Mega Vessels, or Megaships, are causing the shipping industry to make some mega changes.
The term megaship is used for vessels with a capacity of 18,000 TEU or more. But, the desire for bigger and better is not slowing down and 2016 saw a demand for large-scale vessels. The industry is already looking ahead and ordering the next generation of megaships. 18,000 will seem small as the new standard of ship will be 24,000 TEU, slated for operation in 2020.
While these goliaths reduce costs for carriers, they also make ports subjects to new requirements, impact land operations and add stress to the entire logistics chain of containers.
The appeal of these ships is obviously the fact that they can deliver more with one trip. The downfall, or where the most changes will need to be made to accommodate these vessels, is on land. If the demand for these giant ships continues to grow, and there’s really no reason it shouldn’t, two new developments are possible; shipping alliances and megaports.
Because of the new requirements put on ports and the added stress of these ships, many shipping lines are reacting by forming shipping alliances. When shipping lines form alliances, they seek to take on bigger rivals and control rates. Alliances have more leverage than individual lines. Alliances mean that members can cut operation costs by sharing ships, networks, and port calls. Thus, the appeal of megaships for those looking to form alliances, and the fact that more alliances are being formed with the emergence of megaships. It’s the smaller lines that reap the most benefits from alliances as they don’t need to increase their fleet to serve more destinations.
Since it’s clear that megaships are here to stay, ports need to adapt in order to accommodate them.
In the USA, ports are spending $30 million on dredging and infrastructure improvements. They will also need to address congestion, throughput, and onward routing. While Europe is ready (Spain cleared nearly 100 megaships in 2016) so far, only 20 ports in the world can receive 19,0000 TEU vessels. More than half of those are in Asia. If other ports don’t adapt, they could die. To ensure they can accommodate megaships, these are a few measures ports would need to take:
- Enhance length and strength of quay walls
- Increase crane size
- Dredge to ensure water depth
As supply chains work to meet increasing demand, the need for megaships is only going to grow. Megaships will continue to hold mega power over both ports and supply chains and those that don’t adapt, risk falling behind.