Container Shipping
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12 Container Shipping Theo Notteboom 12.1 Introduction container ship, Ideal X, by Malcolm McLean in 1956 can be considered as the beginning The container shipping industry consists of of the container era. In the early years of shipping companies with as core activity the container shipping, vessel capacity remained transportation of containerized goods over very limited in scale and geographical sea via regular liner services. A liner service deployment, and the ships used were simply is "a fleet of ships, with a common owner converted tankers. Shipping companies and ship or management, which provide a fixed other logistics players hesitated to embrace service, at regular intervals, between named the new technology as it required large ports, and offer transport to any goods in capital investments in ships, terminals and the catchment area served by those ports inland transport. The first transatlantic con and ready for transit by their sailing dates" tainer service between the US East Coast (Stopford 1997: 343). Container liner serv and Northern Europe in 1966 marked the ices are specifically focused on the transport start of long-distance containerized trade. of a limited range of standardized unit The first specialized cellular container ships loads: the twenty-foot dry-cargo container were delivered in 1968, and soon the con or TEU and the forty-foot dry-cargo con tainerization process expanded over mari tainer or FEU. Occasionally, slightly diverg time and inland freight transport systems ing container units are also loaded on (Levinson 2006; Rodrigue and Notteboom container vessels, such as high cube contain 2009a). Container shipping developed ers, tank and open-top containers and 45- rapidly because of the adoption of standard foot containers. The diversity in unit loads container sizes in the mid-1960s and the in the container shipping industry is low awareness of industry players of the advan due to the need for uniformity when stack tages and cost savings resulting from faster ing containers below and on the deck of vessel turnaround times in ports, a reduc specialized container vessels. tion in the level of damages and associated Container shipping has a dynamic history insurance fees, and integration with inland of only 55 years. The launching of the first transport modes such as trucks, barges and The Blackwell Companion to Maritime Economics, Pirst Edition. Edited by Wayne K. Talley. © 2012 Blackwell Publishing Ltd. Published 2012 by Blackwell Publishing Ltd. CONTAINER SHIPPING 231 trains. The container and the associated capacity management issue and the pricing maritime and inland transport systems problem in the container shipping industry. proved to be very instrumental to the con Section 12.5 deals with carriers' search for secutive waves of globalization. Hence, scale and scope in their operations. A last emerging worldwide container shipping section discusses the evolving nature of the networks allowed changes in the economic container shipping networks operated by and transport geography, as they signifi carriers. cantly shortened the maritime cost dis tances between production and consumption centers around the world. Container ship 12.2 Growth in the Container ping also became an essential driver in Shipping Industry reshaping global supply chain practices, allowing global sourcing strategies of mul The shipping industry has witnessed spec tinational enterprises, pull logistics solu tacular growth in container trade, fueled by tions and the development of global the globalization process and the large-scale production networks. New supply chain adoption of the container. Worldwide con practices in turn increased the requirements tainer port throughput increased from 36 on container shipping in terms of frequency, million TEU in 1980 and 88 million TEU in schedule reliability I integrity, global cover 1990 to about 535 million TEU in 2008. age of services and rate setting. Around 60% of the world port throughput This chapter aims to provide a compre involves laden containers, about 15% are hensive overview of current issues in the empty containers. The remainder consists container shipping industry. Section 12.2 of transshipped containers. Sea-sea trans analyzes mark.et growth and the changing shipment shows the strongest growth: it has geography in container shipments. Sections more than tripled in the last 15 years (see 12.3 and 12.4 zoom in on, respectively, the Table 12.1). World container traffic, the Table 12.1 World container port throughput and its components for selected years (million TEU) Total port Port-to-port Transshipment Port-to-port Transshipment handling (%) Full Empty FuU (%) Empty(%) 1990 87.9 57.4 14.6 16.0 100.0 25.4 27.9 1995 145.2 92.1 20.8 32.3 100.0 22.6 35. 1 2000 235.4 136.7 36.8 62. 1 100.0 26.9 45.4 2005 399.2 23 1.3 59.7 108.2 100.0 25.8 46.8 2009 (est.) 478.0 275.0 69.0 134.0 100.0 25.1 48.7 2009 vs +229 +199 +232 +315 1995 (%) 2009 vs +20 +1 9 + 16 + 24 2005 (%) Sources: Drewry (2006), ITMMA/ ESPO (2007) and estimates 2009. 232 THEO NOTTEBOOM absolute number of containers being carried even accelerated in the period 2002- 8, partly by sea, has grown from 28.7 million TEU in as a result of the "China effect" in the world 1990 to 152 million TEU in 2008 - an average economy. The absolute rise of container annual increase of 9.5%. The ratio of con traffic is the result of the interplay of eco tainer traffic over container throughput nomic, policy-oriented and technological evolved from 3 in 1990 to around 3.5 in factors. World trade was facilitated through 2008; i.e., a container on average is handled the mitigation of trade barriers and the (loaded or discharged) 3.5 times between introduction of market liberalization and the first port of loading and the last port of deregulation. Market liberalization also discharge. The changing configuration of enhanced the development of logistics liner service networks is at the core of the throughout the world. rise in the average number of port han The center of gravity of the container dlings per box (see Section 12.6, "Dynamics business is shifting to Asia. During the last in Container Shipping Networks"). twenty years the transatlantic container With the exception of the year 2009 trade has gradually lost its dominance to the (when there was a decline in world con transpacific and Europe-Far East trades, tainer traffic of about 12% to 478 million with large volumes moving from Asia to TEU), the container shipping business has North America and Europe (Figure 12 .1). always witnessed moderate-to-strong year The container ports in East Asia handled on-year growth figures. The pace of growth 19.8% of the global container throughput ,...._ 18000 ;:., Q 16000 ="' "'QI != 14000 =Q "' 12000 ~...... --.-Asia-USA ;:i 10000 ---USA- Asia f;a;l !--< ..,._Asia- Europe 0 0 8000 ~Europe-Asia ......0 ~ USA-Europe ·=QI 6000 -=.. ---Europe- USA ..."' 4000 "'QI ·;= ... 2000 u=Q 0 +----,,.---.~-.---,,--.~-.---,,~-.~-.---,.--.~-.-~.--. °'°'\:) °'°'"' °'°''o °'°'" °'°'co ~\:)r;::, ~\:)" ~r:::,"V \:)r:::,"> r:::,~ \:)\:)"' \:)\:)'o \:)~ \:)\:)co ' ' ' ' ' ~ ~ ~ ~ ~ ~ ~ ~ ~ Figure 12.1 Container trade on the main routes, in TEU (full containers). Source: own elaboration based on data in various reports of Drewry and UNCTAD, Review of Maritime Transport. CONTAINER SHIPPING 233 in 1980. In 2008, their share had increased regions considered constitutes almost half to about 37%. Ports in Southeast Asia saw a of the world container port handlings. steep rise in their joint market share, from Within the region of East Asia, export 4.8% in 1980 to around 14% in 2008. In oriented industrialization policies adopted contrast, Western Europe saw its share fall by Hong Kong, Taiwan and South Korea from 30.3% (then the highest in the world) sustained a strong growth in the container to about 18% in the same period. North throughput handled by these economies America also witnessed its share declining, from the 1980s. China developed similar from 24.5% (then the second-highest in the strategies in the late 1980s, which resulted world) to less than 10%. The dominance of in elevated growth, first in the Pearl River Asia is also reflected in world container port Delta and later also in the Yangtze Delta rankings (Table 12.2). In 2009 fourteen of port system and the Bohai Bay region. In the twenty busiest container ports came recent years Shanghai, Guangzhou, Shen from Asia, mainly from China. In the mid- zhen, Qingdao and Ningbo joined Hong 1980s there were only six Asian ports in the Kong and Singapore in the list of busiest top twenty, mainly Japanese load centers. container ports in the world. The future The top twenty container ports represented could see more Chinese ports entering the 46% of the world container port through ranks of the busiest container ports. put in 2009, the top five an elevated 21.3%. Despite the sustained growth brought Table 12.3 provides a list of the main about by the containerization process (par container-handling regions in the world. ticularly in relation to Asia), container car The share of gateway traffic in total con riers have always somewhatunderperformed tainer throughput tends to differ quite sig financially compared to other players in the nificantly between the gateway regions. logistics industries. The weaker perform The Singapore region primarily acts as a ance is linked to the combination of capital sea- sea transshipment platform (that is, it intensive operations and high risks associated functions mainly as a hub, not as a gateway), with the revenues. whereas the seaport system in the Yangtze Delta, for instance, is a true multi-port gateway region, giving access to vast service 12.3 Capacity Management in areas in the Delta and along the Yangtze Container Shipping River.