2020 shows globalisation as less than a perfect vision

Malcolm Latarche

Malcolm Latarche · 16 March 2020

ShipInsight


Shipping is an industry that exists purely to service world trade except perhaps in a few niche areas such as cruising, therefore it is understandable that ship operators especially container ship operators probably see globalisation and free trade as a very positive development.

However, it has become increasingly obvious over recent years that for a significant part of world population, globalisation has caused their standard of living to either stagnate or increasingly to dramatically worsen. The wave of populism that has washed across the world has been due almost entirely to the man in the street realising that the promised benefits of globalisation are being enjoyed only by a minority and not by all.

Mostly this has been due to the fact that manufacturing in the developed nations has been shifted to cheaper manpower sites abroad. That is fine for the multinational companies involved but the reasonably well paid jobs have been replaced by lower paid and lower skilled service jobs, a gig economy and dissatisfaction has been growing for some time. Three years ago that dissatisfaction came to the fore in the vote for Brexit and Donald Trump’s election as US president. In both countries there have been moves to repatriate some of the employment positions that were exported.

This year globalisation has suffered a severe setback in the form of the coronavirus. Beginning with the closedown of much of Chinese production in January and the consequent loss of cargo for the liner sector, it has become apparent that Europe is deficient in manufacturing the equipment needed to fight a disease outbreak.

As much of the continent follows China in closing off borders, travel and industry, the shortage look set to become even more acute. Some would argue that an obsession with just in time and disinclination to stockpile anything more than a few day’s or weeks of products is another problem with the modern view of economics.

This past weekend we have seen the UK government calling on industry to help produce more essential equipment. The government has urged manufactures such as car companies to start making ventilators to deal with the worsening coronavirus crisis. The prime minister is apparently due to hold a call with engineering firms on Monday.

Speaking to the BBC, Health Secretary Matt Hancock said manufacturers should consider switching some production to the production of ventilators. He acknowledged it was the kind of policy normally reserved for times of war.

Ventilators are vital in the treatment of patients whose lungs have been attacked by the infection. The health secretary also told Sky News that the country currently has 5,000 ventilators but said it would need "many times more than that". Prime Minister Boris Johnson is expected to promise that the government will buy stocks of ventilators produced as part of the production drive. He will also set out the role government wants manufacturers to play in preparing the country for a significant outbreak of the virus. Manufacturing firm, Unipart, confirmed that it was involved in the discussions and aero-engine maker Rolls-Royce said it was "keen to do whatever we can".

These are unprecedented developments that would only normally happen in wartime and the fact that it has taken a natural event to precipitate it shows how fragile globalisation has left nation states. It will be very likely that once the crisis has subsided, many nations will slip back into the status quo but it is also certain that the people will want to see resilience increased and the ability to manufacture at home become a priority.

In time that will impact on import requirements and since so many people will have been laid off for weeks during these lockdowns, there will be limited funds available for discretionary purchases. If there is a long lasting impact upon shipping it will be in the container trades that it is felt most because the cargoes are usually manufactured goods.

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