Due to the nature of the transportation industry, and the dependency all other industries have upon it, increases in freight transportation can often be seen as a sign that the economy is on the rise. At a time when the world economy is struggling, close watch is kept on freight industries for those first signs of budding productivity.
The news that various ports and freight hauliers across the world are reporting increases in shipping container volume has been, unsurprisingly, well received. As demand increases, volume must accommodate and the shipping world is coming up with some increasingly more efficient ways to deal with the need to meet requirements.
Much like hauliers who operate on land, shipping businesses are beginning to work off a ‘hub and spoke’ model. Very Large Cargo Ships (VLCS) are beginning to push growth in the sector, allowing more cargo to be carried per ship and further reducing operating costs. But larger ships sail slower; to combat this, businesses are reducing the number of ports a large ship stops at during a round trip, using the larger ports as a hub and redirecting freight to smaller ships that are then sent to the smaller ports. Services remain the same, more ships can be utilised and prices can be kept low.
But bigger ships mean more than just slower sailing speeds. With an expected increase of VLCS’ over the next few years, upgrades will be needed at many ports in order for them to have the capacity to cope with increased cargo, larger vessels and all the additional safety requirements that come hand in hand. The expansion of the Panama Canal is now expected to take until 2015, but it’s opening will allow new routes for VLCS from Asia to the US East Coast.
With the larger ships preparing to dominate the major shipping lanes, smaller vessels are expected to begin creating more alliances, allowing businesses to work together to increase their reach. The hub and spoke model will shift them into a more regional capacity due to their access to the smaller ports. It’s expected that safety standards will be rigorously reviewed, especially in ports supporting VLCS as older equipment has to deal with larger and heavier containers, particularly in light of the tragic accident at the Port of Genoa that cost several lives last week.