The largest container ship to ever dock in the United States will arrive at the Port of Los Angeles at the end of this week.
With a capacity of 18,000 twenty-foot equivalent units, the CMA CGM Benjamin Franklin is as long as the Empire State Builing is tall. It is also about a third larger than the 14,000 TEU ships that most U.S. ports still have trouble accommodating.
We thought we’d mark the occasion with a post about the most important shipping trends of 2015…
1. BIGGER SHIPS
Nearly 100 ships with between 18,000 and 20,000 TEU capacities have been ordered through 2019. A third of those set sail this year.
U.S. ports are investing billions of dollars to dig deeper berths and taller cranes to accommodate these supersized container ships, which promise to drive down costs for shippers as global shipping capacity continues to outpace demand.
2. PORT CONGESTION
West Coast port operations nearly ground to a halt in early 2015 due to stalled labor talks between the International Longshore and Warehouse Union and the Pacific Maritime Association.
The slowdown left shippers scrambling to find alternate shipping routes, either by air or through the Panama Canal.
3. MERGERS AND ACQUISITIONS
The first nine months of the year saw the largest number of major logistics company acquisitions since 2006, according to PwC.
Most were by cash-flush companies looking to expand into new markets.
The big ones:
- XPO Logistics’ purchase of Con-way for $3 billion
- UPS acquires Coyote for $1.8 billion
- FedEx aims to buy TNT Express for $4.8 billion
4. CHEAP OIL
Oil prices dropped below $50 a barrel in 2015, or about half what they were in 2013. Shippers were the biggest winners.
Marine and motor carriers may have benefited from lower fuel costs, but they were also hurt by lost fuel surcharge revenues.
Prices are expected to rise gently over the next 6 months.
5. CHINESE EXPORTS SLUMP
The deliberate devaluation of its currency in August has negatively affected China’s exports.
Exports were already down 8.3% year-over-year in July. The yuan’s devaluation was not enough to counter another Chinese trend: a growing consumer class that is driving imports.
Ultimately, a cheaper yuan has benefited U.S. retailers, the biggest customers for Chinese goods.
6. TRANS-PACIFIC PARTNERSHIP AGREEMENT
Chinese exports may have slumped, but we’ll soon be seeing more Asian imports into the U.S., thanks to the signing of a new trade deal between the U.S. and 11 other Pacific Rim countries (exluding China).
The TPP agreement will:
- lower tariffs on commodities
- limit member countries’ ability to impose trade barriers on food, plants and animals
- open up new markets in growing economies such as Vietnam and Malaysia
7. TRUCKS GALORE!
After fears of a trucker shortage, massive investment in new vehicles and weak shipping demand at the end of 2015 led to excess trucking capacity.
A shortage of truck drivers is still a big concern, however, which is why shippers are increasingly turning to companies like Cargomatic when capacity gets tight.