Mega Ships, Mega Challenges

Shipping lines have sought to stay competitive by running larger, more fuel-efficient container ships in major shipping lanes, holding down the cost of ocean shipping and reducing their cost per container.

 

But the gigantification of container ships and tanker vessels, as well as more particular stability problems of car carrier designs, need to be addressed from an insurance risk perspective, says Dieter Berg, president, International Union of Marine Insurance (IUMI).

 

In this Insurance Institute of London Lecture, Peter Townsend, Head of London Marine at Swiss Re cautioned how these new bigger ships were bringing new concerns to the insurance industry.  Peter concluded that although the rapid growth in ship size has brought with it some questions and concerns, the change is here to stay.

 

There is also a clear need for port infrastructure investments.  The demand for dredging, and port expansion has far outweighed the Army Corps of Engineers ability to deliver.  As a result, the port infrastructure may not be kept up with demand and the larger ships can create challenges.

 

As carriers deploy ever-larger ships, the sheer volume of containers aboard those vessels is starting to overwhelm major gateway ports, challenging their ability to unload import containers on a timely basis.

 

The increasing size already is straining the unloading resources at some port facilities and—along with labor troubles—has contributed to major traffic snarls at the nation’s West Coast ports.

 

“Cost cutting measures such as reducing crew numbers, overworking and lack of training” have exacerbated the risks, and could contribute to a shipping accident, said Jonathan Moss, partner and head of transport at law firm DWF in London.

 

Direct losses from a huge ship sinking or running aground, though potentially severe, could be dwarfed by the impact of a disabled ship blocking a major port or canal.

 

Also, not all ports can accommodate big ships, so the risk is concentrated among the few major ports that can. Insurers expect that risk to trickle down as bigger ships displace smaller ones at these ports and smaller ships are redeployed to replace vessels with even less capacity.

 

To accommodate these giant ships, ports have been significantly expanded and rebuilt, with vast yards to store the containers, huge cranes to load and unload them, and highway and rail terminals to send them directly to market.

 

The Panama Canal is currently being widened to accommodate larger ships, but even after the project is finished in 2016, it won't be able to fit ships the size of MSC Oscar. 

 

During 2014 December, the United Nations Conference for Trade and Development (Unctad) said extensive work may need to be undertaken at ports to accommodate future 24,000-teu giants. 

 

Ports will need to be “future proofed” to face the challenge of a new generation of containerships, Unctad said, with deeper access channels, wider turning basins, more pilotage facilities, strengthened quays, larger storage areas and more sophisticated terminal operating systems.