The Container Revolution

 The Container Revolution

Blog / By Green Shipping Line

Over the last four decades, I have had the privilege of frequently visiting Hamburg, Germany, which is known as the container capital of the world. In doing so, I had a front-row seat watching the “Container Revolution” from its infancy into what it is today. What did I see?

From the end of the late 1980s to the end of the 1990s, German tax law supported the building and financing of a fleet of hundreds of small, purpose-built container ships capable of carrying 250-500 20’ containers. This not only gave investors an attractive place to invest but also supported the German shipbuilding industry – more than 40,000 shipyard workers for more than 15 years.

During the formative years of the “Container Revolution”, containers slowly became the platform of choice to move goods. The adoption of the container was marked by steady growth (see the blue line on the graph). To keep up with the increasing volumes of containers, larger and larger vessels were built, with the Korean shipyards leading the way, as the German shipyards were too small. The fleet of already-built smaller vessels was rotated into the growing transshipment short sea trades (see the orange line on the graph).

On land, billions of Euros, Yen, Won, and Yuan were spent to upgrade, modernize, and expand ports worldwide — except in the United States.

During the 1980s-the 2010s, what transpired in the U.S. was very different. Trucking was made cheaper in 1986 through deregulation and our interstate systems were completed in 1991. Railroads upgraded their systems, modernized their fleets of engines and rail cars, and focused on unit trains. The U.S. did not concentrate on our marine highways or ports, upgrade our commercial fleets nor build any short sea ships or develop short sea services to meet the increase in container traffic. A few ports like Norfolk, Savannah and recently Jacksonville have planned for the future by buying extra land to have space for storing the growing container traffic.

While the rest of the world moved on and incorporated water into their logistics chains, the U.S. focused on landside transportation systems. Today the world uses three modes of transportation — road, rail, and water to move containers domestically. The United States uses only two modes, road, and rail. In the container world, we are at a disadvantage to other economies.

The port and terminal gridlock we are experiencing right now were inevitable. As container volumes increased, our ports and terminals simply ran out of room. While there are many other mitigating factors that exacerbate today’s container pandemic, the simple truth is that our facilities are too small to accommodate present container demand, let alone the ever-growing demands of the future as populations and world trade grow.

So, what can we do? Since GSL has been studying this for years by observing how the rest of the world has been dealing with logistics issues, we first need to own the problem. As Einstein said “we cannot solve our problems with the same thinking we used when we created them” – we need to do something we haven’t done yet – namely integrate water into our transportation systems. Further, we must invest the billions of dollars needed to modernize and expand our ports and build purpose-built short sea vessels that will increase terminal velocity and relieve port gridlock.

GSL would like to build small vessels to start to relieve the gridlock. The expansion and modernization of our ports must be done. Ports are “critical national assets”. It is not a question of whether or not these investments must be made and short sea service started, but rather a question of when.