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On the Majestic Maersk, mega-ship dreams obscure cloudy future

Maritime Activity Reports, Inc.

September 26, 2016

For Captain Dick S. Danielsen, the childhood dream has been to sail the world's biggest ships.

The Danish seaman got his chance three years ago when he was asked to helm the Majestic Maersk, a mammoth, baby blue-painted vessel that at 400 meters (1,312 feet) is longer than a nuclear-powered aircraft carrier. The ship can hold up to 18,270 twenty-foot (TEU) shipping containers and is owned by the world's largest container shipping firm, A.P. Moller-Maersk.

"If you're going to be a captain and the company asks you, do you want to be on our biggest ship in the fleet, everybody would be proud. If they don't, then I think they're lying," he told Reuters from his ship during a 24 hour-long stop in Shanghai's port last Saturday.

Danielsen's dreams reflect the wider vision of his industry, whose firms are in the midst of a spending spree during the last few years to build the biggest ships.

While hailed as engineering feats, these mega-ships are now being blamed for contributing to the overcapacity glut plaguing the container industry, which saw its first major casualty with the August collapse of South Korea's Hanjin Shipping .

The Triple-E class mega-ships ordered by Maersk's container arm in 2011 were almost 20 percent larger than the biggest vessels at the time and the economies of scale slashed shipping costs by up to 30 percent.

But capacity growth outpaced trade, battering freight rates and company profits. As of this spring, 7.4 percent of container ships worldwide have been idle, according to shipping industry data provider Alphaliner.

The Majestic Maersk is no longer even among the top ten of the world's largest ships, overtaken by vessels owned by Switzerland's Mediterranean Shipping Co, China COSCO Holdings and the United Arab Shipping Co. There are 45 vessels that can carry over 18,000 TEU currently sailing and another 76 are being built, with the largest able to carry 21,000 TEU, according to valuation firm VesselsValue.

"This is a crisis that is self-inflicted by the sector," said Olaf Merk, ports and shipping administrator at the International Transport Forum, a think tank that is part of the Organisation for Economic Co-operation and Development. "It's become a competition about who has the largest (ships)... The fact is that they cannot fill the ships."

Akin to floating warehouses that can accommodate stacks of containers up to 22-feet (6.7 meters) high, these large ships trawl the shipping routes between Asia and Europe, transporting goods from toys to wine. The Majestic Maersk even has its own cinema and gym.

Maersk's Danielsen said he did not think companies would stop building larger ships despite the overcapacity currently.

"I am confident that before I get retired I will be on a ship that is 450-500 metres long."

Reporting by Brenda Goh

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