BOOSTING TRANSSHIPMENT AND FEEDER OPTIONS

With frontier markets currently being underserved by direct routes, the industry has seen an increase in the range of options for transshipment, where containers are transferred from one vessel to another at one location, before being shipped to their intended destination.

Transshipment plays a key role in the global supply chain, supporting connectivity by enabling cargo to reach ports in all markets. Originally developed to service smaller ports that could not accommodate large container ships, the growing sophistication and complexity of the maritime industry has fuelled the evolution of specialised transshipment hubs.

Geography has played a part in this development, with hubs proliferating at the crossroads of shipping routes, typically in areas with low maritime deviation and strong connectivity between north-south and east-west shipping lanes. Demand for transshipment is particularly strong along Asia–Middle East–Europe trade routes, with the Port of Singapore as the world’s busiest transshipment hub, followed by Shanghai, Shenzhen, Busan and Hong Kong.

Companies benefit from the availability of transshipment because the increased flexibility can deliver significant cost benefits, enabling them to consolidate smaller shipments or redistribute larger ones depending on need. Global transshipment incidence currently represents approximately 30 percent of maritime trade, reflecting its importance to the industry.

The rise in the number and scale of transshipment hubs has encouraged a parallel increase in demand for feeder services, where medium-sized vessels are used to collect shipping containers from di erent ports and transport them to central terminals or transshipment hubs where they are loaded onto bigger vessels for further transport. The popularity of this ‘hub and spoke model’ for container logistics is likely to continue growing, particularly if current trends in shipbuilding continue.

The new generation of vessels rolling out of shipyards are much larger and capable of carrying increased loads, but these ‘mega-ships’ can only service the largest, most sophisticated ports. Smaller vessels, feedering and transshipment services will be required to service customers in ports that are not on the floating giants’ trade routes.

This trend points to the core structural weakness in the industry: the divide between the global shipping leaders – the companies with the largest fleets that are capable of purchasing and deploying mega-ships –and the smaller, typically family-owned businesses that fill the gaps in connectivity.

One interviewee explains: “The challenge is that the larger shipping lines, by the nature of their business, are focused on the main routes and have little incentive to provide connectivity for smaller ports away from the shipping lanes. The small businesses are there to fill that gap, but when market conditions are challenging – such as in a global recession or during COVID – they don’t have the resources to expand or even stay in the market.”

Several interviewees identified this connectivity gap –the need for a provider with the resources of the larger shipping companies, but the responsiveness of the smaller operators to meet unmet demand. They argued that the availability of the services of such a company would be most valuable on Asia–Middle East–Europe trade routes.