Executive Briefings

What Innovation Will Allow Ocean Container Shipping Lines to Lower Rates?

Over the course of the history of maritime transportation, the free market has consistently urged service providers to reduce the cost of transporting freight.

In recent months, the free market at Shanghai has demanded lower shipping tariffs for containers and at rates that are below the breakeven point of most ship companies. The operation of even very biggest container ships afloat is barely viable at such low rates. That ongoing demand for cost-competitive service is likely to pressure naval architects and ship designers to explore multiple methods by which to increase productivity and competitiveness of the service. There are historical precedents in service improvements from the world of trans-oceanic transport that may still be relevant to present day international transportation.

One relevant precedent originates from the trans-Atlantic passenger transportation sector, at a time when passenger ships and propeller-driven aircraft served the trans-Atlantic market. At that time, Boeing introduced a then revolutionary design of jet-powered aircraft, the model 707. Transportation analysts claimed that the trans-Atlantic passenger market was too small to warrant the introduction of such technology, citing that there were barely enough passengers to fill the trans-Atlantic ocean liners and propeller-driven aircraft of the period. However, within a decade of its introduction to service, the trans-Atlantic passenger market had grown by 10-fold.

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Keywords: international trade, ocean transportation, container vessels, ocean container shipping rates, transportation management, supply chain management

In recent months, the free market at Shanghai has demanded lower shipping tariffs for containers and at rates that are below the breakeven point of most ship companies. The operation of even very biggest container ships afloat is barely viable at such low rates. That ongoing demand for cost-competitive service is likely to pressure naval architects and ship designers to explore multiple methods by which to increase productivity and competitiveness of the service. There are historical precedents in service improvements from the world of trans-oceanic transport that may still be relevant to present day international transportation.

One relevant precedent originates from the trans-Atlantic passenger transportation sector, at a time when passenger ships and propeller-driven aircraft served the trans-Atlantic market. At that time, Boeing introduced a then revolutionary design of jet-powered aircraft, the model 707. Transportation analysts claimed that the trans-Atlantic passenger market was too small to warrant the introduction of such technology, citing that there were barely enough passengers to fill the trans-Atlantic ocean liners and propeller-driven aircraft of the period. However, within a decade of its introduction to service, the trans-Atlantic passenger market had grown by 10-fold.

Read Full Article


Keywords: international trade, ocean transportation, container vessels, ocean container shipping rates, transportation management, supply chain management