![]() In came the global financial crisis, and international trade slowed. Around this time, carriers came up with the idea to build “mega-ships” that could hold over 21,000 20’ containers (visualize that huge vessel that was made famous via being stuck in the Suez Canal), with the thinking that international trade would continue to grow and that there was no ceiling to economies of scale as they relate to vessel size. The glory years of this setup described above were those leading up to the Great Recession. When the world is normal and these contracts work, things are beautiful. Wine and liquor are some of the most consistent commodities shipped out of European ports thanks to their unwavering demand abroad, and parties dealing in these goods generally receive low freight prices from ocean carriers as a result. Companies importing goods can either book freight direct with ocean carriers, or as is customary in our wine industry they can work with firms we call “freight forwarders.” A freight forwarder will negotiate with ocean carriers on behalf of hundreds of importer clients, setting a contract over a twelve-month period where the forwarder will agree to have a specific amount of containers booked onto a specific “stream” each week in exchange for favorable pricing. When this works, it is incredibly efficient and a triumph of modern logistics.Īs far as the legal/financial side of things goes, the shipping business works under contract. There are a number of separate vessels on this run, they are usually the same size (most are purpose-built for the “stream” in question), and are evenly spaced out so that they make one big circle with one vessel on the “stream,” hitting another port on the route every seven days or so. Each Tuesday a vessel leaves Fos-Marseille, and stops at 7 or 8 similar sized ports along the route, in the end dropping our goods off in Oakland. For example, let’s look at our favorite “stream” here at Grape Expectations. This world of standardized shipping is operated by companies we call “ocean carriers.” Ocean carriers own/operate vessels and offer a consistent menu of routes, which we call “streams” in industry-speak. Ship size gradually grew in each decade, and by the early 2000s, most container ships had a capacity of 17,000 20’ containers. The first purpose-built container ships were commissioned in 1956 and carried 68 containers. Deemed “standardized shipping,” this development made the movement of inexpensive goods at scale economically possible. The idea was to create a system where a standard-sized “box” could efficiently transfer between purpose-built ships, trains, and trucks. This technology was invented by the American trucking industry seventy years ago. The standardized container, you know, the 20’ and 40’ boxes that you see on freight vessels, trains, and semi-trucks, is a new phenomenon. Does this sound messy, inefficient, and expensive? It was! As we complain about current shipping woes, we might as well throw some gratitude to the invention of the “standardized container” and modern logistics. ![]() Visualize pulling thousands of separate sized parcels, all of random textures, markings, and sizes, from small vessels of various size and shape. Shipping goods across oceans in boxes is a centuries-old tradition, and until fairly recently the loading and unloading ships was extremely complicated, expensive, and time-consuming. How and why did we get into this mess? How does this whole freight business function? Where are things heading? Let’s take a second to break things down. This all means lead times that are 2–3 times longer in comparison to this time last year, and to add insult to injury, we are all paying triple last year’s freight rates for the privilege. Transit times from winery to distributor warehouse have crept to a snail’s pace due to container shortages, blank sailings, and backups at ports of entry. At this point, most everyone in the industry is aware of the current global shipping crisis.
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