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Is Bigger Still Better?

The ever-bigger boxship has an uncertain future

Racing to acquire the highest capacity has been de-rigeur for container lines for years; but with no consensus on which fuels to use, would they be wise to continue?

Green ship propulsion is difficult to retrofit, and vessels should ideally be built from scratch to make best use of it. Currently, China’s Shanghai Jiangnan-Changxing Shipyard is working on a series of nine LNG-powered 23,500teu Ultra-Large Container Ships (ULCS) for French container line, CMA CGM. It delivered the first, CMA CGM Jacques Saade, in September 2020. Yet even as workers returned to the yard, China’s shipbuilding orderbook had fallen 10% over 2019.

There is uncertainty over how newbuilds, with a lifespan of 30 years, will meet IMO 2050 targets. LNG will not, by itself, be enough to decrease vessel Greenhouse Gas emissions by 70%. Synthetic LNG offers a drop-in replacement; but there is no certainty that there will be enough to fuel large numbers of mainhaul ULCS on, say, the world’s most important liner trade between Asia and Europe.

‘Stranded assets’ – vessels built to a green standard which subsequently turns out not to be widely adopted – are a major concern. The bigger the ships, the greater the risk of wasted capital; over the coming decade, container lines may deem ever-larger giants not worth the gamble. But there is more than one reason to suspect that the ‘bigger is better’ trend may be coming to an end.

Upscaled

Container ships’ true capacity is often assessed by dividing a vessel’s deadweight by “14-tonnes homogenous” – a measure used to approximate average container weights over a significant number of boxes. According to this principle, the 216,900DWT CMA CGM Jaques Saade, with a nameplate cargo capacity of 23,500TEU, is actually closer to 15,500TEU.

A similar calculation performed on the United Arab Shipping Company A-18 class, built in 2015 with a 19,000TEU nameplate capacity and a deadweight of 199,700DWT, yields no more than 14,300TEU. CMA CGM Jacques Saade is the same length and draft as Barzan, the first A-18 series vessel; but at 61m, its beam is 2m wider, requiring ports to fork out for gantry cranes with even greater outreach. For this, CMA CGM Jaques Saade gets an actual capacity improvement of around 1,200 additional containers: respectable, but not quite the 4,500 the nameplate promises.

To get much larger, vessels may need to have twin-skeg hulls, which are much more expensive to build. Running two engines, instead of one, also muddies the water in terms of the linear relationship between the number of containers carried, and fuel efficiency.

Going in depth

There is also the question of where these vessels will dock. As well as ever-larger gantry cranes, ULCS require huge capital dredging. The Port of Hamburg, for example, has embarked on a massive (and controversial) dredging program to deepen the Elbe to 14.5m at high tide. But even when dredging is finished, allowing for a safe margin of water under the hull, ships arriving with a draught of more than 14m will not be able to access the port. The further a ship must divert from where its cargo is needed, the more intermodal, lightering and feeder services it requires, quickly rendering economies of scale a moot point, both from a cost and carbon perspective.

Ports, meanwhile, many of them unable to afford the arms-race of investment needed, would prefer a continuous trickle of cargo from smaller vessels over a single massive ship call overwhelming container yards, storage areas, and rail and road links to the hinterland.

“Larger vessels result in fewer weekly services operated, in turn resulting in fewer direct connections and therefore more transshipment and feedering costs,“ said Lars Jensen of SeaIntelligence, quoted by Port Technology International in a November whitepaper. “And the time spend in port increases sharply as the time it takes to handle a large vessel does not convey any scale advantage. As a consequence, the vessel ends up spending more of its time in port and less of its time actually sailing and moving the cargo.

“…hav[ing] a lower operating cost per TEU… is not the same as the vessel being economically advantageous in a network setting.”

Lars Jensen of SeaIntelligence

We can… but should we?

Quoted in the same paper, a spokesperson from Hapag-Lloyd appeared to agree. “Though [30,000TEU] would be possible from a technical perspective, it wouldn’t bring much advantage from an economic and operational perspective. Slot costs would only decrease on a very small level whilst those vessels couldn’t berth at many terminals due to their size.”

Environmental regulations will lead to old tonnage being scrapped, but owners may wish to think carefully before being caught up in another capacity-building frenzy. With no consensus on fuels, shipowners should seek to maintain as much flexibility as possible as they proceed with fleet replacement programs in the years ahead. Ever larger container ships may not tally with such a strategy.

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