An increase in vessel sizes has left the logistics industry questioning who benefits from the introduction of mega-alliances, mega-vessels and their economies of scale.
Expansion plans are also being considered by ports, as they feel pressured to increase infrastructure to accommodate larger mega-vessels.
The Panama Canal – set to be completed in 2016 – is also likely to put strain on ports that have not yet upgraded their infrastructure, according to The Loadstar.
Speaking at TOC Americas, Dr Jean-Paul Rodrigue, head of global studies and geography at Hofstra University said: “Economies of scale are beneficial for some actors but it creates a whole array of other problems for others. Economies of scale work well for the shipping companies but the bigger the ships the less flexibility you have in terms of port calls, so that is an issue and this has put pressure on the ports.”
Jean-Paul Rodrigue added: “Supply chain managers are going to be more and more annoyed, as you will have two issues: less frequency and more volume. And more cargo on big ships raises insurance issues.”
Allison Nowlin, in charge of international logistics at JBS USA commented on the issue of infrequency, stating: “The concern is that you need to add in transhipment, and if cargo is going from one vessel to another it takes time, there is no way to eliminate that. That is going to increase transit times, which, with slow-steaming, are already a concern.”
Poul Hestbaek, Hamburg Sud’s senior vice-president for Latin America West Coast and Caribbean concluded: “As you increase the size, then suddenly you are seeing half the frequencies. Fruit exporters will tell you that they need the frequency; they need to be re-loading every day, so it’s going to be very interesting to see how we will increase the utilisation rates.”