdictional widening and deepening | International/supranational organisations such as the WTO and NAFTA are beginning to take more interest in shipping while the EU extends its existing interests to activities beyond its member states. The EU is also looking to extend its influence at the international jurisdiction level aiming to obtain direct representation at the IMO level. Such moves direct shipping policy-making away from the national to international level. | Jurisdictional bodies increasingly are spreading their geographical interests to include extra-jurisdictional territories (EU and IMO; EU and Far East; USA and the world). Shipping is becoming a major consideration of the WTO and the OECD as well as the UN IMO. National considerations lessen as this widening takes place. |
| Logistics and marketing | Increased sophistication in logistics and supply chain management continues to extend market influence and global sourcing. Modern logistics continues to reduce economic friction and enforce the need for high-level jurisdictional policies. | Logistics and supply chain management are inhibited but not prevented by artificial jurisdictional definitions while having to consider the constraints they impose. |
| Technical conformity | Obvious but important. Trends in increased technical conformity (exemplified by containers) sustain and extend the need for international policies. | Technical conformity across the world creates a uniformity in transportation that dissolves national differentiation. |
