Does size matter, and, if so, where will it take us? It was not so long ago, well 15 years ago to be exact, that we were overawed by the Emma Maersk, a 6,000-TEU ship that seemed to break all rules and cross all technological boundaries. Then we jumped to the super-efficient Seaspan SAVR class of 10,000 TEU, and subsequently a rash of ships in the 13,000-14,000-TEU size range that could, and ultimately did, traverse the new Panama Canal.
And now the fleet of ships in excess of 20,000 TEU has commenced delivery. Eighty ships of more 20,000 TEU are on order, with CMA CGM having just ordered a series of 23,000-TEU ships with a staggering 24 bays of containers and 24 tiers high (12 under deck and 12 on deck). These behemoths are priced in the order of $150 million, which might explain their desirability. A new 10,000-TEU ship will cost around $ 90 million so the benefits of size and the lower slot cost are obvious.
But where does it all lead? The large players dominate this size with Maersk, CMA CGM, Mediterranean Shipping Co., Cosco, and Evergreen leading the way. The big question that will be on everyone’s mind is how this will impact the rest of the global fleet. In the past year, we have seen ships as young as 7 years old being scrapped, and 15 years old for the older Panamax vessels is now almost a standard scrapping age.
The cascading of tonnage will be with us for a long time, and with the delivery of the more-than-20,000-TEU ships, we will see a tremendous softening of demand for the midsize (and they used to be “large”) container ships. The lower cost slots might also put pressure on many medium-sized to smaller operators, and certainly will not help in the restoration of freight rates.