How Important is the Growing Size of Container Vessels?

Early 2020, the unaware pessimists were predicting total collapse of the container carriers, both on the revenue side and on the profit side.

The bulk commodities, except for crude oil tankers, were seen as immune to the containerised trade. The first half of 2020 seemed to bear those pessimistic sentiments.

According to Clarksons Research, in May 2020 nearly 12% of the entire global fleet was idle. Meanwhile, the ocean-going ships in service struggled with impossibility of crew rotations stranding thousands of sailors at sea.

At the time of writing we are not at the end of 2020 yet, but then, one year does not mean much, especially when measured against three decades of ship’s lifespan.

More big ships were added to the global container fleet in 2020 which will make the capacity game in years to follow very interesting.

These new arrivals represent orders placed for 24,000 TEU vessels a few years ago. Major buyers then included HMM and COSCO, but other lines kept growing their fleets as well.

Carriers adding capacity should be good news for the shippers continuously yearning for lower shipping costs. But the wisdom of investing applies here as well. Past performance is not a reliable indication of future outcomes.

This time around, the shippers should not expect the destructive miracle of near zero rates, the bane of the shipping industry a few years back. The culprit is the digitalisation. It has been talked to death in conferences, I know, but the results are finally showing up. This, and the concentration of supply within the three major alliances.

Fast forward to October 2020 and the reality demolished the pessimism abundant in March of 2020. The carriers acted much faster at reducing sailings and blanking capacity, in many markets much faster than the demand suggested.

Academic Perspectives on the Feasibility of Mega Container Ships

Scale increases in container vessel size are a well-documented and much debated topic. The search for economies of scale and the focus on cost control have pushed the container shipping industry towards the deployment of ever larger containerships.

In the early days of containerisation, ships had a nominal capacity of a few hundreds of TEU. In 1988, APL was the first shipping line to deploy a post-Panamax vessel. In 1996, Maersk Line shook the market by introducing the Regina Maersk of about 7,400 TEU.

Consecutive rounds of scale increases led to the introduction of the ‘Emma Maersk’ in 2006, a containership which can hold more than 15,000 TEU and measures 397m length overall, a beam of 56 m, and a commercial draft of 15.5m. In 2013, Maersk Line led the next wave in scale enlargement by introducing the Triple E class (about 18,000 TEU).

In the past few years, vessel capacity has been pushed beyond the 20,000 TEU mark, a trend initiated by COSCO Shipping (ships of up to 21,237 TEU), CMA CGM (up to 20,954 TEU) and OOCL (units of up to 21,413 TEU). The first Ultra Large Container Ships (ULCS) of 23,000 TEU were delivered in 2019.

The world’s largest container vessel at the time of writing was the HMM Algeciras with a capacity of just under 24,000 TEU. The introduction of ever larger container vessels has resulted in an overall upscaling across the main east-west trade routes, with big vessels also cascading to north-south routes.

Is the 30,000 TEU Vessels Realistic?

One of the most striking trends in the maritime industry in recent years has been the increasing size of container ships, the largest of which is approximately ten times bigger than they were a decade ago.

This is a result of a market that is starkly different that the one we entered in the beginning of the century, one which has undergone financial crises and the formation of multi-carrier alliances.

Carriers have had to adapt to new consumer habits and may have to do so again soon as demand for goods continues to increase and the global economy recovers from the COVID-19 pandemic.

Vessels have increased numerous times in recent years, and they might have to again. The mega-ships in the global fleet today and those that will enter in the near future are sure to affect the maritime and wider supply chain.

The latest fleet of mega-ships can carry up to 24,000 TEU, with some carriers, most notably HMM, MSC and CMA CGM, ordering vessels that are not only bigger than those that came before but are also more environmentally friendly.

The Best Insights Come From Combining Data With Personal Experience

Examples of artificial intelligence / machine learning (ai/ml) aided decision making in container terminal planning processes.

Some people believe that planning for the future is a waste of time, as unforeseen events and dynamics at play will impact any attempt at accuracy. While this may feel like the case in our personal lives – think of the Covid-19 pandemic – this may not be entirely true for container terminals.

In this paper, we will share examples of how predictive visibility can become a part of everyday planning processes and support expert users to make even better decisions. Container terminals are dynamic environments and operators face a variety of planning and optimization challenges.

In our work with planning and execution teams, we have seen the importance of automation and use of advanced equipment optimization solutions to enable improved results, better safety, as well as improved user experience. And now, with the use of artificial intelligence and machine learning techniques (AI/ML), cloud technology and terminal operating system (TOS) data, we foresee a wave of innovation approaching with many different use cases that can be addressed.

We want to share our insights on two specific use cases we have been working on.

How Mega-Ships are Affecting Terminals

“Mega Ship” is a terminology coined sometime around 2013 when Maersk line introduces the Triple E series of ships that can carry 18,340 TEUs. The term “Mega Ships” has since been used synonymously with the term “Ultra Large Container Vessel” (ULCVs).

Mega ships came about in the drive by the shipping lines to pursue economies of scale and cost savings to offset the decreasing rates in depressed freight markets.

When deciding upon the deployment of mega ships, considerations of route, nautical distance and volume are crucial. Based on these criteria, mega ships are mainly deployed on the Far East-North Europe trade lane where the route covers the longest nautical distance and presents adequate cargo imports and exports.

This ensures that the ship will be earning sufficiently from freight carried while saving on operational costs. Cost savings is required for a carrier to achieve an edge in the container shipping industry, where price competition is one of the main drivers.

Mega Ships: The Challenges Presented to Terminals

The bigger, the more economical – the conventional logic may not always apply to container ships in Asia-to-Europe traffic.

Where seaports have invested in infrastructure and logistics systems, hinterland connections are beginning to reach their capacity limits. There are two possible solutions.

In recent years the volume of goods transported by the global container fleet has nearly doubled, reaching more than 200 million TEU per year.

The Far East/Europe and East/West trade, while accounting for just 25% of the global trade volume, cover the longest distances and have had an impact on container ship sizes: Today’s biggest vessels can carry in excess of 21,000 TEU, and 23,000 TEU vessels are on order.

Shaping or being shaped? The potential white labeling of “Uber Port”

Digitization allows ports to easily identify, assess and leverage what is available in the port ecosystem through technologies such as dashboards and touchscreens. Cranes, containers, ships and trucks can now also be monitored and moved across ports and beyond from any place on the planet – provided these things are ‘smart’. Further, when data sharing is done at a nascent stage, it allows all parties involved to prepare for the arrival of vehicles and goods, which thereby increases efficiency and avoids disruptions. Perhaps most importantly, this method allows unfavorable events along the supply chain to be anticipated.

At present, most ports seem to prefer the granular optimization of specific activities. This means a limited data exchange as opposed to a holistic digital operation that would render the physical port a digital business within a broader digital economy. Some ports might even consider this optimization a way towards larger digital integration. For example, the Port of Rotterdam has launched PRONTO, an application that shipping companies, terminal operators and other port stakeholders can use to manage their tasks during a port call based on standardized data exchange.

PRONTO also links into the Hamburg Vessel Coordination Center (HVCC) to exchange port call information, widening the data streams and creating much more accurate predictive analytics. In turn, Antwerp has invested in NxtPort, a data platform offering a range of port services around container weight data and customs information. So far, only Singapore has, with the launch of Calista, created an open supply chain platform that invites other ports and logistics service providers to join.

Reducing Cost and Maximising Safety: The Maritime Doman Awareness Information System

AIS message transmissions number in the tens of millions every single day. The Internet of Things, radar and vessel monitoring systems have hugely increased the amount of data to be processed, stored, analysed and distributed, but a secure cloud-based or hosted infrastructure can reduce the cost, commercial and operational load while increasing the value to the mariner.

Class A Automatic Information System (AIS) transponders are mandatory on all ships of over 300GT on international voyages – and have been for more than a decade. In addition, tens of thousands of Class B AIS systems and other devices operating in the AIS band are in use, including smartphones that carry AIS apps.

Numerous systems have been deployed on land and in space to collect AIS data, promoting the four key benefits of safety, security, protection of the environment and the reaping of economic advantages. So what is the next phase, and how do authorities large and small participate and take advantage of rapidly developing technologies and applications?

Smart Ships & Smart Navigation

Globally, ports are a fundamental part of the commodity supply chain which is undergoing significant developments. They are becoming increasingly digitised, integrated with the wider end-to-end supply chain and thus more efficient. Ultimately, they will pioneer new business models which may change port landscapes at local and national levels.

This will potentially affect where ports are located, the cargoes they handle, the markets they serve, the skills and experience required to operate port equipment and the capacity to serve different types of vessels.

Smart ports, like smart cities, will use a wide range of technologies, using data driven and automated devices connected together within an “internet of things”. New data collection and analytical technologies and techniques can supply information for safer and more efficient management of resources. This applies…

Avoiding a Customs Calamity: The Future of Ports

In light of continued global economic and political uncertainty, companies involved in international trade must now contend with an unprecedented amount of risk as the ‘new normal’. From the cost of air freight to the complexity of international returns plus the need for full disclosure of import tariffs at checkout – all whilst contending with ever increasing customer expectations and Brexit uncertainties – being able to achieve end-to-end supply chain visibility is key.