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Bigger Isn't Better As Mega-Ships Get Too Big and Too Risky
HughPickens.com writes: Alan Minter writes at Bloomberg that between 1955 and 1975, the average volume of a container ship doubled -- and then doubled again over each of the next two decades. The logic behind building such giants was once unimpeachable: Globalization seemed like an unstoppable force, and those who could exploit economies of scale could reap outsized profits. But it is looking more and more like the economies of scale for mega-ships are not worth the risk. The quarter-mile-long Benjamin Franklin recently became the largest cargo ship ever to dock at a U.S. port and five more mega-vessels are supposed to follow. But today's largest container vessels can cost $200 million and carry many thousands of containers -- potentially creating $1 billion in concentrated, floating risk that can only dock at a handful of the world's biggest ports. Mega-ships make prime targets for cyberattacks and terrorism, suffer from a dearth of qualified personnel to operate them, and are subject to huge insurance premiums. But the biggest costs associated with these floating behemoths are on land -- at the ports that are scrambling to accommodate them. New cranes, taller bridges, environmentally perilous dredging, and even wholesale reconfiguration of container yards are just some of the costly disruptions that might be needed to receive a Benjamin Franklin and service it efficiently. Under such circumstances, you'd think that ship owners would start to steer clear of big boats. But, fearful of falling behind the competition and hoping to put smaller operators out of business, they're actually doing the opposite. Global capacity will increase by 4.5 percent this year. "Sooner or later, even the biggest operators will have to accept that the era of super-sized shipping has begun to list," concludes Minter. "With global growth and trade still sluggish, and the benefits of sailing and docking big boats diminishing with each new generation, ship owners are belatedly realizing that bigger isn't better."
german economy newspaper FAZ covered this already in march: http://www.faz.net/aktuell/wir...
Rail transport is more efficient than truck by an order of magnitude, but water based transport, even on a river like the Mississippi, is two orders of magnitude more efficient than rail - especially for large cargos.
The Explorer class ships (to which Benjamin Franklin belongs) are built in South Korea and China.
And to add further insult to injury, the main engine is made in Finland!
"The agriculture ministry is not in charge of Gundam" - Japanese ministry official.
Wrong Franklin but appropriate as he wrote about the Gulf Stream and sailing, from his biography:
"Yet I think a set of experiments might be instituted, first, to determine the most proper form of the hull for swift sailing; next, the best dimensions and properest place for the masts; then the form and quantity of sails, and their position, as the wind may be; and, lastly, the disposition of the lading. "
putting the 'B' in LGBTQ+
The 2009 recession saw the biggest ever fleet sitting idle off the coast of Singapore. There were a huge number of contract disputes as shipyards tried to force their clients to pay for the ships they were already building, and keep their sub-contractors busy. Today many shipyards are still facing bankruptcy or folding. There is still a massive oversupply of shipbuilding, as well as an oversupply of ships.
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Conditions change over time.
Before 2009, shipping companies placed a ridiculous number of orders for the construction of huge ships. Demand for new ships exceeded the space available to build them, and they didn't want to miss out on the boom in shipping.
Then the recession happened.
Shipbuilders forced these companies to honor their contracts, and take delivery of these ships. Though as fewer orders were being placed, the yards did allow the construction of these ships to be delayed to even out their workload.
Now these ships are still rolling off the production line, but there's less demand for them as the economy has not rebounded to previous levels.
So both statements could be considered to be true, provided you clarify when the statement was made.
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Yes, the large container ships also have their problems as the infrastructure to handle those ships is not there yet. But it will be built, and then also the mega container ships will be able to be used much more flexible. Maybe for the next 20 years, not many new 400 m container ships will be ordered, but then they will be built again.
With overwhelming cost advantages, especially on fuel, and cheap finance readily available, the upsizing decision appears to have been a straightforward one for shipping lines.
The ones who are worried are the insurers mainly, it seems. But I'm sure they're just adapting by increasing premiums.
"First they came for the slanderers and i said nothing."