Why Size Matters: Container Ship Economies of Scale

MarineLink.com
Tuesday, September 03, 2013
Image courtesy of Maersk Line

Maersk Line’s first 18,000 teu vessel, the Maersk Mc-Kinney Moller, which was doing the rounds on her maiden voyage in Northern Europe last week, has prompted much speculation on her economies of scale, particularly as HHI has just confirmed that it is negotiating an order for five slightly larger ships with UASC, says Drewry Maritime Research in a new paper.

The economies of scale offered by Maersk Line’s 18,000 teu vessels are so great that few can ignore them. Assuming the Triple E’s consume 164 tonnes of fuel a day (excluding diesel), the estimated IFO bunker cost of the Maersk Mc-Kinney Moller (18,270 teu) would already be 35% lower than a  typical 13,100 teu vessel on a per teu carried basis – $218/teu versus $333/teu. Apart from the fact that the ships are bigger, their hulls are reported to be designed around an average ship speed of only 23 knots, compared to over 24 knots for the first 13,000 teu vessels, enabling them to glide through the water more efficiently.

The unit cost comparison is based on an average westbound ship speed of 20 knots for both sizes of vessel, and an eastbound ship speed of 14.6 knots which is the average of Maersk’s services between Asia and Europe according to Drewry’s 'Carrier Performance Insight' . The ships are also assumed to be 85% full westbound, and 55% full eastbound, which may only be achieved in steady state conditions, when all of the vessels deployed in the AE10 service are Triple Es.

As bunker consumption tables for 18,000 teu vessels are not readily available, and Maersk does not disclose such information, the daily consumption has had to be extrapolated from those of vessels ranging between 10,000 teu and 16,000 teu, but they do more-or-less tie in with public announcements from Maersk and national press reports. Maersk claims the vessels to be 35% more fuel efficient per container carried than the first 13,100 teu ships, and the Daily Telegraph has reported that their westbound fuel consumption is approximately 150 tons/day, compared to normal consumption of over 214 tons/day.

Ship operating costs, including manning, insurance, stores/lubes, R&M and Admin, are also an impressive 11% cheaper – $76/teu carried versus $85/teu carried, although here again, the result has had to be extrapolated from Drewry’s analysis of vessel sizes ranging between 3,000 teu and 12,000 teu in its report entitled ‘Ship Operating Costs 2012-2013 ’. It is based on 2011 costs, which are currently being updated for this year’s edition.

The Maersk McKinney Moller is manned with a crew of just 21, which is not unusual these days, but it is possible to run her with just 13 crew.

Putting both IFO bunker and ship operating cost savings together reveals that Maerk’s 18,000 teu ships are a massive 30% cheaper than 13,100 teu ships on a round voyage basis – $294/teu carried versus $418/teu carried. This does not include Suez Canal and port costs, however, so is not a total slot cost, but the differential in ship operating cost is clear.

Drilling down into this result in more detail, the westbound saving amounted to $121/teu, which is equivalent to approximately 9% of last week’s average spot freight rate from Shanghai to Rotterdam, according to the World Container Index. The eastbound saving was an even higher $128/teu, which is equivalent to 30% of last week’s spot rate from Rotterdam to Shanghai.

Other savings include faster cargo handling. According to APM Terminals, berth and crane productivity of the Maersk Mc-Kinney Moller (18,270 teu) last week already reached a record 215  and 37.1 gross moves per hour respectively in Rotterdam.  This compares with a ‘normal’ berth productivity average of between 140 and 150 moves per hour and a crane productivity average of between 32 and 33 moves per hour for a well stowed 14,000 teu vessel. Because of its greater size, an average of seven cranes could be worked on the Maersk Mc-Kinney Moller, with the maximum going up to eight, whereas only six can usually be worked on a 14,000 teu size vessel.

Drewry's conclusion is that the rush to order vessels over 16,000 teu for deployment between Asia and Northern Europe will gain momentum, despite the fact that they will be too big for the new Panama Canal locks that are due to open in mid-2015.
 
Source: Drewry Maritime Research



 

Maritime Reporter July 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Piraeus Port Posts Flat Profit, Sales Dip

Greece's Piraeus Port (OLP) , the largest in the country, said its first-half net profit was almost unchanged from the same year-ago period, while sales fell. Piraeus Port,

Hyde Marine to Display Ballast Water Tech at SMM

Hyde Marine, Inc., a ballast water treatment technology company, will showcase its Hyde GUARDIAN Gold HG250G Ballast Water Treatment System (BWTS) at the upcoming Shipbuilding,

Report: Ports Lack Maintenance Support

The latest Barometer Report from Trelleborg has revealed a huge gap in the maintenance requirements of port owners and operators, and the support that suppliers are able to provide.

Shipbuilding

Survitec Escape Slide Chosen for Norwegian Ferry

The all-electric Zero Cat ferry, currently under construction at the Fjellstrand yard in Norway, will enter service next year with Norled as the first Norwegian

First N.American Boat Powered by Volvo Penta IPS

Thomas Paine, the new 50-ft. aluminum patrol boat that joined the Massachusetts Environmental Police fleet in July, is the first commercial vessel in North America

Editorial: software ... is it ‘evolution’ or ‘revolution’ ...

The August “Shipbuilding Annual” is one of my favorites to research and produce every year, but even more so when this edition coincides with the SMM exhibition in Hamburg,

Finance

Piraeus Port Posts Flat Profit, Sales Dip

Greece's Piraeus Port (OLP) , the largest in the country, said its first-half net profit was almost unchanged from the same year-ago period, while sales fell. Piraeus Port,

Panama Canal: The Billion Dollar Challenge

Panama Canal expansion will cost operators, insurers As the Panama Canal prepares to celebrate its 100th anniversary, insurers are warning of the increased risks

Wishful Thinking From Across the Pond

European Shipowners Pursue Softening of the Jones Act Just last month, the Secretary General of the European Community Shipowners’ Association (ECSA) opined that

Container Ships

Shanghai Port's Q2 Profit Down; China Trade Flagging

Shanghai International Port , the operator of the world's busiest container port, reported earnings on Wednesday that showed its second-quarter net profit fell 2.

Pariah Containership Banned from Australian Ports

The Australian Maritime Safety Authority (AMSA) informs that it has issued a direction to the container ship 'Vega Auriga' (IMO 9347786) that prohibits the ship

COSCO Resorts to Rate Restoration for F. East to S Africa Trade

COSCO Container Lines would like to announce Rate Restoration for all shipments (include reefer cargo) from Far East to South Africa Trade and take effect from September 1, 2014.

 
 
Maritime Careers / Shipboard Positions Maritime Security Naval Architecture Navigation Pipelines Port Authority Ship Electronics Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.2923 sec (3 req/sec)