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 200 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 35 workers and generates over $32 million annually.

    • The deep sea freight transportation industry consists of about 200 firms that employ about 6,500 workers and generate $6.5 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
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  May 20, 2024 - Firms Increase Prices
                                  • Deep sea freight transportation firms slightly increased their prices during the first quarter of 2024, according to the US Bureau of Labor Statistics (BLS). Water transportation industry employment increased to a 10-year high during the first quarter of 2024, according the BLS.
                                  • Global long-term shipping rates, as measured by the Xeneta Shipping Index (XSI), increased slightly in April to 154.3 points, up just 1.7% from March. April’s Global XSI figure was down 50.1% compared to April 2023.The XSI for European Imports was 171.8 points, up 9.2% from March and its biggest month-over-month increase since June 2022. The XSI for US Imports decreased 9.4% in April to 150.6 points.
                                  • 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.”
                                  • Energy giant Shell has noted in its second 'All Hands on Deck' report that "the magnitude of action and investment needs to step up with speed to achieve the ambition of net zero by 2050." Shell suggests that, while global regulation is needed, effective local and regional regulation can catalyze near term momentum on decarbonization, and clarity is needed on fuel pathways. Shell also suggests that a scaling up of pockets of demand through ‘natural demand aggregation’ for low carbon fuels and low emission vessels could be achieved through initiatives such as join purchasing coalitions, groupings of long-term contracts, and book and claim models. Shell calls for ‘an integrated set of levers – such as efficiency measures and faster conversion and increased modularity via retrofits – to drive fleetwide improvements, and its last suggestion for near term action is to move forward on operationalizing the first green shipping corridors.
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