Mr. Marc Levinson is the author of: “The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger”.

This influential economist has authored a number of books and is also the author of a timely article carried by the BBC News yesterday, November 9th, the day after we posted our five-page commentary on the questionable “economies of scale” that mega-ships were supposed to provide.

He began his story with the following headline: “Why container ships may downsize” … and he capably and effectively reviews the unanticipated problems that are now becoming obvious.

“Economies of scale” means that a big ship can carry each container at a much lower cost than a small ship, Mr. Levinson explains, and he adds that “bigger has been better”.

But bigger doesn’t always mean cheaper, he writes. Acknowledging that mega-ships may be more efficient than smaller vessels while underway, he correctly reasons that these vessels will be much too large to call at most ports until the expense of deepening harbors, lengthening piers and acquiring more costly container handling equipment is borne by shippers … who, of course, will pass these costs on to taxpayers and consumers. And further, where harbors are deep enough to accommodate these large vessels, they will seriously tax that port’s capacity, he states, and he provides his readers with a simple scenario with even simpler calculations.

“Today, a major port might work a big ship with five modern container cranes, each able to move 30 containers per hour,” he writes. “Do the maths and you’ll see that under the best conditions, these five cranes could unload only 3,600 boxes in a 24-hour period. Clearing all 8,000 containers from the ship will take more than two 24-hour days under ideal conditions, and three or four days if allowance is made for crew changes and equipment breakdowns.

“All the while the vessel will be sitting at the dock, not earning revenue. Time is money, and for a shipowner, time at the dock is money not earned,” he concludes.

Well put, and this is what we were driving at in our Vol. II, Art 2 commentary of January 3, 2005:
• “An 8,100 TEU mega-ship requires somewhere around 6,480 TEU (80%) capacity before it could even consider getting underway. This ship, of course, would absolutely not sail until additional cargo was taken aboard. It would be cheaper to put the vessel in mothballs.
• “Two 3,240 TEU container ships, however, would be fully loaded (6,480 TEU) and en route in that same time frame, and would be 100% profitable for the shipowner.
• “Or three smaller 2,160 TEU container ships could be fully loaded (6,480 TEU) and en route in that same time frame, and bringing 100% profit to the shipowner. Bear in mind that in these latter two cases product would be arriving at destinations much earlier.”

[Putting it all in perspective … BIGGER isn’t better, MONEY is better.]