Subscribe to our free, weekly email newsletter!

2011 State of Logistics: Ocean

Carriers get their house in order
By Patrick Burnson, Executive Editor
July 01, 2011

According to analysts at IHS Global Insight, the housing crisis and continued decline in residential construction is making a major impact on containerized shipping volumes.

In his latest white paper, IHS Global Insight analyst Andrei Roudoi notes that housing market indicators, such as new starts and permits last spring, were “quite unfavorable,” and there is a substantial risk that residential construction and furniture imports will under-perform.

“While falling unemployment will probably stimulate demand for housing, tighter lending regulations, as well as declining house prices combined with rising prices for construction materials, may lead to another decline in real residential construction in 2011,” says Roudoi.

Following furniture, wearing apparel and fruits and vegetables are the next two most significant containerized import categories. In 2010, wearing apparel accounted for 6.6 percent of total containerized exports, while fruits and vegetables had a 6.3 percent share.

Visit the 2011 Quest for Quatlity Winners


home page

“The recession affected these categories less than many others, such as furniture, metal products, or motor vehicle parts,” says Roudoi. “In 2010, wearing apparel imports rose 12.5 percent, exceeding the pre-recession high.” Fruit and vegetable imports inched up 2 percent, remaining slightly below the pre-recession peak. IHS Global Insight forecasts that imports of these commodities will grow this year, 7.6 percent and 2.7 percent, respectively.

Furthermore, IHS maintains that world trade has mostly recovered from the recession. Analysts estimate that after plunging 10 percent in 2009, global trade volume (measured in tons) increased 8.5 percent in 2010. In 2011, it is expected to grow 6.9 percent.

“Thus, the volume will exceed the pre-recession level, and the recovery will be generally completed,” says Roudoi.  “At the same time, volumes in some major trade segments—notably, U.S. containerized import volume—will remain below the pre-recession numbers.”

Ocean carrier executives, meanwhile, are taking nothing for granted, and the tired old cliché “thinking outside the box” takes on new meaning when invoked by the world’s leading container shipping company.

In addition, the container shipping industry may be standing on the brink of an “era-defining moment” as it faces fundamental challenges, says Maersk Line CEO, Eivind Kolding. He adds that if carriers are to secure their right to operate in the future, the industry needs to change now.

He notes that containerization—often referred to as the engine of globalization—revolutionized world trade. The potential it unlocked by connecting producers and consumers across the world enabled both shipping lines and their customers to develop their businesses in ways that previously had seemed impossible.
“However, container shipping is also the story of an established business model that often disappoints customers: one in every two containers is late, shipping lines can be complex to do business with, and the industry, even while being the most environmentally-friendly transportation mode, still lacks transparency and common goals,” Kolding says.
With examples from the automotive, aviation, portable music players, and mobile phone industries, Kolding adds that just because an industry is established, it may only be a “few years from being completely overtaken” by new technology.

“Market and customer behavior is forcing companies to never lose sight of what customers really want—including the needs that they are not even aware of.”
Finally, Kolding asks: “Why not see these as fantastic opportunities? What if we could guarantee that cargo would be on time, every time? What if placing a shipping order was as easy as buying an airline ticket? What if the shipping industry was known for beating environmental expectations—not struggling to meet them?”

About the Author

Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Seasonally-adjusted (SA) for-hire truck tonnage in October at 135.7 (2000=100) was up 1.9 percent compared to September’s 133.1, and the ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment was 139.8 in October, which was 0.9 percent ahead of September.

The average price per gallon of diesel gasoline fell 3.7 cents to $2.445 per gallon, according to data issued today by the Department of Energy’s Energy Information Administration (EIA). This marks the lowest weekly price for diesel since June 1, 2009, when it was at $2.352 per gallon.

In its report, entitled “Grey is the new Black,” JLL takes a close look at supply chain-related trends that can influence retailers’ approaches to Black Friday.

This year, it's all about the digital supply network. In this virtual conference, we will define the challenges currently facing supply chain organizations and offer solutions designed to transform linear operations into dynamic, automated networks that offer seamless communication, visibility, and the ability to respond and optimize processes at any given time.

In his opening comments assessing the economy at last week’s RailTrends conference hosted by Progressive Railroading magazine and independent railroad analyst Tony Hatch, FTR Senior analyst Larry Gross said the economy continues to slog ahead at a relatively tepid pace, coupled with some volatility in terms of overall GDP growth. And amid that slogging, Gross said there is currently an economic hand-off occurring between the industrial sector and the consumer sector.


Post a comment
Commenting is not available in this channel entry.

© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA