Surge in sea shipping has trade ripple effect

“Yes, I am a pirate, 200 years too late.

The cannons don’t thunder, there’s nothing to plunder,

I’m an over-40 victim of fate,

Arriving too late. Arriving too late.”

These lines are from “A Pirate Looks at 40,” which is one of my favorite Jimmy Buffett songs. Buffett was romanticizing the golden age of pirates, which was supposed to have ended centuries ago.

However, he was a little premature in his assessment.

In April, two ships traveling in the Singapore Strait were attacked and robbed by pirates, and one crew member was hurt. In 2020, 30 incidents of this type were recorded in this body of water.

Last month, pirates attacked a Ghanaian vessel in the Gulf of Guinea and kidnapped five crew members. This month, officials warned that pirates were expanding their footprint in this body of water, and were asking shipping companies to be extra careful when sailing in the region. In 2021, 61 crew members have been kidnapped in piracy incidents there. Meanwhile, Nigerian pirates have been venturing farther and farther from the coastline, attacking ships in open waters.

A cargo ship docks at the Port of Los Angeles in June 2019. (Marcio Jose Sanchez/Associated Press)

Piracy is growing as maritime shipments themselves increase and become a more important part of global trade, especially as the world attempts to return to normalcy after enduring a brutal pandemic. The 20-foot equivalent unit, which is commonly referred to as TEU, is the measure of cargo capacity used in ports and maritime shipments. It refers to the volume of an intermodal container that is 20-feet long. While there are different sizes of containers carried by cargo ships, the TEU provides a yardstick by which to measure volume of shipments. In May, the Port of Long Beach broke its cargo record by handling more than 907,000 TEU. This was the highest volume in the port’s 110-year history. Compared to May 2020, cargo volume rose 44%. This is driven by cargo imports having risen by 42% since the beginning of the year.

For 10 consecutive months, the Port of Los Angeles has set records for handling cargo.

Compared to 2020, cargo shipments are up an incredible 74% this year. Last month, the port handled 1,012,048 TEU, a record not only for the 114-year-old port, but a record for the entire Western Hemisphere. The port reports that vessel productivity has risen by 50% over the past several years. This, coupled with rising staff hours at the port, are allowing for the increased process of shipments that are being fueled by growing global trade. Trade has grown so much that Home Depot recently chartered its own container ship in an attempt to keep its inventory levels up in North America.

And what is increasing vessel productivity? One element is the sheer size of the ships. Years ago on a trip to Tokyo, I decided to explore the city on my own, using the extensive subway system. I promptly got lost, and ended up at a dockyard where ships were being loaded. I had never seen vessels so enormous up close. They literally took my breath away. The ships I saw that day were puny compared to what is hauling cargo today.

In mid-May, the 1,300-foot container ship CMA CGM Marco Polo arrived in New York Harbor, the largest ship to ever land on the East Coast of the U.S. To put its enormity into perspective, this one ship is larger than the Empire State Building. When it first sailed in 2013, it was the largest container ship the world had ever seen, being able to handle 16,020 TEU. Today, it is not even in the top 50 largest container ships.

At 23,964 TEU, the HMM Algerciras is currently the world’s largest container ship. It is 1,312 feet long and 200 feet wide. This ship is the size of 3.64 football fields. The Algerciras will not have its title for long. Mediterranean Shipping Co., an Italian-Swiss venture, has a ship on order to be delivered in 2023, capable of handling 24,232 TEU. Of the next eight largest ships on order, each one is capable of handling more than 23,000 TEU. These vessels resemble moving cities more than they do ships.

The explosion in ocean shipments has resulted in ports being backed up with cargo ships waiting to be loaded and unloaded. It also has resulted in a shortage of cargo containers to move products. One owner of a container logistics company told me that she has run out of 20-foot containers, and has been waiting weeks for an order she placed for these units to arrive.

So the next time you put on your clothes, play on your Apple phone, hand your child a toy, kick a soccer ball, or ride in your Toyota, know that these items probably crossed the ocean in a monster container ship to eventually get to your door.

Jerry Pacheco is the executive director of the International Business Accelerator, a nonprofit trade counseling program of the New Mexico Small Business Development Centers Network. He can be reached at 575-589-2200 or at jerry@nmiba.com.

 

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