Ocean shipping is an integral part of the supply chain for most industries, making it a backbone of global trade. It is estimated that an overwhelming majority of goods, around 80 percent, are transported by ships. The volume of seaborne trade has been showing a growing trend since 1990. Between 1990 and 2021, the volume of cargo transported by ships more than doubled, from four to nearly 11 billion tons. Hand in hand with the rise in seaborne trade goes the increasing capacity of the global merchant fleet. Between 2013 and 2021, the capacity of the worldwide merchant fleet grew by about 43 percent, reaching almost 2.1 million deadweight tons in 2021.
Despite these developments, the COVID-19 pandemic caused severe disruptions to the ocean shipping industry that are only slowly disappearing. As a result, the volume of cargo transported by ships in 2021 was still slightly lower than in 2019, the year before the pandemic struck.
Impact of COVID-19 on the industry
The COVID-19 pandemic hit the global shipping industry especially hard. Ports had to deal with closures, resulting in congestions, labor shortages, and blank sailings. At the same time, container carriers struggled with capacity utilization and ship delays, bringing schedule reliability of major container ship operators below 40 percent for most of 2021. On top of that, freight rates skyrocketed, putting pressure on industries that rely on exports and imports of commodities and goods. In turn, consumers all around the globe were forced to bear the rising costs of transport in increasing prices, with the inhabitants of small island developing states being affected the most.
Finally, in the second half of 2022, the situation began to improve. Schedule reliability has increased, and freight rates have normalized, dropping to nearly pre-pandemic levels. Subsequently, the profit margins of container carriers have decreased significantly, from their peak of 57.4 percent in the first quarter of 2021 to 8.9 percent in the second quarter of 2023. Still, the container shipping industry reported record-high profits of some 208 billion U.S. dollars in 2022, almost double its profit in 2021.
China as the shipbuilding powerhouse
Aside from being home to the busiest container ports worldwide, China has also been the global leader in shipbuilding since 2010, exporting mainly bulk carriers, oil carriers, and container ships. Over the past years, the demand for container ships of increasingly larger sizes has been going up. By December 2022, there were about 5,600 container ships in the global merchant fleet.
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