The global deep sea freight market was valued at almost USD 390 billion in 2016 and is expected to surpass USD 480 billion by 2021.
Procurement market intelligence analysts have announced its latest market research report on deep sea freight for the period 2017-2021. This market analysis discusses the major drivers and key emerging trends that will influence the growth of the deep-sea freight market during the forecast period. Some of the top vendors listed in this industry analysis include Mediterranean Shipping Company, CMA CGM, MOL, and Hapag-Lloyd.
In terms of geographical analysis, APAC dominated the global deep sea freight market during 2016, accounting for around 44% of the overall market share. The growth can be accredited to the emergence of Southeast Asia as a manufacturing hub, optimization of routes, enhancement of the warehousing, distribution facilities in China, Japan, India, and Australia, and the regional trade liberalization facilitated by free trade agreements.
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According to Angad Singh, a procurement specialist at Technavio for research on category spend intelligence, “The global market is currently witnessing the formation of mega-alliances in the industry across different regions. Such alliances help improve the customer service by providing fast transit times, competitive sailing frequencies, and the most extensive port coverage in the market. It can also enhance the service quality and reliability by quicker transit times, a highly effective fleet of vessels, competitive selection of sailing schedules, and direct port pairs.”
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The new procurement market intelligence report analyzes some of the key drivers and trends responsible for the growth of this market and its sub-segments.
Increasing amount of global trade
The rise in globalization is resulting in the processing of goods across various locations and value being added in several countries and then being shipped to destination countries. This, in turn, is spurring a rise of trade volumes to ship the raw materials and finished goods. During 2016, more than 90% of the global commerce was through the sea freight due to the growing amount of raw materials, semi-finished goods, and end products being shipped to and from manufacturing hubs in Southeast Asia to Europe and the US. Increasing dependence on the outsourcing of manufacturing process to low-cost countries is also propelling the demand for shipment requirement.
Rearrangement of global shipping routes
Emergence and growth of the developing nations in the last decade has paved the way for the redesign of global trade routes to support the shift of the manufacturing markets across the globe. Shorter routes will result in cost reduction due to low fuel spend and eventually increase the profit margin for buyers. For instance, on-going expansion of the Panama Canal, with the third set of locks, will facilitate vessels of up to 12,000 TEU. Newer, optimized routes with lesser travel time are projected to act as a major growth driver for the global deep sea freight market.
Horizontal and vertical collaboration across the value chain
The industry is currently registering a high amount of horizontal and vertical collaboration with a series of M&A leading to 10 major shipping companies and 4-6 global terminal operators that dominate the deep-sea freight. Horizontal integration makes it possible to establish port cooperation’s’ by having synergies in ports that have complimentary nature while vertical integration allows players to collaborate with the freight forwarders, port actors (cargo handlers, stevedores, and shipping agents), shipping companies, and inland transport providers.
A more detailed analysis is available in the procurement market intelligence report titled, ‘Deep Sea Freight – Procurement Market Intelligence 2017’.
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