5 Important Container Shipping Market Trends You Must Know
The container shipping industry is undergoing structural changes in almost all segments of the industry, which will have a very long-lasting impact on a global scale. Amidst all the noise,we have filtered five major trends in this market.
1. Growing capacity of ships
The largest container vessels on order have multiplied by more than six times in past four decades and they will continue to go up by more than 10% till 2020. The continuous rise in ship sizes is proportional to the growth of globalization in the last four decades. It also testifies the rise of containerization at the cost of bulk shipping, and carriers’ need for greater economies of scale to improve their profitability in the market
2. Growing dominance of the Asian liners
It is expected that the Chinese and Japanese carriers will play a more dominant role in the container shipping industry going forward. The integration of China Cosco and CSCL into COSCO Shipping has resulted in a combined market share of 8% in global container shipping and it has become the fourth largest carrier globally. The merger of the container shipping segments of Japanese carriers NYK, MOL and K-Line will catapult them to the 6th largest carrier ranking with a combined market share of nearly 7%. Evergreen, Yang Ming, OOIL and Hyundai Merchant Marine are ranked 7th, 8th, 9th and 10th largest with market shares of 5%, 3%, 3%, and 2% respectively
3. Electric and autonomous ships becoming a reality
Like Passenger cars and truck business, the marine industry is also not too far from the autonomous and electric wave. There has been a consistent increase in demand for alternative propulsion systems which not only improve the overall efficiency of the ship but also reduce carbon footprint. The innovators in the shipping industry are doing all they can to find a solution to this menace. Among all the options presently available at hand in marine propulsion, electric propulsion system seems to have a promising future. In 2017, Port-Liner announced it is building two giant all-electric ships to transport cargo primarily within Europe.
Yara(a Norwegian company) has teamed up with Kongsberg to build the world’s first all-electric and autonomous container ship, which is set to hit the sea in 2018. The hi-tech container ship, named Yara Birkeland, will serve regional hauling. It will first operate as a manned vessel in 2018, become a remotely operated one in 2019 and completely autonomous by 2020. The most important benefit of the new operation comes from a major reduction in NOx and CO2 emissions as it will replace more than 40,000 truck journeys a year with this, all-electric shipping.
Digitization could offer a reliable solution to the ailing industry in improving their overall profitability. Many shipping carriers struggle to understand their actual costs because they operate on old information technology systems that are difficult to integrate with every operation. Those outdated systems often give incorrect route costs, which can have dire consequences on market-specific operating costs. Because of this, there have been major advances in the tools and techniques required to capture, store, and analyse heaps of data sets and draw meaningful insights. A centralized and predictive digital system that can pull data together and then track profitability in real time, can help the management of shipping companies make intelligent and informed decisions. The good point is, developing a system of that sort is not as resource and capital intensive as it used to be.
5.Scrapping of smaller/mid-sized vessels
The global container shipping fleet is still relatively young at 10.5 years. Only 4% of the global fleet is more than 20 years old and approaching the natural age of being scrapped. The natural rate of vessel demolition is likely to be around 2% per year, especially if fuel prices remain low. This level of natural scrapping will not be sufficient to offset the industry oversupply unless the global container shipping demand growth picks up to +4% and above. The natural rate of vessel scrapping is insufficient to offset the industry oversupply. To overcome this problem, the global carrier companies which now operate a good number of larger sized vessels are scrapping off their old smaller size ships.