Industry firms transport freight and passengers on the open seas and inland waters. The freight segment is also commonly known as the merchant marine. Maritime transportation companies also furnish such services as lighterage (floating inter-locking barges), towing and tugboating, and canal and marina operation. For further information about water transportation vessels, see also Shipbuilding .

Merchant fleets of every nation carry merchandise between ports throughout the world in direct competition with each other. Intermodal ships, which deliver goods using two or more transport modes, primarily

Number of Merchant Ships by Country, 2008United Nations Conference on Trade and Development (UNCTAD).

consist of containerships, roll-on/roll-off (ro/ro) vessels, and container/barge carriers. General cargo ships include breakbulk vessels, partial container ships, and other ships designed to carry non-containerized cargo. Primary U.S. operators include CSX (Sea-Land Service Inc.), American President Lines (APL), and Seabulk International Inc.

According to the United Nations Conference on Trade and Development (UNCTAD), the world seaborne trade increased by 3.6 percent in 2008 to reach 8.17 billion tons. In 2009, according to the United States Maritime Administration (MARAD), the total world merchant fleet had expanded by 6.7 percent to 1.19 billion deadweight tons (dwt). Oil tankers (2.7 percent increase) and dry bulk carriers (7 percent increase) made up the bulk of the world fleet, which continued to increase over previous years. By 2003, the average age of a ship was 12.5 years, with 27.7 percent of ships reported to be 20 years or older. General cargo ships had the oldest average age of 17.4 years. Most markets showed increases in the volumes transported during 2003, with the volume of crude oil increasing 3.4 percent, and bulk products, including iron ore and coal, increased 9.1 percent. However, by 2008, the global economic crisis had impacted the shipping industry as well as nearly every other global industry. Poor credit abroad brought about a reduced demand for goods and shipping services and led to decelerated growth in international seaborne commerce.

Simultaneously, delivery of new vessels was on the rise as a result of orders placed before the financial crisis when the industry was expecting continued high growth rates in demand. A potential future crisis could be created by a surge of oversupply and a tumbling freight rate. Combined with a maritime security crisis, the industry could face a critical situation in the future. Based on data from Lloyd’s Register, UNCTAD reported that of the 30,228 ships registered by January 31, 2003, Greece was the world leader in terms of the number of vessels domiciled (the home of the parent company, or owner, of the ship), accounting for 19.52 percent of the world’s ships. Greece was followed by Japan, with 13.6 percent; Norway, with 7.57 percent; China, with 5.77 percent; the United States, with 5.54 percent; and Germany with 5.31 percent.

According to 2006 MARAD statistics, the U.S. merchant fleet comprised 465 total ships with 13.273 million combined deadweight tons (DWT). The majority were tanker ships, with a total of 97, followed by 76 container ships, and 27 ro/ro ships. By 2004, the total combined fleet of the world’s top 20 countries was 28,650 vessels, with a combined DWT of 821.7 million. The number of worldwide container ports grew by approximately 4 percent to reach 506 million twenty foot equivalent units (TEUs) in 2008. Mainland China ports accounted for nearly 22.6 percent of the total world container shipping ports.

Steamship lines worldwide have employed various means to improve their productivity, increase sailing frequencies and port coverage, and reduce costs.

Registered Shipping Vessels by Type, 2005 - Note: The total number of shipping vessels is 46,222.Lloyd’s Register.

Common methods have included vessel sharing agreements, slot and terminal rationalization arrangements, and the introduction of new technologies. Shipping lines also have relied on shipping conferences, which are groups of carriers that service particular trade routes, to facilitate cooperative arrangements and establish rates, although the importance of such conferences had begun to decline in the first decade of the twenty-first century. Conferences lessened the need for individual lines to build new ships when serving new routes. Intra-industry cooperation also enabled steamship lines to overcome the double hurdle of overcapacity and declining world petroleum demand.

In the mid-2000s, many Massachusetts seaside communities began asking the state to subsidize the construction of piers and docks for ferry services connecting cities and towns on Massachusetts Bay. Water transportation was projected to be a large part of the region’s future. “It’s not just an alternative from transportation that takes cars off the road, but it also brings people in and stimulates the local economy,” according to Louis Elisa, director of the state’s Seaport Advisory Council, which subsidizes municipal ferry projects. Gloucester Mayor Carolyn Kirk expressed the desire for her city’s harbor to be converted from an under-utilized resource to a revenue source.

Rising shipping costs were expected to reduce some of the advantages of inexpensive labor in China. Outsourcing of manufacturing to China was probably already underway in 2008, according to Jeff Rubin and Benjamin Tal of CIBC, a Canadian bank. The cost to ship a standard 40-foot container to the U.S. East Coast from Shanghai had nearly tripled, which minimized the already small profits for Chinese exports.

Cargo vessels constitute the largest component of water transportation. Depending on their design, they might haul general cargo (finished and unfinished goods), dry bulk, or liquid bulk. These vessels are structured as common carriers available for public use to provide transportation for passengers or cargo and operate on regular timetables and port rotations.

Containerized vessels are designed to be highly efficient. Containers used to haul cargo need less labor and time to load and unload than breakbulk (noncontainerized) vessels. The containerized category consists of intermodal ships, including roll-on/roll-off (ro/ro) vessels, and container/barge carriers. Ro/ros make it possible for cargo stored in containers to be passed over ramps through doors in the ship’s, while cars, trucks, and other vehicles could be driven on and off the vessel’s aft (rear).

The five trade lanes that account for the vast majority of U.S. international ocean liner shipments are United States-northern Europe, United States-Asia, United States-Mediterranean, United States-South America, and United States-Australia. These trade lanes have varied in their characteristics. Containerized shipping was concentrated in three trade lanes: Asia-North America, Asia-Europe, and Europe-North America. The northern Europe and Asia trades have been the largest in volume and value.

Some dry bulk commodities, such as grain, lumber, cement, potash, coal, and ore, cannot be containerized and are shipped in vessels specially designed for those cargo types. Many have special hoisting devices that assist in unloading. Liquid bulk, such as crude oil and refined petroleum, is transported in tankers, which require such special features as cofferdams that separate the tanks to prevent leakage, expansion trunks, mechanical venting, and steam heating to reduce oil viscosity in cold weather.

Beyond vessel design, a prominent feature of international liner shipping is the existence of carrier conferences, an affiliation permitted in almost all countries. The characteristics of concerted activity and partial immunity from competition and antitrust laws are common to such conferences worldwide. Members of a conference enter into an agreement under which they consent to fix and maintain rates to be charged by the members of the conference. Most nations recognize the conference system but differ in their respective laws and regulations.

The European Union gives antitrust immunity to conference carriers alone. In Europe, conferences are free to organize themselves as their members see fit and may limit membership. By limiting membership, closed conferences are better able to control capacity and thereby exert greater influence over rates than open conferences. Australia provides partial antitrust immunity and exempts only rate fixing, pooling or apportioning of business, cargo restrictions, decisions on conference membership, loyalty agreements, and practices essential to the conference service and of overall benefit to exporters. Likewise, Canada grants conference carriers block antitrust immunity, but independent carriers are subject to competition laws. As in Australia, Canadian policy holds that discussion agreements between conferences and independents are illegal. Japan has granted the broadest exemption in that all ocean liner and non-liner transporters in domestic and foreign trades receive blanket antitrust exemption. Although the United States continues to recognize the existence of conferences, the passage of the Ocean Shipping Reform Act of 1998 (OSRA) took away much of the commercial power of conferences operating in the United States. Members can no longer be required to adhere to conference rates and restrictions cannot be placed on the service agreements members negotiate. In addition, conferences cannot require members to disclose the rates they charge.

The International Maritime Organization (IMO), an agency of the United Nations, began in 1958 when it was determined that there was a need for an international body to regulate safety in the shipping industry. In 1960, the IMO created a new version of the International Convention for the Safety of Life at Sea (SOLAS). In 1973, the IMO created the Convention for the Prevention of Pollution from Ships covering accidental and operational oil pollution, as well as pollution by chemicals, goods in packaged form, sewage, garbage, and air pollution. However, how these conventions are implemented varies from country to country.

The Chinese government reported that the country had the world’s fourth largest maritime fleet. In addition, five Chinese ports had been listed among the world’s top 10 for throughputs (the quantity of raw material processed for any given time). According to the Ministry of Transport’s Director of Water Transport Song Dexing, China’s water transport industry had made significant progress beginning in 1978. Growth in the water transportation industry in the mainland port throughput as well as in container throughput helped China maintain top ranking in the world for five successive years, with Shanghai rated as the world’s largest port. The top 10 liner companies included The China Shipping Company and China Shipping Container Lines Company.

Transportation of goods over water is as ancient as civilization, but did not come to full fruition as an industry until explorers seeking new trade routes for cargo opened sea routes from Europe to Asia and the Americas. To accommodate increased trade volumes, large merchant ships had to be built. Spanish carracks, which held some 1,600 tons of cargo, and later, galleons, became the forerunners of the full-rigged ships that dominated trade during the seventeenth and nineteenth centuries.

Clipper ships began to be used in the nineteenth century. Carrying passengers as well as cargo, these ships became known for their speed, some traveling as fast as 18 to 20 knots. Even with the introduction of the steamship in the mid-nineteenth century, some clipper ships continued to post the fastest speeds of all ships for a time. By the late nineteenth century, however, clipper ships began to be replaced with Britain’s adaptation of ironhulled steamships.

The steamship radically transformed ocean shipping and led to the creation of steam-powered liner systems. By the twentieth century, mechanically propelled vessels had replaced nearly all sail-powered cargo ships. With the exception of wind-driven dhows (Arabian boats with triangular sails) and junks in Asia, by 1960, almost 60 percent of all commercial ships were powered by diesel engines, 30 percent by steam turbine, and the rest by steam-reciprocating engines. Nuclear power, which proved impractical for commercial purposes, came into use in military ships in the 1960s.

The seas remained territory mainly for cargo carrying lines, however. With increases in global trade in the mid-twentieth century, the seas soon became crowded with cargo vessels operated by both large and small corporations. Vessels were redesigned to allow for transporting mixed cargo and accommodating bulk commodities, such as grains, mineral ores, coal, and oil. Until the late 1960s and early 1970s, these general cargo or breakbulk, ships were widely used by the liner trades. After a truckload or boxcar load of cargo was delivered to the pier, breakbulk ships were loaded by breaking the truckload or boxcar load into small quantities that were lifted onto the ship with a sling and boom and stowed in the cargo hold. This process was fairly laborintensive, costly, and time consuming.

To become more efficient and accommodate large payloads, cargo ships were extensively redesigned. In the late 1960s, containerized vessels were introduced that were capable of hauling cargo in 20- and 40-foot containers. These large metal boxes could be placed on a tractor-trailer chassis, loaded at the exporter’s plant, sealed, shipped by truck or train to the port, lifted onto the container ship by a dockside crane, and stacked in specially designed slots. The Page 1177  |  Top of Articlecontainer itself was then unloaded at the destination. This could be accomplished without directly handling the cargo inside the container. Vessels were specifically designed or adapted to carry these containers. A roll-on/roll-off design made it possible for containers to be passed over ramps and through doors in the ships’ sides while cars, trucks, and other vehicles could be driven on and off the vessel. Containerized ships, which accommodate containers filled by consolidators or shippers, were designed to receive cargo with cranes or special hoisting equipment.

The use of containers had the greatest impact on the cost of labor. In 1960, in-port labor costs accounted for 80 percent of the total cost of a typical voyage. With containerized shipments, average handling time per voyage fell from 157 hours to 31 hours, reducing cargo-handling costs between 80 and 65 percent. With steamship lines introducing containerization on all of the major trade routes, many turned to intermodal services whereby containers could be lifted on and off trucks, railroad cars, and steamships, allowing for seamless shipping over land and water. Intermodal services minimized bottlenecks in port as cargo was transferred between modes of transportation. Such efficiencies allowed the development of just-in-time production methods that turned transportation into an important part of a coordinated warehousing/production logistical system.

Supertankers, carrying 24,900 deadweight tons (DWT), were first built in 1949. After the Suez Canal was closed by the Egyptian government during the 1956 crisis, larger and more efficient tankers, many of which were constructed by the Japanese, were built to haul 100,000 tons around the Cape of Good Hope, bypassing the Canal. Tankers were adapted to meet increasing demands for hauling crude oil when they could not keep pace with supertankers. Even larger tankers, known as large crude carriers, capable of accommodating 250,000 to 275,000 tons, also were being built. Eventually, the success of these large vessels led to the development of ultra-large crude carriers boasting capacities up to 400,000 tons. In the 1990s, even larger vessels were being developed, and special consideration was added to protect tankers against oil spills in case of collision.

Tugboats, which were originally called towboats, were introduced to help large vessels navigate harbors and channels. Utilizing standard engines, they were able to generate enormous towing and pushing power due to a very large, slowly rotating propeller. Refrigerated fishing boats capable of catching, processing, and freezing fish while at sea were another development in vessel design. Water taxis, including hovercraft, which make use of air pressure to ride just above the surface of the water, and hydrofoils, which skim along the surface of the water while the hydrofoils remain submerged, have also come into use. Hydrofoils can move up to 50 knots due to the hydrodynamic advantage gained by having the vessel’s hull out of the water while the foils remain submerged, powered by individual engines and motors.

The passage of the Ocean Shipping Reform Act of 1998 (OSRA) was a momentous event for commercial shipping. OSRA completely altered how service contracts between carriers and shippers were negotiated and regulated. It freed carriers to negotiate rates without interference from shipping conferences. The effect of the Act was almost instantaneous. During the first year it was in effect, the Federal Marine Commission reported more than 141,000 service contracts. With the international maritime industry in a period of growth and ferment that lasted into the 2000s, government regulatory bodies worldwide continued their attempts to guide the industry’s development. OSRA ushered in a new era in regulation, the most significant of which was the influence on regulators in other countries as well.

International shipping was seriously affected by the economic troubles and subsequent financial collapse in several Asian nations in the late 1990s. By 1999, conditions had apparently improved. International shipping reached a record high of 5.23 billion tons, according to the United Nations Conference on Trade and Development (UNCTAD). However, the 1.3 percent growth rate was the lowest in more than a decade.

By 1999, world surplus tonnage had decreased to 23.7 DWT, or 3 percent of the world fleet, the lowest in the 1990s. By the end of the decade, although demand for maritime transportation of freight was threatening to overtake supply, price competition was driving rates down. In 2000 the industry rallied, and rates jumped to their highest levels in 30 years, enabling both container shipping firms and dry bulk carriers to realize profits. Larger firms, such as Nippon Yusen Kaisha, had recovered from the 1990s downturn and reported highly profitable years in the early 2000s. Consolidation continued, the most notable of which was the acquisition of Sea-Land Service Inc. by the A.P. Moller-Maersk Line in 1999. The most profitable shipping concerns became those that were part of a conglomerate corporation that also operated concerns in related fields including shipbuilding, intermodal transportation, and freight handling. Such shipping lines included Hyundai and Hanjin of Korea, Mitsui OSK and K Line of Japan, P&O Nedlloyd of the United Kingdom, and Hapag-Lloyd of Germany.

Shipping conferences, or associations of ocean carriers operating in specific trades, played a major role in freight-carrying steamship lines. After the first conference was formed in 1875 to serve the Calcutta-England trade, the number of conferences grew rapidly. Conferences were primarily formed to counter and avoid the rate wars that had resulted from rapid Page 1178  |  Top of Articleincreases in tonnage transported between 1860 and 1880. Shipping companies competed for business by building ships of increasing speed and size to realize greater economies of scale. National policies of most large trading nations favored the development of a strong national flag merchant fleet. Every major power in Europe, as well as Japan, Brazil, and some of the British dominions, employed subsidies to expand, protect, and control merchant shipping.

Conferences were formed to promote cooperation among conference members. In general, they:

The operation of conferences in the early twentieth century prompted two major investigations of the system. In 1909, the British Royal Commission concluded that the conference system was warranted and a deferred rebate system should be accepted. From 1912 to 1914, the U.S. Congress conducted a major investigation of conferences, concluding that while conference agreements were used to restrain competition among the conference members, there were certain advantages to the conference system. Among these benefits were improved service arising from greater stability of rates and greater regularity of sailings that occurred as conference members coordinated their schedules.

By rationalizing sailing dates and ports of call, conference carriers were able to reduce costs. In turn, stable rate levels promoted investment in newer and more efficient ships. Disadvantages included the monopolistic nature of the conference, the possibility of earning excess profits, indifference to cargo delivery, arbitrary policies for settling claims, failure to give adequate notice of rate changes, and retaliation and discrimination against shippers. It was believed that large volume shippers received better rates and service. As a result, the U.S. Congress passed the Shipping Act of 1916, which offered limited acceptance of the conference system. The Shipping Act provided conferences with antitrust immunity, while maintaining a major regulatory role in seaborne transportation for government agencies. To get around the more burdensome portions of the law, yet ensure the stability and effectiveness of its business-friendly aspects, conferences began to use a dual-rate contract system that awarded shippers who signed requirements or loyalty contracts with lower tariff rates. By the end of the 1950s, more than 60 conferences and thousands of shippers used some form of dual-rate contract.

In the wake of the 1961 amendment, further calls for reform were fueled by carrier complaints about delays in the FMC’s approval process for conference agreements, application of vague standards for approval, and loss of predictability in regulatory decision-making. As newcomers crowded into the U.S. trades, many routes became heavily overrun, contributing to a growing instability of rates and service. Moreover, intense competition led several established carriers to offer shippers informal and illegal rebates on published rates.

The Shipping Act of 1984 replaced the Shipping Act of 1916 and its amendments, focusing on unjust discrimination between shippers and attempting to harmonize the objectives of facilitating an efficient ocean transportation system while controlling the potential abuses and disadvantages allegedly inherent in the conference system. After much debate on the effects of allowing discriminatory pricing for ocean shipping services, the 1984 Act specifically authorized service contracts as a compromise between carrier and shipper interests. In exchange, however, Congress removed the antitrust immunity for dual-rate contracts, making carriers and conferences file these contracts confidentially with the FMC, which in turn would make public a summary of these contracts. The idea was to block the conferences’ ability to abuse their market position.

While the 1984 legislation was intended to augment competition, opponents continued to argue that conferences were actually legalized cartels and should not be exempt from any antitrust laws. They maintained that competition in the open market should be encouraged to stimulate creative pricing and that subsidies by foreign governments to their own national shipyards should also be abolished, making U.S. shipyards more competitive. Buyers of steamship services, particularly those transporting large volumes, argued that they had the legal right to negotiate prices and service levels based on fair market value and that foreign companies do not operate under these constraints.

One example of the tremendous power of the conferences was the operation of the Trans-Atlantic Agreement (TAA), which was formed in 1992. Nearly 70 percent of the steamship lines carrying freight on the North Atlantic entered into TAA’s price-setting pact to increase rates on a route that was losing revenues due to diminished trade between the United States and Europe. The rates agreed upon by TAA members caused an uproar among shippers, who claimed that the conference Page 1179  |  Top of Articlecaused freight rates to rise 54 percent in one year, and that no alternative means of transportation existed. Similar ongoing complaints lodged against the TAA by shippers have resulted in nearly continuous investigation of conference practices by the FMC and the European Commission.

The Ocean Shipping Reform Act of 1998 (OSRA), the long-awaited revision of the Shipping Act of 1984, went into effect in May 1999. Among other provisions, the new law changed the nature of service contracts between carriers and their customers. They were no longer public documents but confidential agreements that were not open even to fellow conference members. Consequently, carriers would be able to negotiate their rates independent of conference rate structures. Under OSRA, conferences were prohibited from requiring members to disclose their rates. The philosophy behind the prohibition was to free prices from being set by conferences, giving shippers greater flexibility in negotiating favorable rates. With their power to determine the rates for specific routes stripped away, at least for U.S. trade, conferences, and the monopolistic practices they represented to some, were expected to slowly disappear or to evolve into shippers associations or similar marketing organizations.

Throughout 2000 and 2001 the Canadian Parliament tried unsuccessfully to hammer out its own legislation based on the U.S. model. Following OSRA’s lead, bodies such as the European Union and the Organization for Economic Cooperation and Development (OECD) came out in favor of doing away with antitrust exemptions for shipping conferences and replaced those industry agreements with confidential individual service contracts. The U.S. Federal Maritime Commission (FMC) also played a key international role, repeatedly taking action to end Japanese port regulations that discriminated against non-Japanese carriers. In 1997 the FMC fined Japanese ships entering U.S. harbors, resulting in reform to the Japanese port regulations in 1998. However, in August 2001 the FMC reopened and expanded its investigation when it became evident that discrimination had not ended.

In 2001, the bottom fell out of the industry and rates plummeted, with containership prices plunging 15 percent. A crude oil tanker that had earned US$65,000 a day in March 2001 could earn only US$16,000 a day the following June. The crash sent shockwaves through the industry, causing American Eagle Tankers to call off an initial public offering and Overseas Shipholding Group to cancel a US$150 million stock offering.

Following the terrorist attacks against the United States on September 11, 2001, the U.S. Congress passed the Maritime Transportation Security Act of 2002, canceling its visa procedure for crew members. The Act was intended to ensure the safety of the maritime industry, citing the need to verify that a visa actually belongs to the person using it. The cost to implement these security measures was a major concern to shipping companies. The International Labor Organization of the United Nations supported the U.S. action, seeking ways to protect and identify maritime workers while protecting their rights. However, a lack of international agreement on the standards to be used for biometric technology was delaying resolution of the issue. Its full provisions went into effect in mid-2004. The regulation required vessels and ports to conduct vulnerability assessments and develop security procedures that included passenger and baggage screening, security patrols, and the installation of surveillance equipment.

The loss of the oil tanker Prestige off the Spanish coast in November 2002 had a significant effect on the shipping industry. Carrying 77,000 tons of heavy fuel, the ship began to list in severe weather and started leaking its load. Spanish, French, and Portuguese authorities would not allow the ship to be brought into shore and after limping out to sea, the ship sank. The result was an ecological disaster, with approximately 250 miles of polluted Spanish, Portuguese, and French coastline. The Spanish government estimated that US$9.9 billion would be needed to clean up the coast. The incident raised several serious concerns in addition to the environmental effects. First, the Prestige had not been inspected in 12 months, highlighting the low rate of inspection in many countries. France and Spain stated that single-hull ships would not be allowed to sail within 200 miles of their shores. The European Union set plans in motion to phase out and eventually ban single-hull vessels. Spain sued the American Bureau of Shipping, which led to the U.S. government instituting a law to ban single-hulled ships by 2005. At the time of the accident, there were 5,500 single-hull vessels in operation, compared to 2,500 ships with double hulls. Also at issue was the need for the development of places of refuge for vessels in distress.

According to Lloyd’s Register, in January 2005, the worldwide merchant marine industry included 46,222 registered shipping vessels totaling 597.7 million gross tons. These included 18,150 general cargo ships, 11,356 tankers, 6,139 bulk carriers, 5,679 passenger ships, and 3,165 containerships, as well as 1,733 other types of vessels.

The United Nations Conference on Trade and Development (UNCTAD), reported that as of 2008, the market had shifted in terms who the countries owning merchant ships. Japan led the world with 3,757 ships, followed by Germany (3,380), China (3,247), Greece (3,162), Russia (1,448), Norway (1,412), Turkey (1,199), South Korea (1,144), Hong Kong (1,114), the United States (1,080), Page 1180  |  Top of Articleand Indonesia (1,042). Growth in the industry was expected to continue, mainly due to the economic performance of the United States, Japan, and China.

In Boston, Massachusetts, an editorial in The Boston Globe p July 24, 2008, supported the development of the waterfront and the inner harbor, citing the Lovejoy Water Shuttle Terminal in Boston’s North Station. Love-joy had great unrealized potential, offering “strong rail connections, good access for disabled people, and easy proximity to businesses and attractions, including TD Banknorth Garden.” The owner of the water shuttle terminal, the Massachusetts Department of Conservation and Recreation, was reportedly amenable to a water shuttle service at Lovejoy Wharf, and acknowledged the need to join forces with water transit experts in the state’s Executive Office of Transportation to create a plan to incorporate the Lovejoy terminal into Boston’s water transportation network.

On July 23, 2008, Evergreen Marine Corporation, of Taiwan, signed an agreement to maintain service between Asia and Baltimore through 2018, based on an expected increase in shipping between Asia and the U.S. East Coast. The agreement was dependent on the expansion of the Panama Canal by 2014, which would allow Evergreen’s largest ships to use the Canal. Evergreen, the second largest shipping line in Baltimore, is the only one serving Baltimore directly from Asia.

Dramatic increases in the cost of fuel, combined with a peak season surcharge in 2008, resulted in increases between 25 and 30 percent over 2007 shipping rates for cargo between the United States and India, although the rates remained lower than they had been in 2006. The increase was expected to be reflected in revenues for 2008 holiday sales.

The Baltic and International Maritime Council/International Shipping Federation (BIMCO/ISF) reported in its 2005 Manpower Update that there were about 721,000 sailors, with 586,000 needed, and 466,000 officers, with 476,000 needed. According to BIMCO/ISF, these figures reflected a continuing trend for a surplus of sailors and shortage of officers. Recruitment increased steadily during the 1990s, until it was diminished by the Asian financial crisis. Although the size of the world fleet increased 1 percent per year between 1995 and 2000, labor needs were offset as older ships were phased out and new vessels that required small crews were introduced. There had been a steady change in the nationality of the global workforce during the 1990s as well. The number of seafarers from the Organization for Economic Cooperation and Development (OECD) nations, which were primarily in the European Union, Japan, and North America, dropped from 31.5 percent of the total workforce in 1995 to 27.5 percent in 2000. By 2004, UNCTAD was reporting that Asia was providing 60 percent of the world’s sailors, with the largest supplier being the Philippines, followed by Indonesia, Turkey, China and India.

According to the U.S. Bureau of Labor Statistics (BLS), employment in the U.S. water transportation sector fell gradually from about 211,000 in 1980 to 175,000 in 1995 before increasing in 2000, eventually reaching 201,000. However, according the BLS, by 2008, that number had significantly decreased to more than 81,000. Nonetheless, in 2000, water transportation workers comprised only 4 percent of the total U.S. transportation workforce, an increase of 3 percent over 1980. The water transportation occupation sector was projected to grow by 15 percent, faster than the average between 2008 and 2018. The 2010–2011 National Occupational Employment and Wage Estimates issued by the BLS reported that 32,900 sailors and marine oilers employed in the industry earned a mean annual salary of US$34,390. Captains, mates, and pilots numbered about 33,100 and earned a mean annual salary of US$61,960. There were about 11,500 ship engineers employed in 2010, earning US$60,690.

In the mid-2000s, some schools began to offer career technical training in industry-related classes as the need to replace the aging population of merchant marine sailors was recognized. San Diego, California’s Sweetwater School District, for example, offered a Regional Occupational Program course in Maritime Services at their high school to prepare students to work immediately in full-time maritime positions after graduation.

Danish-owned A.P. Moller-Maersk Group was founded in 1904 as A/S Dampskibs-selskabet Svendborg (The Steamship Company of Svendborg) by Peter Maersk Moller and his son, Arnold Peter Moller. In 2002, the company was ranked as the largest container shipping company in the world by the United Nations. The company purchased P&O Nedlloyd in 2005 and changed its container-shipping segment name to Maersk Line. In 2008, A.P. Moller-Maersk had over 500 container vessels, as well as tankers, liners/container vessels (Maersk Sealand), bulk carriers, supply ships, special vessels, and drilling rigs, totaling nearly 12 million DWT. The company had ordered 34 ships in June and July 2008 for delivery by 2012. With offices in more than 135 countries and approximately 115,000 employees worldwide, the company reported 2009 revenues of approximately US$47.694 billion. The group included various subsidiaries that specialized in various types of shipping, including Maersk Sealand (container Page 1181  |  Top of Articleshipping), Maersk Tankers and Maersk Gas Carriers (tanker shipping), and Maersk Bulk (bulk shipping).

Maersk Line, the company’s cargo liner service, has linked the United States with Asia since 1975 with fast, fully containerized ships operating on a fixed weekly schedule. In 1999 it was expanded greatly by Moller’s acquisition for US$800 million of the international liner business of Sea-Land Service Inc. in a deal that included all of Sea-Land’s vessels, containers, container terminals, and some leases. The takeover was the largest deal to that date in the consolidation of the shipping industry. Sea-Land’s 70 containerships boosted Maersk’s fleet to approximately 180 vessels and made the new firm, Maersk Sealand, twice as large as its nearest competitor in the container shipping business. By 2002, Maersk Sealand was providing service between the United States and Asia, Northern Europe, the Middle East/Mediterranean, and eastern and western Africa; Europe and the Middle East, Asia, eastern and western Africa; Asia and the Middle East and eastern and western Africa; and Japan and Indonesia and Thailand.

Maersk projected global growth for the industry to be between 7 and 8 percent annually in 2008, with trade in Asia growing even more. The company’s Asia Pacific Chief Executive Jesper Praestensgaard regarded the purchase of ships as an investment that will last 25 to 30 years. He also acknowledged that oil prices in the late 2000s were causing decreased consumption and increased overhead in typical transportation costs.

Mediterranean Shipping Company (MSC) was founded by Gianluigi Aponte in 1970 in landlocked Geneva, Switzerland. MSC was the second largest container ship company in the world in 2010, with 414 container vessels and a capacity of 1,638,962 TEUs. MSC’s success is based on customer focus and being cost efficient with an ability to react quickly to market trends because it is a privately owned company. The company also operates the MSC Cruises, which is the third largest cruise group in the world. The number of MSC employees is estimated at 29,000, operating in 270 ports worldwide on six continents, with revenues estimated at US$3 billion per year. In 2007, the MSC line was named shipping line of the year for the sixth time in 11 years, an achievement not matched by any other line. MSC has also ordered 11 new ships that will be able to carry up to 15,000 TEUs, which will make them some of the largest container vessels in the world.

Founded in 1837, Royal P&O Nedlloyd (P&O) grew into a major transport company. The company’s history goes back to the era of the steamship, when its founders started trade links between northern Europe and the Mediterranean/Balkan region. In December 1996, P&O Containers and Nedlloyd Lines merged to form P&O Nedlloyd. By 2005, it operated in 18 countries, with port operations being the fastest growing segment of the company. P&O was the leading provider of ferry service in the United Kingdom, with a fleet of 26 ships. In 2004, one-third of its revenues of more than US$6.7 billion came from its port business, one-third came from its ferry business, and approximately one-sixth came from its container shipping business. In 2004, the 50-50 joint venture P&O had with Royal Nedlloyd, P&O Nedlloyd, became a public entity that was traded on the Amsterdam Exchange, for which P&O retained 25 percent of the shares. The new company was renamed Royal P&O Nedlloyd, and was the third largest container company in the world at the time of its creation. In 2005, A.P. Moller-Maersk Group purchased P&O Nedlloyd. At the time of the takeover, P&O Nedlloyd had a fleet of 156 vessels that called at 217 ports in 99 countries. The company’s 2004 revenues were reported at US$6.7 billion.

Mitsui O.S.K. Lines Ltd.(MOL) was founded in 1884 as Osaka Shosen Kaisha, launching an “express” service that traveled between Yokohama and New York in less than 26 days. By 2005, the company was Japan’s largest marine transportation company, with the largest merchant fleet in the world. The company operated containerships and car and truck carriers, as well as dry bulk carriers that transported a huge variety of products. including electrical goods, iron ore, liquefied natural gas, and crude and refined petroleum products. The MOL Group also managed ports and operated tugboats, ferries, and cruise ships. MOL’s revenues in March 2004 were more than US$9.4 billion and the MOL Group reported 9,626 employees in March 2008. Revenues were up 16.4 percent in 2008 over 2007.

MOL assessed additional fees on goods transported to the United States and Canada from Vietnam beginning on September 1. The increase was blamed on delays at ports, which port representatives claimed was unfounded because the situation had been corrected. Saigon city officials agreed that the fees were unreasonable, but only Maersk removed its fees.

Nippon Yusen Kaisha Line (NYK) was established in Tokyo in 1885. The line responded to changing market forces in the mid-1990s by entering into an alliance with NOL of Singapore, Hapag-Lloyd AG of Germany, and P&O Containers of the United Kingdom in 1995. In 1998, NYK inaugurated a containership service for trade with the United States and Europe and opened a branch in Taipei, Taiwan. Two years later, the firm opened NYK Logistics in the Peoples Republic of China.

NYK’s core businesses by 2005 were container transport, tramp shipping, and passenger cruise ships. The company boasted the largest liner fleet in Japan and the largest fleet of car and truck carriers in the world. NYK was a leader for the development of Pacific trade routes by incorporating the Panama and Suez Canals as short cuts. The company’s Asia East Coast Express (AEX) service, which used the Suez Canal, connected Southeast Asia to ports on the U.S. East Coast within 22 days. Its Singapore California Express connected Singapore to the U.S. West Coast within 16 to 18 days. Its 2000 profits of US$290 million were more than double its results for 1999.

By 2007, the company’s revenues had reached nearly US$26 billion with about 55,000 employees worldwide. It had a fleet of 776 major vessels by 2008, with offices in 240 locations in 27 countries.

HAPAG-Lloyd’s (Hapag) dates back to the mid-nineteenth century when the Hamburg-Amerikanische Packetfahrt-Actien-Gesellschaft (the Hamburg-American Steamship Co.) was founded in 1847, and Norddeutscher Lloyd (North German Lloyd) was founded in 1857. The two companies were formed as passenger lines and were the leading German ship lines for both passenger and cargo service through the first half of the twentieth century. In 1930, the two formed the Hapag-Lloyd Union and merged in 1970 to form Hapag-Lloyd. Shortly after that, Hapag established the TRIO Group, which was a global cooperative venture with four other companies, NYK and Mitsui O.S.K. Lines of Japan and Overseas Containers Ltd. and Ben Line of the United Kingdom. The formation of the TRIO group was the largest in the history of shipping and resulted in the replacement of 60 vessels with the group sharing 19 giant containerships. The next two-and-a-half decades were difficult for the company, which was affected by a downturn in shipping caused by a surplus of tonnage and economic issues. By 1991, Hapag was reporting profits. The firm was reorganized in 1994 to streamline operations. By the time it celebrated its 150th anniversary in 1997, it was shipping about 1.1 million 20-foot containers annually with profits of US$48 million, for a 23 percent jump from 1996.

German tourism giant Touristik Union National (TIU) bought a controlling share of HAPAG-Lloyd in 1998. As of 2002, the company reported US$4 billion in revenue. In 2004 the shipping company accounted for 19 percent of its TIU’s revenues of US$24 billion. In 2007, the company ordered eight new containerships with 8,730 TEUs. Germanischer Lloyd awarded Hapag-Lloyd a “GL Excellence—5 Stars” certificate based on “particularly high standards of safety and security, quality, labour protection and environmental protection.” It was the first such award worldwide. In 2008, TUI announced its intention to sell its entire stake in Hapag-Lloyd shipping by the end of the year. Industry speculation predicted a sale price of close to US$5.9 billion.

Hanjin Shipping Company Ltd. of South Korea was established in 1977 as Hanjin Container Lines. It opened its first international route in 1978, serving the Middle East with one vessel capable of carrying 750 TEUs. In 1979, Hanjin began to serve the Pacific-Southwest and in 1983 provided all-water service to the U.S. East Coast, as well as between South Korea and Japan. In 1988, the company merged with Korea Shipping Corp. and became Hanjin Shipping Company Ltd. By 1991, the company had begun its Pendulum Service between the United States and Europe through Asia. Trans-Atlantic service was initiated in 1995, as was Mediterranean service. Hanjin, DSR, and Cho Yang Lines USA Inc. consolidated their shipping resources in 1996, creating a combined fleet of 70 vessels with a capacity of 194,000 TEUs. In 2001 Hanjin was the second largest shipping company in the world in containership loading tonnage. In November 2001, Hanjin formed the United Alliance with COSCO Container Lines, Senator Lines, K Line, and Yang Ming Marine for international trade. As of 2009, the company owned approximately 200 ships that transported over 100 million tons of cargo annually.

China Ocean Shipping (Group) Company (COSCO), the state-owned shipping company of China, was founded in 1961 and began service between China and the United States in 1982. COSCO’s U.S. East Coast and Gulf Coast service utilized a fleet of eight container vessels, five of which had a capacity of 1,500 TEUs and three of which had a 1,200 TEU capacity. The company served the U.S. West Coast with a fleet of six vessels that had a combined capacity of 2,500 TEUs.

Throughout the mid- to late 1990s, COSCO increased its role in global maritime trade. The company reversed its traditional position as an independent carrier and entered into a space-sharing agreement with K Line and Yang Ming Line on its Asia-Europe routes in 1996. This agreement was officially renewed in 1998. In 1997, COSCO announced that it was expanding its service to include trans-Atlantic routes, which challenged the dominance of the TAA. COSCO again shed its independent status when it joined the Westbound Pacific Stabilization Agreement (WSTA) in 1998 in what appeared to be leading up to the company’s entering a shipping conference. In 2005, the company reported revenues of US$17 billion, although it does not usually make its financial Page 1183  |  Top of Articlestatus public and had a merchant fleet of 600 vessels with an annual capacity of 270 million tons.