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Punit Oza from Singapore consultancy Maritime NXT writes for Splash today.
When I started my career in Precious Shipping in 1993, the company was abuzz with then parent group, G. Premjee, looking to secure a deal with Kandla (now Deendayal) Port to operate a berth for its grain trade. It was a new experiment and one that promised to quadruple the daily productivity to 16,000 tons per day. The agreement happened and we operated the berth for years and showed a government-owned port the way forward.
Later during the 2000s and 2010-20s at Noble and Klaveness, I got used to discharge rates of up to 25000 tons per day in Kandla for coal and other bulk cargoes.
Fast forward to today and I see news that nearly 80,000 tons of coal has been discharged in a day. Congratulations on the fantastic progress in three decades.
Automation and technology efficiencies are creating such efficiency surges in other shipping sectors such as container shipping, too.
The core issue
The global maritime industry is experiencing a profound transformation as ports worldwide implement cutting-edge technologies and operational improvements that are reshaping shipping efficiency and vessel demand patterns. This productivity revolution is fundamentally altering how goods move across oceans and creating ripple effects throughout the shipping industry.
Automation leading the charge
Port automation has emerged as the primary driver of productivity gains across major terminals worldwide. Advanced technologies including automated container handling systems, AI-powered logistics optimisation, and robotic cargo management are reducing processing times and increasing throughput capacity. These automated systems eliminate human error, operate continuously without breaks, and can process containers at speeds previously unattainable through manual operations.
The implementation of automated gate systems, yard cranes, and vessel loading equipment has enabled ports to handle larger volumes with greater precision. Automated terminals can now process containers 24/7 with minimal human intervention, dramatically reducing dwell times and vessel turnaround periods. This technological leap has created a competitive advantage for ports that embrace automation, as shipping companies increasingly favour terminals that can guarantee faster, more reliable service.
Regional performance leaders
East and Southeast Asian ports continue to dominate global performance rankings, with 13 of the top 20 most efficient container ports located in this region. These facilities have invested heavily in infrastructure modernisation and digital integration, creating seamless operations that set global benchmarks for efficiency. Their success demonstrates how strategic investment in technology and process optimisation can create substantial competitive advantages in international trade.
However, productivity improvements are not limited to Asian markets. Ports across Europe, North America, and other regions are implementing similar technologies and achieving significant gains in operational efficiency. The adoption of these improvements is becoming essential for maintaining competitiveness in the global shipping network.
The vessel supply surge
Enhanced port productivity is creating a paradoxical challenge for the shipping industry by dramatically increasing the effective supply of vessels without adding a single new ship to global fleets. This development poses significant headwinds for shipping companies’ profitability and market dynamics.
As ports process cargo more efficiently, vessel turnaround times have decreased from days to hours, effectively liberating ships from port congestion that previously constrained their utilisation. A containership that once completed 12 voyages annually due to port delays can now complete 15 to 18 voyages on the same route, representing a 25-50% increase in effective vessel supply without any new construction. This productivity-driven capacity expansion is flooding the market with additional shipping capacity at a time when many trade routes are already experiencing oversupply conditions.
The mathematics are stark: when a vessel spends 30% less time in port, the global fleet’s effective capacity increases by nearly one-third overnight. This artificial capacity injection creates downward pressure on freight rates, as shipping companies find themselves competing with what amounts to “phantom vessels” – the additional capacity unlocked by port efficiency gains. The result is a supply-demand imbalance that threatens shipping profitability across multiple segments.
This efficiency-driven oversupply is particularly damaging because it occurs without the natural market corrections that typically accompany capacity additions. Unlike new ship deliveries, which can be delayed or cancelled during market downturns, port productivity improvements are permanent and irreversible. Once implemented, these efficiency gains continue generating additional effective capacity regardless of market conditions, creating persistent downward pressure on shipping rates.
Market disruption and profitability pressures
The productivity revolution extends beyond operational improvements to create severe market disruptions that threaten shipping industry fundamentals. While faster cargo processing reduces some supply chain costs, the primary beneficiaries are shippers and cargo owners rather than vessel operators. Shipping companies find themselves caught in a squeeze where their effective capacity has increased dramatically while demand growth remains constrained by global economic conditions.
This dynamic creates a vicious cycle for shipping profitability. Lower freight rates resulting from oversupply reduce shipping companies’ revenues and cash flows, limiting their ability to invest in newer, more efficient vessels. Simultaneously, the increased effective capacity makes existing older vessels more competitive, as their lower capital costs help offset reduced rates. This extends the economic life of inefficient tonnage that might otherwise be scrapped, further exacerbating the oversupply problem.
The concentration effect of high-performing ports compounds these challenges by creating winner-take-all dynamics. Shipping routes that serve automated, high-efficiency ports become oversupplied with vessels seeking to capitalise on faster turnarounds, while routes serving less efficient ports may experience capacity shortages. This geographic mismatch prevents natural market rebalancing and creates persistent rate pressure on the most commercially attractive routes.
Structural challenges ahead
The momentum behind port productivity improvements shows no signs of slowing, suggesting that shipping oversupply pressures will intensify rather than diminish. Continued investment in artificial intelligence, machine learning, and autonomous systems promises even greater efficiency gains that will further increase effective vessel supply. As these technologies mature and costs decrease, smaller ports will gain access to automation tools previously available only to major terminals, potentially multiplying the oversupply effect across the global port network.
The shipping industry faces a structural adjustment period where traditional capacity management strategies may prove inadequate. The industry’s historical approach of managing supply through newbuilding cycles and scrapping becomes less effective when productivity improvements continuously inject additional effective capacity into the market. Companies must develop new strategies to navigate this environment of persistent oversupply pressure.
The most successful shipping companies will be those that can adapt their business models to operate profitably in a permanently higher-capacity environment. This may require fundamental shifts toward operational excellence, route optimisation, and service differentiation rather than relying on capacity constraints to maintain pricing power. Those that fail to adapt may find themselves increasingly marginalised in an industry where efficiency-driven oversupply has become a permanent feature rather than a cyclical challenge.
Additional volume of cargo & constant growth of trade are another way to balance the books. However, with the current trade wars & economic challenges, this becomes more complex. The imports into US ports just in April were down 20%.
The way ahead
There are multiple ways to deal with these challenges and most of them are company-specific and customer-specific. My immediate advice is that, as a shipping company, don’t just look at the bottom line of your current voyage but analyse how the average voyage time has changed over the years and recalibrate your strategies of building additional volume or trimming your fleet size!
Agility is not just about taking actions but pre-empting what actions need to be taken.
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