An Overview Of The Shipping Industry

Mariners have been using ships to transport goods for trade from possibly as early as the third millennium BC. Whilst the first goods traded were high value items such as silks, spices, wine and perfume in small quantities, the development of shipping technology through the ages has allowed the size and quantity of goods that we can transport to continually increase.

Better shipbuilding and global communication has also allowed for the expansion of transport routes and a greater variety of goods to be shipped. For these reasons, many consider the shipping industry to be a central part in the growth of the global economy.

A map of global shipping routes by B.S. Halpern (T. Hengl; D. Groll)

A sea change

A turning point for the modern shipping industry came in 1956, when a crane lifted 58 aluminum truck bodies onto the deck of an ageing tanker ship moored in Newark, New Jersey.

The intermodal shipping container (often referred to as a Twenty-Foot Equivalent Unit or TEU) which is nothing more than a simple metal box, helped transform the world economy and stimulated international trade on a scale no one could have predicted. The idea of a North Carolina truck driver – Malcolm McLean – would pave the for what we now refer to as globalization.

Having risen from truck driver to transport company owner, McLean was concerned that the increasing in motor vehicles on the road was causing traffic jams that delayed his drivers and raised his company’s costs. To combat this problem he conceived the idea of waterfront terminals that would allow trucks to deposit their trailers directly aboard ships. These vessels would then move between locations by sea circumventing heavy traffic and stop lights in the process

The shipping industry at this time was antiquated. A typical oceangoing ship in the 1950s carried around 200,000 separate crates, bags, barrels, and bales all of which would arrive in hundreds of separate shipments that had to be removed individually from a truck or rail car and moved into a warehouse, before later being removed for loading and placed on the dock. They would then be assembled onto pallets and lifted into the ship’s hold where dockworkers would remove and stow each item.

This laborious process meant that moving goods across the ocean at this time would often cost 15 or even 20 percent of their value, a price so steep it rendered many goods unworthy of international trade.

McLean proposed detaching the trailer bodies from their chassis and wheels and putting the metal containers only aboard ship. This would cut out multiple ship loading processes and allow a greater number of goods to be loaded onto the ship at one time. In addition, the containers could be stacked, allowing each ship to carry more cargo.

Standardization of the containers and the process cleared the way for container shipping to become an international business. The industry founded with a single ship and 56 containers transformed the global economy, and today thousands of ships are moving millions of containers around the world each day. In 2016 the equivalent of nearly 10 million truck-size containers arrived at U.S. ports alone.

The global benefits of shipping

Maritime transport is regarded as the backbone of globalization, lying at the heart of support supply chains and cross-border transport networks that enable international trade. An economic sector in its own right, the shipping industry generates employment, income and revenue, and permeates other sectors and activities.

Maritime transport enables industrial development by supporting manufacturing growth, bringing together consumers and goods industries, and promoting regional economic and trade integration.

The numbers

In 2015, estimated world seaborne trade volumes surpassed 10 billion tons. Dry cargo shipments accounted for 70.7 per cent of total seaborne trade volumes, while the remaining share was made up of tanker trade, including crude oil, petroleum products and gas. Total containerized trade volumes are estimated at 1.69 billion tons, equivalent to 175 million twenty-foot equivalent units (TEUs). The top 20 container ports in the world account for about half of the world’s total container port throughput.

There are an estimated 47,000 goods transporting ships in the world. At 17,000 ships, bulk carriers (carrying solid bulks such as coal and grains) are the most common type of ship and accounting for about a third of the global merchant fleet.

The ships

The largest shipbuilding countries are China, Japan and the Republic of Korea, accounting for 91.4 per cent of gross tonnage constructed in 2015. As of January 2016, the top five shipowning economies were Greece, Japan, China, Germany and Singapore, while the top five economies by flag of registration were Panama, Liberia, the Marshall Islands, Hong Kong (China) and Singapore.

The world’s largest container ship by TEU carrying capacity is currently the Madrid Maersk of the Danish shipping giant Maersk Line. The ship was built by South Korea’s Daewoo Shipbuilding & Marine Engineering. According to the maritime analyst Alphaliner, the Madrid Maersk has a capacity of 20,568 TEUs. The Madrid Maersk reportedly measures 399 meters in length and has a beam of 58 meters.

The conclusion: shipping remains the backbone of globalization

As the internet continues to bring us closer together, so too does the shipping industry. Not only can we talk to people on the other side of the world, we can trade with them too; product availability and business relationships are no longer restrained by geography.

With bigger ships, better infrastructure and an expanded route network, the shipping industry has made it easier than ever to trade and transport goods across the globe. That’s why the shipping industry remains the backbone of globalization.

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