Global Trends Effecting The Supply and Demand in The Container Shipping Industry

There are ten global trends have explained which have effect on demand and supply in the container shipping industry.

1. There Is a Lower Demand for Shipments to and From the Far East. Due to rapid economic growth in China during past two decades world seaborne trade has been increased. China has had a rapid economic growth during the last decades and the country has been a tremendous force for increasing global trade. However the past year we could see the predicted growth actually diminish which has led to a lower demand for shipments to and from the Far East.
2. The Overcapacity in the Container Segment Does Not Match the Financial Cycles. Another important factor for the balance of supply and demand is timing. The giant ships of 14 000 TEUs, or more, have to fit into the financial cycles in order to provide a balance between supply and demand. This is a difficult task in a volatile market where prices move vigorously and unpredictably.
3. Fewer Containers Support the Export Demand to and From the Nordic Countries. We know that crisis in the world affects the world trade. The crises in the Middle East, not to mention Ukraine, have led to Russian embargo and less import to Russia. This has affected the container shipping industry with decreased volumes through the gateways to Russia, via Finland and the Baltic countries. The result is fewer surplus containers in Finland and the Baltics that used to support the deficit of units of the east cost of Sweden supporting the export demand.
4. Growth From New Regions Increases the Demand for Containerized Cargo. The future still shows a glimpse of light and potential for growth in the container industry. China will continue to be an important market, but we also see that growth comes from other regions with increased demand for containerized goods. For example Nigeria in Africa; today they have a population of 174 million people, and in 2050 they are expected to be 440 million people.
5. Industries Adapt Their Cargo to the Container Shipping Method. Another trend is that industries are adapting to containerization. For example, the paper industry has adapted their cargo to the container shipping method by adjusting the size of paper rolls to fit the containers. The cargo is transported directly from the mill to the consignee, or even directly to the consumer, to make it more efficient and to reduce the risk of damages.
6. There Is a Shift From Roro Vessels to Container Vessels for Short Sea Transportation. RoRo vessels presently dominate short sea transportations within the SECA areas. But the intra-European market increases year by year and we can now see a clear trend where container vessels increase their intra Europe market share. The container vessels are more efficient and flexible compared to RoRo vessels, which today are relatively old and few new RoRo vessels are in order.
7. Increased Commodities, Malt, Peat Moss, Fertilizers and Timber. Generally, there is a world trade growth and some even predict that in the next decade 90 percent of the general global cargo will be shipped in containers. Commodities such as malt, peat moss, fertilizers and timber are now containerized to a greater extent. (Actually, if all timber in Sweden would be shipped in containers, the total Swedish container shipping market would grow by 100 percent, based on present figures!)
8. Capacity in Ports Grows Faster Than Trade Volumes. In some regions today, Sweden for instance, there are several seaports contributing to an imbalance between supply and demand. Carriers need to decide which ports to invest in, and at the same time, there is a risk with only a few big ports controlling the logistics flows. Single terminal operators that might only find interest in signing up with one or two alliances lead to no diversity in the industry.
9. Continued Focus on Sustainability and Environment in the Shipping Industry. There is an ongoing trend in the shipping industry to focus on sustainability and environmental issues that affect the supply and demand. Carriers have to follow new regulations and adjust their ships accordingly. This affects the costs for carriers, while at the same time all parties of the logistics chain are keen to work with companies that offer sustainable transport solutions and good working conditions.
10. There Is an Increasing Demand for Customer Focus and New Technology. We are in the cradle of a technical revolution where everyone in the entire logistic chain – from producer to consignee – invests in, and develops, new systems to achieve higher efficiency. I believe in more transparency within the whole logistic chain, from producer to consignee, with ambition in the development of processes and to share common IT-systems. I would not be surprised if new container shipping alliances would take initiative for such cooperation.