Giant container ships have the potential to boost supply chain efficiency but how practical are these cargo behemoths when many of the world’s ports are too small for them?
At 395 metres long and with a capacity of 19,224 containers (TEUs), MSC Oscar took the crown as the world’s largest cargo ship when it set sail for the first time in late 2014. Its deck is the size of four soccer pitches and the vessel can carry the equivalent of 1.1 million washing machines in one voyage.
Built to satisfy growing demand for goods produced in Asia and consumed in Europe, MSC Oscar has since been joined by three sister ships of equal size.
Faced with slowing economic conditions and growing pressure on freight rates, bigger vessels such as these should offer economies of scale and significantly reduced fuel costs.
Fuel savings
With a record number of around 150 container vessels due to be scrapped in 2016, the share of total container capacity associated with larger vessels is set to continue increasing in the coming years (see Figure 1).
Shipping lines are poised to take delivery of many more giant carriers over the next two years, some with capacity for up to 21,100 containers and due into service by 2017.
Larger ships are slightly more operationally efficient than smaller ones but the real savings are on the fuel bills.
Megaships are “astonishingly fuel efficient” and consume less fuel on a voyage than 16,000 container carriers, according to the OECD.
Increased speed
And not only do larger vessels carry more goods — they also travel faster (see Figure 2), so both increased speed and increased volume mean larger vessels are taking on an increasing share of container flows (see Figure 3).
The implications of these developments for business supply chains would therefore appear to be positive.
More goods can be transported around the world faster, and the increased ability to ship large consignments in one go has the potential to increase flexibility and decrease storage costs for importers.
However, the shift to larger vessels is having various knock-on effects.
Size restrictions
Many ports lack the capability to handle larger vessels or are simply not deep enough to accommodate large vessels. Others are sufficiently deep, but lack the infrastructure to process cargoes from large vessels efficiently.
This has implications for the geographical distribution of container flows.
Since smaller vessels are able to visit a greater variety of ports, the geographical spread of their associated container flows is broader.
By contrast, container flows carried by larger vessels are concentrated in a smaller number of large ports. This can be seen in Figures 4 and 5, which show the total volumes passing through each port in 2015 for smaller (less than 8000 TEU) and larger (greater than 8000 TEU) vessels respectively.
The trend towards a greater concentration of container volume in ports that can accommodate larger vessels can be seen in Figures 6 and 7.
We see that compared to larger vessels, container volumes carried by smaller vessels are showing a marked decrease in a significant number of ports spread across the world.
Import costs
As larger vessels take on an ever increasing share of container traffic, the growing concentration of container volume in larger ports at the expense of smaller ports is set to continue.
Geographical shifts in container flows of this kind have the potential to impact costs for importers by increasing the need for land-based transport.
We are continuously monitoring the evolution of global container flows using real-time vessel position data. This gives you an up-to-the minute view on flow patterns and potential sources of disruption such as port congestion.
