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Scaling up and its implications

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Author(s): Dean Davison, Principal Consultant, Ocean Shipping Consultants, Royal HaskoningDHV, Egham, United Kingdom

Continued, strong ordering of larger container ships, weaker trade demand and the search for better scale economies has meant that larger vessels are being placed onto secondary trade lanes, with terminals needing to satisfy the demand of these bigger units. The shift to larger vessels has been a highly significant feature for deep sea containerisation. The search for economies of scale is at the heart of this drive. On a tonnage-mile basis, the savings from larger vessels can be substantial and also one of the few factors that are directly controlled by ship operators. Furthermore, as soon as one major operator advances to the next size echelon, the competitive nature of the shipping industry may force other operators to follow suit. The net effect is a rise in both average vessel size and the size of the largest vessels deployed. The largest vessels that are currently planned will have a length overall (LOA) of 400 metres, a beam of 59 metres and a design draught of around 15.5 metres – although full draught will seldom be used. However, the 18,000-20,000 twenty-foot equivalent unit (TEU) vessels now on order are unlikely to represent the largest container vessels that will be constructed.

Notable vessel oversupply

The trend in favour of larger vessels is well established and has accelerated since 2004. The share of 8,000 TEU and larger vessels increased from 0.2 percent of the containership fleet at the beginning of 2004 to 25 percent at the beginning of 2012. The very largest vessels are typically deployed on trades between East Asia and Europe. To date, the emphasis on these trades has been on the 8,000-11,000 TEU size range, but vessels of over 13,000 TEU are now being deployed and are set to increase their share in this market. The oversupply of these vessels is now resulting in pressure to re-deploy these vessels on other trades and the transpacific will be a primary candidate for these developments. There is likely to be pressure to deploy further larger vessels on these trades, where water depth and other considerations permit such operations. The development of the ultra-large container ships (ULCS) fleet is further summarised in Table 1, which includes confirmed data (as available at the start of 2014) and relates to the estimated position in 2016. A significant increase is due to occur in terms of ULCS tonnage scheduled for delivery in 2014 and 2015, whereby 35 percent and 70 percent of new capacity ordered in these two years will be in these size ranges.

Transforming terminals for bigger ships

This represents a transformation of ..

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