The second half of 2008 witnessed recessionary trends that shook all sectors of the world economy, including the shipping sector. Freight rates of dry bulk, liquid bulk, general and containerised shipping hit rock-bottom level.

The first half of 2009 too was in the grip of recession, but emerging markets such as China and India were not greatly affected.

A strong banking system and sound economic fundamentals helped India tide over the recession in a reasonably satisfactory manner. Globally, with a turnaround seen towards the end of 2009, shipping and logistics sectors began looking up from 2010.

The first favourable sign in container shipping was the 2009 financial results of Maersk Line, the world's largest container shipping line, which showed a profit of $19 million against a loss of $130 million the previous year.

Orders for new vessels

World shipyards, which saw few orders in 2009, are now receiving orders for new container ships. During early 2008, a container vessel of 13,000 TEU cost $160-180 million depending on design and engine specifications. London-based non-operating container ship owner Zodiac Maritime — a majority holder in Israel's Zim Line — has ordered 10 container vessels of 13,000 TEU from the Korean STX Offshore and Ship Building.

Each unit appears to be priced substantially lower at $125 million.

Taiwan-based Evergreen Container Shipping Line, which did not place any orders prior to 2008 when prices ruled high, has now in a smart move ordered 20 ships after prices tumbled to $103 million for each 8,000 TEU container vessel. It is reportedly planning to order 10 more of the ships.

In fact, Clarkson Research Services had forecast a price of $86.5 million for an 8,100 TEU vessel at the end of 2010. But the superior design of the vessel, which makes it more eco-friendly, explains the higher cost.

Drewry Shipping Consultants, London, in their recent report ‘Annual Container Market Review and Forecast – 2010-2011' predicts a 7 per cent annual container cargo growth for the next five years.

In September 2010, the order book of container vessels stood at 601 ships with a slot capacity of 3.79 million TEUs — equivalent to just over 27 per cent of the existing fleet in operation. Nearly 63 per cent of the new capacity ordered is due for delivery in 2011-12. Interestingly, in September 2009, orders for new building constituted 42 per cent of the existing capacity. And in September 2008, it was almost 50 per cent of the existing capacity.

Another feature of the new building orders is that 66 per cent is for ships of 8,000 TEU and above. There were 4,883 container ships, aggregating 14.12 million TEUs, in operation as on November 2010.

This represents a 9.9 per cent growth over the previous year and is significantly higher than the 6.6 per cent growth registered between 2008 and 2009. By the end of March 2011, the global container fleet is likely to have about 5,000 vessels with an aggregate slot capacity of about 15 million TEUs.

Maersk Line has reportedly signed a contract for 10 of the world's largest, most-efficient container vessels, together with an option to buy 20 more.

Giant, eco-friendly ships

The vessels will have a capacity of 18,000 TEU each and will be delivered from Korea's DSME Shipyard from 2013 to 2015. These new giant container ships will be known as Triple-E , based on the three main purposes for their creation: Economy of scale; energy efficiency; and environment friendlier.

The Triple-E — 400 metres long, 59 metres wide and 73 metres tall — is 16 per cent bigger than the largest container ship currently in operation, namely the Emma Maersk (14,770 TEU). The contract, including the proposed 20 additional vessels, is valued at $5.7 billion.

Maersk Line is buying the ships in anticipation of the projected 5-8 per cent growth in trade between Asia and Europe.

The new vessels will not only set a new benchmark in size but also in lowering costs and cutting carbon dioxide emissions — about 50 per cent less per container than the industry average on the Asia-Europe trade.

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