SIW1084It has been well documented that for the last few decades container trade has been one of the fastest growing parts of world seaborne trade. In tonnage terms it has grown from an estimated 237 million tonnes in 1990 to 1.5 billion tonnes in 2012, increasing its share of global seaborne trade from 6% to 15%. Like any emerging phenomenon the early years of containerization were marked by rapid growth, following the inaugural voyage of the Ideal-X in 1956.

Great Expectations

The next question was how long it would take the industry to mature and what growth rates could be ex-pected in each phase. We now have plenty of data to examine the progression. The graph shows the historical growth rate of container trade back to 1974, based on estimated ‘A to B’ trade from 1997 onwards and global container ports lifts (a useful available proxy) prior to that. It also shows the growth rate of the volume of world trade in goods (not just those in containers) back to 1980.

Early Growth Phase

The 70s and 80s were really still part of the early phase, and the conversion of the carriage of goods from general cargo to containers sustained rapid growth. In the 70s/80s the average annual growth rate in box volumes stood at 11.7%, and in the 80s the average rate was more than double that of world goods trade.

By the 90s, although many commodities had been container-ised, the trend continued and equally importantly the commodi-ties forming the bedrock of box cargo were representative of the fastest growing part of world trade (i.e. manufactures). In the 90s the average growth rate stood at 9.3%.
Phasing East

In the 2000s the pace of the growth was bolstered by a key trend – the outsourcing of production from developed to developing economies, notably from the US and Europe to China. As western companies rushed to set up shop in or source production from Asia, this boosted volume growth. In the 2000s average box trade growth stood at 7.8%, but prior to the downturn in 2008 it was 10.3%, 1.4 times the growth in world goods trade. The average rate in the 2010s so far has slowed (7.0%) on the back of the downturn, but not (yet) quite as heavily as some expected.

That’s A Lot of Boxes

What’s next? For a new transporta-tion technology, 57 years old is still young, and there’s still non-containerized general cargo out there. But the outsourcing boom and the peak of containerization have passed, and a betting man might expect growth to mature to 5-6% pa in the next decade. Though it’s hard to predict precisely, a lot of capacity will likely be required. Boom period deliveries have ranged between 1.0 and 1.5m teu, but with today’s fleet and orderbook totalling 20m teu, 6% pa growth would soon require 1.2m teu of extra capacity every year just to keep up, before the replacement of old and obsolete tonnage. That’s a lot of food for thought for the shipping industry’s builders and financiers.

Advertisements