Watching the travails of the Ever Given in the Suez Canal, it was hard to avoid the conclusion that its biggest problem was size. When a vessel that tall and wide passes through a canal that shallow and narrow, one mistake or act of nature is all it takes to cause an accident that can rattle global supply chains for months. Which, of course, is what happened, reports bloomberg.
Why Bigger Container Ships?
Obviously, then, the shipping industry will learn its lesson and revert to smaller container ships, right? Of course not. The opposite, in fact. It’s widely agreed that container ships are going to keep getting bigger. “The next few generations of cargo vessels are going to make the Ever Given look like a bath toy,” writes Bloomberg Opinion columnist David Fickling.
To understand why, I interviewed Singapore-based Thomas Bebbington, a graduate of Britain’s South Tyneside Nautical College who went to sea as a deck cadet with P&O Nedlloyd at age 18. In the 23 years since, Bebbington says, he has worked with most of the 10 biggest container shipping lines and has poked around 80 or 90 container terminals worldwide. He has a consulting firm, Container-Logic Pte. Ltd., and is the Singapore country manager for an Israeli maritime cybersecurity company, Cydome.
Hugeness of Ships Creates Problems
Before getting into why ships will get bigger, think about why they shouldn’t. Exhibit No. 1 is the Suez Canal blockage, of course, but the hugeness of ships creates other problems. Ships of the size of the Ever Given strain the capacity of terminals, particularly the giant gantry cranes that move containers on and off the ships. The cranes can barely reach the containers on the far side of the ships. The Port of Amsterdam once cleverly built slips where cranes could work on ships from both sides, but the ships got so big they wouldn’t fit into the slips anymore, so not so clever after all.
Efficiency would dictate that the biggest container ships shuttle between the very biggest ports—for example, between Shanghai and Los Angeles/Long Beach. But that’s not how they’re used. They may stop at two dozen ports, large and small, in the process of loading and unloading, says Bebbington. The shipping lines fear that if they don’t stop at smaller ports they’ll lose business to competitors. Says Bebbington, “They know that this is not the best way to operate these ships but purely commercially they have no choice.”
My Ship is Bigger Than Your Ship
One pressure on ships to get bigger is that fuel costs per container are lower for bigger ships. Competitive fervor may be a bigger factor, though. While the biggest shipping lines such as No. 1 A.P. Moller-Maersk A/S have slowed down their orders for giant vessels, medium-sized shippers like Hyundai Merchant Marine “are placing massive order books,” Bebbington says: “It often comes down to ego—‘my ship is bigger than your ship.’”
The capacity of a carrier’s fleet matters, too. Bebbington says Swiss-headquartered MSC Mediterranean Shipping Co. is close to catching up to APM-Maersk in cargo-carrying capacity. “I worked for Maersk,” he says. “That’s going to be something very, very painful for them to swallow. I’d be very surprised if they don’t say, ‘We can’t let this happen. We’re going to build more ships.’”
World’s Biggest Container Ships Grown
The world’s biggest container ships have grown from a capacity of 1,500 TEUs (twenty-foot-equivalent units) in 1968 to 10,000 TEUs in 2005 to almost 24,000 TEUs last year—the hulking MSC Gulsun, built by Samsung Heavy Industries, at 23,756 TEUs.
“We are going to reach a point where a ship will be built that’s too big,” says Bebbington. “Shipping tends to learn from things only once they’ve made a mistake. The real question to which I don’t have an answer is, what is that tipping point?”
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Source: Bloomberg
