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From Sea to Shining Sea: How Does Shipping Work?

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The following content is sponsored by Seaspan Corporation

How Does Shipping Work?

Earth’s surface is covered by 71% water, connecting every corner of the world, so it’s no surprise that 80% of global trade is carried by ship. But how does it all work?

This is part one of The Shipping Industry: Plotting a Course for the Future, a two-part series for our sponsor Seaspan Corporation about the current state and future of global maritime trade.

A Bird’s Eye View of Shipping

The shipping industry provides low-cost transportation options for a wide variety of goods and products, from raw materials to finished consumer products. Briefly, the process goes something like this:

  1. Order received at overseas factory
  2. Order placed in 20-foot container and transported to port
  3. Cargo loaded onto a ship
  4. Cargo crosses the ocean
  5. Cargo arrives at destination
  6. Cargo is offloaded
  7. Cargo clears customs and makes its way to the customer

In 2022, nearly 11 billion tons of goods took a similar journey, according to data collected by the United Nations in their annual Review of Maritime Transport.

Now that we have some idea of how the process works, let’s take a closer look at some of the pieces that keep world trade flowing, starting with the global shipping fleet.

From Tanker to Titan

The first thing to know about the fleet is that it’s big. In 2022, it numbered 102,899 ships over 100 gross tons, including tankers, bulk transports, and containerships. And it’s growing, and not just in sheer numbers. 

Containerships in particular have been steadily growing in size since a converted WWII T2 tanker made history in 1956 by strapping 58 containers to its deck, as ship owners chased greater economies of scale. Today’s containerships can carry upwards of 20,000 twenty-foot equivalent units (TEUs). 

Too Many Ships, Not Enough Cargo?

Ship-breaking on the other hand, the process of disassembling ships for parts and raw materials, has stalled. 

Over 2021 and the first three quarters of 2022, the number of containership breakdowns plummeted. With more newbuilds on the way and the World Trade Organization revising global trade growth projections downwards, there might not be enough containers to go around.

Port Volumes Are Up, but So Is Performance

And that could be good news for shipping prices, which hit record highs during the supply chain disruptions caused by the COVID-19 pandemic. 

At the beginning of 2022, the Shanghai Containerized Freight Index, which tracks ocean freight charges on a collection of routes, hit a record 5109.6, nearly five times the pre-pandemic average. 

Prices have since returned to Earth, as ports worked to clear their backlogs. Ports processed 857 million TEUs in 2021, up 7% year-over-year. The latest Container Port Performance Index, which tracks total hours per ship call, showed that 172 ports improved their scores in 2022.

It wasn’t all sunshine and roses, however, especially for North American ports. The bottom three ports on the Index were Long Beach, CA; Vancouver, BC; and Savannah, GA.

All I Ask Is a Tall Ship and a Star to Steer Her By

A lot has changed since 1902, when John Masefield wrote that oft-quoted line to describe the call of the sea. For example, the center of global trade has shifted eastward to Asia, where 9 of the 10 busiest container ports are located.

Seaspan, a worldwide leader in independent management and ownership, is getting ready for the next era of shipping by adding 58 new state-of-the-art vessels over this year and next.

Stay tuned for the next installment of this series, The Shipping Industry: Plotting a Course for the Future, where we look at how shipping companies like Seaspan are preparing for a low-carbon future.

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Find out what else Seaspan is doing to get ready for the future of shipping.

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