Dec 15, 2014

MOL mulls building over 20,000-TEU-ships

Containerships over 18 thousands TEU are increasing

Persistent moves to enlarge containerships among shipowners/operators are on the threshold of entering an age of 20,000 TEU-plus at long last. Mitsui OSK Lines (MOL) is currently in the final stages of negotiations with parties concerned for the construction of six super-large containerships with a nominal capacity of 20,000 TEUs or over. MOL is expected to come to a final conclusion on the fleet consolidation project as early as at the turn of 2015. Since last year, boxships with capacities of over 18,000-TEUs have been in operation, but MOL's project will give birth to even larger boxships when finalized. Meanwhile, there are some shipping sources pointing out that "The trends toward ever-larger containerships are now reaching the limit." They are of the opinion that "Theoretically, further enlargement of boxships is possible, but there would be only a minor benefit obtained from the perspective of operators, citing that in addition to their possible encountering infrastructure-related issues, there will be hull design-wise restrictions that accompany more enlargement. For some more time at least, it is possible that the 18,000-20,000-TEU ships will be the maximum types of boxships.

What one knows as the typical super-large containership is the series of 18,000-TEU Triple-E ships Maersk Line deployed last year. The Triple-E overtook the 16,000-TEU CMA CGM Marco Polo the namesake French operator deployed last year. The Triple-E garnered lots of industry attention as the world's largest containership and called at Japan for one time for a self-introductory voyage. Later on, however, the title of the world's largest containership went to the 19,100-TEU CSCL Globe China Shipping Container Lines (CSCL) commissioned recently.

The global drive toward larger containerships has come only an inch before touching the 20,000-TEU stage. The operator that will break through this barrier will likely be MOL. According to related sources, MOL plans to deploy six boxships with capacities of 20,000-TEUs plus onto Europe routes in 2017 and is currently in the final stretch toward materializing the project. It has been reviewing the two ownership modes of building them either as tie-in ships or procuring via charters from owners. Already it is in the process of holding a second bidding and is expected to come out with a concrete plan as early as at the turn of 2015.

MOL currently charters five 14,000-TEU ships from APL Ltd., a fellow member of the G6 Alliance, the fifth unit of which was delivered to MOL in April this year. With the charter period of this ship set for three years, MOL is to return it to APL by 2017. This had made it inevitable for MOL to arrange for the next-generation trunk fleet ships as the successor to the 14,000-TEU ships it now operates on Europe loops. MOL has been making detailed assessments on each of candidate ship sizes to fix the optimal type, which included the arrangement of 13,000-14,000-TEU ships many operators currently deploy on Europe routes as the standard type of ship or even larger ships.

The major consideration MOL kept in mind when it was studying the project was the view that the enlargement drive for containerships that had long prevailed was now coming to a close. Maersk Line's Triple-E ship measures 399 meters long overall and 59 meters wide with maximum draft of 16 meters. Its width and draft are both quite near the upper limit for a containership navigable through the Suez Canal. The abovementioned CSCL Globe's dimensions are almost identical to the Triple-E ship in terms of overall length (400 m) and width (58.6 m) with a 15-m draft. The CSCL Globe's official capacity outperforms the Triple-E type reportedly because the former allegedly carries more boxes on deck. Aware of the end of enlargement waves of boxships around the corner, MOL earnestly hoped to arrange for most competitive ships and made detailed studies in search of the optimal type, which was 18,000 TEUs or larger, for MOL. The 20,000-TEU boxship MOL has been mulling ordering is almost identical to the Triple-E in terms of hull size, but has increased loading capacity by reviewing the inside structure of cargo holds.

Outside of MOL, not a few shipping companies hold a negative view of a boxship that exceeds the 20,000-TEU mark, commenting that "As things stand now, such a large ship is not workable." The fact is that blueprints are already drawn for boxships of 22,500-23,000-TEU-class and theoretically there still is some latitude for building larger ships than those now in operation. Nevertheless, the existing Triple-E ship's breadth and draft are almost the same as those of the Suezmax ships, which indicates there is no option other than to lengthen the hull if a ship of 22,500 TEUs or over were to be constructed. Specifically, elongating the ship hull by one bay worth would allow for ensuring the overall length of 430 meters and capacities of 22,500 TEUs or even 23,000 TEUs.

According to shipping company sources, however, construction of ships built to these designs would require consumption of huge quantities of steel material in order to ensure hull strength, which will eventually result in operators of such ships not being able to expect much enhanced cost competitiveness. They further opine that such ships would not only entail a much higher construction cost but also not allow for a big increase in loading capacity because of added weight of cargo, although proclaiming its nominal capacity is a different story. This is because effects of unit cost reduction from enlargement are cancelled out by demerits. It seems dominant views among operators are that the situation may change when lighter and stronger steel plate is developed in the future, and consequently for some more time to come, the 20,000-TEU ship would represent the limit for the realistically viable maximum size of boxship.

Following Maersk Line and CSCL, other major operators such as Mediterranean Shipping Co. (MSC), CMA-CGM and United Arab Shipping Co. (UASC) are scheduled to deploy 18,000-19,000 TEU ships on Europe routes next year. Previously, it was believed that only super-large operators such as Maersk Line would be able to operate such extra-super-large containerships, but now operators that will follow in the footsteps of Maersk are increasing in number. How the ongoing sharp plunge in the price of marine fuel will affect the fate of the newbuilding market for sea behemoths is opaque, and it merits giving close attention to what levels of orders for 18,000-20,000-TEU-class boxships will be placed going forward.

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