After A Downturn, Global Shipping Bets Big On Everything
On a cold, blustery day at Port Elizabeth in New Jersey, one of several massive cranes whirs along a rail high above the pier, picks up a heavy container from a ship's deck and loads it on a waiting truck back on land. The truck drives away, another arrives, and the whole process starts again.
It's a scene played out every day along America's coasts as massive container ships from across the globe pull into deep-water seaports, waiting to be unloaded. The ships are enormous — some 10 stories high and several football fields long.
Mark Hanafee, director for safety at the terminal, says no one on the pier knows for sure what's inside them.
"We know the contents of anything that's hazardous, but general cargo we don't know. It could be chicken, clothes, auto parts, anything — computers, televisions," Hanafee says. "We're an import society. We import everything."
Chris Koch, president of the World Shipping Council, says demand for cheaper goods over the past couple of decades has driven the shipping industry. He points to Walmart, which he says brings in more than 360,000 of the 40-foot cargo containers each year.
"If you add all that up, that's probably a line of trucks that is somewhere close to 4,000 miles long. That's a lot of cargo," he says.
We're an import society. We import everything.
No matter where you shop, there's an excellent chance that virtually everything on or near you arrived in the U.S. by container ship — what we wear, eat and drink, products to entertain us, transport us, fill our living rooms, kitchens and bedrooms.
Richard Meade, the managing editor of Lloyds List, a shipping industry news provider, says container ships are a critical link in the global supply chain. But Meade says the shipping industry is struggling through an upheaval right now.
"The shipping industry is cyclical by its nature. I think the difference that we're looking at the moment is the sheer epic scale of the cycle that we saw post-2008, when the global economy crashed," he says.
Meade says international trade fell, freight rates plummeted, and fuel costs shot up. Some shipping companies went out of business. Other major shipping companies are trying to form alliances to help cut costs.
Nonetheless, analysts expect the industry to rebound. In anticipation of that, they are building bigger ships, ones that will be able to transit the Panama Canal after its multibillion-dollar expansion, due to be completed in late 2015.
Meade says American ports are spending billions of dollars in a race to upgrade their facilities. They are dredging the ports to make them deeper so they can handle the larger ships. They are buying larger cranes to unload these giant ships. He says every port will want to accommodate the largest ships possible.
"They don't want to be effectively designated as the backwater of global trade simply because they can't now accept the global standard," Meade says.
There's also an effort underway to pull the industry into the 21st century. Ken Bloom, CEO of INTTRA, an organization created by six of the largest shipping companies to help streamline and automate logistics, says until recently, everything — from invoicing to booking — was done by phone or with paper and pencil or by fax.
Bloom says INTTRA has devised a computerized system that allows a customer to view the schedules and costs of various shipping companies — something like an Expedia.com of the container shipping world.
"What used to take days, now took a few clicks of the mouse and he has a confirmed container, chassis and slot on the ship," he says.
With more than 5,000 container ships on the water at any given time, the competition is ferocious for shipping companies wanting to fill those slots.
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