Containerization II

It is known that contemporary merchant fleet carries approximately the 90% of the total
amount of the global trade volume. Someone who wants a view about the way world
market operates must take a look on how this market is organized. In this second part about
global containerization I will write about shipping containers as a portion of maritime
industry.
We have already talked about the containerships evolution. In the picture below you can see
schematically this evolution. The size of container ship, since its early use in 50 until today,
becomes larger and it is not only the technology developments which allow us to build so
large ships. The larger the ship is, the higher earnings gained for company. Thats because
ship can carries more containers and for that reason is more efficient than its smaller
competitors.

Efficient means that it is possible for the ship owners to keep the standard freights (or lower
in some cases when the competition demands that) while they increase their capacity and
they can carry more containers with insignificant increase in operational cost because of the
larger ship use. So the profit in absolute numbers increases and these companies attracts
more capital investment and order larger ships and so on. There are few sectors in industry
where you can invest with such certainty and so high profit paid back. All those companies
are enlisted in high value stock markets (e.g. NASDAQ) and attract huge capital investments.
However, there are not only benefits in these developments. Some serious problems arise.
As you can imagine the biggest issue is if the brokers can really find so many (many
thousands) containers to fill the ships with. Additionally they must find the areas where they
are going to use the replaced smaller ships. That answers the question where the port
infrastructures (and not only within port but also around the port) must upgrades because of
the larger ships presence. The large ships requires deep ports (due to their draught), many
and automated port cranes (container ships has not cranes onboard), space for container
storing (too many containers onshore side) and transportation connectivity (studies show
that 65% of arriving containers must leave the port store facilities the same day).
Complicated markets like this one which I described above are usually self-corrected. The
correction is underway the last decades and the operational picture changes year by year. It
depends on other global trade factors. Shipping industry would have been never operated
independently from them. The population density, the GDP changing, the fair states or their
operational legislation frames are for example some of these factors which have a direct
impact on imports or exports of goods from a country and of course on global trade.


As you can see, in the first animated picture above (animated because never is night at the
same time worldwide) the night lights depictured and define the high density population
areas. Those areas are reflected in the second map where the biggest ports depictured
considering the TEU (Twenty foot Equivalent Unit - Container) circulation.
Those areas have their centers (each one area has a hub called port). The hub ports are
the biggest port in of the area in terms of TEU circulation capacity. The large container ships
call that hub ports. The smaller (called feeder or client) ports do the container distribution in
the rest of the area. But a hub-port does not satisfy only the other so called client-port
demands. It also satisfies the inland demands for goods delivery. That is possible by carrying
containers from port to inland destinations or vice versa with trucks or trains.
The model of hub - client port which is part of nowadays multi modal transportations as I
briefly describe above, is used from many freight stakeholders and key players in the market
in order to help them to define the next market trends. National administrations are looking
for infrastructure upgrading plans (and jobs creation plans), capital investors are looking for
profitable investing opportunities, big companies trying to expand their fleet or their market
sharing and in general everyone who is involved in that market seeks to be advanced of that
using operational research models such as the hub client port model.
Still there are challenges such as overcapacity issues (too many ships with a lot of capacity
cover easily the current demands and there are many more, that have already ordered
which are currently built), the remaining low demand and additionally the future low
demand predictions, the close to zero global GDP increasing, the regional conflicts, the clean
energy issues, the higher ship global legislation requirements are only few of the problems
that industry is going to deal with in the near future.