Container Analytics
with Ben Meyer
The cover story this month examines the increasing size of vessels deployed between Asia and the United States, especially as it relates to the crippling port congestion currently being experienced at West Coast ports.
Even before the conclusion of contentious labor negotiations between the International Longshore and Warehouse Union and its employers that exacerbated congestion considerably, many industry experts warned port congestion at West Coast ports preexisted the labor slowdowns and would not simply go away when a new agreement is signed.
While it’s true containerships have grown significantly in size over the past five years, ocean carriers would argue the industry was given plenty of warning, as new ship orders are generally announced five years before they are ready for deployment.
The United States has not been completely stagnant in these efforts. In its fiscal year 2016 budget proposal, the White House recommended to Congress a six-year, $478 billion surface transportation reauthorization that includes an $18 billion first-time fund for regional freight transportation projects.
Many East Coast ports have started dredging to increase harbor depths to accommodate larger vessels. Some ports, like Los Angeles/Long Beach, New York/New Jersey and Pacific Northwest ports of Seattle, Tacoma and Portland, have begun “gray” chassis pools to better manage drayage equipment.
Trucking companies plan to raise wages and incentivize more people to become drivers to ease the constriction of truck capacity. And railroads are increasing intermodal connectivity and reducing their average length of haul so shippers can use some of their excess capacity in place of trucks.
Although I sympathize with shippers bearing the brunt of extra costs associated with port congestion, ports in Asia and Europe have been handling much larger vessels for quite some time now.
Just how much bigger are the containerships already being deployed between Asia and Europe?
The chart below, built with data from BlueWater Reporting’s Trade Route Deployment application, compares average and maximum vessel capacity for direct region-to-region services in the Asia-North Europe, transpacific and transatlantic trades in 2009 with present vessel sizes. At the end of Q1 2009, average capacity in the Asia-North Europe, transpacific and transatlantic trades was 7,148 TEUs, 5,158 TEUs and 3,979 TEUs, respectively. The largest containerships on both the Asia-North Europe and transpacific trades in early 2009 belonged to Maersk Line, with respective capacities of 14,781 TEUs and 9,700 TEUs. Between North Europe and North America, several Evergreen vessels held the title of highest capacity at 7,024 TEUs.
Source: BlueWater Reporting. Since then, average vessel size between Asia and North Europe has increased 65 percent to 11,769 TEUs, and the largest containership currently in service, the MSC Oscar, can hold 19,224 TEUs, an increase of 30 percent from 2009. Ships deployed in the transpacific have grown 31 percent to 6,733 TEUs on average, and the 13,386-TEU COSCO Denmark is the biggest, 38 percent larger than the largest in 2009. Containerships in the transatlantic have only increased their average capacity to 4,371 TEUs, a difference of about 10 percent, but the largest vessels, Hapag-Lloyd’s Chicago Express, Osaka Express and Kuala Lumpur Express, have grown by over 24 percent to 8,749 TEUs.
This means present average and maximum vessel size in the transpacific still hasn’t even reached the level the Asia-Europe trade was already handling five years ago. These UCLs in the transpacific aren’t going away and everyone, from terminal operators to drayage providers to the U.S. government, is going to have to adapt. In fact, vessels will likely only get bigger as newbuilds currently on order are delivered and deployed in Asia-Europe andUCLs serving that trade now are cascaded down to the transpacific. Industry stakeholders in the United States would be wise to look at Asian and European port and inland transportation infrastructure if they ever want to catch up to the size of ships being deployed in the transpacific and put an end to the port congestion that costs shippers countless dollars each day.
Meyer is web editor of American Shipper and a research analyst with BlueWater Reporting. He can be reached by email.
This column was published in the April 2015 issue of American Shipper.
