A crisis in the delivery of cargo is looming with the aging feeder container fleet not being replaced at a fast-enough rate to meet expected demand.
Container feeders accept transhipped cargo from much larger vessels at hub-ports which have the cranes, terminals, draught and approach channels that can accommodate the mega-vessels. Those ports and terminals also need to have the ability to move cargo onto its final destination quickly using road, rail and sea to make sure that cargo does not sit too long in the terminals, creating a cargo logjam.
There are 132 ships of between 10,000 and 22,000 twenty-foot equivalent units (TEU) currently on order, 90 of which are ultra-large container ships (ULCS) that will double the container capacity on the Asia to Europe trades within two years, according to figures from Vessels Value.
Meanwhile, the expectations are that cargo growth will amount to 3 percent per year, an extra 300,000 TEU for 2019 over the 9.9 million TEU shipped westbound from Asia in 2017, according to the latest figures from the World Shipping Council.
With more mainline ships and more cargo, the feeder ships will be in greater demand, because they are the most efficient method of moving cargo off the quay side. These smaller vessels deliver cargo to outlying ports, often closer to the final destination. Without these ships, the terminals will become overloaded with cargo, causing major delays in the supply chain and raising costs significantly.
It is crucial then that the feeder fleet remains available, but Vessels Value’s statistics show that nearly one-quarter of the feeder container fleet are over 20 years old (some 638 ships of the current fleet of just around 2,800 vessels of less than 3,000 TEU).
A further 460 vessels are approaching 20 years of age. With orders for feeder ships currently at 222 vessels, it is clear that in the coming years there will be a need to replace this older tonnage. The demand for feeders is increasing with the deliveries of ULCS remaining high, but the overall number of feeders is set to fall.
In a vote that may well have unintended consequences, the International Maritime Organisation (IMO) voted to bring forward environmental legislation that will make the scrapping of feeder ships less likely.
New container vessels will need to meet tough new Energy Efficiency Design Index (EEDI) parameters. EEDI uses a formula to calculate the carbon emitted compared to the speed of a vessel and the cargo carried. Therefore smaller vessels would be considered to have a greater environmental impact and, it is feared, would not meet the EEDI rules.
This environmental regulation was initially due to be enforced beginning in 2025 but following last year’s spring meeting the IMO decided to begin enforcement in 2022.
Observers at the IMO said that they believe that this could force owners to maintain their older, less efficient tonnage, rather than ordering new, more efficient ships. Another scenario could see owners go on a feeder vessel ordering spree in an effort to build the vessels before the EEDI regulation is due to be enforced. For that to happen new ships would need to have their keels laid before January 2022. So far evidence of such an ordering spree has not materialized.