Mega container ships
Fan, Xiao Rong
Date of Issue2017-05-19
School of Civil and Environmental Engineering
Malcom Mclean’s development of the concept of containerization and the rise of intermodalism has make transportation of cargos across oceans more efficient and cheaper, drastically boosting national economies and world trade. However, not many have expected the dire state the container liner industry is in today, despite shipping being a dynamic industry. Assuming cost savings can always be attained through economies of scale, ship owners have jumped onto the bandwagon in building container ships of enormous sizes (>14000 TEUS) after Maersk’s lead in building the Maersk Triple E. However, the recent political changes and sluggish economy has resulted in the container liner industry to an all-time low. Protectionist anti-trade pacts by the US and slow economic growth in China has resulted in the lack of demand and since liner shipping service is a derived demand depending largely on the demand of consumption good, it is very severely affected, a prime example being the collapse of the world’s 7th largest container liner, Hanjin. Excess cargo capacities originally existing in the container liner industry, along with the building of even more mega container ships, have led to a record low freight rate that is difficult to be matched by smaller liners, who are struggling to even cover their operation costs. Formation of Shipping alliances and cascading effect, all are costs to the trend of building mega container ship, will be discussed in this paper. So, what are the ship owners thinking when they ordered those mega container ships? Did they not see the existent excess capacity in the industry and that mega container ship may exacerbate the situation? How will the current economic climate have an impact on the container liner industry, especially the projected slower Chinese economy in the coming ten years. What will be the future trend of mega container ships? This paper aims to analyse and answer these questions.
Final Year Project (FYP)
Nanyang Technological University