Freight shipping

The turmoil in the shipping industry starts with over-capacity and leads to global downturn. The arrival of the triple E class container carriers* increases the available hold space (which decreases the cost of moving goods). The demise of Hanjin, the world's seventh largest transporter of containers is the major casualty (a side effect of which is to leave 20,000 empty containers at Felixstowe taking up stack space).

Maersk have taken over Hamburg Sud which reinforces their position as the world's largest container line (almost 20% of the world market). MSC are second, carrying over 5 million containers every year.

Although Felixstowe regularly shout about having the berth capacity for the world's largest container vessels (both length and width) there has been trouble handling them to schedule; the lack of quayside stack space contributes.

The industry is alive with rumour that OOCL (the fourth largest carrier in Asia) is for sale, concerning for us here in Suffolk because their western hemisphere headquarters are in the old Fisons building at Levington. Possible purchasers include China's COSCO and Taiwan's Evergreen. Incidentally, China Shipping is now part of COSCO.

The 25 largest container carriers collectively recorded a loss carrying boxes in 2015. Very broadly speaking the cost of bringing a container from China has been £1000; in 2015 it dropped to half that and although it has recovered since it still costs considerably less than it did 12 months ago.

The most notable feature of the downturn is that the shipping lines are sharing on-board capacity; the world's biggest rivals are working together to survive.

The Maersk Triple E ships (18,000 TEUs^§) have recently been usurped by the MSC Oscar and Oliver (19,225 TEUs), all built by Daewoo Shipbuilding & Marine Engineering (DSME) in a little under a year (each ship). They are all much the same physical size, 400 m long and 60 m (23 containers) wide requiring 16 metres draft. 20,000 containers is considered by some to be the economic maximum size of the super-large ships.

Ships of this size cannot easily access the east coast of the USA, nor can they pass under the Golden Gate Bridge, thus Oakland (San Francisco) is out of bounds. Long Beach (Los Angeles) is too shallow and San Diego is too far south. Thus the 15,000 TEU ships still have a future sailing across the Pacific.

Meanwhile freight trains are leaving Yiwu railway yard in Zhejiang Province, China bound for the London Freight terminal in Barking, Essex. An eighteen day journey of 7,500 miles including the Channel Tunnel is considerably cheaper that airfreight and is quicker than the sea route.

John Norman

* Triple E ships: Economy of scale, Energy efficient and Environmentally improved.

^§ TEU: The Twenty-foot Equivalent Unit; a 20 foot-long freight container is 1 TEU.