A Crash Couse in Economics

Robert Wright at the Financial Times reports:

“Crisis at container terminal as crane falls”

“A damaged crane at the nation’s second-busiest container terminal has triggered a month-long crisis – and cast a telling spotlight on the shortage of spare capacity at the UK’s main container ports.

“Scores of ships have been diverted or delayed since January 18, when a boom being lowered over a ship collapsed on to the vessel. The Southampton terminal shut almost entirely for the 10 days it took to remove the ship, along with the debris from the accident.

“The painstaking work since has focused on trying to understand what went wrong and ensuring other cranes of a similar age and design to the one that broke are safe. Five cranes, out of the terminal’s total of 11, are still out of action.

“For shipping lines and their customers, the affair has caused huge disruption, inconvenience and cost at a time when they are under pressure from the impact of the credit crunch.

“Many shipments have been delayed, either at arrival or departure point or because the goods have had to be shifted to another port for handling …”

“Many vessels, mainly smaller ones, have diverted to alternative ports such as Tisbury or Thamesport. Larger vessels have had to either wait in queues off the Isle of Wight for a berth at Southampton or carry on to continental European ports where smaller feeder ships are able to pick up UK-bound cargo.”

Now, isn’t that interesting. We’ve been talking at length about the shortcomings of those “bigger-is-better” leviathans, but this “affair” in Southampton serves as a dramatic illustration of the inability of those cumbersome giants to cope in any kind of a situation that calls for maneuverability or flexibility.

Another point to be made is the step taken recently to reduce fuel costs by cutting back on the speed of these larger vessels. The higher speed of mega-ships, you may recall, was touted as an advantage that would effect “economies of scale” for carriers. Now, however, the same shipping line that led the way down the primrose path is boasting that their seven 4,170 TEU “B-class” container ships have a service speed of 29.2 knots. So which size vessel provides “economies of scale” now?

Those smaller and flexible “B-class” ships, you can be sure, weren’t among those waiting in queues off the Isle of Wight, or engaged in time-consuming and costly feedering in European ports.

[Anybody wanna buy a mega-ship? Cheap?]