1. The Netherlands Maritime Institutes of Technology Our vision is to be a leading maritime institute offering education, training and consultancy services for Malaysia and the region. "Excellence with a Purpose” is the underlining philosophy of all the programs offered to the individuals and the maritime industry. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT) Wholly owned & operated by Maritime Intelligence Sdn. Bhd. (867557-P) General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my “Excellence with a purpose”

2. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my MODULE OUTLINE 14 Lecturing + Tutorial Sessions (Face-to-face) 1 Quiz (10%) lesson 1- 4 Week 5 1 Test (15%) lesson 1- 9 Week 9 1 group assignment (25%) Week 8 1 Final written examination (50%) Total = 100%

3. 17/10/12 INTRODUCTION TO SHIPPING ECONOMICS AND FINANCE

4. DISSCUSIONS WHAT IS SHIPPING? HOW IT (SHIPPING ACTIVITIES/ BUSINESS) CONTRIBUTE TO WORLD ECONOMY?

5. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my CHAPTER 1: SHIPPING & IT’S FUNCTIONS DEVELOPMENT OF SHIPPING VARIABLES IN WORLD SEABORNE TRADE STRUCTURE OF CARGOES ADVANTAGES & PITFALL OF SHIPPING INTERNATIONAL TRADE & IT’S EVOLUTION

6. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my WHAT IS A SHIP?

7. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my THE SHIP  Comprises of two parts: the hull and the machinery  Hull = the shell of the ship designed for a particular trade as specified by ship owners  Now, the tendency is to have large open holds with automated hatch covers  Concerns: speedy handling of cargo and faster turnaround time of vessel MAIN FEATURES

8. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my

9. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my THE GLOBALIZATION OF THE WORLD ECONOMY

10. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my FREE FLOW OF GOODS The result of the treaty known as the General Agreement on Tariffs and Trade (GATT) The Uruguay Rounds (rounds of negotiation) of member states formed after WW ll further reduced trade barriers and established the World Trade Organization The decreased then enabled firms to view the world as their market Also enable firms to base individual production activities at the optimal location for that activity while serving the world market from that location 10

11. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my Development Of Communication Information And Transportation Development of the microprocessors has enabled the growth of high powered, low-cost computers Global communication have also been enhanced by developments of satellite, optical fibre, wireless technology and now the internet and World Wide Web Negotiation can also be conducted via video conferencing. Money and all documents required can be transmitted over the web Also development in the transportation technology. commercial jet aircraft, super freighters and containerization that have simplified greatly shipment of cargoes of products worldwide

12. Effects of the Suez and Panama Canals on Travel Distances (in nautical miles) MRI2304

13. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my WHAT IS SHIPPING? MOST IMPORTANT TRANSPORT CARRY BILLIONS OF TONNES OF GOODS CONTAINERIZATION TANKERS BULK CARRIERS CONTAINER SHIPS Trade Routes Global Cargo Shipping

14. SHIPPING AND CLIMATE CHANGE The Growth Of The Global Merchant Fleet According To Type Of Vessel

15. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my The most carbon-efficient mode of transportation and produces fewer grams of exhaust gas emissions for each ton of cargo transported than air, rail, or road transport. In addition, new International Maritime Organization regulations establish strict standards for vessels NOx, SOx, and particulate matter emissions. The millions of containers that are used around the world are now 98 percent recyclable! LOW ENVIRONMENTAL IMPACT

16. SHIPPING AND CLIMATE CHANGE Of all modes of transportation, ships are unbeatable in terms of efficiency.

17. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my MODERN SHIPS - Large, Fast And Highly Specialized SIZE SPEED DESIGN SPECIALIZATION AUTOMATION Marine innovations are:

18. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my TYPES OF VESSELS

19. General Cargo Ships A shipping specialists. A large proportion of the goods they transport are awkwardly-shaped and bulky, and do not fit into standard containers. Their cargo includes heavy goods and project cargo for major building projects such as power stations, offshore installations and mining. Some pieces of cargo weigh more than 1000 tonnes. 19

20. CARGO VESSEL/SHIP

21. Oil Tanker The capacity of the global oil tanker fleet is huge This makes oil tankers the most important cargo ships in the global fleet next to bulk carriers. Interestingly pollution from tanker accidents has reduced considerably in past decades, despite the increased volumes of oil transported. This can mainly be traced back to improvements in shipping technology. 21

22. Oil Tankers

23. Bulk Carriers Bulk carriers, like oil tankers (huge capacity) These ships transport goods such as ores, coal and cereals. The principal routes for ore shipments are from South America to Europe and Japan as well as from Australia to Japan. The major shipping routes for coal are from the major exporters of Australia and South Africa to Western Europe and Japan. fb: Elly Ilyani Lecturer23

24. Cruise Liner The total capacity of passenger ships and cruise ships, accounting for only one per cent of the global fleet, is relatively small. Nonetheless the sector is booming and has become a lucrative and growing business for tour companies. Despite the economic crisis the major shipyards are continuing to build bigger and increasingly elaborate ships. fb: Elly Ilyani Lecturer24

25. Container Ship The container shipping industry has grown considerably in importance over past decades. Standard container sizes have led to significant savings of time spent on unloading and transferring cargo to trucks and rail. In terms of capacity per ship, container ships left general cargo ships behind long ago. fb: Elly Ilyani Lecturer25

26. Container Vessel/Ship

27. o carry containers for 20 or 40 footers, and the delivery involved A cargo is instructed to carry containers for 20 or 40 footers, and the delivery involved is part of International Business 27

28. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my EVOLUTION OF MERCHANT FLEET

29. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my STRUCTURE OF CARGOES

30. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my ADVANTAGES OF SHIPPING 1.Shipping is the most efficient, secure and safe means of transporting more than 90 percent of global trade. 2.For vast majority of cargoes like fuel, food, component parts, commodities and finished goods there is simply no viable alternative other than shipping. 3.Shipping is the least environmentally damaging form of commercial transport while taking into consideration the productive value of the activity.

31. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my 4.Any form of transport other than shipping to move some 90 percent of global trade would be unthinkably high while taking into consideration both the economic and environmental costs. 5. Shipping is a very positive force for sustainable development. The imports and exports that generate global trade are all carried by sea and developing countries like Bangladesh can, and do, become major participants in the industry itself, generating income and creating wealth in the process. ADVANTAGES OF SHIPPING

32. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my DISADVANTAGES OF SHIPPING 1.Ships can create serious environmental issues such as oil pollution or marine pollution either through accidents or poor operating practices by dumping wastes at sea or using harmful paints or coatings on ships’ hulls. 2.Even though ships produce less CO2 emissions compared to airfreight or other transports, still regulations and capacity- building measures need to be developed and implemented to reduce the emission. Otherwise shipping might pose threats to the global environment. 3.Leakages of oil, noxious liquid substances or garbage thrown to the sea water might become a threat to several aquatic life forms if not properly regulated.

33. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my THE KEY SHIPPING ROUTES There is a relatively small number of principal transport routes: Japan Shanghai Singapore Hong Kong United States Europe and East Asia East Coast of the United States fb: Elly Ilyani Lecturer33

34. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my LIST DOWN SHIPPING ROUTE THAT VULNERABLE TO PIRATE ATTACK

35. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my THE KEY SHIPPING ROUTES Bottlenecks Straits of Dover, Gibraltar, Malacca, Lombok and Hormuz, and the Cape of Good Hope at the southern tip of Africa. Traffic builds up in these areas, making ships vulnerable to attack by pirates. fb: Elly Ilyani Lecturer35

36. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my IMPLICATIONS FOR THE GLOBALIZATION OF PRODUCTION AND MARKETS 1.Technological innovations had made possible for firms to manage a globally dispersed production system 2.Communication technologies have enabled Hewlett Packard to increase integration of its globally dispersed operations and to reduce the time needed for developing new products 3.Internet and WWW has created global electronic market places for diverse products 4.Transportation technologies – has reduced the cultural distance between countries and has brought about the converge of consumer taste and preferences 5.At the same time, global communication and global media are creating a worldwide culture fb: Elly Ilyani Lecturer36

37. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my WHAT IS INTERNATIONAL TRADE? International trade is the exchange of capital, goods, and services across international borders or territories.

38. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my EVOLUTION OF INTERNATIONAL SEABORNE BUSINESS As maritime serves the world trade, any changes in trading activities development in ship design & operation International law and convention Evolution of cargoes packaging Economical condition (market cycle, depletion of natural/semi final goods) have direct repercussion on shipping and port

39. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my

40. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my 1.Liner shipping connects countries, markets, businesses and people, allowing them to buy and sell goods on a scale not previously possible. 2.Is responsible for millions of existing jobs and plays a crucial role in stimulating new jobs. 3.Contributes hundreds of billions of dollars to the global economy annually thereby increasing gross domestic product in countries throughout the world. 4.As the lifeblood of global economic vitality, ocean shipping contributes significantly to international stability and security. SEABORNE AS GLOBAL ECONOMIC ENGINE

41. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my

42. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my

43. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my

44. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my TO BE CONTINUED

45. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my

46. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my

47. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my

48. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my

49. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my

50. www.nmit.edu.my Netherlands Maritime Institute of Technology (NMIT). General Line: +607-218 2020 Fax: +607-227 1818 E-mail: enquiry@nmit.edu.myenquiry@nmit.edu.my