COST ADVANTAGE OF MEGA-CONTAINERSHIPS QUESTIONED
Savings achieved by very large containerships are “hard to detect” beyond vessel sizes of 8,000 TEUs, and will only affect a small portion of the costs of a container move, said Martin Stopford, managing director of Clarkson Research, the research arm of U.K.-based shipbroker Clarkson.
“Not everyone agrees that mega-ships are what the industry needs,” Stopford told the CI Shipping Forecast Conference in London.
“Beyond 5,000 TEUs, economies of scale diminish very rapidly,” he said. A new 1,700-TEU containership costs about $12 million per 1,000 TEU of ship capacity, whereas a 6,200-TEU ship costs about $10.3 million per 1,000 TEU, he said. Referring to a recent study into a potential 18,000-TEU “Malacca-max” containership by Dutch academics, Stopford said that such a ship is estimated to cost $10 million per 1,000 TEU of ship capacity.
“Operating costs, which include crew, insurance, stores, maintenance and administration also offer less opportunity for economies than appears at first sight,” he added. Bunker expense grow proportionately to the vessel size, he added.
Overall, increasing a ship size from 2,000 TEUs to 4,000 TEUs saves 20 percent of total vessel unit costs, but increasing again from 4,000-TEU sizes to 6,000-TEU saves only 4 percent, Stopford estimated. “Beyond 8,000 TEUs, the economies are hard to detect,” he said.
Stopford said that the ship accounts for only about 23 percent of through transport costs, using the transatlantic container trade as an example. “We should be aware that any savings achieved by using bigger ships may be heavily diluted by the time they reach the shipper, especially if there are diseconomies in other parts of the system,” he said.
Stopford also sees diseconomies of scale resulting from very large ships, such as deep dredging costs for ports and additional feeder services. “Those feeder costs dwarf the savings on using bigger ships on the deep sea leg,” he said.
Other shipping sectors have moved away from very large ships. “For example, the average size of crude oil tanker shot up in the 1970s, but is smaller today than it was 20 years ago,” Stopford said.
“I think liner operators are going to want flexible ships — and what 18,000-TEU ships don’t offer is flexibility,” he added.
Jim Brennan, partner of the consultancy firm Norbridge, Inc., said that large containerships can achieve savings of 5 to 10 percent on water costs, but they impose higher operational and infrastructure requirements from ports and port operators.
“If we’re going to reach the economies of scale of big ships, we need to turn the vessel around (in port) in 24 hours or less,” he said. This means investments in a large number of quay container cranes and high productivity rates per crane, he added.
“Marine terminals can and do support mega-ship scale economies today,” he said. U.S. West Coast terminals already handle about one mega-ship service a week, but this will increase to multiple mega-ship services in the next few years, Brennan predicted.
Brennan defined mega-containerships as vessels with a capacity of 5,000 TEUs or more. He said there are currently 158 such ships in operation today, representing 5.5 percent of the total number of containerships. Another 94 such ships are on order.