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Mega-ships: do the benefits outweigh the costs to the transport chain?

Olaf Merk

1 June 2016

10th International Harbour Masters Congress

Vancouver, Canada

Big is beautiful?

• Bigger ships

• Bigger costs, peaks, risks

• Bigger shipping lines

• Bigger ports and terminals

• Always bigger?

2

“The Impact of Mega-Ships” Report

3

Bigger ships

4

Container ships

Bulkers

Passenger & Cruise

Tankers

Ro/Ro-ships

General cargo

0

20

40

60

80

100

120

140

160

180

200

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sh

ip s

ize g

ro

wth

(d

wt;

10

0=

ind

ex)

Bigger container ships

5

Cost savings for shipping lines

6

,100 $

,150 $

,200 $

,250 $

,300 $

,350 $

,400 $

,450 $

5,000 7,000 9,000 11,000 13,000 15,000 17,000 19,000

US

$/

TE

U

Nominal TEU size

cost at 16 knots

cost at 22 knots

old units at 22 knots, contains first ~15,000 TEU units and hypothetical fast 19,000 TEU ship

modern units at 22 knots

old units at 16 knots, contains first ~15,000 TEU units and hypothetical fast 19,000 TEU ship

modern units at 16 knots

Assumptions: Round trip: 21,000 nm, three weeks tied up for port operations Average cost of main engine fuel: US$ 600/ton

Utilization of nominal capacity: 85%

8,500 TEU vessel built ~ 2003

Bigger costs for the transport chain

7

8

9

10

11

12

13

Bigger peaks

14

0

50000

100000

150000

200000

250000

300000

0

1

2

3

4

5

6

7

8

30/7 19/8 8/9 28/9 18/10 7/11 27/11 17/12

GT

Yard

AVG DAYS

GT daily volume of container shipsmoored over 50 000 GTGT daily volume of container shipsmoored <= 50 000 GT

Pressure on terminals

15

Bigger is not faster

16

How much faster is possible?

17

How much faster is possible?

18

Who is going to pay?

19

More flexibility

20

0

5000

10000

15000

20000

25000

30000

35000

40000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Container arrivals/departures by road transport per hour of day in 2014

21

Bigger risks

22

Bigger risks

23

Bigger container shipping lines

24

Bigger shipping lines: alliances

25

Bigger terminals: alliances of terminals

26

Need for bigger ports?

27

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30

Cu

mu

lati

ve m

ark

et

sh

are

(%

)

Rank

North Europe

Carriers

Ports

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30

Cu

mu

lati

ve m

ark

et

sh

are

(%

)

Rank

Mediterranean

Carriers

Ports

Bigger ports

28

Can the ships be filled?

29

Where are we heading?

30

Cascade effects

31

Big, bigger, biggest: vicious circle?

32

Need to cut costs

Bigger ships

Overcapacity

Lower freight rates

“The Impact of Mega-Ships” Report

33

Thank you!

Olaf Merk

olaf.merk@oecd.org

www.internationaltransportforum.org

Twitter: @o_merk

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