No matter how you slice it … (A Reprint of Vol. IV, Art. 10 – A Leviathan?)

On July 18th, the internet edition of an overseas newspaper carried an interesting analysis of the influences that megaships are sure to have upon the world’s container ports. These are some of the points that were brought out, and let’s hope that U.S. authorities are aware of them:
1. 30% of all vessels delivered between now and 2007 will be vessels of 8,000 TEUs or more.
2. Although it takes about a year to build a megaship, because ports are lagging behind in preparation for these megaship deliveries, it takes “many more years” to set up a terminal in order to accommodate these ships. Long and drawn-out planning procedures, environmental protection measures and strict port security and maritime rules also hinder preparations.
3. Major container operators, to the surprise of no one, remain unconcerned about the possible fallout of this increased tonnage in the freight market.
4. The current 8 – 14% annual growth in container trade which prompted the construction of these megaships, is now projected to fall to a 6.5% growth rate between 2007 and 2010.
5. Although we can assume that shipowners had done some homework, it is difficult to imagine that they could have been in a position three or four years ago to anticipate the unexpected increases in charter rates, in the cost of fuel, or in the unforeseen costs of the delays caused by congested port operations.
6. All these extra expenses … let’s call them miscalculations … are being passed on to shippers, who, of course, pass them on to consumers.
7. The major container operators are convinced that the intermodal supply chain links must accept these increasing rates if they want the carriers to provide “the kind of service they demand” in terms of capacity and transit times.
8. Despite the pressures from shippers to reduce rates, these major container operators are insisting upon long-term contractual arrangements along with a demand for acceptance of these added costs and rising rates.
9. Because of the nature of their operations, megaships are a major cause of congestion. The heavy volume of containers taxes the capabilities of a port. More space must be available for the disgorged cargo; megaships occupy berths for longer periods of time; and with ever-increasing numbers, these giant vessels, arriving at ports within hours of one another, are required to wait long and costly periods of time for berths. Congestion is unavoidable.

But wait. There’s more. “Infrastructure”, which has exhibited serious failings in recent years, has to be developed even further to cater to the requirements set up by major container operators, otherwise “the kind of service they demand” will not be met.

Ports with deeper drafts must also be provided for these megaship owners, or else. Or else the number of ports called upon by these behemoths will be limited, and transshipment and additional and costly modes of delivery to the end user must then be employed. No matter how you slice it, it’s still baloney. Either the consumer/taxpayer pays for the dredging … because the shipowners will insist upon using these profitable megaships … or the consumer/taxpayer will pay for transshipment and additional modes of delivery … because the shipowners will insist upon using these profitable megaships. [Heads they win, tails we lose.]