This paper discusses the development of safety regulation in sea transport. It suggests that international competitive forces and regulatory capture, coupled with the slow and uneven effects of international conventions, has led to a sub-optimal level of ship safety. Reforms are therefore needed based on a systematic programme of cost-benefit analysis, involving higher quality of information.
Topic: 3.3 General
Equilibrium in the maritime transport market between the established flag sector and the flag of convenience sector is explained by reference to comparative levels of efficiency and the real cost of labour. The established flag sector would increase if it could reduce its labour costs, especially the non-wage element.
There is little integration of shipping with production; the few instances accord with the institutional theory of the firm. The variety and flexibility of shipping contracts give many of the advantages of vertical integration without its costs.
A case study shows that investment in shipping is profitable for Israel and makes net contribution of about 25 per cent to the balance of payments. Investment is most profitable in second-hand ships about 10 to 13 years old.
The author refutes the common belief that developing countries bear the burden of freight rates on both imports and exports. He concludes that a reduction in export rates would actually harm them, as it would lead to an increase in freight charged to importers, who cannot pass it on.
Wool is traditionally carried by conference liners. Specialised ships would be economic with backloading or combination cargoes; they would give scope for improved handling methods to be devised.
Subsidies for US merchant fleets were formerly on a cost-plus basis, giving no incentive to economise on labour costs. The 1970 Act restricts the subsidy by reference to an index of wages paid in other industries. This has many advantages, but Dr. Franco thinks it may be disadvantageous to seamen.
Queueing of ships for berths and inadequate use of berths could be eliminated by area – and ultimately world-wide – control over the route and speed of each ship. This would also prevent collisions. The author works out probable costs and benefits. International agreement would be essential.
The American shipping and shipbuilding industries are in decline, despite large government subsidies. A Bill now before Congress proposes an assistance programme providing $300 million a year for five years. This has instigated the major maritime interests to submit their own proposals to Congress: four of these are analysed in this article, together with a ten-year plan recently put forward by the Nixon administration.