Deep Sea Freight Transportation
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 226 deep sea freight transportation service providers use large vessels to move cargo between ocean ports. Carriers may transport intermodal containers, dry bulk, bulk liquids and gases, motor vehicles, industrial and heavy equipment, and boxed, palletized, and other packed goods. Firms may also offer logistics and intermodal transport services, customs brokering, and terminal and stevedoring services.
Cyclical and Dependent on Economic Conditions
Demand for ocean freight transportation is notoriously cyclical and driven by trade activity, which is affected by domestic and global economic conditions.
Dependence on Port Operations
Port congestion, labor strikes, and intermodal delays can interfere with on-time scheduled services and increase expenses.
Industry size & Structure
The average deep sea freight transportation company employs about 31 workers and generates over $40 million annually.
- The deep sea freight transportation industry consists of about 230 firms that employ about 7,200 workers and generate $9.3 billion annually.
- The industry is highly concentrated; the top 50 companies account for over 97% of industry revenue.
- Large firms include Matson, Genco, and Seaboard Marine.
- Water is the leading transportation mode for US-international freight; vessels moved over $1.8 trillion in freight to and from the US in 2021, according to the US Department of Transportation.
Industry Forecast
Deep Sea Freight Transportation Industry Growth
Recent Developments
Nov 14, 2024 - West Coast Ports Win Market Share
- The US West Coast share of total imports from the Far East has increased in 2024 but spot rates into the West Coast have fallen faster than into the East Coast since July 1, according to ocean and air freight rate benchmarking and market analytics firm Xeneta. Service reliability from the Far East to US West coast is up 25 percentage points compared to July 2023 at 67.4%. Service reliability into the US East Coast remained flat year over year at 39%, making it less surprising to see more shippers choosing to import into the US West Coast, according to Xeneta.
- Container freight rates oscillated dramatically between January 2023 and March 2024, according to Statista. Freight rates slumped to their lowest level on the 26th of October 2023, when the going rate for a 40-foot container was $1,342. The global freight rate has generally increased since then, hitting over $5,800 in June 2024, the highest value on record. The surge in freight rates has more than covered rising expenses. Container ship operators have reported record-high operating profit margins since the beginning of the pandemic, according to Statista. Some carriers are using profits to increase their carrying capacity by buying new containers and ordering new container ships. The delivery of these newly ordered ships is still years away, however.
- Attacks on cargo ships in the Red Sea and drought affecting the Panama Canal have created a “perfect storm” of disruption in global shipping, according to Mike Giambrone, an account executive at logistics provider OEC Group. The Red Sea is a critical shipping lane for cargo traveling through the Suez Canal, which accounts for about 12% of global trade, according to Giambrone. Approximately 30% of global container traffic traverses the Suez Canal, transporting $1 trillion of goods per year, according to the Government of New Zealand. Drought conditions in the Panama Canal, worsened by a severe El Nino, have severely impacted container ship traffic through that key trade route. October 2023 marked the driest October on record for the Canal watershed, according to the Panama Canal Authority, and officials have cut the number of transits. The Panama Canal accounts for about 7% of global seaborne trade, according to the Wall Street Journal. “It’s really the East Coast and Gulf Coast markets that are going to see the results of this,” Giambrone said. He noted that when there’s a problem on the East Coast, shippers can transfer their capacity to the West Coast, but this can bring additional problems. Giambrone cited the post-COVID shipping surge that resulted in “a parking lot of container ships” at West Coast ports in 2021. Some ships were diverted to the East Coast to ease the congestion. “Then the East Coast started having serious congestion.”
- US waterway tonnage increased 2.3% year over year but decreased 2.9% month over month in June, according to the US Bureau of Transportation Statistics. Deep sea freight transportation firms slightly decreased their prices during the first nine months of 2024, according to the US Bureau of Labor Statistics (BLS). Water transportation industry employment remained near 10-year-high levels in September 2024, according the BLS.
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