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10 global trends that affect supply and demand in the container shipping industry

The container shipping industry is precariously balanced, with many different factors playing a part in its potential growth or decline. Let’s look at some of the global trends that have the power to affect supply and demand, tipping the container shipping industry one way or the other.

#1 The financial and economic climate

A strong economy means plenty of global trade, so a recession is really bad news for the container shipping industry. The financial crisis of 2008 had a huge effect, resulting in a shipping cycle downturn that the industry is still recovering from.

#2 Demand for shipments to and from the Far East

As the biggest exporting country in the world, the economic situation in China can affect the shipping industry drastically. The United States and Germany follow at a close second and third, and the more these powerhouse exporters ship, the more demand for container shipping grows.

#3 Growth of developing countries

Developing countries such as Nigeria have a vital role to play in increasing demand for container shipping. Africa’s economy, on the whole, has boomed over the last 15 years, which has been credited to a young, fast-growing population. For example, Nigeria’s population is expected to double by 2050, overtaking the US and vastly increasing its world trade requirements.

#4 Brexit

Significant political changes such as the UK’s decision to leave the European Union can affect the shipping industry, with this particular change expected to slow the growth of UK container traffic, at least in the short-term.

#5 The Russian sanctions and embargo

Similarly, economic sanctions placed on Russia, as well as Russia’s retaliation embargo on a broad range of imported foods, continues to hurt the shipping industries of those involved, including the EU and the US. The decreased volume of containers going through Finland and the Baltic countries to Russia has also meant a knock-on effect on the Nordic countries, which now see a shortage of surplus containers to support their export demand.

#6 Currency changes

Fluctuations in a country’s currency can dramatically affect supply and demand, with a falling currency typically increasing demand for exports and reducing demand for imports.

#7 Smarter packing

It makes sense that industries are keen to streamline their packing methods, to make shipping as efficient and cost-effective as possible. This may be by designing items and packaging specifically to fit better in a standard container, or by hiring a consultant to ensure optimum packing methods. Ultimately, smarter packaging and packing is better for business profits and the environment, but it does mean fewer containers are needed to ship the same amount of goods.

#8 Regulatory changes

Changes in regulation can quickly affect the shipping industry. For example, stricter controls on sulphur emissions in the North Sea led to increased costs as shippers were forced to consider low-sulphur oil and other alternatives instead – and higher costs, from any source, naturally filter down to the customer and can dampen demand.

#9 Trend for newer, larger ships

The recent trend towards larger ships has meant greater shipping efficiency – which in turn means lower operating costs and makes container shipping a more attractive and cost-effective prospect for customers. There are also numerous incentives for shippers to switch their older vessels for new, including more attractive scrappage rates and increased environmental accountability. Bigger, quicker and cleaner container ships should mean a more efficient shipping process and contribute to growth.

#10 Improving technology

As technology improves at every link in the logistics chain, efficiency follows. Examples of new smart shipping tools include ‘digital twins’ of a vessel to allow virtual testing, blockchain tracking technology and the development of crewless cargo ships. You’ve also got technologies that make shipping more user-friendly for individuals and businesses – for example, 24/7 online tracking that customers can use to maintain contact with their cargo. Any advances in technology that make container shipping more efficient and accessible will boost its appeal as an option for moving goods around the world.

Choosing an experienced and established company for your shipping and logistics will ensure a service that you can rely on. Whatever may be going on in the world to affect the shipping industry, leveraging a freight forwarder’s experience means it won’t adversely affect your business.

By |2017-10-12T12:07:09+00:00April 25th, 2017|Categories: Freight Forwarding, Shipping|Tags: |Comments Off on 10 global trends that affect supply and demand in the container shipping industry