Understanding the maritime industry
The maritime industry, however lucrative and mysterious it may be to the general public, connects the world. The amount of sectors this single industry plays a role makes the maritime industry one of the most important businesses we have today and that’s due to shipping. Large cities are established around ocean borders where a majority of the world’s population lives for both comfort and accessibility. Accessibility to transportation and to goods.
When you talk about the maritime industry you’re usually talking about shipping. Shipping is defined as the transfer of goods or people from one place to another. There is multiple modes of transport in the maritime sector, however they are usually separated by the following: Cruise, Container, Bulk/Breakbulk, Auto, and Fishing.
90% of all world trade moves by ship. And 90% of that 90% trade is made by containers and container ships. A global fleet of just over 5,500 container ships last year constantly building more and larger vessels moving the global economy. The current combined capacity of these container ships is 25 million twenty foot equivalent units (TEU’s) or 12.5 million forty foot equivalent units (FEU’s), the standardized sizes of containers used in freight movement across the world. The largest of these vessels can hold 24,000 TEUs being over 1,300 feet long.
With an estimation of also 20–23 million containers in circulation these containers are moved through ports about 800 million times total each year measured in TEUs (so 400 million if it was all 40 foot boxes).
The average value of an import teu ranges from $30,000 — $50,000 depending on the commodity. Sometimes it is even more than 50 grand.
The cost of shipping has recently skyrocketed due to immense demand but before the crisis, container shipping was by far the most cost effective way to move goods internationally. Shipping rates from China to the West Coast at the peak of supply chain issues and terminal congestion were about $20,000 per FEU in August/September 2021. Before that it was closer to $3,000 per 40 foot container. Remember that a 20 foot box can hold up to 47,700 pounds of cargo inside. Usually you see the boxes with a gross weight of 30,000 to 35,000 pounds. The cheapest air freight shipping is $4 per kilogram. 30,000 pounds is 13,607 kilograms. That would cost $54,000 dollars to move a loaded teu.
Cruise carries passengers to tourist destinations worldwide and fishing involves global fishing fleets catching fish and sea life from the oceans.
Bulk and breakbulk shipping were the original way to move freight and still is for logs, grain, natural gas, oil, gravel, and more that could not easily fit into a container or that are more feasible to be transported in bulk or in boxes, barrels, or placed onboard a vessel. Autos refer to vessels specifically designed to transport vehicles of any size or type. These vessels are called roll-on roll-off ships (RoRo).
It’s no secret container shipping is the backbone of the maritime industry but we have seen issues across the global supply chain play out over the past two years. From the Suez Canal blockage, to the vessel lineup in Southern California, with shipping rate hikes, sky high inflation, and mass shortages of anything you could possibly buy in the store or online there’s issues across the board that are slowly being corrected. Why it happened and what it will take to get back on pace is a whole other discussion.