[190313.EN.SEA] TOC Talking Points: Mega Box Ship Orders Expected Despite Overcapacity

DESPITE overcapacity, more ultra-large containerships will be ordered in the next two years, SeaIntel Maritime analyst Alan Murphy told container supply-chain conference TOC at the Hong Kong Convention and Exhibition Centre.

Mr Murphy also said that consolidation would shrink the number of global container shipping lines to eight by 2025 because the industry can no longer support 20 global ocean carriers.

"Competition has forced lines to order more, bigger ships for fear of losing market share and the status of global carrier," said Mr Murphy, who predicted up to 165 new orders for 13,000-TEU to 14,000-TEU vessels within two years.

He also noted that Hanjin, Cosco, Evergreen, Yang Ming had bought mega ships and that UASC and CSCL is considering doing the same, adding that typical big ship on the Asia-Europe trade will be in the 13,500 TEU range in two years, and not the 8,500 class as they are today.

But it was also pointed out that many intra-Asia ports remain unable to handle any ship bigger than 6,000 TEU and that trade has surged 20 per cent in two years.

On one hand, terminal operators benefit from shorter port stays by larger containerships, but there are costs too, noted Cosco Pacific deputy managing director Ken Chan.

"Bigger ships are challenges. When they come, terminals worry that they cannot handle them," he said. "We see higher investment costs for equipment and dredging, and higher labour costs, which have risen quicker than expected in China. Then sometimes when we add capacity we find out we don't have enough volume."

Agreeing, Modern Terminals manager Benjamin Lai said larger ships without volume growth would bring little benefit. The terminal handled bigger ships, which increased in size by 3.2 per cent since 2009, but the port handled 2.8 fewer moves per call. "Those numbers mean inefficient use in our terminal assets," Mr Lai said.

Source : HKSG.