Crisis and Changes: Topics in Late Twentieth-Century Shipping History
Author(s)
Tenold, Stig
Abstract
Discusses two aspects of late 20th century maritime history: the shipping crisis of the 1970s-80s and the concomitant changes in the flag distribution of the world fleet. The analysis of the shipping crisis focuses on the development of the tanker market, where Organization of Petroleum Exporting Countries (OPEC) oil-price increases signaled the end of a long period of rapid demand growth. Stagnating, and later declining, demand for tanker transport combined with a strong tonnage increase to create severe overcapacity. The growth of the tanker fleet in a stagnating market is explained by the actions of three groups: shipowners, shipbuilders, and financial institutions. The crisis spread to other segments of the shipping market, leading to a dramatic decline in freight rates and vessel values and a sharp increase in ship lay-ups and shipping company bankruptcies. A connection is also made between the shipping crisis and changes in the flag distribution of the world fleet. During the shipping crisis, the importance of traditional maritime nations waned, as an increasing share of the world’s merchant marine was registered in flag-of-convenience countries and emerging maritime nations, particularly in Asia. This trend toward reregistration of the world fleet was exacerbated by conditions in the shipping market. Three direct links between the crisis and changes in the distribution of the world fleet are emphasized. First, the declining freight rate led to an increased focus on costs, favoring flags with low labor costs and limited manning regulations. Second, the fall in vessel values had implications for the terms of competition. Third, the shipping crisis brought about changes in regulatory patterns in traditional maritime nations.
