Posted: October 9th, 2022

Difference between Maritime, Shipping, Freight, Logistics and Supply Chain

There is a distinction between maritime, shipping, freight, logistics, and supply chain management.
Maritime, shipping, freight, logistics, and supply chain are all discussed in detail in this article. I begin by providing some basic definitions of these terms and then go on to explain how they are all interconnected.
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The term “Maritime Industry” refers to anything that has to do with the ocean, the sea, ships, ship navigation from point A to point B, seafarers, ship ownership, and other related activities.

Shipping Business = the act of transporting cargo from point A to point B using ships, which falls under the jurisdiction of the Maritime industry..

In the Maritime industry, freight is defined as the cargo that is transported using the shipping services provided by the shipping lines using the ships.

In the Maritime industry, logistics services are defined as “the processes involved in moving cargo from one location to another,” which includes the coordination of ship-to-ship transportation services provided by shipping lines.

In the context of a product cycle, supply chain refers to the entire process that includes all aspects of the product cycle, from sourcing raw materials to manufacturing, packaging, and distribution to delivering the goods to the shelf, involving all of the industries, businesses, and services listed above.

In economics, trade = is the fundamental 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 different parties. Trade is the driving force behind all of the businesses listed above from 1 to 5.

There is a distinction between maritime, shipping, freight, logistics, supply chain, and commerce.

Industry in the Maritime Sector

It is fair to say that Maritime Transportation has been and still remains the backbone of global trade and has been so since the Egyptians, Greeks, Romans, Arabs, Indians, Chinese, Europeans all started sailing and improvising the sailing methods from sailboats, dhows, long boats, dragon boats, steamships to the current ULCVs, VLOCs, VLCCs etc..

A derived demand, maritime transportation serves the primary purpose of supporting trade, business, and commerce – whether international or domestic, whether transporting cargo or people.

According to estimates, the sea transports 89.5 percent of all global trade. As per UNCTAD figures, in 2019, although the maritime trade growth and port traffic growth were down, world seaborne trade reached a volume of 11 billion tons with a predicted growth of +2.6 percent in 2019 and an annual average growth of +3.4 percent for the period 2019-2024..

An estimated 793.26 million TEUs were handled in container ports worldwide in 2019 and as of now there are 6,145 active ships carrying 23,657,724 TEUs around the world..

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 Bank.

Not only does the maritime industry provide ownership opportunities, but it also provides employment opportunities for an estimated 1.65 million seafarers who work in the global merchant fleet all over the world.

Here are a few statistics to get you thinking about the Maritime Industry (all statistics compiled/shared from the United Nations Conference on Trade and Development).

Types of ships in the world fleet

Which country has the greatest number of ships in its possession…?

By number of vessels

China overtook the grouping of the Rest of the World countries to reach the highest number of vessels in the world in 2019..

By Deadweight Capacity

Top 10 Countries supplying seafarers

Officer Rank

countries supplying seafarers – officers – difference between maritime, shipping, freight, logistics, supply chain and trade

Top 10 Countries supplying seafarers

Crew (also known as Ratings)

country supplying seafarers – difference between maritime, shipping, freight, logistics, supply chain and trade

Shipping

As briefly defined above, Shipping is the act of carriage of cargo from point A to point using the ships which falls under the Maritime industry..

Cargoes are carried by various types of ships all around the world..

Oil Tankers

Dry Bulk Carriers

General Cargo Carriers

Container Carriers

Gas Carriers

Chemical Tankers

Off Shore Vessels

Ro-Ro ships

Ferries/Passenger Ships

Others

There is a distinction between maritime, shipping, freight, logistics, supply chain, and commerce.

All these ships are operated by shipping lines for commercial gain.. A lot of these ships are owned by the shipping lines operating them and a lot of them are chartered by the shipping lines from the ship owners..

These shipping lines may be operating a liner service or a tramp service.. On the liner service the majority of the business is handled by container shipping lines..

There are many container shipping lines operating “shipping services” around the various trade lanes in the world, and the Top 50 shipping lines around the world derived from Alphaliner are as below..

The top 10 container lines above have a combined market share of 82.3 percent in the containerised trade leaving only 17.7 percent for the rest of the container lines..

Well anyway, shipping includes (but not restricted to) activities as below :

Booking cargo for specific vessels, sometimes weeks and months in advance

Ensuring that all cargo booked is planned on the intended vessels

Ensure that the cargo that is planned on the vessels is actually shipped

Ensure that the stowage planning is done properly on the vessel to optimise the vessel loading

Ensure that all containers loaded have their VGM

Ensure safe loading and discharging of the cargo

Issuing bill of lading and other documentation for all cargo loaded

In a typical shipping line or shipping agency office, there are several divisions that work together to accomplish various tasks. These divisions include: planning; marketing; sales; container operations; documentation; finance; administration; and procurement.

The distinction between maritime, shipping, freight, logistics, and supply chain is important.

Planning and identifying the most profitable trade routes around the world, as well as determining 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 expenses, fuel expenditures, manpower requirements, and so on for each voyage are all part of the shipping process…

…………………………… I’m out of breath just thinking about all of the processes that are involved.

Freight

Many of us in the transportation industry refer to freight as “money.” Freight is the backbone of global trade, but it also has a distinct meaning from money in its own right.

In layman’s terms, FREIGHT is CARGO that is transported by a carrier (ship, road, rail, or air) in exchange for monetary compensation.

Specifically, in the context of waterborne freight, freight refers to the cargo that is transported using the shipping services provided by the shipping lines and the ships, which are all classified as belonging to the maritime industry.

There are many different types of cargoes that are shipped all over the globe.

difference between dry bulk and coal, 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), containerised 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. Dry bulk accounts for approximately 70.2 percent of global trade, while wet bulk, which

Please note that bulk and break bulk are shown separately (although they both fall under the category of dry cargo) because there is a discernible difference between the two categories of cargo.

It is possible to transport freight in a variety of parcel sizes, ranging from 500 grams via bicycle courier to more than 400,000 kilograms 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 cases. [page number]

Logistics

Military personnel have claimed that the term logistics originated in the military, and that it was first used to describe troop and equipment movement in the various areas of military operations.

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 destination.

It is actually the process of logistics that begins long before the actual shipment takes place, as it entails discussing and deciding on delivery schedules that are acceptable to both parties.

Once these have been determined, the logistics services provider will need to determine the most efficient method 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 commerce.

A LSP (Logistics Services Provider) should have the knowledge and experience to select the most appropriate solution for the movement of the 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 to offer.

Air freight may be more expedient than sea freight, but it is significantly more expensive. In comparison to road freight, rail freight may provide more consistent transit times and schedules as well as being less harmful to the environment. Road freight has the capability of providing complete door-to-door service and can be considered to be one of the more cost-effective modes of transportation.

The primary 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 company’s 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 listed above.

The supply chain is comprised of a network of suppliers, transporters, warehouses, distribution centers, shipping lines, and logistics service providers who all collaborate to ensure that a product is created, sold, and delivered to you and me.

When it comes to developing and running a supply chain, supply chain management is the management of all supply chain activities in the most effective and efficient manner possible.

In addition to product development and sourcing, this management may also include logistics and all of the systems necessary to coordinate and deliver these activities.

*** LATEST UPDATE ***

One of the readers was unsure of the distinction between Supply Chain and Logistics, so I included a brief explanation below.

A simple supply chain may be composed of only a few different processes that are all linked to the movement of products along the chain as it is constructed. The customer is at the beginning and end of a typical supply chain.

The customer places a sales order with the company that will be supplying the products that they are interested in purchasing.

The supplier will proceed to the planning stage as a result of this sales order. Production plans (if the products need to be manufactured) and sourcing plans (if the supplier is procuring the product from another source) will be developed by the supplier. A supply plan will also be developed (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 source.

The following process will be the production process, which will involve manufacturing and will result in the production of the order.

This will be followed by an inventory process, which will include receiving the goods from the various suppliers at the suppliers warehouse, storing them, and keeping track of their stock levels. The logistics process may begin here or it may be incorporated into it, depending on the type of business involved.

The transportation process, which includes logistics and shipping, is the last but not the least of these.

When the goods are delivered to the customer, the chain is considered to be completed.

Supply Chain Management is the term used to describe the process of managing all of the items listed above.

Trade

sales contract and trade

In economics, trade is the fundamental 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 two or more parties

Trade is the reason all the above businesses exist..

Global trade, also known as International Trade and World Trade is simply the import and export of goods and services across international boundaries..

Goods and services that enter a country for commercial purposes are called imports and goods and services that leave a country for commercial purposes are called exports..

There are many reasons why countries conduct trade globally

Unavailability of certain products domestically

Comparative Advantage

Market expansion

Earn Foreign Exchange

Achieve economies of scale

Improving political relations

Procure good quality at reasonable rates

Here are some interesting facts and statistics to help you understand the reach of global trade..

As per the WTO, the current World Merchandise Trade is in excess of US$ 19,670,000,000,000 – that is US$ 19.67 Trillion.. The value of global merchandise grew by 10% while the volume of global merchandise grew by 3% in 2018.. In 2019, the merchandise trade volume growth will fall to 2.6% but will rebound to 3% in 2020..

As per WTO statistics, almost 70% merchandise exports are manufactured goods.

Image 1 – Source : World Trade Organisation

Image 2 – Source : World Trade Organisation

Image 3 – Source : World Trade Organisation

US$ 19.48

Trillion

The value of world merchandise exports was US$ 19.48 trillion in 2018, up from US$ 17.33 trillion in 2017, partly due to higher oil prices.

US$ 5.70

Trillion

The value of world commercial services exports grew by 8 per cent in 2018, reaching US$ 5.77 trillion, up from US$ 5.36 trillion in 2017.

53.3%

The top ten economies represented 53.3 per cent of world trade while the top five leading economies accounted for 38.1 per cent of total trade.

3.0%

Growth in the volume of world merchandise trade, as measured by the average of exports and imports, was 3.0 per cent in 2018, down from 4.6 per cent in 2017, amid rising trade tensions.

Image 4 – Source : World Trade Organisation

Image 5 – Source : World Trade Organisation

Conclusion

As you can see, there is a vast difference between Maritime, Shipping, Freight, Logistics and Supply Chain and I haven’t even covered the other related industries such as Ports, Terminals, ICDs etc..

There are different career opportunities in maritime, shipping, freight, logistics and supply chain and each of them requires different qualifications, skill sets, expertise and experience..

I will be writing about these career opportunities in due course, so stay subscribed so you don’t miss out on these important tips..

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