Sea freight update: size matters

Continuing in our recent series of articles on sea freight, Rob Shelley founder of Maritime Cargo Services, a Suffolk-based freight forwarder explains how the cost of international maritime transportation has eased slightly.

Freight rates have been sliding for some months now and there has been much sabre rattling from the shipping lines talking up rising oil prices and the like and having to redress the balance with “rate restorations” or GRIs (General Rate Increases). However, the reality is that the market is hugely competitive at the moment and that, in the short term at any rate, price increases will be hard to make stick.

What may possibly, in the fullness of time, make some difference to shipping costs has the international freighting community ‘all agog’ – and has even piqued the interest of your average Daily Mail reader. The world’s largest container ship operator, Maersk, recently announced that it is building a new fleet of super containerships and some of the statistics – and costs – involved are similarly stratospheric.

The company has placed a firm order for an initial 10 – with an option for a further 20 – of what will be, far and away, the largest container ships in existence.  The total order is worth a potential $6 billion and would represent the largest single contract in the history of shipping.

These ships will be 400m long, 60m wide and will each carry 18,000 twenty-foot containers! They have been called the Triple-E; for economy of scale, energy efficiency and environmental performance.
Maersk claim that the sheer size and modern technological efficiency of the new fleet will mean that they are 50 per cent more CO2 ‘friendly’ than the industry average for ships ploughing the same trade routes.  This is a major marketing point and may play well for importers and exporters with sustainability and environmental commitments in mind for their products and supply chains.

But, over and above the anticipated environmental benefits, what will this mean in the cold commercial light of day?  Well, Maersk is anticipating – and betting that – industry volumes will grow at between 5-8 per cent annually over the coming years; more than enough to ensure that these behemoths are kept full. They are also claiming that these ships will cut the cost of transport by around 20-30 per cent per container. But how quickly and how extensively this trickles down the supply chain to the shipper of tyres and related products is another thing altogether.

Rob Shelley’s view is that for Maersk it’s a very expensive throw of the dice. For tyre shippers, it might mean that you will eventually see some savings in your supply chain. And, I’m afraid the emphasis remains on the word ‘might’.

Related news:

• How Will Shipping Fair in 2011?

• Extra Slow Steaming is Affecting Transit Times

• Freight Forwarding Pricing Turned Upside Down

• Tyre Freight Rates: Navigating Stormy Waters