It began to take shape fifty years ago. Parts of the outline of the highly efficient global merchant shipping industry we see today started to become visible in the early 1960s. The transformation process was already well under way by then, in the tanker sector. But back in 1963 much of the world’s shipping system, consisting of cargo liner services and dry cargo tramp trades, was not functioning well. Dramatic changes were beginning, however, which would revolutionise the dynamics over the next decade and beyond.
The preceding revolution, the changeover from sail to steam propulsion, had greatly improved performance in the shipping industry. This fundamental technological change had increased capacity and enabled scheduled services to operate, but some inefficient aspects continued. In many trades cargo-handling in ports was said, jokingly, to have remained unchanged since the time of the Phoenicians, except that powered winches had replaced muscle-power. In the next revolution, from the 1960s onwards, old methods and traditions would be swept away by new technology and new working practices.
Industry characteristics and economics were studied in the early sixties by ambitious young men, working in London shipping offices, who enrolled for the shipping certificate course at the City of London College (in this era few women aspired to senior positions in the industry, which was male dominated). The course involved two years of evening classes. These keen students learned that the world fleet of ships at that time was dominated by liners (cargo and passenger), tramps (dry cargo) and specialised ships, including tankers.
Cargo liners were versatile, multi-deck ships with installed cargo-handling gear, carrying mostly manufactured goods, often accompanied by refrigerated products, together with some bulk cargo parcels. They operated on regular scheduled services. Tramps (dry cargo), available on the charter market, usually carried full shiploads of bulk commodities. Many of these tramps were similar, in size and specification, to cargo liners and their role was often interchangeable between the sectors. Tankers mainly transported oil and oil products. During the early sixties, two changes were prominent. Bulk carriers, including ore carriers and dual-purpose combined carriers (able to carry either oil or dry bulk cargo), were coming in strongly, and passenger liners (operating on regular routes) were going out.
Fifty years ago many ships spent a large proportion of their working lives stationary in port. In the cargo liner trades especially, cargo handling – loading and discharging – was often slow, or very slow, caused by labour-intensive methods. This sluggish performance frequently was exacerbated by poor labour relations with dock workers. Consequently, a huge global fleet of ships was chronically under-utilised. Expensive, sophisticated cargo liners could be in port for up to 60 per cent of available time for transport movements (equivalent to 200 or more days annually) and much of that was idle time, when no cargo was being handled. Profitability suffered heavily, and the system struggled to perform adequately. A more efficient service was needed to cope with fast trade expansion and the solution was containerisation, which developed quickly from the late-1960s onwards.
Containerisation proceeded apace through the 1970s and 1980s, and was truly a revolutionary upheaval, enabling manufactured goods to be transported around the world rapidly, securely and cheaply. Cargo liner trades became integrated into a through-transport system providing a door-to-door service for manufacturers, a new way of organising transport involving vast capital investment in ships, ports and cargo-handling equipment. This reconfiguration hastened and greatly assisted the world’s transition to a globalised economy, with its extended supply chains, as we know it today.
In other shipping sectors, bulk (dry and wet) and specialised trades, developments were also dramatic, although not quite so revolutionary. But notable changes greatly enhanced efficiency and provided more economical transport. In a large number of international trades much larger ships of improved designs were utilised. Different types of specialised vessel were introduced. Coupled with high speed shore-based cargo loading and discharging equipment, this amounted to a transformation.
Over the past five decades world seaborne trade growth has been astounding. Global seaborne trade of all types totalled 1.35 billion tonnes in 1963, according to UNCTAD statistics, of which 53 percent was liquids, mostly oil (tanker cargoes). The 2013 figure, based on calculations by shipping information providers Clarksons, could be 9.9bn. This total represents a more than seven-fold expansion over the fifty year period, having already reached an estimated 9.5bn last year, of which oil cargoes comprised 29 percent.
Another aspect is longer voyage distances in numerous trades. More remote supply sources for commodities and other goods were located and became economical to use, while globalisation and reduced transport costs altered geographical trade patterns. Tonne-miles, the standard measure of shipping demand because it reflects both cargo volume and voyage distance, was further boosted. A great enlargement of carrying capacity was required.
Shipowners responded to this requirement with huge investment in new tonnage, continuously expanding the global fleet of ships. Measured in gross tons, the world fleet of all types of merchant vessel in mid-1963 totalled 145.9 million GT, comprising 39,571 ships, according to Lloyd’s Register statistics. Fifty years later the mid-2013 fleet, based on Clarksons data, was 1,114.8m GT, consisting of 85,642 ships. This growth, over seven-fold, was similar to the trade volume percentage increase. But the productivity of the fleet had also improved. More specifically, a typical ship’s annual carrying capacity, as distinct from the single cargo capacity measured by vessel tonnage, had risen. Higher speeds at sea, less time spent in port, coupled with enhanced operational efficiency was instrumental in ensuring that each ton of ship’s capacity carried more cargo in a typical year. Another feature accompanying fleet tonnage growth was the 253 percent rise in the average ship size, from 3700 GT in 1963, to 13000 GT in 2013.
Currently, in the early 2010s, the world fleet of ships meeting the needs of cargo movements is comprised of three main sectors. Today’s students, such as those pursuing post-graduate maritime studies at Greenwich Maritime Institute, London are well aware that bulk carriers, tankers and container ships dominate. These vessels are accompanied by what has become a very large group of special purpose ships, such as liquefied gas carriers and car carriers. A prominent feature in many trades has been the great increase in the size of vessels typically employed, demonstrating advantages to be gained from economies of scale, amid pressure to reduce the unit cost of providing services.
From these brief highlights we can see that a fascinating and impressive period of progress has evolved in the global shipping industry, during the past 50 years. World seaborne trade has expanded enormously. The fleet of cargo-carrying ships, of various types and varieties, has been required to tackle an ever more challenging task, and has done so pretty effectively. Sometimes though, fleet growth in various sectors has been far too rapid, as investors collectively misjudged – always a difficult judgement – or ignored the shipping market cycle. What is abundantly clear is that great improvements have been made in the efficiency and sophistication of the sea transport system, restraining costs and freight rates and contributing massively to the globalisation era.
Richard Scott, GMI visiting lecturer and MD, Bulk Shipping Analysis
