Container Ports in Emerging Markets Invest to Stay Competitive

With the highly anticipated completion of the Panama Canal expansion, many regions of the world are investing to get their shipping ports and container terminals upgraded and ready to accommodate fleets of the new ultra-large shipping container vessels. From the new state-of-the-art port facilities being built, to the modernization of existing ports and the deep dredging of channels, these trillion dollar infrastructure and port investments have encouraged growth in developed and emerging economies all over the world, by creating tens of millions of jobs worth hundreds of billions of dollars.

map of leading emerging economiesAs they continue to demonstrate strong growth, China, India, Brazil, Russia, and Africa are all nations that are expected to emerge as huge and attractive consumer markets. With emerging markets (like these mentioned above) representing half the world’s population, it is within reason to believe that they could become major contributors to global economic growth and thus, offer more appeal to investors looking to invest in containers and global trade. Some analysts would argue that these regions have already become viable contributors to rebuilding the world’s economy, helping it continue to grow over the last five years. Others would say that their contributions have not yet been fully realized and are yet to truly shine. With that being said, the new global economy in the future is very likely to be more inclusive and competitive, particularly as the world’s emerging markets in the East and the South continue to see their economies grow.

The new structure of the container shipping industry is expected to evolve around cost-effectiveness and modern-efficiencies. Ports that are unable to comply with the new demands run the risk of watching their hopes for prosperity pass by. Experts and analysts will tell you that shipping ports and terminals are the economic lifeline of any regional economy. Over 90 percent of the world’s consumer goods are transported by sea and, with recent upgrades and improvements, an outdated or inefficient port will not be able to compete in the new global economy. Interestingly, one thing that all the leading emerging markets (mentioned above) have in common, is that they all made enormous investments into their shipping ports and most will be ready by 2015 to accommodate the industry’s growth.

Container Shipping Industry Must Invest to Match Global Growth

cma cgm marco polo container shipFrom its modest beginnings in 1956, the container shipping industry has undergone extraordinary growth, to the extent that nowadays it represents a majority of all the seaborne trade. Container shipping, or box shipping, refers to the entire system of shipping containers, ships, trains, and trucks that transports cargo from one location to another. That freight, consisting of everything from electronics to fruit, gets transported around the world in large shipping vessels to port cities; where the containers are received and then rerouted over-land to their final destination. As the industry continues to grow, you can expect that the relationship between vessels owners and port cities will continue to evolve.

Aside from rising container volumes around the world, the size of the ships used in container shipping is growing ever year, as well. Today’s mega-ships, like the Marco Polo and Mary Maersk, cost hundreds of millions of dollars to build, and are able to transport 13,000+ 20-foot shipping containers (or, 20-foot equivalent units, TEUs). The increase in the size of shipping vessels is a sign of the growth and rapid spread of the container shipping industry, worldwide.

Albeit today’s container industry leader is clearly Maersk Line, at the moment container shipping is an industry without monopoly. Once dominated by shipping lines from the United States, new influencers from Europe and Asia are constantly emerging to contribute and re-shape the industry. Many of today’s shipping companies are subsidiaries of private conglomerates, such as Japan’s Nippon Yusen Kaisha (NYK), while others are state-owned enterprises. The United States lost its lead in the industry when a legislative change required the U.S. to employ American crews and build its ships in America. This move put the United States’ shipping industry at a costly disadvantage.

Regardless of the country of origin or the ownership structure of the company, all players in the container shipping industry have the same challenge: to remain price competitive in a volatile industry. When it comes to addressing this concern, it is important to note that many of the shipping industry’s costs are not assumed by the shipping companies themselves, but by the shipping ports. To remain competitive, it is the ports that must invest in maintaining facilities that will support the ultra-large container ships, that are currently in use. To accomplish this, ports have to make major port and infrastructure investments to dredge their channels, and increase terminal space. The fact of the matter is that unless a port has the conditions the shipping line demands, the shipping vessels will not visit and the port’s region will suffer economically.

As consumer demand grows, it is apparent that the container industry will be relied upon to expand with the shipping sector and continue to deliver container cargo to prospering trade destinations, around the world. In doing so, shipping container lines, shipping ports, and investors will profit from investments in international trade, and the development of a stronger global economy.