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Marketplace Morning Report

Cargo ships at full capacity

Scott Tong Aug 18, 2010
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Kai Ryssdal: The business news of an otherwise slow day in mid-August comes to us from the high seas. The ship has definitely come in for ocean transport companies. The Danish shipping giant Maersk reported a profitable first half of 2010 this morning, after a completely horrible ’09. Profits at the big port operator DP World sailed past expectations. Increased global trade, of course, is what’s good for them. But demand is so high in some places, it’s creating pretty serious shipping backlogs. Even for us.

Marketplace’s Scott Tong just moved from Shanghai back to Washington D.C. He is still waiting for his stuff to show up a month-something later. So what to do? Bide his time, and file a story on the shipping business.


Scott Tong: The movers in China took away our beds, bikes and other stuff 34 days ago. Then, our container sat at the port of Shanghai for a month, and just now got on a ship. ETA in America? End of September.

Paul Bingham: That’s a great example of what has happened in this shortage of capacity situation.

That’s analyst Paul Bingham at IHS Global Insight. When he says “shortage of capacity,” he means ships are full — and companies are sailing fewer ships as a whole. The turnaround is due in part to American retailers re-stocking. They kept their shelves bare during the bleak 2009.

Bingham: When the recovery started to gain hold, there was pent up demand to bring a tremendous amount of cargo through the freight system.

With all that business, steamship lines raised their prices. Last year, a container like mine cost about $1,200 to move. It’s now double that. And, the carriers moved high-priority containers first, not ours.

Bingham: They do what they call “roll cargo,” which essentially means they leave a box sitting on the dock for the next ship, which may be a whole other week or multiple weeks. Your cargo was probably put into that category.

For that, the industry deserves a choppy second half. And seriously, it may get it. Today, Danish shipping giant Maersk said future growth could slow because of uncertainty in the global economy. Here’s maritime consultant Ben Hackett.

Ben Hackett: Consumer spending growth is still relatively low. So May, June, July were very strong months. Don’t believe that that will be repeated.

And for all the profits, analysts says shipping lines are also dealing with customers disgruntled by high prices and delays, including this one.

In Washington, I’m Scott Tong for Marketplace.

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