Super sized shipping vessels are changing the economics of global trade

The ocean freight shipping industry is trending toward super sized vessels.   These vessels   are not only almost twice the size of a typical cargo vessel, but they pollute less.   The shipping industry has decided that super large cargo ships that are highly efficient to operate is the answer to the plunging profit margins that they are dealing with.   The oddity of this trend is these companies are adding significant shipping capacity to an industry that already has excess capacity.    If the natural laws of supply and demand come into play, then one would believe that there will be more downward price pressure that would further erode profit margins.     The shippers are betting that the greater efficiencies will more than offset the price erosion.

Some of the current largest shipping vessels are Maersk E Class; there are 8 ships in operation.  These ships are 1,304 feet long ,which is longer than the USS Enterprise, currently the longest aircraft carrier in the world.  In 2013 this super cargo ship will be superseded by 400.0-meter (1,312.3 ft) Mærsk Triple E class.  The triple E designation is for better Energy Efficiency, more Economy of Scale and better for the Environment.

These ships are now limited to the high volume shipping lanes between Asia and the US west coast.   However in late 2014 the Panama Canal project will be completed and these mega vessels will soon be traveling to Galveston Texas and ports along the US east coast.   Many ports are currently scrambling to accommodate these super sized vessels as the ability to handle large cargo ships may impact the local economies around the ports.  The widening of the Panama Canal is considered a game changer for logistics and various economic regions of the US.   One example is that farmers in the Midwest will be able to use Texas ports to ship grain to Asia at a much lower cost.

While Packnet doesn’t handle the logistics of export cargo, we do offer on-site crating services for companies that are shipping cargo overseas.   More on Packnet’s on-site crating service.