The Worlds Trade and the International Shipping Industry - Essay Example

The risk of piracy has continued to dominate the list of shipping risks for most organisations, sometimes superseding other risks in terms of frequency of occurrence and the intensity of loss or/and liability. As a direct result of piracy, the costs of operating shipping lines have significantly increased. Insurance costs for sea vessels, for example, have continuously soared to greater heights. In contrast, vessels must install certain security features to help reduce the risk of loss resulting from piracy.

According to the International Maritime Organisation (IMO), approximately 90 per cent of the world’s trade is transported by the international shipping industry. Owing to the importance of the shipping industry in international trade and considering the risks it faces, it would only be wise to consider ways to mitigate the effects of such risks or eliminate them. This work is dedicated to analysing piracy as the main shipping risk and aims to develop strategies and techniques for combating this specific risk. O

Transportation of bulk raw materials and manufactured goods and intercontinental trade would practically be impossible without international shipping. Better said, without the international shipping industry, one half of the world would ultimately freeze while the other half would starve. Under close analysis, ships are high value and sophisticated assets. Merchant ships in their annual operations generate income above 380 billion USD dollars in freight rates alone. In reality, this accounts for about five per cent of the world’s entire economy.

This percentage no shows how vital the industry contributes to investors, governments, employees, organisations, and by extension, the global economy. In this sense, all stakeholders need to join forces and ensure that the industry is shielded against threats, potential risks, and losses.

The risks associated with shipping are great in number; common knowledge has it that the sea is rough in its natural sense and exposes ships to considerable levels of physical risk. Further, ships may get involved in accidents or capsize due to countless reasons.