Monday , 23 September 2019
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Bigger is not necessarily better

With the ever greater inflow of mega-ships in the global fleet it seems that the cost savings introduced by these behemoths have bottomed out as savings are decreasing and might not even be realised, according to a study about the impact of mega-ships on maritime transport.

The study was published at the beginning of June, 2015 by the International Transport Forum (ITF) at the OECD, an intergovernmental organisation with 54 member countries, acting as a strategic think tank with the objective of helping shape the transport policy agenda on a global level.

Doubling the maximum container ship size over the last decade has reduced total vessel costs per transported container by roughly a third. However, these cost savings are decreasing with size; the cost savings of the newest generation of containerships are four to six times smaller than the savings from the previous round of upsizing, the study shows.

Approximately 60% of the cost savings of the most recent container ships are related to more efficient engines and not to scale. In addition, mega-ship development and the related container fleet capacity growth has taken place despite sluggish growth of world containerized seaborne trade.

“The massive ordering of new mega-ships has resulted in an oversupply of container ships, which will most likely dampen some of the cost savings due to larger ships, as low demand results in fewer savings per transported container. The transport costs due to larger ships could be substantial,” the study said.

There are size-related fixes to existing infrastructure, such as bridge height, river width/depth, quay wall strengthening, berth deepening, canals/locks and port equipment (crane height, outreach).

Mega-ships also require an expansion of infrastructure to cater to the higher peaks related to mega-ships; as a result, more physical yard and berth capacity is needed. These annualised transport costs related to mega-ships could amount to US$400m, according to the ITF’s rough and tentative estimations.

Roughly a third of the additional costs might be related to equipment, a third to dredging and another third to port infrastructure and port hinterland costs. A substantial share of the dredging, infrastructure and hinterland connection costs are costs to the public sector in many countries, the study finds.

According to the study, further increase of maximum container ship size would raise transport costs, raising the question on whether such increases would be desirable.

“The potential cost savings to carriers appear to be fairly marginal, but infrastructure upsizing costs could be phenomenal. Introduction of one hundred 24,000 teu ships in 2020 would require substantial investments in those places where these ships would be first introduced (Far East, North Europe, Mediterranean), but would also – via cascading effects – result in introduction of 19,000 teu ships in North America and 14,000 teu ships in South America and Africa. This would imply additional investment requirements there as well,” the study said.