Ocean carriers believed they could reach economies of scale if they built giant ships. But it wasn’t until the 2000s that the Big Boat Era truly began, Mercogliano said. Now, rates are somewhat softening. (FreightWaves SONAR)Ĭontainer ships have been steadily increasing in size since they were created in 1956. ![]() The cost to move a container ship was steady and low for much of the 2010s, then exploded from 2020 onward. More canceled sailings mean less capacity for cargo, and likely higher rates. New Chinese COVID lockdowns were one reason for the cancellation, but Loadstar also pointed to 2M’s desire to “halt the slide in rates” amid a slump in volume from China. ![]() The Loadstar, a global logistics publication, reported on April 22 that the 2M alliance was blanking at least three Asia-North Europe sailings. Some claim this consolidation and the alliance system lead to inflated rates. This system has been great for the carriers’ own financial performance. But these alliances may cancel - or have “blank sailings” - if demand has slumped. Each company shares space on the container ship with other members of the alliance. To ship something from, say, China to Los Angeles, you book space on a container ship operated by one of these alliances. Today, the largest ocean carriers are organized into three major container shipping alliances: 2M, The Alliance and Ocean Alliance. Megashippers decided to copy the strategy. Smaller ocean carriers began forming alliances with each other in order to compete with larger carriers, said Campbell University professor Sal Mercogliano. All of these companies are based outside the U.S. The top 10 largest ocean carriers in 2000 commanded 51% of the market today, they dominate 80% of it, according to a White House fact sheet. Up to 60 of the 100 largest ocean carriers have vanished from the 2000s to today, thanks to a wave of bankruptcies and acquisitions. Since then, the market has consolidated into just a few large firms. In the 1970s, there were so many ocean carriers that no single company controlled the industry. Global shipping is dominated by a few giant firms. They underpin the global shipping oligopoly. Here are the three reasons I hate big boats: 1. I spoke with four experts this week to learn how megaships are the sneaky reason for much of our ongoing shipping crisis. Massive container ships have helped wreak serious chaos on global trade. The largest ship class of a given year has increased by 50% from 2012 to today, or nearly sixfold from 1981 to today. (This class of ship is named - I am not making this up - the “Ever Alot.” The Evergreen shipping company, the very same that blocked the Suez Canal last year, ordered the record-breaking ship.)Įach year brings a new, larger-than-ever megaship. The largest container ships to be delivered this year have a maximum capacity of 24,000 TEUs. The Emma Maersk is now wimpy next to 2022’s true megaships. Today, we’ve appeared to reach peak Big Boat Era. Ocean carriers ordered bigger and bigger ships, believing that they could reach economies of scale if they could jam all their shipments into one big boat instead of a few small ones. (TEUs translate to about half of a standard forty-foot shipping container.)Įmma Maersk set off an “arms race” with its introduction. In 2006, Maersk stunned the global shipping community with the introduction of Emma Maersk, a container ship that could carry nearly 15,000 twenty-foot equivalent units.
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