Giant container ships get the blame for inefficient trade

Today’s domination of container traffic by gigantic ships that can carry up to 12,000 containers was born in the years before 2008, when there was widespread optimism that global trade would increase at a greater rate than overall economic growth.
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Author says the modern vessels take too long to load and unload and are too big for many harbours and loading facilities

Today’s container ships are huge and can carry vast amounts of cargo.

But in some ways they are also like dinosaurs, relics of an earlier age when very different conditions applied, says an historian and analyst of the container shipping business.

“These mega-ships have generally fouled up the transportation system,” said Marc Levinson, author of The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger.

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“You actually have fewer ships calling at most ports than you used to have.”

Today’s domination of container traffic by gigantic ships that can carry up to 12,000 containers was born in the years before 2008, when there was widespread optimism that global trade would increase at a greater rate than overall economic growth, Levinson said on Bloomberg’s Odd Lots podcast.

However, world trade growth has lagged overall growth since the financial crisis of that year, creating a lot of slack.

That caused a huge slump in ship profitability and a wave of ship line failures and mergers.

In the wake of the slump the industry has consolidated, with three huge shipping “alliances” dominating the global industry.

Those alliances are now managing their stock of ships to ensure they are profitably used, but their overreliance on huge ships has made container trade less efficient in some ways than with smaller ships.

“Those ships really don’t work very well,” said Levinson.

“It takes too long to load them. It takes too long to unload them. There are too many places they can’t go. It’s too often the case they’re not needed.”

Some harbours and loading facilities can’t handle the giant ships. Other routes and parts of the world don’t need such vast amounts of cargo as the giant ships can carry.

“All of these things have tended to make the transit times longer and have made it harder for shippers to get their freight where it’s supposed to be on deadline,” said Levinson.

“That’s bad for everybody.”In fact, the major shipping lines are considering building smaller, more flexible ships to fit the less bullish future that has applied since 2008.

Levinson thinks the current shortage of container-carrying capacity could fade and reverse once the world leaves COVID-19 behind.

“We have the prospect of overcapacity returning as the pandemic recedes,” he said.

Levinson followed up his 2016 book The Box with 2020’s Outside the Box: How Globalization Changed from Moving Stuff to Spreading Ideas.

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