A ship for many seas

The latest in a string of vessel orders from Maersk Line stands out for something other than just efficiency and size. Its design will enable it to be used in a variety of trade lanes.

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Søren Toft, Maersk Line’s Chief Operating Officer: “What we asked ourselves with the design of the 14,000 TEU ships was ‘Can we build a vessel that can perform in many trades and with different cargo characteristics without sacrificing maximum efficiency? After approximately 10 months of experimenting with a variety of different designs, the answer is yes”.

In a break from an industry tradition whereby vessels are designed to match the operating requirements of a specific trade lane, the 14,000 TEU vessels ordered by Maersk Line in July will be built for operational versatility – and commercial opportunity.

“What we asked ourselves with the design of these ships was ‘Can we build a vessel that can perform in many trades and with different cargo characteristics without sacrificing maximum efficiency?’” says Søren Toft, Maersk Line’s Chief Operating Officer. “After approximately 10 months of experimenting with a variety of different designs, the answer is yes”, he continues.

Traditionally, container vessel design has been determined by the operational and commercial requirements of the specific trade route where they would be deployed.

Factors influencing the design like the typical weight of the cargo, the expected operating speed of the vessel and the draft of the ports it would call, among other things, would then influence the choice of engine type, hull shape and draft of a ship. But this is not the case with these 14,000 TEU ships; they will be built for many seas.

Tricky trade flows

According to Graham Slack, Chief Economist for the Maersk Group, these more versatile vessels are a timely investment. Since the financial crisis began in 2008, trade flows have become less predictable, making it more challenging for shipping lines to build their networks.

Before the crisis, the vast majority of manufacturing (supply) was in China and the vast majority of consumption (demand) was mostly from Europe and the US. Therefore, shipping lines could, with some degree of certainty, optimise their vessel networks simply by using big ships on these big volume East-West trade routes.

“Suddenly, after 2008 and the financial crisis, a structural shift has taken place”, says Slack. “Cargo volumes aren’t growing at the same pace as before on these routes, partly due to lower demand in the US and Europe, but also due to an increase in the offshoring and near-shoring of production by manufacturers in order to get closer to their end markets and diversify their supply chains”.

While China remains the centre for global manufacturing, companies are looking to spread their supply chain risk to different geographical locations, such as Turkey, Mexico or North Africa and other places closer to their consumer markets.

“When you put it all together, we see trade flows becoming more diversified and a bit more tricky to predict”, says Slack. “It’s not just a case of where it’s cheapest to source anymore, and therefore it requires a more holistic analysis from the logisticians”.

A new workhorse

 The new 14,000 TEU ships will be able to go almost anywhere, once they begin coming into the fleet in 2017. With an operating profile designed to be efficient regardless of cargo weigth and physical dimensions that fit a large number of ports, the 14,000 TEU ships will be deployable in either East-West trades where cargo mostly consists of lighter finished goods, or North-South trades where heavier types of cargo, such as commodities, are more common.

“They will be workhorses, giving us more options for deployment across our network. We can move them wherever the demand is, here and now, and be confident they will continue to perform optimally wherever they are needed in five to ten years time”, says Anders Boenæs, Head of Network in Maersk Line.

The 14,000 TEU ships will be much more efficient than the fleet’s current workhorse, i. e.the S-Class vessels. Maersk Line has roughly 100 of these ships, ranging in size from 8,000 – 10,000 TEU, that sail in several different trades. With sharper hulls designed for higher operating speeds, these older workhorses – built between 1995 and 2008 – are from a generation less focused on efficiency.

There is no reason to believe that the environmental and economic efficiency dynamics driving carriers to use larger ships in large volume trades are going to be reversed. At the same time, there is no reason to believe that every container service will be served by the very largest vessels. Ship ordering and deployment decisions are, and will be, based on each carrier’s decision about optimising operational efficiency with capital and operating expenses.

WORLD SHIPPING COUNCIL: “SOME OBSERVATIONS ON PORT CONGESTION, VESSEL SIZE AND VESSEL SHARING AGREEMENTS”, 28 MAY 2015