For a dozen years or more we’ve been citing the need for smaller – profitable – container ships, rather than the monstrous white elephants that are being called for by out-of-touch carrier officials. Drewry Maritime Research is now preaching the same sermon.
“New investors needed to help finance ships below 3,000 TEU” is how Drewry titled its report.
“The collapse of the German KG ship financing system leaves a hole in the small box ship market, which needs to be filled, particularly as smaller vessels tend to be more fuel efficient and eco-friendly,” the report begins.
“Only four percent of the existing fleet of ships below 3,000 TEU is on order. Though small, the vessels are the workhorses of intra-regional services and account for 25 percent of global cellular capacity but carry far more because of shorter transits.
“Market conditions are no longer attractive to investors. As one German shipbroker lamented: ‘The crisis of the last five years has eaten into much of the reserves of these owners who would like to order anti-cycle, but can’t since their money is committed to just maintaining existing vessels.’
“Although there is no shortage of capacity today, much of it is neither fuel-efficient or environmentally friendly, which is why so much is being scrapped. Last year, as many as 151 vessels with a total capacity of 353,149 TEU were demolished.
“New investors must be attracted to the short-sea sector, but they will want more financial security, particularly for fuel-efficient newbuilds. In this respect, it is unlikely that all existing short-sea specialists will be able to match the financial muscle of the top 20 players, particularly as bigger vessels are cascaded out of their deep-sea services.” –
Like we said, “… out-of-touch”. A case in point is JadeWesserPort, Germany’s only deepwater harbor. It opened for business last September, but the 33,000 containers the port has handled since then fall woefully short of the annual 2.7 million TEUs forecasted when the $ 13.1 billion project was launched ten years ago. The port opened last year in the midst of a shipping industry plagued with vessel overcapacity, falling freight rates and a collapsing EU economy, and since March 16th, 332 of its 400 workers have been put on shorter hours.
“It is not yet the success story we wished for, but it was right to build the port,” Germany’s Deputy Economic Minister said in an April interview. The shipping industry will rally by the end of 2014, he said with the same confidence displayed ten years earlier by those who forecasted the 2.7 million TEU figure. They’ll never learn.
[So, according to some, bigger is better, despite the fact that “bigger” just isn’t working out. And that brings us right back to our patented smaller – and profitable – container ship design, doesn’t it?]