Deep Sea Freight Transportation
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Industry Overview
The US deep sea shipping industry includes about 300 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $8 billion. Major companies include APL, Crowley, and Overseas Shipholding Group. The industry is highly concentrated: the 50 largest companies account for more than 90 percent of industry revenue.
Deep sea shipping is the transport of cargo to and from foreign ports. US coastal and Great Lakes shipping, which includes deep sea shipping between US ports, is covered in a separate industry profile, as are cruise ship operations.
Competitive Landscape
Demand is driven by macroeconomic trends in global imports and exports. The profitability of individual companies depends on efficient operations and a good safety record. Large companies have advantages in fleet size and port access. Small companies can compete effectively by chartering services out of smaller ports and transporting unusual cargo. The industry is capital-intensive: average annual revenue per worker is about $800,000.
Products, Operations & Technology
Major services include transportation of shipping containers (about 55 percent of industry revenue), dry bulk cargo (15 percent) and bulk liquids and gases (15 percent). Other services include transportation of automobiles and trailers, as well as maintenance and repair services.
Overall the US leads the world in trade; it is the top importing nation and among the leading exporters. Only a small percentage of the 50,000 or so merchant ships trading worldwide are registered in the US, however. Regardless of where they pick up or deliver cargo, many ships fly "flags of convenience," meaning they are registered in nations that provide favorable tax treatment, minimal regulatory oversight, lower labor costs, or other factors that reduce expenses. Top flags of convenience include the Bahamas, Liberia, the Marshall Islands, and Panama.
Major vessels types include container ships, which transport intermodal shipping containers, dry bulk carriers, which transport commodities such as iron ore, coal, and food; liquid bulk carriers such as tankers that ship crude oil, chemicals, and petroleum products; and roll on-roll off (RORO) vessels that transport wheeled cargo such as cars, trucks, and trains.
Service takes three different forms: liner, charter, and tanker service. Liner service is regular, scheduled stops at ports along a fixed route. Liner routes are dominated by container ships transporting manufactured goods. Charter service, also known as tramping, is an "as-needed" mode of shipping that moves between ports based on cargo availability. Tramps inexpensively transport a single form of dry bulk cargo (grain, coal, ore, sugar) for a single shipper. Tanker service transports crude oil, petroleum, and other liquid products. Tankers can be chartered, but most are owned and operated by major oil companies.
A ship's capacity is measured by several formulas. Dead weight tonnage (DWT) is the total weight of cargo, supplies, and crew that can be loaded on an "empty" ship. Gross register tonnage (GRT) measures the total internal capacity of a vessel. One GRT is equal to a volume of 100 cubic feet. Twenty-foot equivalent units (TEUs) refer to a container ship's total cargo-carrying capacity.
Ships depend highly on complex information systems to maintain vessel schedules and efficiently manage terminal operations. Deep sea shippers manage ship routing through real-time, web-based tracking systems. Some shippers outsource route optimization to technology companies that track weather and wind patterns. Radio frequency identification (RFID) tagging allows customers to track containers and cargo throughout the entire voyage. A mandatory international safety protocol, the Global Maritime Distress & Safety System (GMDSS), standardizes distress signaling and locating.
