Posted: August 14th, 2022

Analysis of the Impact of Establishing Public Shipping Company in South America

Analysis of the Impact of Establishing Public Shipping Company in South America

South America is a continent with a large population, abundant natural resources, and diverse economic activities. However, it also faces challenges such as inadequate infrastructure, political instability, and environmental degradation. One of the sectors that could benefit from more investment and development is the shipping industry, which plays a vital role in facilitating trade, transportation, and integration among the countries in the region.

Currently, the shipping market in South America is dominated by a few large private companies, such as Maersk Line, Mediterranean Shipping Company (MSC), CMA CGM, and COSCO Shipping Lines. These companies have a combined market share of over 60% in terms of the twenty-foot equivalent unit (TEU) capacity of their fleet (Wikipedia). They offer various services and routes to connect South America with other continents, but they also face competition from other regional and global players, such as Hapag-Lloyd, Ocean Network Express (ONE), Evergreen Marine Corporation, Yang Ming Marine Transport Corporation, Wan Hai Lines, and ZIM Integrated Shipping Services.

The establishment of a public shipping company in South America could have significant impacts on the shipping industry and the economy of the region. A public shipping company is a state-owned enterprise that operates under the supervision and regulation of the government. It could have several advantages over private companies, such as:

– It could offer lower prices and better services to customers, especially to small and medium-sized enterprises (SMEs) that may not be able to afford the high rates charged by private companies.
– It could promote regional integration and cooperation by facilitating trade and transportation among the South American countries, as well as with other regions such as Central America, the Caribbean, Africa, and Asia.
– It could create more jobs and income for the local population, especially for the workers in the ports, shipyards, and related industries.
– It could enhance the competitiveness and innovation of the shipping industry by investing in new technologies, equipment, and infrastructure.
– It could contribute to the social and environmental goals of the government by implementing policies and practices that support sustainable development, such as reducing greenhouse gas emissions, improving safety standards, and protecting marine biodiversity.

However, establishing a public shipping company in South America could also entail some challenges and risks, such as:

– It could face opposition and resistance from the existing private companies, which may lobby for protectionist measures or engage in unfair competition practices to maintain their market dominance.
– It could encounter difficulties in raising capital and financing its operations, especially in times of economic downturn or crisis.
– It could suffer from inefficiency and corruption due to bureaucratic procedures, political interference, or lack of accountability and transparency.
– It could be affected by external factors such as geopolitical tensions, trade disputes, or natural disasters that could disrupt its operations or damage its assets.

Therefore, establishing a public shipping company in South America requires careful planning and analysis of the potential benefits and costs. It also requires coordination and collaboration among the governments of the countries involved, as well as consultation and participation of the relevant stakeholders such as customers, workers, suppliers, investors, regulators, and civil society. A public shipping company in South America could be a viable option to improve the shipping industry and the economy of the region if it is managed properly and responsibly.

Works Cited

“List of largest container shipping companies.” Wikipedia. https://en.wikipedia.org/wiki/List_of_largest_container_shipping_companies. Accessed 26 Oct. 2023.

“The Top Ten Shipping Companies for Latin America.” Guangzhou China-Latin Imp.&Exp. Co.,Ltd. https://www.chinalatinagent.com/en/news/The-Top-Ten-Shipping-Companies-for-Latin-America.html. Accessed 26 Oct. 2023.

“South America Freight And Logistics Market Size & Share Analysis Report.” Mordor Intelligence. https://www.mordorintelligence.com/industry-reports/south-american-freight-and-logistics-market. Accessed 26 Oct. 2023.

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