WWW.SEAPOWERMAGAZINE.ORG 70 SEAPOWER / MAY 2016
Currency trends and economic uncertainty have economists and commercial shipping industryleadersexperiencingafamiliarsense
of unease about the global marketplace.
“The maritime shipping industry is suffering the
consequences of a decade of pretty bad business bets,”
said Jock O’Connell, a trade adviser with Los Angeles-based Beacon Economics International.
O’Connell said one problem is that larger ships are
being built without the port capacity, particularly in the
United States, to handle them. Most container ships are
under 10,000 twenty-foot equivalent units (TEU), but
recently there has been a push by companies in Europe
and Asia to build larger vessels, over 18,500 TEU.
“Port infrastructure was really stretched by the rapid
development of the really larger ships. Most ports, especially those in the U.S., were designed to handle smaller
ships,” he said.
The United States only has five ports capable of han-
dling the larger ships. There are several ongoing expan-
sion projects to grow that number, most of them due to
the nearly $6 billion Panama Canal expansion project that
is slated to be completed this year. Prior to the expansion,
ships over 4,500 TEU were unable to
pass through the canal.
O’Connell said those larger ships
coming to U.S. ports impact all areas
of the industry, from the workforce
to drainage systems around ports.
As ports prepare for larger ships
one thing currently is missing:
cargo to fill them.
In January, the International
Monetary Fund (IMF) projected the
global economy would grow 3. 4 per-
cent in 2016, down from its October
projection of 3. 6 percent. Recently,
the IMF said that number could
once again be revised downward.
As the global economy goes, so
goes the shipping industry, O’Connell said.
With the economies of China and Europe struggling, he said the need for cargo started to fall.
“It’s not a healthy industry right now,” O’Connell said.
Container traffic from northeast Asia to north Europe
is down 4. 1 percent compared to this time last year.
In February, Danish business conglomerate A.P.
Moller-Maersk, which owns the world’s largest shipping company, declared that conditions were worse
today than during the 2008 financial crisis.
The only trade showing any growth is from northeast Asia to the west coast U.S. market, and that is
because the U.S. economy is doing better than others
around the world, O’Connell said.
Shipping companies are slowing their growth as well,
with orders for new vessels down 40 percent in 2015,
from 2014, according to London-based consulting firm
Clarksons Research. Maersk, which still has 27 new
ships on order, has canceled its options to buy more.
“Sooner, rather than later, a major shipping line is
going to have to reduce shipping capacity to start a trend
and get the industry back into a healthy state. … It’s a
very sticky situation right now,” O’Connell said.
The container shipping industry was able to bounce back from the
2008 recession, but a global economic uncertainty has renewed
fears that the industry will stagnate.
n U.S.-flag vessels that trade internationally and are not eligible
for the Jones Act trade have seen a more than 25 percent drop
in international usage over the last year.
n The world’s biggest container shipping company has stopped
orders on building new ships.
n One economist said larger ships with more capacity are partly
to blame for the current struggles.
Struggling to Find Cargo
Container shipping industry once again faces
strong current of uncertainty due to the global economy
By JOHN C. MARCARIO, Special Correspondent