Giant Killers

PostPanamax container ships … dredging … economies of scale … If you buy into that rubbish, then you’re one of the folks Will Rogers was ridiculing when he’d follow up a nonsensical joke with his famous line: “I only know what I read in the newspapers”.

Since PostPanamax vessels are being punched out like cupcakes, you’re being told, U.S. ports must be dredged … and dredged … and dredged … in order to accommodate these leviathans. It’s all for the best, you understand, because of “economies of scale”.

Sounds simple, so why argue? Higher volumes mean lower prices. Everyone knows that. It says so in the newspapers.

Wait a minute. What about supply and demand? Demand calls for higher volumes, right? And doesn’t demand also result in higher prices? Isn’t that what we learned in Economics 101? So who benefits (Cui bono) by this “economies of scale” hogwash? Certainly not the consumer who’s been seeing higher and higher prices on store shelves, thanks to the higher and higher volumes being delivered by larger-than-life container ships.

The consumer/taxpayer, in fact, is the only one who doesn’t benefit from this scam. As consumer, the unwitting American is required to shoulder the higher prices (which pay for the construction of container vessels, as well as the various means of transporting imported goods) and as taxpayer the clueless American is required to foot the cost of dredging required to accommodate these foreign-built giants. And like sheep, we submit without a murmur.

But what choice do we have? These 10,000-TEU, 11,000-TEU and 12,000-TEU cupcakes will soon be the only access we have to low-cost, foreign-made goods. Right? Wrong. Here’s some announcements that have appeared in small print in the past few days:

• Dec. 28, 2007 – BEIJING. A signing ceremony was held for a deal between COSCO and Yangzijiang Shipbuilding to build twenty 4,250-TEU container ships.
• Jan. 2, 2008 – Rickmers Maritime takes early delivery of 4,250-TEU.container ship. Rickmers has a fleet of 23 container ships ranging in size from 3,450-TEUs to 5,060-TEUs.
• Jan. 3, 2008 – Seaspan orders five 4,420-TEU boxships destined for “K” Line.
• Jan. 4, 2008 – Hong Kong-based OOCL today christened the fourth of sixteen 4,578-TEU vessels ordered from Samsung Heavy Industries.

Commander Jon Helmick, Conrad Everhard, James Hartung, Neil Davidson, Nolan Gimpel, Tommy Stramer, Mark Page, Chris Gillis, John Martin, Santanu Sanyal, and now David Tozer at Lloyd’s Register, have all advised against the excessive use of giant boxships, and it’s obvious from the recent orderings shown above that shipping lines have heeded their warnings.

So, in the words of the unforgettable Ensign Pulver … “What’s all this crud about” … dredging?