The operating costs of shipping between East Asia and the U.S.
East Coast could fall by up to 30 percent because the labor and fuel
costs per container are lower on larger vessels, according to
industry experts.
East Coast could fall by up to 30 percent because the labor and fuel
costs per container are lower on larger vessels, according to
industry experts.
But the cost savings only apply if a ship is full, Michael
Wilson, senior vice president of business operations for Hamburg Süd
North America, said during a panel discussion at the Intermodal
Association of North America’s annual conference in Fort
Lauderdale. Fla., in September.
Wilson, senior vice president of business operations for Hamburg Süd
North America, said during a panel discussion at the Intermodal
Association of North America’s annual conference in Fort
Lauderdale. Fla., in September.
A 10,000-to-12,000-TEU vessel operating through the Panama
Canal at only 50 percent utilization will have operating costs per
slot that are more expensive than a panamax vessel, he said.
Canal at only 50 percent utilization will have operating costs per
slot that are more expensive than a panamax vessel, he said.
Mega-ship cost savings can also be undercut by ports that have
yet to build infrastructure to accommodate the new cargo surges.
Loading and unloading can cost more if a port doesn’t have adequate
cranes, cargo-handling equipment, storage space, easy intermodal rail
access, available chassis and fluid truck gates.
yet to build infrastructure to accommodate the new cargo surges.
Loading and unloading can cost more if a port doesn’t have adequate
cranes, cargo-handling equipment, storage space, easy intermodal rail
access, available chassis and fluid truck gates.
“The cost picture changes more unfavorably as the ship size
comes up until the port infrastructure is capable of handling these
vessels,” Wilson said.
But if those upgrades are in place, “I
actually think ports have the potential to be more efficient with
fewer, bigger ships” than servicing panamax-size vessels, James
Newsome, the head of the South Carolina Ports Authority, said in
mid-January at a major transportation conference in Washington,
D.C.
comes up until the port infrastructure is capable of handling these
vessels,” Wilson said.
But if those upgrades are in place, “I
actually think ports have the potential to be more efficient with
fewer, bigger ships” than servicing panamax-size vessels, James
Newsome, the head of the South Carolina Ports Authority, said in
mid-January at a major transportation conference in Washington,
D.C.
The ability of liner firms to run mega-ships through an
expanded Panama Canal beginning sometime next year will probably
shave more than $400 from vessel operating costs per container,
depending on the price of fuel, Kevin Lynskey, deputy director of
PortMiami, said at IANA. Whether any of that money gets shared with
customers, he added, remains to be seen.
expanded Panama Canal beginning sometime next year will probably
shave more than $400 from vessel operating costs per container,
depending on the price of fuel, Kevin Lynskey, deputy director of
PortMiami, said at IANA. Whether any of that money gets shared with
customers, he added, remains to be seen.
Wilson said ocean carriers provide a great deal of transparency
in their pricing models and a lot of savings in recent years have
been passed onto shippers as the larger ships have come on line.
in their pricing models and a lot of savings in recent years have
been passed onto shippers as the larger ships have come on line.
And, according to Lynskey, the newest ships will be even more
efficient than those cutting the waves today.
efficient than those cutting the waves today.
“It is interesting that a ship designed today and coming on
the market two years from now is designed for slower speeds. Some of
the 15,000- and 16,000-TEU vessels designed five years ago, they
didn’t get the efficiency,” he said. “So I think there’s
still more savings that’s going to pop out of these things.”
the market two years from now is designed for slower speeds. Some of
the 15,000- and 16,000-TEU vessels designed five years ago, they
didn’t get the efficiency,” he said. “So I think there’s
still more savings that’s going to pop out of these things.”
The Panama Canal toll structure could influence demand for
all-water services to the East Coast, but industry officials say the
canal authority officials won’t price themselves out of the
market.
Vessel operators pay about $80 per TEU, depending on the
size of ship, to transit the canal.
all-water services to the East Coast, but industry officials say the
canal authority officials won’t price themselves out of the
market.
Vessel operators pay about $80 per TEU, depending on the
size of ship, to transit the canal.
“How long they keep that is going to be a mystery because
they’re going to do what you would do if you controlled the only
street in town: They’re going to price it low, grab market share
and start ratcheting it up. But they’re not going to be silly and
price it now,” Lynskey said, in part because of competition from
the Suez Canal.
they’re going to do what you would do if you controlled the only
street in town: They’re going to price it low, grab market share
and start ratcheting it up. But they’re not going to be silly and
price it now,” Lynskey said, in part because of competition from
the Suez Canal.
“If you look at the savings and the debt payments [for
expansion construction] that have to be made, and the fact that 40
percent of revenues for the canal are from containers, you’re not
going to have an extraordinary need to hyper-price a container. You
might opportunity price it, but they will pay off that investment,”
Lynskey said.
expansion construction] that have to be made, and the fact that 40
percent of revenues for the canal are from containers, you’re not
going to have an extraordinary need to hyper-price a container. You
might opportunity price it, but they will pay off that investment,”
Lynskey said.
And if tolls go up an extra $15 per TEU it won’t eat far into
the overall savings from big-ship utilization, he said.
Anti-trade
rhetoric
the overall savings from big-ship utilization, he said.
Anti-trade
rhetoric
During a Republican presidential debate in January, candidates
took turns talking tough about trade. It was the first lengthy
treatment of the subject in any of the debates so far this campaign
season. Infrastructure also made a cameo appearance.
took turns talking tough about trade. It was the first lengthy
treatment of the subject in any of the debates so far this campaign
season. Infrastructure also made a cameo appearance.
The most interesting idea was posited by Sen. Ted Cruz of
Texas.
Former “Apprentice” host Donald Trump played his usual
shock-jock role, saying he would slap steep tariffs on goods from
China if that country didn’t stop unfair policies designed to give
its companies unfair trade advantages.
He said the United States
is running a $505 billion trade deficit with China, when in reality
the deficit is closer to $370 billion. He complained that China
manipulates its currency to influence exports and heavily taxes U.S.
Imports.
Texas.
Former “Apprentice” host Donald Trump played his usual
shock-jock role, saying he would slap steep tariffs on goods from
China if that country didn’t stop unfair policies designed to give
its companies unfair trade advantages.
He said the United States
is running a $505 billion trade deficit with China, when in reality
the deficit is closer to $370 billion. He complained that China
manipulates its currency to influence exports and heavily taxes U.S.
Imports.
Sen. Marco Rubio and Gov. Jeb Bush, both of Florida, cautioned,
however, that imposing antidumping duties only hurts U.S. consumers,
who end up paying the tariffs, and companies, who get retaliated
against.
however, that imposing antidumping duties only hurts U.S. consumers,
who end up paying the tariffs, and companies, who get retaliated
against.
Sen. Cruz proposed a simple flat tax of 10 percent for
individuals and 16 percent for businesses, which would be adjusted
downward for exports to offset any tariffs faced in an overseas
market.
Gov. Chris Christie of New Jersey endorsed tax reform that
would allow taxation of repatriated corporate profits to be used for
infrastructure investment. On MSNBC’s “Morning Joe”
program, Trump said the United States is “becoming like a Third
World country” because it is willing to spend $2 trillion to fight
a war in Iraq, but not rebuild the backbone of the U.S. economy.
individuals and 16 percent for businesses, which would be adjusted
downward for exports to offset any tariffs faced in an overseas
market.
Gov. Chris Christie of New Jersey endorsed tax reform that
would allow taxation of repatriated corporate profits to be used for
infrastructure investment. On MSNBC’s “Morning Joe”
program, Trump said the United States is “becoming like a Third
World country” because it is willing to spend $2 trillion to fight
a war in Iraq, but not rebuild the backbone of the U.S. economy.