Presently there is a huge transformation taking place in the global economy, driven by the Asia Pacific, and in particular, China. This is reverberating around the world and will change the course of international trade forever. Consider that of the Fortune 500 countries there are now 400 of them with manufacturing plants in Shenzhen, China. Last year Chinese ports moved 88 Million TEU (twenty-foot equivalent containers). That represented one-third more than expected for the year. China's containerized trade is expected to reach 140 Million TEUs by 2010. While Hong Kong's growth levels are off, the ports of Shenzen and Shanghai are expanding at an incredible rate.

China's integration into the global economy means lower prices for consumers, lower interest rates and lower inflation. China is now consuming more than half of the world's cement, a quarter of its steel, and the most of its raw materials. This creates opportunity for Canada, but at the same time puts tremendous pressure on global transportation. In 1999, Vancouver ports, primarily Vancouver and Fraser River, handled just over 1 million TEUs and a five short years later that volume doubled to 2 Million due to trade from China. This shows no signs of abating and this will impact the way business is done.

The present world containership capacity is 9 Million TEUs representing 7,600 vessels. Another 3.8 Million TEUs or 1,000 vessels is contracted for delivery by 2009. This is an extra 42 percent increase in current capacity. China Shipping, one of the largest carrier companies in the world, has the largest vessels on order at 10,000 TEUs. Other carriers have suggested that they will soon be ordering 12,000 TEU ships.

The result of this growing trade has put pressure on all those in the logistics chain including shippers; carriers; port terminals; longshore labour; road and rail infrastructure; ports; and others. Billions in new investment is urgently required to tackle the problem. This will require cooperation from all stakeholders from both industry and governments. Many have argued that Canadian ports are now clearly one of the biggest economic development tools they have at their disposal. Canada must now seize the opportunities to grow its global trade which has been Canada's strength since the construction of the Canadian Pacific Railway and will sustain our country well into the future.

Overall the volume of international trade has outstripped shipping industry projections. China’s surging demand for imports is outstripping shipping capacity. According to the Baltic Dry Index, the rates shippers charge to transport bulk products such as iron ore and coal have tripled since August 2002.

In the next decade, Singapore is likely to replace London as the foremost maritime services center in the world. The Port of Singapore Authority has benefited from strong government support and is proving successful in attracting maritime service providers to the island. (Maritime Digest 2004)

China is having trouble unloading and the problem will worsen as demand for shipping continues to expand and flood of new ships comes into service. China is expanding capacity, but it cannot keep pace with demand, which is growing by 50 percent per annum at some of the country’s ports.

Even Singapore, one of the most efficient ports in the world, is suffering from congestion.

Deploying 8,000-plus-TEU ships ‘will be a challenge’. The big ships take longer to load and discharge, and that can throw a labour rotation off schedule. Carriers may be able to deploy the big ships in Singapore and Asian ports, but other options are limited. On the West Coast the ILWU does not have the productivity to handle the large ships. If they try to discharge the larger ships the congestion problems will be worse. (Journal of Commerce, November 2004).

170 new container ships with total capacity of 862,610 TEUs will come on the market in 2005, carriers say the continuing demand for shipping capacity to carry Chinese trade will continue to outstrip supply and lift freight rates for at least another year. (Journal of Commerce, Nov 22, 2004)

“I think the key issues facing shippers today are congestion and capacity. It’s across all modes. Congestion and capacity issues add to everything: They add to costs, they add to delays, customer-service failures and not having your product on the shelf.” (Michael J. Barr, Chair, National Transportation Industrial League Director of Global and Cross-border, Proctor & Gamble)

The first four 8,000-plus TEU ships called Long Beach in 2004 and represents the first wave of
150 to come on stream over the next three years.

Consider the impact of a large 8,000 TEU Vessel:
• Discharges 4,000 40-foot containers or 8,000 20-foot
• Leads to 2,000 Truck Moves
• Leads to 10 Double-Stack Trains Loaded with 200 Containers stretching 20 miles
• Needs 140 acres for a terminal to work a 8,000 TEU Vessel in a single call

As the more than 150 vessels of 8,000 TEU-plus capacity enter the trans-Pacific and Asia-Europe trades, they will displace Dozens of vessels of 5,000 – 6,000 TEU capacity. Many of those Vessels will shift to services calling in the Pacific Northwest and at East Coast ports. New York/New Jersey are preparing for larger vessels with deepening of berths to 50 feet and installed post-Panamax cranes able to stretch over 22 rows of containers. (Journal of Commerce, 2004)

“There is a lot of evidence that we are beginning to hit the wall in terms of the capacity of our transportation system in all modes, so it’s important that we begin to think creatively.” (Jeffrey Shane, Undersecretary, US Maritime Administration, DOT)