According to the IMO, over 90% of the world trade is carried by sea. Oceans are busy highways – with some routes used more than others, depending on the trade requirements that control the inflow of vessels and containers. This affects the freight charges and tariffs.
Shipping is responsible for the import/export of raw material, manufactured goods, fuel, etc. around the world. With most of the global trade carried through the sea, shipping is growing rapidly. And so are evolving the shipping routes. Today, we’ll talk about how you navigate the ocean paths. As well as how you can control your container tariff.
Shipping routes – the what, why, how
Similarly to roads on land, sea routes are used by vessels on oceans and lakes for commercial shipping. They connect major ports across the world and are responsible for carrying out the import/export of goods efficiently. Every day, thousands of ships of all sizes use these maritime routes. Some of the busiest shipping routes across the world include:
The English Channel (between the UK and France)
The busiest sea route in the world, it connects the North Sea and the Atlantic Ocean. More than 500 ships pass through this channel daily. It also has the world’s busiest shipping lane: The Dover’s Strait.
The Strait of Malacca (near Indonesia, Malaysia, Singapore)
The shortest route between the Pacific and the Indian ocean. It links major Asian trade hubs like India, Malaysia, Singapore, China, etc. More than 83,000 vessels use this route annually. Almost 40% of the world traffic passes through this strait.
The Panama Canal (in the US)
An artificial seaway, this was designed to reduce transit time between the Pacific and Atlantic ocean. It shortens the voyage by ~8,000 miles and cuts the 67-day transit time to just 10 hours. Close to 14,000 vessels use the route every year.
The Suez Canal (near Egypt)
The shortest sea route between the Atlantic and Indian ocean via the Red Sea. This canal cuts the 24-day transit time to just 16 hours. It is one of the most heavily used ocean lanes, with more than 100 ship passes daily. The canal is so narrow that it cannot regulate two-way traffic, and the wait-time of vessels can be up to a week.
The Danish Straits (Denmark, Germany & Sweden)
They link the North Sea and Baltic Sea and comprises 3 channels: the Øresund, the Great Belt, and the Little Belt. These are important points of transit for trade in Russia and Europe.
The shipping industry fulfills the global trade requirements of raw materials, processed products, finished goods, fuel, automobiles, grains, spices, among others. The biggest share of shipments is petroleum and oil products (almost 10%). The most crowded sea route is between China and the US due to the massive amount of export/import of goods.
The density of shipping routes is such that we can even form outlines of the continents just by looking at the map. As evident, some routes are used more than others (deep red lines).
Why Are Some Shipping Routes Used More Than Others?
The sea is limitless. And so are the shipping routes. Yet, some routes are frequented more than others. Numerous reasons affect the traffic flow like frequency of trade, one-way traffic, physical constraints (coasts, reefs), nature (marine current, winds), and even pirates.
Vessels often take the safest and most cost-effective route to get the cargo delivered on time. This leads to an imbalance of traffic on some routes. While other routes have traffic due to the frequency of trade carried out (like routes from China and UAE).
Sea routes like the Suez Canal, Panama Canal, Strait of Malacca, Dover, etc. are core routes linking major continents and passing through countries with high import or export demands. These routes are important commercial shipping hubs and control the shipping flow, as compared to countries with smaller markets. Some places have high traffic surges because they are points of passage for ships – acting as chokepoints. This also leads to a huge cargo imbalance on many ocean routes.
As the world trade grows, the maritime industry is growing – and shipping routes are becoming busier. Containers and associated maritime transport systems have been crucial to globalization and the world economy. Which is why, most of the shipping industry is dominated by cargo and containers, in terms of cargo value.
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Controlling Container Tariff on Shipping Routes
On marine lanes with a lot of traffic, carrier-owned-containers or COC containers are often the best solutions. In cases where the shipment originates in a “high surplus” area i.e. a region where trade imbalances result in an overstock of empty containers — using COC can give significant discounts in freight charges. But, on most other routes, shipper-owned-containers or SOC containers could be the go-to choice. Especially because of the control they offer on supply, ownership, and cost.
The Europe-Asia and transpacific routes often have cargo surplus. This needs to be managed well. Shipping networks can be optimized by rationalizing cargo ports, shipping trade routes, transit time, and containers. These are the top 10 most profitable shipping routes for container traders.
The Way Ahead…
With more than 50,000 vessels transiting every year, maritime trade is ever-expanding. In the coming times, these ‘sea highways’ would see an unprecedented surge in traffic. Which calls for more efficient, cost-effective ways of shipping and trading. The growing demand has urged companies and freight forwarders to find better ways for managing freight charges and control container tariffs on shipping routes.
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