Parallels
12:40 am
Wed March 12, 2014

After A Downturn, Global Shipping Bets Big On Everything

Originally published on Thu March 13, 2014 8:22 am

On a cold, blustery day at Port Elizabeth in New Jersey, one of several massive cranes whirs along a rail high above the pier, picks up a heavy container from a ship's deck and loads it on a waiting truck back on land. The truck drives away, another arrives, and the whole process starts again.

It's a scene played out every day along America's coasts as massive container ships from across the globe pull into deep-water seaports, waiting to be unloaded. The ships are enormous — some 10 stories high and several football fields long.

Mark Hanafee, director for safety at the terminal, says no one on the pier knows for sure what's inside them.

"We know the contents of anything that's hazardous, but general cargo we don't know. It could be chicken, clothes, auto parts, anything — computers, televisions," Hanafee says. "We're an import society. We import everything."

Chris Koch, president of the World Shipping Council, says demand for cheaper goods over the past couple of decades has driven the shipping industry. He points to Walmart, which he says brings in more than 360,000 of the 40-foot cargo containers each year.

"If you add all that up, that's probably a line of trucks that is somewhere close to 4,000 miles long. That's a lot of cargo," he says.

No matter where you shop, there's an excellent chance that virtually everything on or near you arrived in the U.S. by container ship — what we wear, eat and drink, products to entertain us, transport us, fill our living rooms, kitchens and bedrooms.

Richard Meade, the managing editor of Lloyds List, a shipping industry news provider, says container ships are a critical link in the global supply chain. But Meade says the shipping industry is struggling through an upheaval right now.

"The shipping industry is cyclical by its nature. I think the difference that we're looking at the moment is the sheer epic scale of the cycle that we saw post-2008, when the global economy crashed," he says.

Meade says international trade fell, freight rates plummeted, and fuel costs shot up. Some shipping companies went out of business. Other major shipping companies are trying to form alliances to help cut costs.

Nonetheless, analysts expect the industry to rebound. In anticipation of that, they are building bigger ships, ones that will be able to transit the Panama Canal after its multibillion-dollar expansion, due to be completed in late 2015.

Meade says American ports are spending billions of dollars in a race to upgrade their facilities. They are dredging the ports to make them deeper so they can handle the larger ships. They are buying larger cranes to unload these giant ships. He says every port will want to accommodate the largest ships possible.

"They don't want to be effectively designated as the backwater of global trade simply because they can't now accept the global standard," Meade says.

There's also an effort underway to pull the industry into the 21st century. Ken Bloom, CEO of INTTRA, an organization created by six of the largest shipping companies to help streamline and automate logistics, says until recently, everything — from invoicing to booking — was done by phone or with paper and pencil or by fax.

Bloom says INTTRA has devised a computerized system that allows a customer to view the schedules and costs of various shipping companies — something like an Expedia.com of the container shipping world.

"What used to take days, now took a few clicks of the mouse and he has a confirmed container, chassis and slot on the ship," he says.

With more than 5,000 container ships on the water at any given time, the competition is ferocious for shipping companies wanting to fill those slots.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

DAVID GREENE, HOST:

The film "Captain Phillips" was nominated for a number of awards this year. It's based on the true story of a ship and its crew hijacked by Somali pirates.

(SOUNDBITE OF MOVIE, "CAPTAIN PHILLIPS")

TOM HANKS: (as Captain Phillips) Four pirates on board. Four pirates coming towards us, down the main deck.

GREENE: The voice of Tom Hanks there. The movie brings to life an industry many of us probably take for granted: global shipping. Without it, we wouldn't have many of the dirt-cheap consumer goods we love to buy. Today, NPR's Jackie Northam begins a three-part series on global shipping. She begins at a New Jersey port, where a vessel from Europe has just come in.

JACKIE NORTHAM, BYLINE: I'm here at Port Elizabeth. I'm standing alongside an enormous container ship, and they're offloading containers right now. You see these giant cranes picking up the containers on the ship. They glide across these rails, and then they just seem to float down and settle on massive trucks and take them away. It's a scene played out every day at sea ports across the U.S. Some container ships are 10 stories high and several football fields long. This particular ship is carrying about 9,000 containers, says Mark Hanafee, director for safety at the terminal. Not all of them will be unloaded here. And what's inside them? Hanafee says no one on the pier knows for sure.

MARK HANAFEE: We know the contents of anything that's hazardous, but the general cargo, we don't know. But it could be chicken, clothes, auto parts, anything, computers, televisions. We're an import society. You know, we import everything.

NORTHAM: Chris Koch, president of the World Shipping Council, says demand for cheaper goods over the past couple of decades has driven the shipping industry.

CHRIS KOCH: Wal-Mart imports somewhere in the neighborhood of 360 or 370,000 40-foot containers of cargo each year. If you add all that up, that's probably a line of trucks that is somewhere close to 4,000 miles long. That's a lot of cargo.

NORTHAM: It doesn't matter where you shop. Just take a look around you. There's an excellent chance that virtually everything on or near you arrived in the U.S. by container ship: your clothes, the furniture you're sitting on, the food you eat, the device on which you're listening to this story. Richard Meade, the managing editor of Lloyd's List, a shipping industry news provider, says container ships are a critical link in the global supply chain. But Meade says the shipping industry is struggling through an upheaval right now.

RICHARD MEADE: The shipping industry is cyclical, by its nature. I think the difference that we're looking at, at the moment, is the sheer epic scale of the cycle that we saw post-2008, when the global economy crashed.

NORTHAM: Meade says international trade fell, freight rates plummeted and fuel costs shot up. Some major shipping companies are trying to form alliances to help cut costs. Nonetheless, analysts expect the industry to rebound, and in anticipation of that, are building bigger ships, ones that will be able to transit the Panama Canal after its multi-billion dollar expansion, due to be completed in late 2015. Meade says American ports are spending billions of dollars in a race to upgrade their facilities, dredging the ports and buying larger cranes.

MEADE: Every port will want to accommodate the largest ships possible. They don't want to be effectively designated as the backwater of global trade simply because they can't now accept the global standard.

NORTHAM: There's also an effort underway to pull the shipping industry into the 21st century.

KEN BLOOM: Overwhelmingly, the greatest challenge in the industry still is the development of an accurate invoice.

NORTHAM: Until recently, everything - from invoicing to booking - was done by phone or with paper and pencil or by fax, says Ken Bloom, the CEO of INTTRA, an organization created by six of the largest shipping companies to help streamline and automate logistics.

(SOUNDBITE OF CLICKING)

BLOOM: Clicking on the book now button, validating...

NORTHAM: Bloom says INTTRA has devised a computerized system that allows a customer to view the schedules and costs of various shipping companies - something like an Expedia.com of the container shipping world.

BLOOM: What used to take days, now took a few clicks of the mouse, and he has a confirmed container, chassis and slot on the ship.

NORTHAM: And with more than 5,000 container ships on the water at any given time, the competition is ferocious for shipping companies wanting to fill those slots. Jackie Northam, NPR News.

(SOUNDBITE OF MUSIC)

GREENE: And we'll hear much more about global shipping from Jackie tomorrow. We'll go with her as she catches a ride on the world's largest container ship, as it sails from Poland to Denmark. Transcript provided by NPR, Copyright NPR.