The Hindu Business Line : Mega container ships come with jumbo problems

Though shipbuilding yards are overflowing with orders for huge container ships, attention must also be focused on such issues as cargo inducement, port capability and insurance.

What is a mega container ship? Difficult to define precisely, frankly. This is because in the mid-1980s, when the US built Jumbo Econ, a 4,354-TEU-capacity vessel, any container ship with capacity upwards of 4,000 containers was classified in the mega category. Not any more. The 4,000-box barrier has been breached.

The major shipyards today have plenty of orders on hand for container ships of much higher capacity. For example, Hyundai Heavy Industries (HHI) of Korea, the world's largest shipbuilder, has orders for 50 containerships of 5,000 TEU each, for delivery in 2008.

CMA CGM, the world's third largest container shipping company and France's largest, is believed to be planning to acquire from HHI eight container ships of the capacity of 11,400 TEUs each at a total cost of $1.2 billion. The news of the order for giant vessels, which together represent the biggest single order received by HHI, came as the newly-built Emma Maersk, built by Odense Steel Shipyard for Maersk Line and billed as the biggest containership yet, with capacity of 11,000 TEUs, began its voyage between Asia and Europe.

Mega orders

In June, HHI won a $1.04-billion order from CMA CGM and Mediterranean Shipping Co for eight 9,600-TEU ships for delivery from 2009. Four of these vessels, each costing about $130 million, will be delivered to CMA CGM from February 2009 while MSC received a similar price for its quartet which will start to join the Swiss company's fleet from March 2009.

And recently, Danaos Corporation, one of the largest US-listed containership companies by fleet and capitalisation size, took delivery of CSCL Le Havre, a 9580-TEU vessel built by Samsung Heavy Industries of Korea.

Evergreen Marine Corporation has announced that the company's latest new build, Ever Strong, the seventh in a series of 10 S-type vessels of 7,024-TEU capacity each being built in the Kobe shipyard of Mitsubishi Heavy Industries of Japan, will be ready for delivery in March 2007 while the sixth vessel in the series, Ever Steady, will sail shortly. Earlier, CMA CGM had contracted HHI for six vessels of 5,078-TEU capacity each for delivery in 2007 and four sister ships of the same capacity for delivery in 2008. HHI has also on hand orders for eight 6,800-TEU vessels from United Arab Shipping Corp and seven 6,800-TEU ships from Hyundai Merchant Marine.

The Shipping Corporation of India recently signed an agreement with Hyundai Samho Heavy Industry for acquiring two container vessels, each of 4400 TEUs, for delivery in 2008.

A little more than a year ago, the senior executives of Germanischer Lloyd and HHI presented before 100 customers an innovative design study for 13,000-TEU ships (with two main engines and two propellers) and suggested that the ship will be 382 metres long and 54.2 metres wide with a draught of 13.5 metres. About 6,230 containers can be stacked in 10-tiers below deck and 19 rows while 7,210 containers can be stowed in deck on 21 rows.

Related issues

In fact, a consensus among builders and the ship operators has been reached that the design and construction of even higher capacity container vessels, about 15,000 TEUs, may well be possible, though efficient operation of these vessels will presuppose many things. First, of course, is the cargo inducement. There must be sufficient volume of trade to support such huge vessels.

But more important perhaps is the port. Not all ports will be suited for handling these high capacity container vessels. Also, a complete rethink on the way the containers are to be handled, that is, to and from the ship as well as to and from and within the shore side terminals, is needed. Shore side facilities must match the increased capacity of the vessels.

Other critical issues include the question of water depth, the environment impact and intermodalism for seamless transportation ashore and afloat. Experts have expressed doubts over the lower slot costs of high capacity box-ships, cautioning ship-owners that they must be "very careful" about ordering such vessels.

There is another point. Many international insurance underwriters have raised serious concerns over the rapidly rising size of the container ships pointing out that in the event of a disaster, the total loss of an Emma Maersk-size vessel fully laden with stuffed containers could involve total claims of about $3 billion sufficient to sink the marine insurance market. The apprehension is more because the underwriters postulate the advent of even 20,000 TEU carriers.

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