No Room For Error

Some sensible moves are being made by maritime authorities and it’s time we took a second look at them.

• Last November, Hanjin Shipping Company, South Korea’s leading container shipper, placed an order with Samsung Heavy Industries Co. for four 4,300-TEU class vessels “in order to run its fleet more effectively”. “We require more mid-sized vessels,” a Hanjin official said.

• “You can get to a situation where you have so much cargo landing at any one time that dealing with it on land, getting it to its onward destinations efficiently, becomes a big problem.” — Marc Levinson

• “Joseph, of Limited Brands, said that it now takes two to seven days longer for cargo to reach Columbus than it did 10 years ago. It’s particularly problematic in the fast-changing fashion industry, because manufacturing orders can’t be planned too far in advance.” — Long Beach Press Telegram

• “When the container ship Hugo pulled into Long Beach, Calif., last month after a trans-Pacific crossing, its docking was about as easy as parallel parking a Greyhound bus in a telephone booth.” — The Wall Street Journal

• “We’re pushing the limits with these ships … there’s no room for error.” — John Strong, a vice president of Jacobsen Pilot Service Inc.

• “Daewoo Shipbuilding and Marine Engineering Co. has won a $ 500 million order to build five 4,710 TEU containerships for Germany’s Hamburg Sud … The vessels will be built at Daewoo Mangalia Heavy Industries, Romania, for delivery by 2010.” — MarineLog (January 2006)

• “Seaspan Corporation (NYSE:SSW) says it has signed contracts to acquire four 4,800 TEU vessels from A.P. Moeller-Maersk A/S (APM). After purchase, the ships will be chartered back to Maersk.” — MarineLog (October 2006)

• “Horizon Lines announced today it took delivery of its first new containership, the Horizon Hunter from the Hyundai Mipo shipyard in South Korea. The Horizon Hunter is the first of five new, U.S.-flag, foreign-built, sister vessels … they have a capacity of 2,824 TEUs”. — Dec. 1 / PRNewswire (December 2007)

• “HAMBURG — On February 1, the container vessels BAHIA and BAHIA BLANCA were christened by Hamburg Sud at Daewoo Shipbuilding & Marine Engineering Co. Ltd. Co. Ltd. (DSME) in Okpo, Korea. The BAHIA and BAHIA BLANCA are the first of a total of six identical 3,752 TEU container ships.” — The Daily Shipping News (February 2007)

Katherine Yung had a story in the Dallas Morning News last year and this is the perfect time to review it again. She was stressing the downside of mega-ships:

• These new giants consume 20 tons more of diesel fuel per day than the next biggest carriers. That 20 tons per day of diesel fuel translates into an additional 44,000 gallons.

• It takes 15 to 20 minutes to bring a ship of this size to a stop, which adds almost an extra half-hour to every maneuver.

• These giant vessels can be brought into port only during daylight hours and only when the wind is less than 10 knots.

• Only three U.S. ports — Long Beach, Oakland and Seattle — can handle these mega-ships.

• These behemoths cannot pass through the Panama Canal.

• Four to five days, instead of the usual two or three, are needed to unload these ships.

• They require the use of taller, bigger and more expensive cranes than those found in most ports.

• They require longer and wider berthing spaces than those available in most ports.

• They force major railroads to make adjustments, such as running longer trains on nonstop routes across the West.

• As Katherine speculated, if all our ports are overrun by these ships in the coming years, enormous amounts of funding will be required for dredging, berth expansion, equipment upgrading, bridge and highway replacement projects, and so on and so forth.

Katherine hit the nail right on the head. Look at the billions of taxpayer dollars being spent at the ports of NY/NJ and LA/Long Beach. And for whose benefit? Certainly not the taxpayers. They’re the ones being stuck with the tab. Foreign carriers are the prime beneficiaries … so far.

The taxpayer wears two hats, though. {S)he is also a consumer … and in too many cases, an unemployed consumer. So maybe consumer prices are now lower on all those items that were “outsourced” to cheap foreign labor? … in those facilities that used to employ U.S. consumers when they were located on this side of the pond? It doesn’t add up, does it?

Eventually, carriers will realize that the above-mentioned hurdles in mega-ship operations will not be sufficiently removed in the foreseeable future because the financial hardships being encountered by U.S. taxpayers/consumers simply won’t allow it. Less employment means less spendable (or taxable) income. But like Hanjin, Hamburg Sud, Seaspan and Horizon, every carrier will see the wisdom in turning to more “mid-sized vessels … in order to run its fleets more effectively”.