Taking On Water
“Though shipbuilding yards are overflowing with orders for huge container ships, attention must also focus on such issues as cargo inducement, port capability and insurance.”
That’s the way Santanu Sanyal began his December 18th analysis in India’s “Business Line”.
Why is it that impartial analysts are the first to acknowledge the weaknesses and the unpredictability of maritime operations? Too many within the industry can’t seem to see much beyond the weather reports, nor do they seem to feel there’s any reason to be concerned about possible downturns and setbacks.
Mr. Sanyal emphasized the importance of cargo inducement in his report, and cargo inducement covers a lot of ground. Demand, of course, is the driving force behind international trade, and without the strong demand on the part of the U.S. consumer, cargo inducement would gradually but surely dissipate. How much longer can the buying power of the U.S. consumer be sustained, do you suppose, when we’re seeing record numbers of foreclosures and bankruptcies taking place? The planners in the maritime industry aren’t connecting the dots.
But more important, says Mr. Sanyal, is the fact that not enough ports are suited to handle these high-capacity mega-ships, and he cites the need for “a complete rethink on the way the containers are to be handled. Shore side facilities must match the increased capacity of the vessels”, he adds.
Other critical issues addressed by Mr. Sanyal include “the question of water depth, the environmental impact, and intermodalism for seamless transportation ashore and afloat.” He notes that experts have expressed doubts over the lower slot costs of high-capacity box-ships, cautioning ship-owners that they must be “very careful” about ordering such vessels.
His final point, a more than likely scenario, deals with the loss of one of these giant delivery vessels. “Many international insurance underwriters,” he informs us, “have raised serious concerns over the rapidly rising size of the container ships pointing out that in the event of a disaster, the total loss of an ‘Emma Maersk’-size vessel full laden with stuffed containers could involve total claims of about $ 3 billion sufficient to sink the marine insurance market. The apprehension is more because the underwriters postulate the advent of even 20,000 TEU carriers”.
In past years we heard warnings from Secretary Norman Mineta of the DOT, from Jean Godwin and James Hartung, both of the AAPA, from John Vickerman of TransSystems Corp., from Nolan Gimpel of Axiom Consulting, from Neil Davidson and Mark Page, both of Drewry Shipping Consultants, from Dan Griswold of The Cato Institute and even from the editors of the FINANCIAL TIMES. Mr. Vickerman,in fact, hit the nail right on the head when he criticized the reckless building programs of foreign shipyards and shipping lines in their efforts to upstage each other.
[A “corporate fanning of feathers”, is what it is.]