The first waterborne vessels were probably used on the rivers of ancient Egypt and Mesopotamia around 4000 B.C. Hollowed-out logs, bundles of papyrus or reeds, and inflated animal skins carried people and trade items along the Nile. Later, the shallow waters of the Mediterranean and Red Seas became traffic routes as well. Trade items were a bit different than they are today, but just as diverse—copper, precious stones, ivory, rare woods, foods, fabrics, and incense. (The Nile, the longest river in the world, continues to be a vital waterway for moving people and cargo in Africa.)

Trading vessels were specially designed for their function. They were built rather round so they could hold as much as possible with very small crews. Ship design became important, and the use of oars developed into the use of sails to take advantage of the wind. During early centuries, ship speed was dependent on the number of rowing oarsmen; later, and until as recently as the 19th century, speed became dependent on the design and number of sails. By 1200 A.D., the standard sailing ship in Europe had square and triangular sails mounted on two masts. In China, the standard vessel was the junk, a flat-bottomed ship with a high stern. Junks were the largest and strongest ships in the world until the 19th century.

The shipping trade gradually became a big industry, with vessels transporting more goods with increasing frequency. Large, full-rigged ships weighed hundreds of tons. Types of vessels fell basically into two categories: military (naval) and mercenary (merchant marine). The largest merchant marine fleets belonged to nations, such as Holland and England, countries that engaged in fierce competition for the riches they wanted from the East, specifically India and China. The British East India Company exploited trade with East and Southeast Asia and India from 1600 to 1708; the Dutch East India Company prospered in the 1600s for the powerful Dutch commercial empire.

The establishment of the United States as a political entity after the colonies' independence from England marked a new phase in the development of shipping. When the North American colonies were ruled by England, their inhabitants were major customers for British goods, sent over by British ships. But colonists eventually found that they could make their own products. After independence, Americans began to build excellent ships more cheaply than other countries; they also staffed and operated them less expensively. Thus the United States became a major player in the shipping industry.

As in all industries, progress was put into very quick motion during the Industrial Revolution of the 1800s. The steam engine, which eventually replaced the use of sails in water vessels for trade, was born at this time. By the late 19th century, the sailing ship was disappearing, replaced by machine-powered vessels. Most advances in steam shipping took place on the North Atlantic, and the United States became the world's largest marine power. From 1840 until the Civil War, competition in the industry was mainly between Britain and the United States.

From the turn of the century until World War II, the United States was a star in the maritime industry. During wartime, the government relied upon merchant vessels to assist the navy in carrying out procedures such as delivering war materials and other supplies. The world wars gave shipbuilders the motivation to build high-quality vessels, which were ordered by the defense industry. Even today, the government relies on merchant marine vessels to be prepared to help if war occurs. Therefore, in the United States, the federal government has traditionally nurtured its shipping industry by giving subsidies to the merchant marine and by passing laws that protect U.S. shipping companies.

In 1920, the U.S. Congress made it a requirement that cargo moving between U.S. ports had to be carried in ships built in the United States, owned by U.S. companies, and operated by U.S. crews. The government also eliminated a lot of the competition among U.S. shipping companies by allowing them to join together and set prices and coordinate services. In 1936, the Merchant Marine Act gave cash payments to U.S. vessels to offset the increasing cost of building vessels in the United States. In 1948, the Inter-Governmental Maritime Consultative Organization was established to provide international regulations for shipping standards and maritime safety. The name was later changed to the International Maritime Organization. Its mission has since evolved to also focus on environmentally sound and sustainable shipping operations.

Many believe that the manner in which the U.S. government regulates the shipping industry has caused its decline since the 1940s. The United States is no longer the greatest merchant marine power in the world. The industry is not as cost-effective as it used to be. To begin with, ships built in the United States are at least twice as expensive as foreign ones (yet, as mentioned earlier, current law allows only U.S.-built ships to receive subsidies and carry cargo between domestic ports). In fact, the United States depends on foreign ships and tankers to carry most of its cargo.