An Insid(ers) Joke
“Toldja so!” Don’t you just hate it when somebody says that? Well, we would never say it, but now that everything is going haywire for those mega-ship fanatics who insisted that “bigger is better”, let’s look back at the caution flags the more intelligent analysts were waving.
As far back as November 2nd, 2004, in a commentary we entitled “A Fitting Solution”, we noted Nolan Gimpel’s concern that mega-ships even then were straining the capacity of inland infrastructure, terminal operators and rail and truck carriers.
In that same article we reported that Neil Davidson, earlier that year, had called attention to the operational and commercial limitations that reduce the effectiveness of mega-ships. He predicted back then that carriers would have a difficult time filling those large vessels, thereby cancelling out the “economies of scale” these ships were supposed to produce. He also cited the limited number of ports able to service these larger vessels and the inability of these vessels to accommodate importers and exporters who preferred more direct, less costly service.
Then, right after New Year’s Day 2005, in our commentary, “Upon further review …”, we quoted from an article in the FINANCIAL TIMES:
“Future Need of Mega Container Ships Questioned” was the headline.
“Doubts have been raised about the future need for so-called mega container ships, capable of carrying more than 8,000 TEU.
“The doubts come at a time when industry insiders expect vessel capacity to increase faster than cargo volumes, the FINANCIAL TIMES reported.
“While giant container ships, which came into service in 2004, are expected to ‘revolutionize container trade between Asia and the US and Europe’, some shipping executives and analysts have questioned the apparent economies of scale offered by such vessels.
“The introduction of these large container ships will require shipping lines to reorganise their services to reflect the longer times these vessels will have to spend in port, the report stated.
“To maintain current schedules, such vessels will have to sail faster to make up for the extra time in port. To achieve this, ‘even with modern, fuel-efficient engines, this is likely to mean extra spending on fuel’.
“The article added that ultimately savings will depend on vessels operating with capacity loads.”
[Although we would never say it, can’t you just hear Nolan Gimpel, Neil Davidson, and the industry insiders and analysts mentioned in the FINANCIAL TIMES saying, “Toldja so!”]