The distinction between maritime, shipping, freight, logistics, and supply chain is important.
In this article, I explain the differences between the terms maritime, shipping, freight, logistics, and supply chain, as well as how they are all interconnected, beginning with some basic definitions of the terms involved.
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The term “Maritime Industry” refers to anything that has anything to do with the ocean, the sea, ships, ship navigation from point A to point B, seafarers, ship ownership, and other related activities.
The act of transporting cargo from point A to point B using ships falls under the Maritime industry.
In the Maritime industry, freight is defined as the cargo that is transported using the shipping services provided by shipping lines and ships.
Logistics Services = the processes involved in moving cargo from a manufacturer’s warehouse to a receiver’s warehouse, including arranging for shipping services provided by shipping lines using ships, which falls under the Maritime industry.
Supply Chain = the entire granddaddy process that includes all aspects of a product cycle, from sourcing raw materials to manufacturing, packaging, and distribution, all the way through to delivering the goods to the shelf, utilizing all of the industries, businesses, and services listed above.
Trade = is the fundamental economic concept that involves the buying and selling of goods and services, with compensation paid by a buyer to a seller, or the exchange of goods or services between parties. Trade is the driving force behind all of the businesses listed above from 1-5.
There is a distinction between maritime, shipping, freight, logistics, supply chain, and trade.
Industry in the Maritime Environment
The backbone of global trade has been and continues to be maritime transportation, which has been the case since the Egyptians, Greeks, Romans, Arabs, Indians, Chinese, and Europeans all began sailing and improvising sailing methods, which ranged from sailboats to dhows, long boats to dragon boats to steamships to the current generation of ULCVs, VLOCs, and VLCCs, among other vessels.
A derived demand, maritime transportation serves the primary purpose of supporting trade, business, and commerce – whether global or domestic, whether transporting cargo or people.
It is estimated that the sea transports 89.5 percent of all global trade. According to UNCTAD statistics, world seaborne trade reached a volume of 11 billion tons in 2019, despite a slowdown in maritime trade and port traffic growth. A predicted growth rate of +2.6 percent for 2019 and an annual average growth rate of +3.4 percent for the period 2019-2024 is predicted.
The world’s container ports handled an estimated 793.26 million TEUs in 2019, and there are currently 6,145 active ships carrying a total of 23,657,724 TEUs around the globe.
Because of the growth, numbers, and volume involved, the maritime industry has become one of the most globalized industries in the world in terms of ownership and operations, according to the World Economic Forum.
Not only does the maritime industry provide ownership opportunities, but it also provides employment for an estimated 1.65 million seafarers who work in the global merchant fleet all over the world.
Here are some statistics to consider regarding the Maritime Industry (all statistics compiled/shared from UNCTAD).
Types of vessels in the world fleet
Which country has the greatest number of ships in its possession…??
According to the number of ships
As of 2019, China had surpassed the group of countries known as the Rest of the World in terms of total number of ships in the world.
When it comes to the Deadweight Capacity,
Leading suppliers of seafarers are the following countries:
Affiliation with the Office of the Chief of Staff (Officials)
Differences between maritime, shipping, freight, logistics, supply chain, and trade in the countries that supply seafarers – officers
Leading suppliers of seafarers are the following countries:
a group of people who work together to accomplish a goal (also known as Ratings)
a country that supplies seafarers – the distinction between maritime, shipping, freight, logistics, supply chain, and international trade.
Shipping
As previously stated, shipping is the act of transporting cargo from point A to point B through the use of ships, and it is classified as a part of the maritime industry.
Cargoes are transported around the world by a variety of ship types..
Tankers carrying oil
Carriers of Dry Bulk
Carriers of General Cargo
Shipping Containers is a business that specializes in shipping containers.
Those who transport gasoline
Tankers for Chemicals
The Offshore Vessels are vessels that operate off the coast of a nation’s coastline.
ships that travel by ro-ro
Transport by ferry or passenger ship
Others
There is a distinction between maritime, shipping, freight, logistics, supply chain, and trade.
Every one of these ships is operated by shipping lines for the purpose of making a profit. A majority of these ships are owned by the shipping lines that operate them, and the majority of them are chartered by the shipping lines from their respective shipowners.
Liner services or tramp services are provided by the shipping lines in question. Among the liner services, container shipping lines account for the vast majority of the revenue.
There are numerous container shipping lines that provide “shipping services” along the various trade lanes around the world, and the following are the top 50 shipping lines in the world, according to Alphaliner.
The top ten container lines listed above have a combined market share of 82.3 percent in the containerized trade, leaving only 17.7 percent for the remaining container lines to contend with.
Shipping activities include (but are not limited to) the following, to name a few.
Cargo is reserved for specific vessels weeks or even months in advance, depending on the vessel’s availability.
Maintaining a record of all cargo booked and ensuring that it is scheduled on the appropriate vessels
Inspect the vessels to ensure that the cargo that has been planned is actually transported.
In order to optimize the vessel loading, ensure that the stowage planning is done correctly on board.
Consistently check that all loaded containers have their VGM
Prevent damage to the cargo during loading and unloading.
Producing a bill of lading and other supporting documentation for all cargo that has been loaded
A typical shipping line or shipping agency office has a number of departments, including planning, marketing, sales, a container department, vessel operations, documentation, finance, administration, and procurement, among others.
the distinction between maritime, shipping, freight, logistics, and supply chain
Shipping entails identifying and planning the most profitable trade routes around the world, as well as the volume of cargo available on these routes, the number of ships that must be employed on these routes, the ports that this service must call in order to maximize business, the number of transit days that a ship will take for a round trip, the cost per voyage, which includes operational costs, port costs, fuel costs, the manpower required, and so on for each voyage…
…………………………… I’m out of breath just thinking about all of the processes involved.
Freight
Many of us in the industry think of freight as “money.” Freight is the backbone of global trade, but it has a distinct meaning from money.
The term “freight” refers to cargo that is transported by a carrier (ship, road, rail or air) in exchange for a monetary reward.
In the context of waterborne freight, freight refers to the cargo that is transported using the shipping services provided by the shipping lines using the ships that fall under the jurisdiction of the Maritime industry.
A wide variety of cargoes are transported around the world.
a distinction between maritime, shipping, freight, logistics, supply chain, and international trade
Global trade is divided into two categories: dry bulk, which includes five major bulk commodities (iron ore, coal, grain, bauxite and alumina, phosphate rock), minor bulks (forest products and the like), containerized cargo, general cargo/break bulk, and wet bulk, which includes tanker cargo (crude oil, petroleum products, and gas), which accounts for approximately 29.8 percent of global trade.
If you look closely, you will notice that bulk and break bulk are shown separately (although both are included in dry cargo) because there is a distinct difference between bulk and break bulk.
It is possible to transport freight in a variety of parcel sizes, ranging from 500 grams via bicycle courier to more than 400,000 tons via Valemax ship.
Of course, different types of freight have different characteristics and are more susceptible to different types of cargo damage, so expert handling is required in all situations..
Logistics
The term logistics is said to have originated in the military and to have been first used to describe troop and equipment movement in various areas of military operations in the early twentieth century.
Logistics refers to the process of transporting cargo from a manufacturer’s warehouse, point of origin, mine site, farm, or other location to a receiver’s warehouse, door, store, or other location.
The logistics process begins long before the actual shipment takes place, as it entails debating and deciding on delivery schedules that are acceptable to both the buyer and the seller.
Once these have been determined, the logistics services provider must determine the most efficient means of transporting the cargo from the seller’s door to the receiver’s door.
There is a distinction between maritime, shipping, freight, logistics, supply chain, and trade.
As an LSP (Logistics Services Provider), you should be able to choose the most appropriate solution for moving your cargo. Cargo is transported by road, rail, air, and sea, and each of these modes of transportation has its own set of characteristics and peculiarities.
Although air freight is faster than sea freight, it is significantly more expensive. Rail freight may provide more consistent transit times and schedules than road freight, and it may also be more environmentally friendly. Road freight has the capability of providing complete door-to-door service and can be considered one of the more cost-effective modes of transportation.
The main function of logistics is the planning, implementation, and execution of the various aspects involving the movement of cargo, such as materials, services, information, shipping, documentation, scheduling, tracking, and delivery.
Supply Chain Management (SCM) is a term that refers to the organization of a supply chain.
Supply Chain is the granddaddy process that encompasses all aspects of a product cycle, from sourcing raw materials to manufacturing, packaging, and distribution, and finally delivering the goods to the shelf, utilizing all of the industries, businesses, and services mentioned above.
Suppliers, transporters, warehouses, distribution centers, shipping lines, and logistics service providers are all involved in the supply chain from the time a product is created and sold to the time it is delivered to you and me.
Supply chain management is the coordination of all supply chain activities with the goal of developing and operating the supply chain as effectively and efficiently as possible.
In addition to product development and sourcing, this management may also include logistics and all of the systems required to coordinate and deliver these activities.
*** RECENT UPDATES ***
One of the readers was unsure of the distinction between Supply Chain and Logistics, so I included some clarification below.
A simple supply chain may consist of only a few different processes that are all linked to the movement of products along the chain. The customer is the starting point and the ending point of a typical supply chain.
The customer places a sales order with the company that will supply the products that they are interested in purchasing.
The supplier will proceed to the planning stage based on the sales order. Production plans (if the products need to be manufactured) or sourcing plans (if the supplier is procuring the product from another source) or supply plans will be developed by the supplier (if the supplier already has the product can supply straightaway)..
The procurement process follows the planning process, and the supplier will be required to procure raw materials if they are manufacturing the product themselves, or to source or procure the product itself from a third party.
The following process will be the production process, which will involve manufacturing and will result in the creation of the order.
An inventory process will follow, which will include receiving goods from various suppliers at a supplier’s warehouse, storing them, and monitoring their stock levels. The logistics process may begin here or it may be incorporated into it, depending on the nature of the business.
The transportation process, which includes logistics and shipping, is the last but not the least.
When the goods are delivered to the customer, the chain is considered to be complete.
Supply Chain Management is the term used to describe the process of managing all of the factors listed above.
Trade
contract for sale and trade
Trade is the most fundamental economic concept, involving the buying and selling of goods and services, with compensation paid by a buyer to a seller, or the exchange of goods and services between parties.
All of the businesses listed above exist because of trade.
Trade across borders, also known as international trade or world trade, is simply the act of bringing goods and services into and out of a country.
Trade in goods and services between countries is known as importation, and trade in goods and services between countries is known as exportation.
There are a variety of reasons why countries engage in international commerce.
The non-availability of certain products in the domestic market
Advantage in a competitive environment
Expanding the market
Make money in foreign currency.
Obtaining economies of scale
Increasing the effectiveness of political relationships
Purchase high-quality items at a reasonable price.
Here are some interesting facts and statistics to help you better understand the scope of global trade.
According to the World Trade Organization, the current value of the world’s merchandise trade exceeds US$ 19,670,000,000,000 – or US$ 19.67 Trillion. In 2018, the value of global merchandise increased by 10%, while the volume of global merchandise increased by 3%. In 2019, the growth in merchandise trade volume will slow to 2.6 percent, but it will pick up to 3 percent in 2020.
According to WTO statistics, manufactured goods account for nearly 70% of all merchandise exports.
Image 1 – Courtesy of the World Trade Organization
Image 2 – Courtesy of the World Trade Organization
The World Trade Organization provided the third image.
US$ 19.48 (in US dollars)
Trillion
Increased oil prices contributed to an increase in the value of world merchandise exports in 2018, which increased from US$ 17.33 trillion in 2017.
US$ 5.70 (five dollars and seven cents)
Trillion
In 2018, the value of world commercial services exports increased by 8%, reaching US$ 5.77 trillion, an increase from US$ 5.36 trillion in 2017.
53.3 percent of the total
The top ten economies accounted for 53.3 percent of global trade, while the top five leading economies accounted for 38.1 percent of total trade.
3.0 percent of the total
As a result of rising trade tensions, the volume of world merchandise trade, as measured by the average of exports and imports, shrank by 3.0 percent in 2018, compared to 4.6 percent in 2017.
Image 4 courtesy of the World Trade Organization
Image 5 courtesy of the World Trade Organization
Conclusion
The differences between Maritime, Shipping, Freight, Logistics, and Supply Chain are significant, and I haven’t even touched on the other related industries such as Ports, Terminals, and ICDs.
The maritime, shipping, freight, logistics, and supply chain industries all offer a variety of different career paths, each of which necessitates a unique set of qualifications as well as specific skill sets, expertise, and experience.
I will be writing about these career opportunities in the near future, so make sure you subscribe to my blog so you don’t miss out on any of the important information..
