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.

Shipping Port Investments Encourage Regional Economic Growth

With international trade barriers being reformed and relaxed and more and more countries emerging as viable contributors to the global economy, many industry analysts are predicting that an economic boom is just on the horizon. But, along with the good financial news, comes bad. Regions that fail to prepare for the future demands of the shipping industry, are likely to find themselves in a weak competitive position, versus the prospering regions that have committed to the necessary investments early on.

Although there are countless reasons why so many countries and regions around the world should invest in their port infrastructures, the biggest seems to be the financial benefits it provides to local economies. In the United States for example, the Port of New Orleans contributes more than $8 billion in earnings annually and generates $800 million in Louisiana state taxes, while at the same time supporting over 160,000 jobs. Like the economic benefits experienced in New Orleans, many other shipping ports across Europe are widely considered their region’s economic lifeline and are relied upon to deliver prosperity.

With that being said, every smart investment is made with the intention of generating a positive return and delivering investment profits to investors. Port investments are no different. Governments around the world are making investments into their shipping industry, in an effort to put their own region in a competitive trade position today, so that they are more likely to profit in tomorrow’s market and well into the future.