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How Mega Ships Impact Ocean Freight Logistics

How Mega Ships Impact Ocean Freight Logistics | Transportfolio

MegaShip-Tblog

We all know that when we go to the store to purchase an item, we often look for a good bargain. After all, when we save a few dollars here and there, it starts to add up. With this in mind, let’s apply the same thinking upstream. Putting production and labor costs overseas aside, transportation becomes the prime target to help drive down costs. As a result, ocean vessels have gotten larger. It’s pretty simple—the more containers you can fit on a vessel, the lower the operational costs are, which can be passed on to consumers for better bargains on the shelf.

In 1957, the average vessel size was only around 750 TEU and they were about 460 feet long. Today, the CMA-CGM Benjamin Franklin that called the USWC not long ago was 18,000 TEU and 1,310 feet long. Some estimates believe vessels will be around 24,000 TEU and 1,410 feet by 2018.

So, bigger is better and will yield better cost savings, right? Not quite. The fact remains that supply chains have many working parts. To get from the factory to a retail shelf you have ports, terminals, rail, trucks, warehouses, and much more to consider. The fact of the matter is bigger ships are affecting ocean freight logistics. Let’s look at how:

Inefficient Unloading and Loading

Inefficient Unloading and Loading | Transportfolio

Often, a voyage consists of several ports. Similar to airlines, ocean vessels needs to maintain its schedule integrity. If the vessel misses a port by even a day, it can cause severe delays and congestions at ports later in the voyage. No one understands this better than those at the port terminals. They will often do just about anything to unload and load the vessel within the given timeframe. To meet a deadline, containers might be inefficiently stacked on top of one another. So it’s no longer first in-first out (FIFO), it’s more like, “first in and we’ll get it out when we can.”

Lack of Terminal Space

Lack of Terminal Space | Transportfolio

Another valid concern about larger vessels is that a ship carrying 18,000 to 19,000 TEUs will need about 100 acres of terminal within the port to carry out efficient operations. With the exception of a few ports, that amount of working space is unavailable at most U.S. ports. Even when nearby land is available, it can take many years to get the necessary permits to construct new terminals and subsequent infrastructure. By the time an expansion may be completed, it may be operationally obsolete because of even larger ships.

Carrier Alliance Confusion

Carrier Alliance Confusion | Transportfolio

There are also carrier alliances to think about. For example, the G6 alliance has six different cargo interests on one vessel, all of which might have different terminal and intermodal interests. When it comes to intermodal moves, the rail lines will need to deal with the additional volumes; to complicate matters even more, they must work with six different shipping lines. This means for the CMA-CGM Benjamin Franklin, rail lines and terminals deal with the equivalent of six 3,000-TEU ships. Carrier alliances further complicate train loading priorities given their various interests. Making matters worse, alliance members are operating multiple terminal interests within a port, which means containers are discharging from a single ship and the chassis may be returned to different terminals. This exacerbates congestion, delays, and financial burden.

Final Thoughts

How Mega Ships Impact Ocean Freight Logistics | Transportfolio

Larger ocean vessels are here to stay. Unfortunately, the infrastructure downstream is not evolving as quickly as it should to handle the increased volumes.

In this complex environment, it’s imperative you ask the right questions to your service provider because a rate upstream will not necessarily mean your overall landed cost will be reduced.

The expanded Panama Canal opened to traffic in June 2016. How will the expansion impact logistics going forward? Read the white paper, Wide Open: How the Panama Canal Expansion is Redrawing the Logistics Map.

Comments

Valeriy Kucherenko

Thanks for the article and in fact the mega ships strategy is challenged by many given the current lack of port and road infrastructure to continue sustaining pressure of ever evolving international containerization. It is not clear whether port and rail operators will be able to continue catching up ongoing process of ships modernization.

4.20.16

Reply

Marc Salzberger

"Larger ocean vessels are here to stay."

Not if I have my druthers.

I think we are going see underwater suspension bridges, large evacuated tubes able to accomodate rail traffic, anchored to the sea bottom. By controlling the slope of these bridges with ballast tanks it ca be turned into a largely down hill ride, saving more fuel.

Experience with deep sea oil drilling rigs is helping to make this possible.

6.18.16

Reply

    Bill March

    Marc Salzberger: While I welcome innovation, this is completely unreasonable, if not downright impossible. The oceans cover more surface of the planet than land. Ocean vessels will never be replaced by underwater rail tunnels, because the distances would require more rail network than we have on land. The prohibitive costs would render even the simplest & shortest route unprofitable.

    Also, your idea of sloping the underwater tubes "downhill" exacerbates the complexity of the design, and does not take into consideration the tubes eventually have to slope "uphill". Unless we are building a one way railway to the center of the Earth, gravity force towards the Earth's center will always have an effect on both ends of the route. Lol

    6.30.16

    abraham

    U.S. west coast ports will loose traffic due to the Panama canal enlargment....................

    7.13.16

Kevin McGinnis

Their is alot of empty docks at the Port of New Orleans;
that might be a great place for these mega ships.

6.29.16

Reply

    Bill March

    Not if hurricanes continue to swing thru the Gulf of Mexico.

    6.30.16

Bruce Wade

Well-written and informative article.

Question; What is CH Robinson's solution to container chassis dispersion among the shipping partners' yards?

Thanks

7.5.16

Reply

John D.

Please gentleman lets not exclude under water piping as with todays technology is booming and brilliant minds are exploring , who knows what tomorrow brings. U.S.Navy Cmdr. Retired

7.7.16

Reply

    GeneTucker

    Yes we need not exclude under water piping. Hyper loop would be a perfect application for the transport of goods across the oceans.

    7.11.16

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