Introduction to the challenges and opportunities in the ocean transport sector
The challenges that face the U.S. maritime industry are numerous.
They include econometrics, types of vessels, alliances, and economies of scale.
In this article, we look at the challenges and opportunities facing the U.S. maritime industry. To learn more about how these challenges can be overcome, read on.
Challenges facing the U.S. maritime industry
The challenge of reducing operating costs is one of the main problems facing U.S. maritime carriers today.
Despite the importance of shipbuilding to the maritime industry, U.S. carriers are facing increasing costs of new ships, despite the fact that they rely on U.S. shipbuilding.
Although the industry historically has enjoyed self-regulation, the maritime policy must balance national and political objectives. In the end, it will help the industry as a whole.
The Maritime Administration plays an important role in the U.S. maritime industry. The Department of Transportation has appointed its Maritime Administrator to the subcabinet Coordinating Board.
It is part of an interagency forum comprised of representatives from 25+ government agencies. The goal of the META program is to identify environmentally and economically sustainable solutions to the problems faced by the maritime industry.
Further, this initiative aims to build partnerships between the maritime industry and the government.
The government is also concerned with a lack of qualified mariners to maintain the surge fleet of 60 Government-owned cargo ships. A shortage of these individuals would be a huge challenge for the U.S. maritime industry.
Most RRF vessels are nearly 40 years old, which means a longer time for repair and overhaul. The RRF has not been fully activated 600 times since its inception in 1990. Of those, over half of the activations were for other than readiness testing.
A major challenge is a global economy. As the economy continues to slow down, U.S. ports could face greater difficulties in exporting and importing goods. This would negatively impact their ability to supply their customers abroad.
Additionally, a reduction in operative safety could slow down the inspection process at ports and delay the response time to contingencies. This would only worsen the risks of accidents and damages.
A growing number of U.S. military forces has also affected maritime safety, so the threat of an epidemic has become more serious than ever.
Types of vessels
Various types of vessels are used for different purposes in the ocean transportation sector. For example, multi-purpose ships, also known as general cargo ships, can transport a wide range of goods.
These ships are usually geared and supplied with cranes and have ramps and platforms for immobilizing various types of wheeled vehicles, such as industrial vehicles and lorries loaded with freight.
Moreover, they are fitted with a variety of sea fastening equipment and are highly competent in loading and unloading break bulk cargo.
Nowadays, most of these vessels are registered under a flag of convenience, and some include gyms and swimming pools. Moreover, these ships offer lounge-style areas where passengers can spend their leisure time.
Some companies even provide television sets in cabins and enforce strict smoking policies. Additionally, officers are sometimes provided with video game consoles to keep themselves entertained during their travels.
These types of vessels are the most common in the ocean transportation sector.
Roll-on-roll off (RoRo) ships are the most common types of ocean transport vehicles. These vessels were originally designed to ferry people but now operate in deep-sea trades.
Compared to ferries, they are larger and can carry more vehicles. Moreover, they can also transport trucks and trailers. The size of these ships is measured in lane meters. There are different types of RoRo vessels. You can find some of these in New Hampshire, California, and in Texas.
Despite the vast number of available vessels, there are many different types of ships. These vessels can carry different types of goods, including oil, gas, and livestock.
Regardless of their purpose, knowing how they function and what they can carry is important in the transportation of various goods. They are each unique in their own way but share some fundamental similarities.
The following will give you an overview of the main types of vessels and their history.
Economies of scales
Economies of scale are important in the transportation sector because they can cut the cost of transporting a large amount of product. Often, the cost of transporting a single product is low, but the cost of transporting large amounts is higher.
By using large vessels, organizations can reduce their costs, especially if they have many of them. This is becoming the new trend in manufacturing. The following are some benefits of economies of scale in the ocean transportation sector.
Economies of scale in the ocean transportation industry may be nearing a peak, but a bigger ship can still lead to significant cost reductions.
In order to achieve economies of scale, shipping companies must invest in port infrastructure, such as dredging channels, strengthening quays, and purchasing larger cranes.
The wrong market perspective can lead to disastrous results. It can affect a port’s flexibility and commercial feasibility.
However, there are some negative consequences. In the past, the maritime industry was a highly fragmented industry.
Today, the largest shipping companies are also the operators of major ports of general interest. As a result, they may not see significant revenue growth.
In the long term, economies of scale in the ocean transportation sector may even negatively affect the sector. In the long run, this may actually result in a decrease in capacity at a terminal and a reduction in the time necessary to process cargo.
Large companies often experience internal economies of scale as a result of the size of their workforce or the decisions made by their management.
By concentrating on large-scale production, a company may experience lower operational costs because it can obtain a greater volume of output at a lower cost. They can also increase production levels and access capital through bulk purchases.
A larger company can also reap external economies. The latter is the most effective of the two types of economies of scale in the ocean transportation industry.
The world’s ocean transport industry is facing a looming sea of competition. Two recently announced alliances are likely to result in significant changes for the industry.
As competition for the Asia-Europe and transpacific markets increases, smaller carriers may find themselves compelled to consolidate operations and focus on local and regional activities. The advantages of such alliances are obvious.
This article will explore the benefits of these alliances, as well as how they can benefit shippers.
In the year 2016, the ocean transport industry underwent a whirlwind year. Not only did ocean freight rates plummet, but also the landscape of alliances shifted.
CMA CGM bought APL, Hapag-Lloyd announced a merger with UASC, and three Japanese carriers formed a joint venture. In 2016, the second wave of ocean carrier alliances formed.
This was done to offer shippers sustainable service while keeping capacity at an acceptable level. In the meantime, carriers have begun to reposition themselves to meet the demands of shippers.
Despite the similarities and differences between alliances, the core areas of communication and information sharing are the same. These include fuel types, stowage plans, and scheduling.
Alliances are generally more profitable than working with individual carriers as their purchasing power is much higher. These benefits extend to shippers, who can benefit from common operating expenses and reduced costs over the course of their commercial lives. This is especially true for smaller carriers.
The federal government is currently working on reforms for the ocean transportation industry. One such reform calls for Congress to enact legislation to protect American businesses from large foreign companies.
Despite their proposed changes, ocean shipping companies are still under a lot of pressure. While they may be beneficial to American business, they pose a significant threat to national security and economic competitiveness.
As a result, President Obama is calling for additional tools to monitor the industry and address its problems.
Cold chain growth
The increasing demand for perishable products and the cold chain’s role in preventing food loss are the major factors driving growth in this industry. The growing popularity of convenience foods and the inclination of consumers to eat more vegetables and fish has increased the demand for perishable products.
The growing import-export of meat products also fuels the market growth. So, the growth of the cold chain is a must for the world’s food industry.
Growing demand for sea-based produce has opened new markets for ocean-freight providers. In the fourth quarter of last year, sea-based produce shipments increased by over 8%, representing a massive opportunity for the logistics industry.
This new market segment can also open up additional revenue streams and potentially expand a company’s reach into new markets.
Further, the increasing demand for temperature-sensitive payloads in emerging markets is expected to continue boosting the growth of this industry.
The cold chain has many uses. It is used in a variety of industries. For example, pharmaceutical products have stringent fulfillment times, and hospitals cannot afford to risk patient safety if their products are delayed.
Food products are also shipped daily, which means that restaurants and supermarkets need daily shipments of fresh food. In short, the cold chain offers little room for error and great rewards. It is also one of the fastest-growing segments of ocean transportation.
The pharmaceutical industry is another growing industry that relies on controlled and uncompromised cold chain transfers.
Pharmaceuticals move along the cold chain during the experiment phase. In clinical research and trials, pharmaceutical products undergo a high degree of sensitivity to temperature.
Unanticipated exposure to variant temperatures can render them ineffective or even harmful to patients. Therefore, cold chain management has become a vital part of the pharmaceutical industry's overall supply chain.