MARITIME ECONOMICS

THE FAMILY OF CONTAINER SHIPS – FULL CONTAINER VESSELS

Baris Anil CETINKaren CONCEICAOOlga KRAUSYiqiaoyuan ZHANG

Table of Content

Introduction

History

Technical Aspects

Operations

Market of Today

Future Vision

Conclusıons

Table of Content

Introduction

History

Technical Aspects

Operations

Market of Today

Future Vision

Conclusıons

Guess what???

Longer than five and a half Airbus A380 aircraft

Bigger than the Empire State Building and the Eiffel Tower

Powered by an engine as powerful as 1,000 cars

Introduction

Look around – there is another life is going on while you’re

sleeping…

Table of Content

Introduction

History

Technical Aspects

Operations

Market of Today

Future Vision

Conclusıons

History

Production growth

International trade development

Cargo protection – damage decrease

Increase of shippers demand

Cost reduction by automation

History

Containerization has its origins in early coal mining regions in England beginning in the late 18th century.

Containerization has increased the efficiency of moving traditional break-bulk cargoes

significantly, reducing shipping time by 84% and costs by 35%.

IDEAL X was the first commercial successful container ship in 1956. Capacity = 58 ctnrs Nowadays containerships capacity reaches 18’000 TEUs (MAERSK Triple E-class)

History

On April 26, 1956 the Ideal X carried 58 containers from Port Newark , New Jersey, to Port of Houston, Texas, where 58 trucks were waiting to be loaded with the containers

T-2 oil tanker

History

http://people.hofstra.edu/geotrans/eng/ch3en/conc3en/containerships.html

Container ships evolution

History

THE SPEED

Some ships with huge power plant(s) and multiple screws could achieve speeds up to 28 knots.

In 1972/73 Sea-Land took delivery of eight 33-knot containerships capable of carrying 1900 TEU. This speed was realized by installing two steam turbines and two screws.

However, they turned out to be an economic failure when fuel prices went skyward and the vessels were sold to the U.S. military.

Nowadays service speed is in the 24-26 knot range.

SS Regulus

Table of Content

Introduction

History

Technical Aspects

Operations

Market of Today

Future Vision

Conclusıons

Technical Aspects

INFRASTRUCTURE & PORT CALLS

Source: STOP, F. (2009) Maritime Economics (3rd Edition) London and New York

Port-to-port service

• Port had the control of the cargo,• Vessel went to the port to get cargo,• There was always a vessel looking for

cargo, so port did not invest in equipment,

• Consequences: Vessels navigating below their capacity,

• Ports with low performance.

Base Ports (Hub) & Feeder Ports

• Liner companies took the control, • Started to plan the itinerary which

gave economic advantage (optimized vessel capacity = lower cost),

• Consequences: competition between ports to attract liner services,

• improvement in port investments,• Improvement on performance =

efficiency and productivity.

...then things changed

Technical Aspects

Source: http://www.ship-technology.com/features/feature75321/feature75321-2.html

Modern container ports can stretch over vast areas of land and handle millions of tons of cargo each year.

The Port of Singapore handles a vast array of cargo, including containers and conventional and bulk cargo

INFRASTRUCTURE & PORT CALLS

Port designed to attend the demand of shipper lines.

Technical Aspects

1. bridge castle front,2. deck containers,3. foremast and mast top,4. forecastle,5. insulated containers in holds,6. container refrigeration ducts,7. double hull composed by a complex arrangement of steel plates and strengthening beams8. passageway

Container Vessels Projects

http://forshipbuilding.com/ship-types/container-ship/

Bays / Rows / Tiers

Ship Container = complex engineering project which should be taken in consideration:- Safety- Balance and stability- Resistance against the nature forces,- Profitability & Capacity, etc…

Technical Aspects

Cargo Holds

http://en.wikipedia.org/wiki/Container_ship

EFFICIENCY = ships are specially constructed to speed loading and unloading, and to efficiently keep containers secure while at sea.

Cell Guides = strong vertical structures constructed of metal installed into a ship's cargo holds

CARGO PLAN = Is the key to minimize the vessel time on berth

Technical Aspects

LASHING SYSTEM

http://en.wikipedia.org/wiki/Container_ship

Numerous systems are used to secure containers aboard ships, depending on factors such as the type of ship, the type of container, and the location of the container.

Vessel and Cargo Safe!

In general we have 3 systems:- lashing systems (secure containers to the ship)- locking systems (the effectiveness of lashings is increased by securing containers to each other )- buttress systems ( = pillar = used on some large container ships - system of large towers attached to

the ship at both ends of each cargo hold)

Technical Aspects

INCIDENT - LASHING SYSTEM

Technical Aspects

http://www.marineinsight.com/sports-luxury/equipment/16-types-of-container-units-and-designs-for-shipping-cargo/

CONTAINER - TYPES

Dry storage container Flat rack container Open top container Tunnel container

Open side storage container Car carriersRefrigerated ISO containers Tanks

According to Drewry Maritime Research:

Global container fleet = 32.9 million TEU in 2012**Dry container 92%, refrigerator 7%, tank 1%

Table of Content

Introduction

History

Technical Aspects

Operations

Market of Today

Future Vision

Conclusıons

Operations

WHAT TO DO TO TRANSPORT CARGO IN A CONTAINER VESSEL?

The Owner decides attend the demand using the maritime modal.

This demand can be domestic (cabatoge) or an import / export operation.

Operations

1st Step

Operations

Check which shipper line could attend with the best conditions (price, route, schedule).

Should be in accordance with what was planned.

2nd Step

Inform the shipper line how many containers and what kind of goods will be loaded. Shipper line will inform your Booking number.

Booking Number: reference number of your reservation that contains type of container, which vessel, dead line, Origin and Destination Port.

Operations

3rd Step

Operations

4th Step

With this #Booking number# you can provide the pick up of your empty container from the “depot”.

DEPOT = is the local that shipper line storage your empty and full containers.

Load the cargo inside the container – in this stage it´s necessary to arrange all details to load the cargo in a safe way.

Plan what´s necessary to maintain the integrity of the cargo and vessel during navigation.

Operations

5th Step

Steel Coil = 12 ton

Operations

ORIGIN PORT load the FULL container in the vessel.

Attention to the dead-line to avoid losing the ship.

6th Step

During your cargo navigation it´s possible to track & trace.

This information comes from the Shipper Line.

Operations

7th Step

Operations

DESTINATION PORT UNLOAD the containers

Shipper Line gives some free days to pick up the FULL container and then return EMPTY in perfect condition. In this moment, DEPOT makes an inspection in the container, and if detected any damage

caused by the cargo owner will pay this cost.

8th Step

The terminal UNLOAD the cargo.

Use appropriate equipments to unload in a safe way and without damage.

Operations

9th Step

Final destination…

Lessons learned and check which items shoud be improved!!

Operations

10th Step

Table of Content

Introduction

History

Technical Aspects

Operations

Market of Today

Future Vision

Conclusıons

Containerization has rapidly increased over the past 30 years;

Standardization of transports constantly increases the intermodal transport from door-to-door, improves transit and turnaround times and reduces cargo damage;

Containers continue to replace bulk and other forms of shipping goods, especially with specialized and higher value-added products;

Sophisticated systems and controls are the key in creating a competitive advantage for container shipping companies.

Market of today

Trends & Key Development of Global Container Ship Industry:How it looks now?

Source : Review of Maritime Trade 2012 UNCTAD, EU Commission Press 28/03/2012

Future Vision

The Role of Container Shipping on the Global Trade

%16 of the seaborne trade tonnages are containerised.

In terms of value of the good, container shipping account for more than 50% of the global trade.

In comparison with DWT share of vessels and the share of the value carried, container ships carry 27 more seaborne trade than dry bulk carrier.

From the economic perspective, rise of the costs and low margin of earnings enforce companies to make alliances and oligopolies.

Market of today

Source : Review of Maritime Trade 2012 UNCTAD

Market of today

Global Container Trade 1996-2013 (millions of TEU and annual growth)

Source : Alphaliner Annual Review 2012

Market of today

Distribution of Container Ships among the Companies

• TOP 3 container shipping companies of the world CMA CGM, Maersk Line and MSC Mediterranean Shipping Company SA have agreed to establish a long-term operational alliance on East – West trades, called the P3 Network.

• The aim is to improve and optimize operations and service offerings.

• The P3 Network will operate a capacity of 2.6 million TEU (initially 255 vessels on 29 loops) on three trade lanes: Asia – Europe, Trans-Pacific and Trans-Atlantic.

NEW SHIPPING ALLIANCES

Market of today

Trends & Key Development of Global Container Ship Industry: what it is challenged by?

Staff of approximately 200 will run the alliance from offices in London, UK and Singapore

42 % of the Asia-Europe market share

24 percent of the transpacific routes

Between 40 and 42 percent of all transatlantic crossings

Maersk Line’s Lars Mikel Jensen will be the organization’s CEO

NEW SHIPPING ALLIANCES: how are going do this?

Market of today

Trends & Key Development of Global Container Ship Industry: Challenges

Market of today

Latest developments of Global Container Ship Industry: Facts and Figures

Pricing volatile and demand driven, at the same time fuel cost and is unpredictable that makes margins volatile.

Market of today

Trends & Key Development of Global Container Ship Industry: what it is challenged by?

The container market is struggling to handle surplus capacity in a period with low demand growth and an orderbook entirely filled by large post-panamax vessels.

Container shipping dependent on global trade, subject to economic fluctuations and is extremely seasonal, that increase uncertainty and limited ability of the shipping companies to influence the situation.

Table of Content

Introduction

History

Technical Aspects

Operations

Market of Today

Future Vision

Conclusıons

MAERSK TRIPLE E

Modified version of Emma Maersk

Carrying capacity 18.000 TEU

400 m. length , 59 m. beam , 14.5 m. draft , 165.000 DWT

50% less CO2 per container compared to average of the market

Constructed by Daewoo Shipbuilding & Marine Engineering

Source : www.worldslargestship.com

Future Vision

Gigantic Container Ship Circumnavigating Around World

Max Draught 21 m. , 400.0 m. length , 60.0 m. Beam , 18.000+ TEU Capacity

Opportunities

• Operation cost per container goes down

• The lesser ship the lesser CO2 emissions

• Expected acceleration in economic growth

• Competitive advantage

Threats

• Twin propulsion requiring more maintenance

• Port limitations• Utilisation of capacity• Oversupply in

container market• Too many eggs in one

Source : Long-Term Trends in Container Shipping – the Revised Fourth Revolution (Ashar, 2012), The future of containerization: perspectives from maritime and inland freight distribution ( Notteboom, Rodrigue 2009) , www.containershipping.com , The feasibility of mega container vessels ( van Ham, 2005)

Future Vision

Malacca-max : The New Opportunity or Escapade

Source : WTO 2013 Press Release , 19 September

GDP growth of among the countries is expected to increase in 2014 , consumption is forecasted to be core factor of the growth.

The positive consequences of expanding to container shipping can be seen in the next years.

It is expected to be seen a recovery after the crisis

80% of world trade by volume is carried by sea

Future Vision

World Merchandise Growth Trade and GDP*

Source : Data Hub Trade Statistics 2013, Lloyds List

Future Vision

Projections of Global Trade in terms of TEU(1)

Source : Data Hub Trade Statistics 2013, Lloyd List

Future Vision

Projections of Global Trade in terms of TEU(2)

Source : Review of Maritime Transport 2012, UNCTAD

Future Vision

Alterations of Global Trade Pattern in the Future

Russia - Brasil – India – China – Republic of Korea will comprise more than 50% of the total grow GDP between 2011 and 2025. ( average %4.7 increase per year – for developed countries %2.3).

It is expected that Asian countries bloc will take lead from NAFTA and Eurozone by 2015

Acording to OECD report, by 2030 main trade corridor will not include US and Europe but extend Asian side Thailand and Vietnam

It is forecasted that by 2050 60% of exports will go from developed Asia to emerging Asia. That means the future centre of trade will be South-South trade.

Future perspective

To be proactive and flexible

Technical progress in line with infrastructure development

Easiest for customers to do business with

For surviving in the storming market environment, container shipping companies are advised to keep the following route

Table of Content

Introduction

History

Technical Aspects

Operations

Market of Today

Future Vision

Conclusions

Conclusion

The container service is constantly changing to meet the needs of trade.

By using containers to mechanize the transport of ‘general cargo’, it has, in Adam Smith’s words “opened the whole world to a market for the produce of every sort of labor”… Source: STOPFORD, M. (2009) Maritime Economics (3rd Edition) London and New York

“ God must have been shipowner. He placed the raw materials far from where they were needed and covered two thirds of the earth with water.” Erling Naess

“ Whosoever commands the sea commands the trade ; whosoever commands the trade of the world commands the riches of the world and consequently the world itself ”Knight Sir Walter Raleigh, 1650

THANK YOU,QUESTIONS?