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after 1987, if at different annual rates. The average yearly growth rate for each trade category and their main sub-divisions between 1985 and 1990 are shown in Table 3 on page 15. By 1990 the total annual seatrade volume reached four billion tons, including about 2.5 billion tons of dry cargo and 1.5 billion tons of liquid cargo.

13. The dry cargo category of seatrade includes dry bulk and general cargo. Subsumed under the latter are the containerized and other forms of unitized trades. The share of general cargo in total annual seatrade volumes has increased from 12-14 percent in the early 1960s to about 20 percent in 1990.

14. All three phenomena--reduced liquid cargo, steeper proportional increases in dry cargo volumes, and a steady growth in the share of general cargo--point to fundamental changes that have taken place in the organization and management of international seatrade. Among the three principal categories of seatrade, the liquid cargo segment was the most vulnerable with regard to downturns in the world economy. Crisis situations had an immediate negative impact on traded volumes which lingered much longer than in the case of dry cargo. On the other hand, oice recovered the ensuing annual growth rates of liquid cargo trades were higher than those displayed by tire other trades. Noteworthy is the fact that the general cargo trades were the least affected by economic crises and maintained steady growth trends during most of the period between 1970 and 1990.

_15._ During the years ahead the composition and proportional share of cargoes, as well as the growth rates in the international seatrade markets will be strongly influenced by a number of factors. These factors reflect predicted further changes in industrial practice, in the structure and management of global trading, and in economic and social policies adopted by individual countries. Developments along these lines during the 1980s suggest that the principal drivers behind the predicted changes are likely to include further globalization of manufacturing processes, ongoing adjustments to production techniques and organization, more relocation of industries, continued integration of key regional markets, substantial growth in value-adding at source, an increasingly forceful drive towards conservation, and the growing importance of environmental concern.

16. The _globalization of manufacturing processes_ has been sparked by the search among Organization for Economic Cooperation and Development (OECD) industries for countries which afford lower factor costs and offer other conditions of comparative advantage. These corporate objectives have already induced substantial outsourcing of intermediate manufacturing and assembly tasks to a variety of developing countries during the 1980s. A recent Bank survey<sup>2</sup> not only confirmed these developments but projected much further expansion of such industrial practices. Owiv' to such trends the demand for long-haul ocean transport of many primary commodities from developing to industrialized countries can be expected to diminish. On the other hand, however, there will be an increasing need for small highvalue shipments in short time intervals.

17. The last observation reflects _changes in production techniques and organization_ which have evolved for a number of reasons. Firstly, growing integration of the acquisition, production, and marketing processes through cost-minimizing logistics management techniques has induced the trend towards inventory reduction. These developments have already led to very specific demand for speedy

> **2** Peters, Hans J. 1992. _"Service - The New Focus in International Manufacturing and Trade"._ Policy Research Working Paper Series 950. World Bank, Washington, D.C.