Shipping industry faces sea change as bigger box ships ply all trade lanes

COMPETITION in the shipping industry is going through changes with the arrival of larger containerships and the average size of the vessels increasing 24 per cent since 2008 from 2,610 TEU to 3,250 TEU across all trade lanes.

Although the size of containership fleets rose by only eight per cent in the last four years to 4,965 units, their aggregate capacity has jumped by 35 per cent to 16.13 million TEU, according to Alphaliner. The upsizing trend will continue as vessel deliveries continue to be skewed towards the larger sizes.

Shipping lines have introduced larger ships across all trades since 2008, a move dictated by an orderbook of large ships and by the need to reduce unit costs through economies of scale to offset the impact of higher fuel costs.

The Far East-Europe route has absorbed the bulk of the largest vessels. Of the 138 containerships of over 10,000 TEU delivered in the last four years, 124 units are now deployed on this trade. The average vessel size on this route has risen from 6,390 TEU in August 2008 to 9,350 TEU now and is expected to exceed 10,000 TEU by the middle of next year.

The Middle-East/Indian subcontinent dedicated trades saw the arrival of seven ships with capacities above 10,000 TEU earlier this year, resulting in the highest jump in average vessel size of 51 per cent from 2,350 TEU to 3,540 TEU in the last four years. Since 2008, the size of the largest ship deployed on this sector has more than doubled from 6,600 TEU to 14,000 TEU.

Since 2008 the Latin American trades have also seen a significant upsize in vessels deployed, with the largest ships on this route now reaching 9,600 TEU. Average vessel size on the Latin America trades has increased from 2,300 TEU to 3,400 TEU, according to Alphaliner.

On the long-haul Asia to South America routes, vessels with capacities of between 2,000-3,000 TEU that were used on services to both the east coast and west coast of South America in 2008 have been completely phased out. The Far East-ECSA and Far East-WCSA trades are now dominated by a gearless fleet of 4,000- to 9,000-TEU units.

The North American trades have seen the smallest increase in vessel size with containerships on both the Asia-North America and Europe-North America routes increasing by a relatively modest 15 per cent on average, the lowest growth level amongst all the main trade lanes surveyed.

The mid-sized vessel segment of between 2,000 and 4,000 TEU is facing the greatest pressure, as ships of this size are increasingly displaced by larger ships that have become redundant on the Asia-Europe, Asia-Middle East/Indian subcontinent and Far East-South America trades. In 2008, there were about 450 units of below 4,000 TEU deployed on these three routes, but now fewer than 100 of these ships continue to serve them.