As deploying larger container ships become the standard for ocean carriers to increase efficiency, these mega ships are becoming a challenge for both ports and shippers. One of the biggest is the failure by carriers in their inability to fill the space created by the introduction of the new vessels. The drop in demand created by excessive supply from using larger ships is not the only issue with severe effects for the shipping industry. Besides these larger vessels causing overcapacity, the global shipping industry faces addressing matters such as diminishing economies, upgrading infrastructure, and providing safe passageways for ships. So, “Is bigger better?” This question is one that the global shipping industry must come to terms with over the next several years, especially with the current state of overcapacity in the shipping container market.
While the concept of using megaships reduces voyage costs for the ocean lines, the shippers are not benefitting from these cost efficiencies because increased port and landside costs are offsetting the transport savings. At this time, megaships are providing minimal cost effectiveness, and their size is eating away at the efficiency gains. According to a recent study by Drewry that evaluated the total system cost, found “the upsizing of vessels provides only modest savings for the overall supply chain with efficiency gains being further eroded as vessels size increases beyond 18,000 TEUs.” Larger ships create more volume at ports. So regardless of the port, the volume carried on megaships will strain terminal resources, especially when handling container activities during peak hours. Before the average size of ships increased, port facilities had the capacity to unload multiple ships. Now, these same ports can only handle the amount of cargo from one megaship, giving them less flexibility and more opportunities for more congestion.
Another risk on the horizon for mega ships is new data that revealed inaccurate ocean depth measurements could lead to a catastrophic grounding of a larger vessel. This dangerous prediction claims that the lack of experience with longer, wider and deeper ships making calls at ports combined with following traditional routes for cargo vessels to these ports creates a perfect recipe for a disaster because most countries have inadequate survey data along coastal waters. In fact, the earth’s oceans remain more of a mystery than the surfaces of the moon and Mars. Therefore, it is unclear if all traditional routes will be able to provide safe passage for the deeper drafts the mega ships will produce. The U.S. leads the way in surveying the world’s oceans, but this does not improve the situation globally to provide safe passageways for shipping.
If current marine transportation services continue to exceed demands with container space, the question is whether it is worth all the efforts and expenses required to expand canals and dredged ports to support more of these mega ships coming online. For example, the U.S. government authorized $12.3 billion in funding for 34 water infrastructure projects through the Water Resources Reform and Development Act. These funds will help address the demands larger vessels place on ports by assisting with terminals upgrade equipment, yard facilities, manning levels, and in some case, dredge harbors to support deeper drafts.
So, the $216 million earmarked for Boston Harbor is of particular importance for a port of its size because the improvements will help Boston remain a relevant stop for carriers. Boston continues to perform as an excellent alternative to the Port of New York/New Jersey, ranking tenth among U.S. ports for fastest growth in imports with an 11% volume increase in 2015. Even with this impressive growth, the Port of Boston is at risk of being obsolete from the advent of megaships. While OCEANAIR joins in the maritime excitement of the port receiving its largest vessel of 8500 twenty-foot equivalent units (TEUs), in April, it cannot handle the current fleet of 37 megaships with the capacity to move over 18,000 TEUs.
By 2020, these larger ships will reach capacity up to 20,000 TEUs, and will be the norm in the industry as more than 70 new mega ships expect to be in service by that time. It will be interesting to see how ports will grapple with changes that supersized ships will bring over the next few years. It is a little disconcerting that French shipper, CMA CGM, already pulled a megaship from U.S. West Coast services only after five months. Hopefully, the current issues of today with the transition to these ships will eventually be viewed as growing pains tomorrow. As mega ships begin to rule the seas, stakeholders must remain optimistic that it sometimes takes a few years before the benefits of innovation and advancement take hold.