One-Upmanshipping – Will egos tear the shipping industry apart?

We all know people who like to keep up with the Jones’ however is this attitude destabilising shipping lines, hitting their customers’ margins and cheapening the industry?

The bigger the better

Over the past year shipping lines Maersk and CMA CGM have been trading punches and launching some true monsters of the sea. The biggest of which, the Maersk Triple-E class vessels are quarter of a mile in length and taller than London’s Olympic Stadium. The first of these vessels, the Mærsk Mc-Kinney Møller is now on the water and with a capacity equivalent to 18,000 twenty-foot containers (TEU) it could carry a golf ball for half of the world’s population at any one time.

There is no doubt that these engineering marvels are a fantastic display what the human brain can design and build, a parade of the peacock’s feathers. However, do we, or more to the point, they, need them? 


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Unused space on ships and in bank accounts

The increase in goods being shipped is slowing, as are China’s exports, and over the past years we’ve seen some tough times and big losses reported for shipping lines. The problem? Too much unused space on the ships.

When ships are sailing below full capacity the shipping lines are forced to lower their prices as supply outstrips demand. The rates had been falling month after month for the past year until some of the ships have been taken out of service to force a large rate increase. This was also the case in 2009 when over 400 container ships were sitting idle, many off the coast of Singapore in order to keep the vessels in service fairly full. Unless they’re planning to scrap a lot of existing ships, building bigger ships at a steady rate when there isn’t demand will surely spell disaster.

Maersk’s profits have been announced as being 28% down on this time last year, but they can boast that they have the largest containership on the sea.

Rates all over the place

When the shipping lines take vessels out of service to stop the rot it’s not just harming them. If you imported a container in June and again in July or August, exactly the same shipment would have cost you about £500 more for a 20ft container and £1000 more for a 40ft container from China to the UK. Not everyone buying goods from China can just absorb or pass that kind of increase on overnight.

 


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