Doubt cast on viability of giant vessels

PUBLISHED : Wednesday, 27 July, 1994, 12:00am
UPDATED : Wednesday, 27 July, 1994, 12:00am

FUTURE post-Panamax vessels may bring no savings but entail extra costs to all shipping-related industries, according to Hsu Jau-yi, president of Taiwan's Evergreen Marine Corp.

While ship owners and port and terminal operators will try to solve the problems caused by the length and width of the massive vessels, the draft will be a persistent problem for many ports, he said.

To create water depths of more than 14 metres to accommodate bigger ships, many ports will have to be dredged continuously, possibly at prohibitive costs, Mr Hsu said.

Therefore, the savings from economies of scale might not compensate for the enormous costs incurred on dredging, buying of gantry cranes, feedering, landside congestion, big volume of container flows, and turnover within a limited area, Mr Hsu said.

''I think you will see these problems happen,'' he said. Without a detailed study, it would be hard to tell whether economies of scale will be achieved in building the large post-Panamax ships, he said.

In the past it was easy for carriers to make decisions on new building programmes without facing immediate problems with port facilities.

''To the contrary, we have now faced this problem,'' he said, pointing out that in Asia there are few ports with water depth of more than 14 metres.

These include Yokohama, Tokyo, Nagoya, Kaohsiung, Pusan and Singapore.

The newbuildings will need strong back-up and commitment from the port and terminal operators to ensure their infrastructure generates real cost savings, Mr Hsu said.

Towards the end of the 1970s, leading liner carriers were building ships of 1,800 TEUs (20 ft equivalent units). By the early 1980s, vessels over 2,700 TEUs were being deployed.

In the mid-1980s, carriers began taking delivery of 3,400-TEU vessels and in the past couple of years 4,200-TEU vessels have been introduced.

Recently, some owners operating on transPacific routes have rushed to order post-Panamax container ships.

Mr Hsu would not speculate on the size of vessel that will be built in 2000, or 2010, or 2020.

He said the answer to the question whether it will be 5,000 TEUs, or 6,000 TEUs, 7,000 TEUs, or even 8,000 TEUs, might not be readily available.

''If you (had) asked me just a few years ago whether shipowners would be building post-Panamax vessels, I would probably have said no,'' he said.

But there is no doubt that carriers will continue to seek cost reductions by achieving economies of scale by deploying bigger and bigger vessels, he said.

Bremer Vulkan of Germany has had a design for a 6,000-TEU ship for quite a while.

So what size of post-Panamax ships will be the largest, truly cost-effective vessel in the transPacific trade? Mr Hsu said this would depend upon a detailed study to be carried out jointly by carriers, port and terminal operators.