Thursday, March 28

Freighter ships are getting bigger and bigger. And that’s a problem, especially when they run aground


“They did what they thought was most efficient for them — build big ships — and didn’t pay much attention to the rest of the world.” The reflection is from the economist Marc Levinson and it captures well one of the great problems that appears on the horizon of maritime transport: encouraged by the rise in demand and in their attempt to reduce costs, the large shipping companies have been betting on container ships every larger and with greater capacity.

The problem is that these big ships also pose big challenges.

ever larger ships. No, it is not your impression. Container ships have been “growing up”. In fact, they have been doing it for some time. as you remember New York Timesin the 1980s its average capacity increased by 28%, in the 90s it gave another “growth” of 36% and in the middle of the 2000s Maersk once again expanded the limits with a new ship, the Emma Maersk, a colossus with capacity for approximately 15,000 containers.

At least a year ago, Alphaliner already registered 133 ships of the largest type, with space to move between 18,000 and 24,000 units, and another fifty long ones were on the way. If in 2011 ships with a capacity of more than 10,000 TEUs —cargo capacity of a standard container— represented 5% of the world fleet, five years later they already accounted for 25%.

The Ever Given extends its fame after blocking the Suez Canal and becomes a tourist attraction for a few days

The goal: lower costs. Why have container ships given this “growth”? Well, by the same logic that governs most businesses, whether they are carried out on sea, land or in the air: the search for greater profitability. As Levinson points out, what shipping companies seek is to gain efficiency. The larger the ships, the greater the cargo capacity they have and the more profitable it is to move a container. If in the 1950s, when the first commercially successful voyage of this type was closed, only a few dozen units moved, today 24,000 TEUs can be reached.

The trend is obviously accompanied by an increase in global demand, international freight traffic and pressure for companies to offer more competitive rates. Managing a couple of data helps to have an idea of ​​what maritime transport means today: it is estimated that about 90% of the goods traded are transported by sea, which explains that in 2021 561 container ships will be ordered for a value of 43,390 million dollars. In October 2021 only APM-Maersk had an operational fleet, according to Statistica, of 735 ships.

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A change that is noticeable in the ports. Shipping companies are not the only ones that have had to adapt. The fact that 400-meter masses have begun to navigate the oceans and that larger ships are being used also forces infrastructures to adapt. One of the great nodes of international transport, the Panama Canal, for example, was expanded with an investment of around 5,000 million dollars. To take advantage of the new scenario and capture traffic, ports such as Baltimore, Miami, Norlfolk or Virginia launched dredging projects to gain depth.

The phenomenon is not exclusive to the other side of the Atlantic. In Spain there are also important initiatives underway. The Port of Algeciras is preparing to increase the draft in the Isidro Sea by 3.5 meters with megaships in mind, the Port of Valencia already has the ok from the central authority for a work that will allow it to accommodate ships of up to 24,000 containers and Cartagena It also manages a project to reclaim 58 hectares from the sea. In neighboring Portugal, the Port Authority of Leixões, in the northern region of the country, has an ambitious investment plan on the table with which it aspires, among other things, to gain depth and capacity for large cargo ships.

The hard lesson of the Ever Given. Not even this rain of millions can prevent incidents such as the one that starred in March 2021 the Ever Given, a container ship of 20,000 TEUs and 400 meters long that was trapped in the Suez Canal. By crossing the track, the Ever blocked the intense flow of ships in the area and dealt a heavy blow to international traffic. According to the BBC, on March 28 – five years after the incident and shortly before the pipeline was released – there were 369 boats stuck and the impact on the economy was already brutal.

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Lloyd’s List calculated that the ship was retaining neither more nor less than a commercial flow valued at 9,600 million dollars a day. Allianz, in turn, estimated that the blockade was costing world trade between $6 billion and $10 billion a week. The figures are explained by the role of the canal: it is estimated that 12% of world trade, a million barrels of oil and 8% of liquefied natural gas passed, at least at that time, through the Suez Canal on a daily basis.

…And the Ever Forward scare. Almost a year later, another cargo ship also operated by the Taiwanese Evergreen Marine, the Ever Forward, was involved in a similar incident again during its voyage between Baltimore and Norfolk. The ship ended up trapped in the Chesapeake Bay, in the USA. Unlike what had happened in the Suez Canal, the Forward did not block traffic, although, yes, freeing it took a little longer: the authorities took a month to unclog it, a maneuver that they were able to complete thanks largely to the high tide and tugboat support.

The logistical and commercial consequences on international traffic did not reach the dimensions of 2021 on this occasion; but the event rescues a reflection raised a year ago by New York Times: the proliferation of large container ships, with their XXL size and their consequences on the sector itself, limiting competition between the giants of maritime transport, does it make us more vulnerable to supply interruptions? The consequences of port congestion during the pandemic are still recent in memory.

Thousands of people traveled around the world on cargo ships.  Until the pandemic came

The influence of megaships in the sector. The question is certainly not trivial. The megaships have contributed to consolidate the sector, but they have also made a palpable mark on it. Buying, maintaining and paying for the insurance of large ships is expensive and, in a certain way, has made it easier to limit competition between large firms. To adjust to the new scenario and offer competitive services, some companies have chosen to merge or seek alliances.

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For years there have been voices warning of the risks that may be involved in the “obsession” of operators to charter ever larger container ships. In 2016 in Supply chain Factors such as excess supply were pointed out, which collides directly with the profitability of operations, or the lack of routes to deploy mega-container ships. In T.N.Y. Other keys along the same lines were pointed out: how the added benefits of building larger ships are increasingly limited, how restricted ships are when choosing their ports or the risk of incidents when giants such as Ever Given are involved. .

And as a backdrop: the challenge of sustainability. Today, the maritime transport industry generates around 3% of global greenhouse gas emissions and the percentage —at least according to the data handled by the International Maritime Organization— does not seem to be slowing down without policies that encourage it. His calculations conclude that, if left unchecked, emissions could grow by up to 130% between 2008 and mid-century. Aware of their footprint and how more and more companies measure the impact of their supply chains, companies like Maersk have already set out to achieve net zero greenhouse gas emissions by 2040.

Over recent years the sector has also adopted strategies to reduce its environmental footprint. For example, slow navigation, which basically consists of advancing at a slower speed than the ship can in order to consume less fuel. Industry calculations show that by using 10% less “accelerator,” greenhouse emissions from the voyage can be reduced by nearly double: about 19%. Another bet is precisely the use of large ships, capable of transporting more cargo in fewer trips.

Images | Eddie Zhang (Unsplash), Venti Views (Unsplash) and Diego Fernandez (Unsplash)



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