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Maritime transport and trade: a field of tensions

Maritime shipping lanes are arteries of economic activity. They help to carry the overwhelming majority of all internationally traded goods. It’s common to assume that whatever you buy at a local market was produced far from the point of sale. Exceptions are often remarked upon and may carry special status and corresponding labels identifying them as ‘local’.

Overall,  maritime transport accounts for about 80% of global trade by volume, or 70% by value.

Sea-borne and river routes are vital to today’s production process. A worldwide network of relationships underpins an international economic circulation that’s suffused with contradictions. These contradictions can’t simply be isolated as anomalies or inefficiencies, they’re often foundational to the international economy.

For example, the barriers and distinctions of space and distance have been reduced by logistical, administrative, and technical innovations that make global shipping what it is today. That’s why iron ore can be mined in Australia and Brazil, taken to China where it’s processed into steel, shipped to Thailand for the manufacture of a pickup truck, which is then taken to and sold in Nepal.

This feature of the world’s economy is often called a global value chain. Here’s what the OECD has to say about it:

International production, trade and investments are increasingly organised within so-called global value chains (GVCs) where the different stages of the production process are located across different countries.

[…] The whole process of producing goods, from raw materials to finished products, is increasingly carried out wherever the necessary skills and materials are available at competitive cost and quality. Similarly, trade in services is essential for the efficient functioning of GVCs, not only because services link activities across countries but also because they help companies to increase the value of their products.

The Organisation for Economic Co-operation and Development, Global Value Chains (GVCs), [website], 2018, https://www.oecd.org/sti/ind/global-value-chains.htm, (accessed 4 December 2018)

In some sense, this integration is coupled with fragmentation as different stages of the circulating process are broken up into narrow but interlocking activities, and dispersed over many and distant regions. At the same time somethings have to bind these activities together, to relate them to one another. These seemingly fragmented activities must be connected to each other in careful and precise manner so that, for example, an automotive assembly plant in Thailand isn’t met with constant interruptions because the supply and delivery of its intermediate products are mismatched.

The organisational pressure is evident in the planning and practice of liaising firms. This includes international corporations and conglomerates like Apple, Alibaba, Walmart, Amazon, Maersk shipping, etc.

Such large firms are taking an increasing share of their sector’s total or niche activities under their purview while smaller and more numerous enterprises are party to a smaller share by value of the market. Furthermore, medium to small firms are framed by the organising impetus of their larger monopolistic, oligopolistic, and monopsonitic counterparts.

Nearly half of all online sales in the US are made via Amazon. This amounted to about 28% of the gross merchandise value of e-commerce. That company’s influence is particularly visible when one breaks down their market share according to types of items sold. A report by Jumpshot claims that Amazon facilitated more than 90% of online sales “in home improvement tools, skin care, batteries, golf and kitchen and dining accessories” in the first quarter of 2018.

Amazon relates many sellers and producers via its online marketplace and transportation logistics. The company’s business is not simply composed of a sum of the workers, producers, and sellers; it helps to structure their activities, exerting its considerable influence to lay down the priority circuits of circulation from production to consumption. This may explain why one of Amazon’s most important sources of revenue is the sale of detailed information regarding the end-to-end process from production to consumption. That information is used to organise the whole of the network as well as to catalyse changes in particular phases such as the exact manner in which work and workers are managed on the shop floor.

As shown in this short film, workplace analysis and time motion studies are a part of the organic development of integrated relations between production, transportation, and consumption.

Even though, as the OECD succinctly put it, global value chains are supposed to permit economic activity to be “carried out wherever the necessary skills and materials are available at competitive cost and quality”, the reality is somewhat different. Take the use of cargo ships: the vessels are growing in size and require increasingly sophisticated logistical support. This means that they can’t just dock anywhere in the world. They have to rely on the world’s mega ports. About 87% of sea-borne trade by volume was handled by only 20 of the world’s ports in 2017. It takes a lot of time, human effort, and material resources to build such facilities, along with all the supporting infrastructure such as interposing railway networks, roads, canals, warehouses, etc.

So, maybe it’s better to say that there’s an elasticity rather than full mobility in the transport of cargo and its overarching global value chains. There are points of fixity, where, for instance, the toil of numerous generations of people has sedimented in the form of grand ports. To simply abandon these would lead to the waste and ruin of fixed resources, and to build new ones from scratch would take a great span of time in order for them to reach the stage of utility.

These points of fixity do move as old ones wither and new ones develop, but they don’t happen at the snap of a finger. Even the historically very rapid shift in manufacturing from western to eastern regions of the world has taken generations to unfold. China didn’t become a hub of transit and production by pure chance, it made some effort in the matter: between 2011-2013, China used more cement than the US did in the entirety of the 20th century.

The geographic location of these points of fixity don’t necessarily constrain power of control or economic benefit to a single site. A number of factors and levers of political and economic power relate to each other or rub up against one another. The network of relations is a field of tensions. For example, Thailand may be one of the world’s premier locations for automotive manufacturing, but that industry is predominantly controlled by foreign companies such as Toyota, Honda, and Mercedes-Benz. These companies have bases outside of Thailand. They make decisions that benefit their entire multi-continental interest and they funnel significant profits away from the centres of production to  far flung locations.

Maritime trade and transport is multi-located and in motion. Realised wealth from the sale of merchandise after sale and conversion into money is part of a system of ceaseless circulation. If there’s a jam in the system – if the flow is blocked or slowed – we have economic turbulence or even recession on our hands. The circulation of the value of social labour in commodity form uses, constructs, and is also threatened by geographic differences.

As the OECD has pointed out, expertise and low costs can attract capital. This capital partly crystalises in immobile form as mines, canals, ports. These further the advantage of a location as a node in the international network of economic activity. They also provide necessary functions for the effective circulation of  capital. As this advantage via the built environment (as well as the establishment of administrative techniques like trade deals or financial exchange regimes)  grow, so can capital’s dependence on them. Disruption to one such point can disrupt a series of interdependent relays.

The push and pull of utility plus potential friction rooted in fixed material, administrative, and technical nodes is what makes this a field of tensions. This field is rife with opportunities and risks.

The international character of global value chains requires convertibility between separate regimes and nation states. A universal equivalence needs to be established for the smooth running of account keeping and for exchange between firms, peoples, and customers in different nation states using different ‘home’ currencies, paying fees and taxes in a variety of national currencies. This explains why international standards are necessary for the ongoing activity and exchange between these regimes.

One such standard of equivalence is the role played by the US dollar. In international exchanges, multiple jurisdictions and economic regimes encounter each other. The US dollar, then, is used as a standard to measure like with like, to track the flow of activity, and to complete exchange between these disparate regimes. For instance, in the European Union, some 55% of extra-EU imports were invoiced in US dollars in 2016. Here again we see how multiplicity and difference is related via a constructed object of universality. Particularities relate via points of commonality, while on the other hand equivalences are symbolic expressions of the differences.

Whether via the US dollar or a port, there are tensions of relation and dependence that run both ways: from global shipping and globalised economies to the narrow selection of ports and shipping lanes, then back. This is one way in which the circulation of capital is embodied.

Density of commercial shipping.
Density of commercial shipping. / Image: by T. Hengl, http://www.nceas.ucsb.edu/globalmarine/impacts, CC BY-SA 3.0 license.

The elastic circuits of maritime shipping and trade run through and are run through by living assemblages of ports, cities, surveillance posts, and military bases. A representative map should juxtapose the various layers that form and are formed by their interconnections. So, an accurate map of maritime transport should include ports, shipping lanes, value transported over time, exclusive economic zones of nation states, military bases, listening posts, rail and road links, insurance and financial flows, etc.

The world’s major shipping lanes are lasting arteries that connect industrial and merchant capital with finance and rent. They help capital to flow through production and consumption, with owners of land and money extracting a portion in the form of rent. They’re pervaded with geopolitical tensions as seen in military maneuvers in the South China Sea as well as off the coast of Yemen, Somalia, and Djibouti. Transport is facilitated by standards and laws over which there is much contest. Key routes are often dominated by alliances of major shipping companies that deliver a significant portion of traded goods. Such particulars articulate the histories of core and peripheral countries, baring relations of power.

One of the world’s most used waterways.
Over 64% of China’s and almost 42% of Japan’s maritime shipping passes through the Strait of Malacca (2016).

A study of maritime trade and traffic should keep these factors in mind, realising that the cartography of trade traces the lines of combination as well as those of friction. The system is built on top of a body of contradictions. Its form denotes economic, political, historical, and geographic dynamics.


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