SCDigest editorial staff

The News: The Wall Street Journal reports ship builders continue to crank out the new generation of mega-ship cargo vessels, with the biggest now holding 11,000 20-foot containers

The Impact: The current and scheduled delivery of these massive ships will help the industry deal with the ever increasing rise of imports from Asia to Europe and North America, though ports and related technology will have a hard time keeping up. Some are questioning whether ocean carriers are passing along enough of the savings to shippers and importers.

The Story: How big can they get?

With the 10,000+ container ships now steaming into ports, and plans for dozens more, the era of the mega-cargo ship is in full bloom.

These are happy times for shipbuilders, as these mega-ship are priced at $100 million or more. By some reports, there are now nearly 100 cargo ships with a capacity of greater than 8000 containers, with orders for another 150 or more in the next few years.

Like driving a big car, things go pretty smoothly moving across an open ocean, but can get a little hairy when moving into traffic and having to find a parking spot.

The Wall Street Journal reported this week that as one mega-ship approached the port of Long Beach, the 1095-foot Hugo required two harbor boats and three tug boats to guide it through a narrow shipping channel to the dock. Crew members had to fold down a radar mast to clear the 157-foot high Desmond Bridge – and made it with only five feet to spare. Then the ship made a 90-degree turn, its stern narrowly avoiding a concrete structure known as ‘the can opener.’”

It felt like “parallel parking a Greyhound bus in a phone booth,” according to the Wall Street Journal reporter.

As one shipping company executive said, “There’s no room for error.”

Indeed, few if any existing ports are really ready for these mega-ships, many of which are already wider than the Panama Canal.  Long Beach had to weld new steel beams on to existing cranes to get the needed height for the tall stacks of containers. The Gerald Desmond Bridge there is being replaced at a cost of $800 million, in part to accommodate these new ships. Panama has to spend billions on the canal to make it capable of handling the mega-ships, Oakland is spending $1.6 billion on deepening its port and other improvements, etc.

In addition to raw capacity, the ships should drive down average freight costs, as fixed costs of crew, fuel and other factors are spread over more containers. By some estimates, the savings are as much as 30% per container.

Ocean shipping rates have dropped in the past year, due to many factors, including supply and demand and capacity increases. The Wall Street Journal reports some shippers and importers do not believe container rates have fallen for travel on the mega-ships equal to the savings being achieved by the carriers. One shipper says it’s hard to really gauge the real rates due to the complex list of surcharges for fuel and other items.

They keep coming. French carrier CMA CGN recently announced orders for eight ships that can each carry 11,400 20-foot containers, the largest ships yet.

Are we at the limit? Not according to marine architect Charles Cushing, who says the ships can get “as big as your imagination.”

Is there any downside to the wave of these new mega-ships? Will they keep getting bigger? What’s the impact on port selection and processing? Should carriers be passing on more costs savings to shippers and importers? Let us know your thoughts.