ULCS (Ultra Large Container Ships)
Will this be the eye-opener and wake-up call to the container shipping industry? Not likely but it does allow for some reflexion over the concept of ULCS’s and 20.000 ++ TEU vessels.
Some history I can share from my experience. In 1999-2000 did we meet up with the engineers of the yard who presented us their drawings for large container vessels. The Terminal & Ports Team focussed on some key questions. What is the LOA and beam of these ships? What can be the max. draft of these ships? How many rows wide will they carry? Based on the answers we concluded that there was not one single container terminal in the world able to handle these ships. Key challenge was the combination of max. draft, LOA and beam. We realised that we only could increase the beam – not the LOA – to limit the draft increase. It was then decided to start converting the terminals by installing the right cranes able to handle these ships. Yes, this was 20 years ago but the intake of these container vessels on the drawing board was to be 10.000 TEU hence half the intake capacity of today’s ULCS’s with an intake of 21.000+ TEU
Let’s make a small inventory of today’s ULCS’s. Example. HMM Algeciras. LOA 399,90. Intake in hold 9.932 TEU (11 deep) and on deck 14.032 TEU (9 high) – (wonder how containers can fall overboard?). Beam of 61 mtr. Max draft 16,2 mtr. Not many ports and terminals can handle these ships. It requires a deep-draft access, a berth of 430 mtr and more important depending on the possible ships list cranes with an outreach between 68 and 71 mtr not to speak of lift hight between 49 and 51 mtr. US Ports in general cannot handle these ships. Asia is likewise limited in capacity for these vessels and Europe has entered into critical berth capacity modus forcing these vessels to divert to alternative ports. European ports have become a bottleneck to global trade. On top of the current insufficient berth capacity for the ULCS’, the European Container Terminals fail to process the containers efficiently. No surprise that they fail to move 4.000 to 5.000 containers in less than 48 hrs from ships stowage to the hinterland and v.v. Trucks are queuing-up at gates. Barges lay idle for one week waiting to deliver and receive containers. Stakeholders continue to fail in exchanging key-data on the containers allowing efficient planning of operations and yard management. Last but not least; all players remain in a state of denial and continue to finger point to each other. Likewise they all keep claiming the cost of inefficiency on the cargo. Congestion charges on road haulage and inland navigation, shortages of equipment boosting freight rates to 10.000 Usd / FFE are frequent. You and I will ultimately pay the bill in the shops for more expensive clothing, shoes, food, electronics etc…
All these challenges are not new. A study I delivered in 2014 to the ARA Range port authorities and the Terminal Operators proved with facts and figures that the foundation of these problems where surfacing and unless urgently addressed would only aggravate in the near future. Today is that near future and it has aggravated to unacceptable levels. And it will not be resolved any time soon.
And all this under normal circumstances without a Suez crisis. Ship’s queuing-up in Suez is not the most challenging issue. In the hope that the Ever Given is cleared this Sunday 28/03 and the hundreds of container ships start moving east and west, the real challenge will show starting mid-April and continue to impact logistics till at least end June 2021 – at the very best. Meantime factories will halt due to lack of parts, product deliveries will have lay times exceeding weeks etc…
Loosing Containers
MSC Zoe on the Dutch coast – 200 containers. Maersk Eindhoven – 280 containers. One Apus 1.800 containers. APL England – 40 containers. Surprised when stacking 9 high on deck? Surprised when analysing the lashing systems on these ULCS’? Is it a matter of “Pride goes before the fall” as another way to describe arrogance? Or did cost savings when building these ships play a major factor? An urgent review of the lashing systems on these ships will be needed. Until than they should limit the deckstacks to max. 5 or 6 high. Can Nautical Authorities in the ports take initiatives and be responsible? Should they in view of these recent incidents consider ULCS with 9 high stowed deckcontainers as unsafe from a nautical viewpoint and prevent them from sailing? Or will the commercial pressure for ports encourage further denial of the issue and risk? Realising that most of the IMDG classified containers are deckstowed one can consider extended disaster scenario’s not being a question of “if” but “when”.
SUEZ Crisis
The crisis will not show in Suez. The impact will show in Asia and Europe where ports are today already challenged to serve all container vessels – not to speak of the 20.000 TEU ships.
Today and under normal circumstances and without a Suez crisis ships are queuing-up to enter ports and find a berth. No issue for the carriers – just bill the cargo with a congestion surcharge. It is becoming a habit and the miracle stick the carriers use is VATOS (Valid At Time Of Shipment). Carriers recovering the extra cost caused by their lack of competence to deliver efficient and effective shipping services is smartly handled through VATOS. So don’t worry, you and I will pay the end bill. Will carriers have the balls to apply a “Suez Event Surcharge” under VATOS?
In the hope that the Ever Given is cleared this Sunday 28/03 and the hundreds of container ships start moving east and west, the real challenge will show starting mid-April and continue to impact logistics till at least end June 2021 – at the very best. Meantime factories will halt due to lack of parts, product deliveries will have lay times exceeding weeks etc…
Wrap-up
Where is the feel of responsibility of the carriers? Have freight rates dropped and did shippers benefit from the economy of scale with the use of bigger ships – ULCS? No – on the contrary Asia/Europe went up to 10.000 Usd/FFE. Have shippers been kept clear from the effects of fuel price movements? No – VATOS Bunker Surcharge. Do carriers indemnify the cargo for the congestion they cause by wrongly anticipating on the impact of their ULCS on Ports and Terminals? No – VATOS Congestion Surcharge. Did the COVID-19 pandemic impact the results of the carriers negatively? No – on to the contrary they make profits never seen before (Maersk Q3 2020 EBITDA +39% compared to Q3 2019, CMA-CGM +68%, ONE +78% etc… and for MSC we don’t know as they keep the results secretly hidden). Did the schedule reliability improve? No – on the contrary it dropped to an all-time low with no compensation for the cargo.
When will the carriers be hold accountable for this state of affairs in shipping and global logistics and be presented with the bill for the situation they created? When will all stakeholders be gathering on one table and find solutions with focus on burden sharing and allocating the cost on the right shelf? Who will take such initiative? Could it be the Top 5 industry leaders – Maersk, MSC, CMA-CGM, COSCO, Hapa Lloyd ++ ? A deep clean-up is a must.
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