The transportation of cargo by sea is an industry that underpins world trade. It is vital to global economic success and the ability of companies around the world to meet the demands of customers. Thousands of containers can now be stacked onto supersized vessels and on any day of the year, billions of goods will be making their way across the sea.

To anyone watching container vessels arriving at or departing from any major port, it could appear that the shipping industry was in a strong position. In reality, 2015 was a tough year and there are many on-going challenges to face.

Over Supply of Vessels

One of the key issues facing the industry is the oversupply of vessels. The number of vessels being produced exceeds demand and with the cost of scrapping older vessels, many companies are choosing to retain old stock even when replacement vessels have gone into service. This leads to excessive competition and can have a significant impact on freight rates and profit margins.

Reports have shown that many of the container ship journeys in 2015 were made at a loss. In order to remain profitable companies have to focus on developing operational niches where they can gain the competitive edge.

Legislation

Many shipping companies feel that the current legislation which governs the industry is out dated. Whilst there have been many benefits to having a highly regulated industry, there is also the risk that current legislation inhibits development opportunities. It is hoped that current legislation will be reviewed and revised to account for future shipping development.

Port Infrastructure

The technological advancements in design have led to supersized vessels that can carry what would have been several loads of containers in a single journey. The challenge is that suitable port infrastructure to support such vessels and their cargo is limited.

Even with smaller scale ships, the efficiency and safety of cargo transportation is dependent on appropriate port infrastructure being in place. Governments around the world need to invest in ports, along with road and rail links, to aid the industry and international trade.

Environmental Impact

In a speech titled ‘The Shipping Challenge: Carry More, Emit Less’ Dr Grahaeme Henderson spoke to the University of Southampton about the role of innovative technology and new approaches to business in addressing the environmental impact of the industry.

The Vice President of Shipping and Maritime at Shell suggested a collaborative approach could help tackle environmental challenges. He suggested that in sharing good practice, research data and technology, the shipping industry could play a leading role in tackling climate change. As the deadlines for government targets for reducing carbon emissions grow closer, it is likely that all shipping companies will have to comply with more environmental regulations and green technology could become an essential part of the business strategy.

Crew Safety

The shortage of skilled seafarers and other maritime roles is a long running issue in the industry. Work is underway to promote marine careers to young people, but it will take many years for this to have a significant impact on recruitment.

The safety records for the maritime industry have improved greatly, yet with crews being recruited from emerging economies, there are challenges when the level of training and assessment isn’t consistent with local levels. Crew safety is also put at risk by shortages, as reduced crew numbers can compromise safety and increase the risk of human error.

No matter what costs need to be cut, it is vital that crew safety remains a priority. Ensuring that there are sufficient crew on board, along with adequate medical supplies for ships LE West is essential. The provision of on-going training to prepare and upskill the crew is also necessary for longer term success. This will take investment, but when delivered properly, it generates a return.

2016 will have its challenges, but it also presents new opportunities for the industry to develop. With an innovative approach and government support, many of the challenges can be overcome.