Specialized Features of Shipping Industry

The particularity of an international shipping industry as compared to many other activities, often shore-based, is the primary reason why maritime economics exists. It is not sufficient for people to understand the cost and pricing and production changes of the shipping industry by applying the general economic principles to the sector, as it is the case in many other economic activities. Such particularity of shipping can be observed from various angles, mainly the following four.

1. First of all, maritime transport is a service sector with a derived demand from trade. Often, foreign trade it self is generated by economic activities of a country or a region. In other words, shipping does not create its own demand, its demand is derived from the need of trade in goods. It is quite important for those who work in maritime transport to know and fully understand that people do not need shipping, they need trade. Trade will not be completed until the good is moved from the seller's pace to that of the buyer. Shipping becomes essential just because it is part of trade chain. The dependence of shipping on world trade justifies a closer look of trade when maritime economics is discussed. Being part of the transport sector, shipping has those typical characteristics of transport industry. As a means of transportation, its output is the movement of cargo or persons. As such the output cannot be stored. When the capacity, e.g. a ship, is built, it is there and the lion's share of the total cost is fixed. Shipping is a highly capital intensive sector measured in capital required per employment created. Not only are modern and increasingly specialized ships expensive to build, a maritime transport system requires also huge investment in port facilities and in other activities such as communication, which are part of the system.
2. Maritime transport is also considered as the most internationalized sector in the world. Such high level of internationalized of shipping is both the born and evolved feature and it is true from both outside and inside of it. International shipping by definition is carried out between countries, not within. It is mostly operated on the international waters. As such it is by and large subject to international waters. As such it is by and large subject to international rules and regulations rather than any national ones, especially compared with land transport, which is often dependent on national regulations and other legal, social  commercial and physical conditions on a national and regional basis. The shipping practices,which means the way the business and the services are organized and operated are also common to all countries. Shipping is a sector with well-structured and organised markets, which is again international. It is the industry that has created such a complete and functional operational and market mechanism to self-regulate the sector so that doing business smoothly. The high level of internationalization of maritime transport is also reflected inside the sector as an evolved feature. This means that the composition of the shipping services is from the input and elements of truly international sources. No country alone can and does provide all elements needed for the production. Ship are typically made in a small group of countries, registration is done by another handful of nations, classification, insurance repair, scraping, are all concentrated in the hands of those who are the most efficient and effective. Even seafaring is becoming more and more international affair. An extraordinary division of work has evolved naturally and based on comparative advantages in the shipping sector. Shipping had been globalized long before the current globalization process started. But today this process continues to go even further and broader. 
3. Openness and freedom is another special feature of maritime transport. Compared to any other economic sectors, shipping is recognized by the openness of its activities and freedom for any new comers to join. This is because maritime transport is operating on the high sea and therefore remains to be one of the most internationalized sectors in the world. Due to this particular characteristic shipping has a long tradition to be left free (or as one says that it had been so developed before the state intervention became fashionable), and most attempt made by various authorities to regulate and interfere in shipping have had only limited effects. Physically the seas and oceans, including national territory waters, are free for all ships to sail and pass. Commercially "cross-trading"-carrying cargo for the 3rd countries-is compared with other modes of transport. On a world-wide basis, shipping is for example much freer than international air transport, which is heavily regulated (in terms of services, routes, schedule and tariff, although situation varies from country to country).
4. The major source of competitiveness of maritime transport comes from the low cost and the large potential of achieving the scale economies, which is another feature of shipping. Floating and moving on water gives shipping a huge advantage over other modes of transport because the extraordinarily big quantity of goods that an ocean-going ship can carry (the largest ship can transport almost half a million tons of cargo at a time) makes shipping the most inexpensive means of transport. Air and other surface transports are much more restricted in respect to the size of the vehicle, thus limiting the effects from economies of scale.