PIL exec: Mega-ships strain medium-sized carriers, feeder services
In less than 10 years, it is likely 80 percent or more of global container capacity will be controlled by the top 10 lines, an executive of one of the world's top 20 carriers said today in Singapore.
The top 10 currently control slightly more than 60 percent, according to AXS Alphaliner.
That consolidation of power by the biggest lines in the world would place an increasing amount of pressure on medium-sized carriers to find their niches and make money, said S.S. Teo, managing director of Singapore-based Pacific International Lines. The addition of huge post-Panamax vessels capable of carrying 12,000 TEUs and more, gives the larger lines unit cost operating efficiencies that smaller lines with smaller ships don't enjoy.
'Marginal players, like myself, have to restructure their strategies to ensure their viability,' Teo said on the first day of the Sea Asia conference in Singapore. 'They have to take advantage of the very large containerships' lack of flexibility and focus on niche ports and niche trades.'
In 2006, PIL moved into American Shipper's top 20 steamship line list, with capacity of 138,029 TEUs, up 7 percent from 2005. However, that capacity was more than 270,000 TEUs less than the average of the entire top 20 list.
Teo said the giant ships now in service or about to come online are also influencing the size of feeder vessels that serve ports where the mega-ships call.
'The size and speed of feeder ships have to grow in tandem with larger vessels,' Teo said. 'These giants won't wait.'
With the Panama Canal soon to begin construction on a widened set of locks that will accommodate post-Panamax ships, Teo said that Germanischer Lloyd, the ship classification group, is preparing a new Panamax classification, which could be as big as 12,500 TEUs.
The conference continues Tuesday.