Container spot rates take a tumble
NewsPrices for international shipping containers are falling. Spot rates are down almost a half in the third quarter and 10% in the last week of September.
Neo Panamax and Post Panamax ships are projected to command nearly 70% of capacity growth shaping the future of global shipping.
There has been a rapid increase in the size of container ships over the past decade reshaping the sector‘s landscape. The escalation in ship size has been primarily propelled by the pursuit of economies of scale and substantial savings on fuel costs within the maritime industry
Since 2006, the average container ship has doubled in size to 4,580 TEU and ships with a capacity of more than 12,000 TEU have accounted for 51% of the fleet’s capacity expansion, as explained by BIMCO‘s Chief Shipping Analyst, Niels Rasmussen.
Today, just 626 ships provide 36% of the fleet’s capacity, and the trend is set to continue as the large ships dominate the order book.
“Neo Panamax and Post Panamax ships contribute nearly 70% of the capacity on order and they will continue to drive growth in the fleet. We estimate that at the end of 2025 the average container ship will be larger than 5,000 TEU and the two segments will contribute more than 40% of the fleet’s capacity,” he said.
In August 2006, the launch of the Emma Maersk heralded a monumental moment in maritime history, introducing the world’s largest container ship, measuring an impressive 400 meters in length and 56 meters in width, with a remarkable capacity of around 17,800 TEU (14,000 TEU upon delivery).
Surpassing its predecessors by a significant margin, including the previously largest ship delivered just two months earlier with a capacity of 9,500 TEU, the Emma Maersk initially did not signify a revolutionary shift in container shipping. At that time, only a few vessels of similar size, including seven sister ships, were on order.
However, over the ensuing years, a new category of container ships emerged, known as the “Post Panamax,” distinguished by their immense size exceeding the dimensions of even the newly expanded Panama Canal locks unveiled in 2016. These giants boast capacities surpassing 17,000 TEU, with the largest among them reaching an impressive 24,000 TEU.
A smaller ship type developed alongside the very largest. They are known as Neo Panamax and can transit the new Panama Canal locks with a capacity of 12,000-17,000 TEU.
“The Neo Panamax and Post Panamax ships have contributed significant reductions in both cost and greenhouse gas emissions compared to smaller ships. Compared to a 10,500 TEU ship, the very largest ships cost 25% per TEU less to build and bunker consumption and greenhouse gas emissions are also 25% lower per TEU,” Rasmussen said.
“The very large ships have also meant that service frequencies have not developed as they otherwise would have. Still, as the fleet now consists of 68% more ships than in 2006, liner operators have been able to expand service frequency and coverage even when factoring in that sailing speeds have reduced significantly during the period.”
The increase in the size of container ships has brought about significant implications for ports worldwide. As vessels become larger, ports must invest in infrastructure upgrades to accommodate these behemoths, including deeper berths, expanded terminals, and enhanced crane capabilities.
While larger ships offer economies of scale and efficiency benefits for shipping lines, they also place added pressure on port operations, requiring more sophisticated logistics and handling systems to manage increased cargo volumes efficiently. Moreover, the trend towards larger vessels has prompted ports to reassess their strategic positioning within global supply chains, as they compete to attract mega-ships and remain competitive hubs for international trade.
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