Shipping: the backbone of international trade

Did You Know?

Some Shipping Facts

  • The average age of a ship sent to the scrap yard in about 25 years.
  • The average VLCC voyage lasts about 70 days, of which only 22 are laden days at sea. (VLCC = very large crude carrier)
  • The average speed of ships is in the region of 12-13 knots per hour.
  • As of early 2016, the global order book for ships stood at 490.
  • A commonly cited rule in shipping is that you only buy ships at the bottom of the market cyle.

Shipping: the least CO2-intensive mode of transportation

According to the Internal Energy Agency, transportation accounts for around 25% of energy-related CO2 emissions.

Of all the main modes of transportation, shipping is by far the lowest emitter in terms of amounts of CO2 emitted per tonne of goods transported per kilometer. This is true of both ocean-going vessels and inland waterways transportation by barges.

Maritime transport emits around 1000 million tonnes of CO2 annually and is responsible for about 2.5% of global greenhouse gas emissions (3rd IMO GHG study).

Shipping emissions are predicted to increase between 50 and 250% by 2050 – depending on future economic and energy developments.

This is not compatible with the internationally agreed goal of keeping global temperature increase to below 2°C compared to pre-industrial levels, which requires worldwide emissions to be at least halved from 1990 levels by 2050.

The shipping industry recognises that it has an important role to play in this respect and the shipping community, from ship owners to designers and engine manufacturers, is actively developing more efficient, cleaner modes of propulsion.

These efforts are encouraged by the adoption of supportive policy and regulatory frameworks both at the IMO level, the EU and in many different countries. Several policy mechanisms exist to incentivise further research and the adoption of more environmentally friendly technologies in shipping, one of them being the tonnage tax regime (for more information on the tonnage tax click here). Given the international profile of shipping, all stakeholders support the adoption of rules that would apply globally, thereby sustaining a level-playing field for all companies.

Growth and transformation through globalisation

Throughout history the oceans have been important to people around the world as a means of transportation. Unlike a few decades ago, however, ships are now carrying goods rather than people. Tankers, bulk carriers and container ships are today's most important means of transportation and each year carry billions of tonnes of goods along a few principal trade routes.

The main reason behind the massive increase in shipping has been the growth in world trade. But institutional and technological factors also had a role to play.

In the past, the liberalization achievements under GATT and its successor the WTO provided a new momentum to world trade. China’s economic opening to the outside world, which led to its 2001 admission to the WTO, was also very significant – its exports quadrupled within 5 years. Another example of integrated markets boosting international trade is a trebling of exports from Mexico to the USA within 6 years of NAFTA being established.

The appetites of the industrial nations and newly-industrializing emerging economies for energy and mineral resources led to increasing quantities of goods being transported from far-distant countries.

The information and communications technology revolution dramatically reduced the costs of mobility and accessibility. It allowed new network connections and production processes such as just-in-time production, outsourcing and offshoring, and provided a tremendous stimulus to logistics. As a result of rising demand, transportation costs fell. Ships increased in size. Economies of scale were exploited.

Furthermore, there were technological advances and organizational improvements in port management – of general cargo traffic, for instance. Of overriding importance was containerization, the greatest transportation revolution of the 20th century.

Switzerland, a maritime nation

A 2017 study run by Oxford Economics outlines the importance of the maritime transportation activity in Switzerland. This study also sheds light on the positive impact that the introduction of a tonnage tax would have for the country’s competitiveness and attractiveness for businesses.

Switzerland currently represents:

The 11th commercial operated fleet in the world from a volume stand point (GT). Comparable to the fleet operated from the UK, or Norway (Switzerland ranks number 5 among the EU countries).

A fleet made of 812 ships in 2016.This is the equivalent of a volume of 42 million tons (GT).

Approximatively 65 Shipping and Shipping services companies, located in 12 cantons, most of them being based in Geneva, Zurich, Basel, Vaud, Ticino and Zug.[1]

The headquarters of major players in this activity, such as the second largest container-ship operator in the world, MSC, but also companies such as Massoel, Suisse-Atlantique, ABC Maritime or Swiss Maritime Services.

[1] Clarkson List 2017

The Shipping activity contributes yearly to the Swiss GDP with CHF 2.4 billion (approx. 0.4% of total GDP). It represents approximatively 2000 direct jobs.

As part of promotion of Swiss maritime hub, Swiss authorities are studying the possibility of introducing a tonnage tax regime for shipping activities.

Learn more by reading our dedicated tax page.

Different ships for different purposes

Specialization in the shipbuilding industry has brought massive changes to ocean shipping. As a result, special ships have increasingly been constructed for different types of freight. Specialisation helps speed up cargo handling, thus reducing the costs per unit transported.

General cargo ships

General cargo ships can be compared with bulk carriers but are in fact shipping specialists. A large proportion of the goods they transport are awkwardly-shaped and bulky, and do not fit into standard containers. Their cargo includes heavy goods and project cargo for major building projects such as power stations, offshore installations and mining. Some pieces of cargo weigh more than 1000 tonnes.

Tankers - crude oil, petroleum products, chemicals, liquid gas and juice concentrate

The capacity of the global oil tanker fleet is huge and stood at 418 million tonnes in 2009. This makes oil tankers the most important cargo ships in the global fleet next to bulk carriers. Pollution from tanker accidents has reduced considerably in past decades, despite the increased volumes of oil transported. This can mainly be traced back to improvements in shipping technology.

Container ships - general cargo for long hauls

The container shipping industry has grown considerably in importance over past decades. Standard container sizes have led to significant savings of time spent on unloading and transferring cargo to trucks and rail. In terms of capacity per ship, container ships are now far larger than general cargo ships.

Bulk carriers - ores, coal, grain

Bulk carriers, like oil tankers, accounted for 35 per cent of the total capacity of the global fleet in 2009. These ships transport goods such as ores, coal and cereals. The principal routes for ore shipments are from South America and Australia to Europe and China.

Passenger and cruise ships

The total capacity of passenger ships and cruise ships, accounting for only one per cent of the global fleet, is relatively small. Nonetheless the activity is booming. Despite the economic crisis the major shipyards are continuing to build bigger and increasingly elaborate ships.


In addition, ferries for shipping trucks as well as roll-on/roll-off (Ro-Ro) ships, which carry articulated lorries to drive the cargo onto the ship, are taking over the tasks of general cargo vessels on short-haul routes, while refrigerated vessels ("reefers") specialise in transporting fruit and other perishable goods, mainly from the Southern Hemisphere.


Giants of the seas

Ships are getting bigger, faster and more efficient

Modern ships – large, fast and highly specialized

Modern ships are very different from those operating a century ago. A number of innovations have helped shape the ships of today and fuel the growth of maritime freight traffic. The most significant innovations have to do with size, speed, specialisation and the automation of maritime and port activities.

The average size of ships has increased substantially as larger vessels benefit from economies of scale reduce the shipping costs per load unit for crew, fuel, demurrage, insurance, servicing and ship maintenance. As a result of increasing vessel sizes, port authorities must respond by expanding port infrastructure (wharfage, transport connections inland) and improving port access (e.g. by deepening fairways).

Infrastructure constraints are often the major factor determining the use of different categories of ships (e.g. Panamax ships suited to the Panama canal maximum beam width).

Streamlining ship operations

Specialisation and economies of scale have had an important impact of shipping costs per unit transported but automation both on-board ships and in ports has led to momentuous efficiency gains, as well as improved safety.

Various automation technologies have been introduced to shipbuilding and ship operations, including self-loading/unloading systems, computerized navigation, and the global positioning system (GPS).

Automation has markedly reduced the number of crew needed and at the same time substantially improved safety standards. As a result, far fewer vessels are lost due to accidents or sinking despite the sharp rise in fleet numbers.

Speed as an economic variable

Speed is an important element for shippers. For decades, the aim was to build faster ships that would shorten maritime routes and reduce the costs associated with being at sea.

In a shipping market suffering from record oversupply and low shipping prices, ship operators tend to reduce speed in order to remain competitive. This explains that average speeds have dropped to about 11 knots.

Since the invention of the double propeller, marine propulsion has not made any significant forward stride. While the modern merchant ship has an average speed of about 15 knots (about 28 kilometres per hour) and can travel the equivalent of about 670 kilometres a day, the latest ships are capable of 25 to 30 knots (45 to 55 kilometres per hour). However, achieving even higher speeds is a technological and economic challenge, as with greater speeds efficiencies tend to fall and fuel consumption rises, increasing the cost of transportation.

Regulating the High Seas, the role of the International Maritime Organisation

IMO – the International Maritime Organization – is the United Nations specialized agency with responsibility for the safety and security of shipping and the prevention of marine pollution by ships.

Shipping is a truly international industry, and it can only operate effectively if the regulations and standards are themselves agreed, adopted and implemented on an international basis. It requires a level playing-field that encourages without compromising on safety, security and environmental performance.

As a specialized agency of the United Nations, IMO is the global standard-setting authority for the safety, security and environmental performance of international shipping. Its main role is to create a regulatory framework for the shipping industry that is fair and effective, universally adopted and universally implemented.

Currently STSA is following closely the work of the IMO's Marine Environment Protection Committee (MEPC) on key issues such as CO2 emissions, sulphur limits in marine fuels, ballast water management and ship energy efficiency.

These rules will have an important impact on shipping as the new 0,5% global sulphur emission cap to enter into force on 1st January 2020 is expected to apply to about 70,000 ships worldwide according to the IMO.

In addition to IMO rules, STSA monitors the legislation adopted by the European Commission, such as the EU Shipping MRV Regulation.

Link to the IMO website

Link to the European Commission's webpage on shipping