In: Economics
What are the economic challenges facing Maritime businesses in 2020 and beyond? Explain by referring to the economic performance indicators.
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Maritime business refers to any business program that is being conducted in the area of shipping and related activities. Since it corresponds to the cheapest mode of transport and has several advantages when compared to many other factors, the maritime business plays a major role in years to come. The analysis of the impact of the maritime business across the globe could be done with the study of various economic performance indicators like GDP, CPI, Producer Price Index, Money supply etc. In the midst of the advantages of the Maritime business, it is expected to face many challenges in the years to come. The following are the major economic challenges faced by the maritime industry currently and in the years to come
· The blue economy which consists of responsible fisheries, oil exploitation, sea transport and tourism is facing serious threats which has affected the reduction in explorations of these sectors.
· With the spread of the current pandemic and with the lockdown measures imposed across the globe, the global transport has been declined which has lead to a decline in the demand for oil which contributes to majority of the maritime trade
· According to the report of the United Nations Conference on Trade and Development, the maritime trade corresponds to almost 90% of the global trade.
· The global shipping industry is worth $700 billion today and is expected to grow to a $1.3 trillion economy with the development of e-commerce across the globe.
· The major challenge faced by the maritime business is the impact of global economic crisis on them. Once an economic crisis hits the world, the maritime trade would be declined and hence the maritime business would be considerably affected.
· Lower demand and oversupply have remained the major challenges that have been faced by the maritime industry till date.
· With the SOLAS compliance being imposed, the operational challenge are increased and hence operational costs are being increased.
· With labour disputes and job cuts being increased in the maritime sector, the input costs are also increased which has lead to an increase in the shipping costs
All the above challenges are being faced by the maritime industry today and is likely to remain in the future which will have serious implications on the global maritime business.