Growth of ship sizes
The rapid and dramatic growth in container ship sizes over the last few years has been well documented. The largest ships are deployed on the Asia-Europe trade route and Maersk Line’s 18,000 TEU Triple E vessels have already been surpassed by China Shipping Container Lines’ new 19,000 TEU vessels. These mega-ships, on one of the primary eastwest trade routes, naturally grab the headlines. However, what is just as important is that their introduction has caused the cascading of many large vessels into secondary/north-south trade routes. As Table 1 shows, in the last three years, average ship sizes have increased markedly on all the routes shown, but the biggest growth is actually in the secondary/northsouth trades. The container ship order book is set to reinforce this. There are 139 vessels of 14,000+ TEU due to be delivered by the end of 2016 and they will push even more ‘smaller’ vessels in the 8-10,000 TEU size range into cascaded routes. However, there are also over 100 vessels of 8-10,000 TEU on order in the same time period. These vessels will go straight to secondary/northsouth routes such as those involving Latin America, the Middle East and perhaps the Asia-US East Coast route via the expanded Suez Canal.
Growth in alliances
Hand-in-hand with ship size growth is an increase in the scale of liner alliances. The only way to fill ever-larger container ships, and obtain the potential economies of scale that they offer, is for carriers to pool their volumes on particular trade routes and share ships. Table 2 shows schematically how the 16 main carriers are coming together into just four main groupings. It is important to note that these are operational vessel sharing agreements though, commercially, carriers remain separate and in competition. Not only are alliances growing in terms of the number of member lines, they are also seeking to expand their geographical coverage. For example, Evergreen has joined the CKYH Alliance on the Asia-Europe trade route, and now the rebranded CKYHE is seeking to extend this arrangement to the Transatlantic and Transpacific trade routes. In addition, besides shipping lines operating on the same trade route opting to share ships, other forms of alliances are emerging too, with a recent agreement between UASC and Hamburg Sud to cooperate a pertinent example. UASC is primarily in the east-west trades, and Hamburg Sud primarily in the northsouth trades, so in this case, each carrier is looking to expand its network coverage at a stroke by teaming up.
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