So far, I have been throwing around the term the Norwegian shipping industry as if its meaning is common knowledge among each and everyone of us. After all, it is quite obvious that the shipping industry is constituted by companies that are connected to shipping activities. However, it gets slightly more complicated if we consider the question, what is meant by shipping activities? Furthermore, which of these activities is the Norwegian shipping industry involved with? In this chapter, I will give a general presentation of the historical development of the Norwegian shipping industry as well as the activities that they perform.
4.1) Early history
The history of shipping in Norway goes back hundreds of years and since the middle of the 19th century they have been one of the largest actors on a global scale. In 1885, the Norwegian fleet was the third largest and employed around 60.000 people – a significant achievement considering the country`s relatively small size (NSA, 2014c). On the one hand, it is perhaps natural that an industry relying on oceans emerged in a country with one of the longest coastlines in world. On the other, it was not until the liberalization and growth of the economy during the 19th century that Norway emerged as a major actor. According to Harlaftis and Theotokas (2010, p. 17)
The success of the Norwegian shipping industry during the nineteenth century is related to the “collective mobilization of resources” at the local level, i.e. the partrederi system, according to which, members of the local community provided resources for the construction and operation of a ship, becoming shareholders of the shipowning company and receiving the resulted profits.
As Norway itself far from generated enough work to be done to enable a world-leading shipping nation, the Norwegian industry expanded internationally. Due to the fact that
Norwegian shipowners offered shipping services that were relatively cost-effective they were able to capitalize on the growing international trade.
4.2) A changing industry
A reason for the growth in international trade was largely due to the industrial revolution that was occurring at the time. However, this in many ways became a double-edged sword for the Norwegian shipping industry. Not only did the industrial revolution revolutionized society`s means of production, it also revolutionized its means of transportation. The Norwegian fleet, which had developed a competitive advantage in sailing, were slow to make the transition to steam (Harlaftis & Theotokas, 2010). Making this transition necessitated a significant amount of capital, which was not easily available for the minor shipowners scattered up and down the Norwegian coast. This eventually led to a decline in shipping that was sailed based, and the emergence of new companies. According to Wicken (2009, p. 44),
The shipping companies were established in urban areas, mostly around Oslo and Bergen. Many companies were not closely incorporated into local communities, but emerged from interaction between individual Norwegian entrepreneurs and large international corporations.
This eventually led to heavy investments, which soon would lead to the return of Norway as one of the largest shipping nations in the 1920s. What perhaps characterized this development the most was Norway’s expansion within the segment of bulk shipping (Harlaftis &
Theotokas, 2010). With heavy investment in tankers, their market share grew steadily up until the 1970´s and the occurrence of the shipping crisis (NSA, 2014b). However, bulk shipping was not the only segment that the Norwegian shipping industry was involved with. According to Harlaftis and Theotokas (2010) this was also one of the reasons that the Norwegian industry remained one of the largest in the world in spite of the crisis.
4.3) A Wide Array of Activities
Connected to the development presented above, the Norwegian Shipowner`s Association (NSA) has been an important facilitator. Since its establishment in 1909, the NSA has promoted the Norwegian shipping companies` interests related to areas such as politics, trade, innovation and safety (NSA, 2014b). Today, the NSA consists of close to 150 members, representing more or less all segments of the Norwegian shipping industry and its wide spectrum of activities. Here, the main segments are deep sea shipping, offshore contractors, offshore services, short sea shipping, and subsea contractors. Deep sea shipping represents activities associated with transporting internationally over greater distances. Within this group we have oil tankers, bulk carriers, vehicle carriers, chemical tankers, gas carriers and cruise traffic (NSA, 2014d). Offshore contracting, as the name implies, is connected to the offshore industry, more specifically drilling and floating production. Here they are focused on
“floating installations such as semi-submersible and jack-up rigs, accommodation platforms, drilling ships and production vessels” (NSA, 2014d, in "offshore contractors"). Also involved with the offshore industry are offshore services. This mainly involves activities on the seabed, more specifically “supply services and anchor handling, seismic, cable and pipe-laying”
(NSA, 2014d, in "offshore services"). As for short sea shipping, this involves transportation between ports within Norway. However, it can also involve transportation between ports within a single continent. Furthermore, short sea shipping also involves passenger ships.
Finally, the offshore contracting segment involves activities underwater, such as the development and maintenance of production facilities, floating as well as fixed. However, in addition to all of the segments and activities presented above, the largest companies are often involved in a great deal of supporting activities. In other words, the Norwegian shipping industry consists of various companies that are specialized in a wide array of activities.
4.4) Occurring Challenges
In this chapter, I have given a short presentation of the Norwegian shipping industry – its historical development as well as some challenges it has been faced with. As mentioned in the introduction, it appears that the industry, in Norway as well as globally, is in a process of change. Perhaps the most substantial change in recent time has been the reduction in oil-prices, which has had significant effect on the shipping industry. Although far from all Norwegian shipping companies are directly related to the oil industry, few have been able to escape the ripple effects that the low conjuncture has had in the global economy. Another
challenge, and perhaps most relevant for the topic of this thesis, is that the industry is facing increasing demands to take sustainability into consideration. Connected to the Paris Agreement this is especially related to the emission of greenhouse gasses. Although the shipping industry’s contribution to the global CO2 emission did not represent more than 2.7 per cent in 2013 (NSA, 2013), the International Maritime Organization are currently in the process of creating regulations towards reducing emissions. Connected to this, the Norwegian shipping industry has seemingly taken a proactive role. This was indicated by the NSA who stated that they wanted their members to be on the forefront regarding monitoring, reporting and verification (MRV), as well as ensure transparency through reporting. In the following chapter, I will present my findings connected to how this is implemented in practice. More specifically, how the idea of sustainability performance measurement is implemented in the Norwegian shipping industry.