Dredging and infrastructure upgrades benefit mega ships, but disrupt landside logistics into the mess it has become
 Difficult problems can work themselves out naturally in shipping when each party takes advantage of a fresh development by adapting to changes in adjacent link of the global supply chain.
As vessels grow and crews shrink, ships that were too big to work themselves into harbours that could only dock smaller ones have since widened market access through dredging, and infrastructure upgrades that enlarge air draft in tunnels and bridges.
In the current Covid crisis it is difficult to make reliable forecasts because too many factors are at play and it is not even known whether brick and mortar stores will go the way of Kodak film and IBM Selectrics once the market changes have fully matured.
Attempts to iron out kinks in the supply chains into something like a conveyor belt as Maersk tried to do 10 years ago with its "Daily Maersk" by imposing daily cutoffs increasing and regularising strings to idea was to achieve a smooth flow of cargo did not last. Ideally, it was thought as a concrete step to door-to-door delivery.
More than a decade has passed since that idea was shelved in the face of shipper overbooking that showered carriers with no-shows, and resentment built as the carrier demanded greater shipper discipline - especially when rival carriers were ready, willing and able to load cargo the old way. It was a time when salesmen were under orders to "fill the ship" and known to give more than the odd slot away free of charge.
One thing to be distilled from the tumult of yesteryear is the intractability of terminal congestion and empty boxes piling up in the wrong place. There does not seem to be fix for that - easy or otherwise - to clear the massive dumping of cargo on the docks of the world.
And this problem has its root in the drive for economies of scale, the direct result of bigger ships, deeper navigation channels, wider turning basis and canals, the raising of New York's Bayonne Bridge, and the replacement of the Gerald Desmond Bridge in Long Beach.
One could say that the technical transformation of the container shipping industry has changed more in the last 10 years than it did from 1970 to 2010. Looking back in 2005 the container fleet in total was under 2,000 vessels, the largest vessel capacity was 11,078-TEU. By the close of 2020 it had become 5,234 vessels, some boasting capacities of 23,964 TEU.
This has driven overall compound annual growth rate by 42 per cent, from 44,000 TEU in 2005 to 8.82 million TEU in 2020. Economies of scale have been sought by all, especially in the dominant Asia-Europe trade lane fueling enough cargo, and fierce competition among owners. All have played into the burgeoning desire for more of what have become known as “mega ships".
This has proven to be an enduring trend with ships now breaching 24,000 TEU. Looking further to 2024 the current orderbook suggests a levelling off, but whether this is indicative of earlier phases of vessel development before the next leap forward remains to be seen.
Considerations around advances in size vs cost benefit, viable infrastructure, plus factors like UN 2020 regulation, are all playing into owners' decision-making. The container fleet is estimated to be responsible for 30 per cent of shipping emissions but some owners are taking measures with new mega vessel orders, for example Hapag-Lloyd’s recent 24,000-TEU vessel orders boasting LNG/dual fuel capability.
Vessel growth has meant dimensions have also expanded rapidly since 2005 to accommodate capacity, but the correlation with rising capacity vs length and breadth hasn’t been a simple upward curve.
The correlation started to level off at the point vessels reached 18,000 TEU since 2013. Taking the next step on those dimensions may well have implications for larger vessel orders. As for operational implications, the Ever Given blocking of the Suez Canal prompted canal authority to require vessels over 400 metres to receive assistance, and Ever Given dimensions pushed that to the limit with a length overall of 399.944 metres. By way of comparison the largest container vessel currently in service by TEU is HMM Le Havre and boasting a-TEU capacity of 23,964, a dwt of 232,000, though “only” a length overall of 399.900 metres.
Looking at the capacity and the impact on draught for example, maximum draught in metres to summer load line, the minimum water depth for container vessels of 10,000 TEU or 100,000 dwt is 14 metres. For vessels of 20,000 TEU like the HMM Le Havre, this rises to 16.5 metres.
Larger vessels have naturally driven developments in port infrastructure and handling facilities, notably to ensure deep-water container port availability, plus investment in the required dredging in estuaries and rivers. In addition, key waterways such as Suez, Malacca and Panama have all had to develop to accommodate size demands.
There are distinct concentrations of ports able to handle vessels of 10,000 TEU with draughts of 14 metres even considering that the primary Asia Europe trade routes via Suez Canal. South and East Asia, for example, are home to 40 per cent of viable ports.
This handling capability distribution becomes more acute when looking at vessels of 20,000 TEU and 200,000 dwt with draughts of 16.5 metres notably aligned with the Suez Canal enabling much shorter voyage times vs alternative routes around the Cape of Good Hope. As a case in point, due to the Ever Given incident one vessel that took the Cape route thereby adding a week to the journey time, was sister vessel Ever Greet.
The greater part of these developments, taken together, shows how gargantuan problems can result from gargantuan economies of scale.
But where things have not worked out well - for which little blame can be ascribed to any one party - is on the landside docks, railyards and truck queues where much discontent grows.
This is perhaps the biggest problem in shipping, but it has little to do with ships and more to problems or road and rail. What must be done now is to apply a modicum of dream engineering to something like Daily Maersk of a decade ago, but in such a way that it works and works well. |
