The Container Shipping Industry Trends and Market Outlook

Evolution of Container shipping started in early 1950’s and by early 1970’s it evolved as the most common medium of transportation for commercial and industrial goods such as heavy machineries by sea. Among all the sectors of international shipping, the growth of container shipping is fastest. In terms of business volume of containerised trade grew from 11% to 14% of the global trade in the period of 2000-2010 (IMO, 2013). Major companies involved in container shipping are Amerijet International Inc, APL Limited, Evergreen Shipping Agency Corp, China Ocean Shipping (Group) Company etc.

The rise of container shipping over other methods can be attributed to the following benefits:

  • The containers used in the shipping offers a safe and sound transportation of the cargo. Thus there is no handling of goods while they are in transit.
  • Due to the specialised equipments such as cranes, the turnaround time for cargo loading and unloading is also less.
  • The average speed of container ships is around 25 knots as a result of which the shipping time is also reduced.
  • The cost of transportation of goods using container shipping is less in comparison to other shipping methods.

In terms of figure, by 2006 the total traffic for container shipping was around 130 million teu which raised to143 million teu in 2007 (IMO, 2013). By 2008, the traffic was around 158 million teu and profit margins rose year by year. However the industry went through a rough patch in 2008-2009 due to the global financial crisis. During the same period, oil prices sore to a new record level resulting in increase in operational cost and reduced profit margins. To reduce their operational cost, the shipping companies decided to introduce carriers of more storage capacity. For better fuel efficiency the speed of ships was also reduced (CLIA, 2011).  These steps helped the industry to recover in 2010 and by the end of 2011 industry posted strong results.

However the industry is already seeing signs of saturation as a result the rates, demands and profits are expected to remain in a fixed range till 2015. Oversupply of carriers is the main reason behind this saturation state of the industry. For improving the market scenario, many companies have already reduced the number of vessels for container shipping. Shipping companies have started utilising their resources effectively to reduce their operational cost and increase their profits. Thus we can say that the overall outlook of the market is positive towards the container shipping industry.

 
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