It is now some 50 years since Malcom McLean introduced a new method of shipping break-bulk dry cargoes by sea.
This led to the establishment of the transport container which was separated from the truck and fundamentally replaced the loading and unloading of boxes of cargo at the ports and also at both ends of the transport journey ashore.
Today, container shipping is the largest transportation form of any shipping type, and the ships are some of the largest in the world.
This transformation affects not only ship design, but the terminals used by the ships and the trucks used to carry the containers on land.
Today, the container shipping companies comprise less than a dozen huge ones, mostly based in Asia, and numerous smaller ones providing feeder services to the giants.
The customers still book to have their products collected at their factories or other business establishments and delivered to their customers in these large containers.
All this for a single price and within specific timeframes, which are very important for perishable goods.
The large container shipping companies not only compete for business but cooperate in Alliances where the sea-shipping can be conducted with any of an Alliance’s ships that trade the specific routes.
But are these companies profitable today?
There are many challenges and pressing issues that cloud the horizon for container shipping:
- The cost of these giant new ships is enormous, and most suffer from little or no back-haul cargoes.
- The outlook for Globalisation is now in doubt as companies seek to keep manufacturing in their home countries and import less.
- Most of the large container-shipping companies do not report their earnings and tend to depreciate their ships over long periods even though the changes in ship size have occurred in relatively short time frames.
- The container fleet is already overcapacity for the demand yet the industry seems hell-bent on building ever-larger ships that few ports can manage
- The ports are not wanting to expand their facilities just to cope with ship sizes when their container throughput is unlikely to grow. Thus, the massive investment in constructing docks and cranes will not be recoverable without a significant increase in port fees.
- The newly upgraded Panama Canal has opened enormous opportunities for the smaller ships to serve the ports on the East Coast of the USA without these ports being expanded – they could never cope with the Mega-ships anyway.
- The major container shipping companies in China, Japan and Korea are closely involved with the major industrialists who absorb their operational losses in their pricing. Thus, the large independent container shipping companies such as Maersk, CMA CGM, MSC are faced with cargo rates that are unprofitable.
Personally, and in summation, I see considerable problems ahead for container shipping as the costs of transforming terminals to accommodate ever-increasing ship sizes and the one-directional nature of most cargoes, coupled with the desire to keep manufacturing at home in the USA or Europe, will not fill the ships.