Archives for posts with tag: cargo ship

Historically, the fuel of choice for the vast majority of large cargo ships has been heavy fuel oil. But in 2020, sulphur oxide emissions will be capped to 0.5% by IMO convention, ruling out current standard grades of HFO. Both fuel consumers in the shipping industry and producers in the refining industry have now had a little time to consider the potential options to deal with the imminent regulatory change…

For the full version of this article, please go to Shipping Intelligence Network.

SIW1110In the movie Super Size Me, a film-maker investigated what would happen to him if he ate nothing but fast food for a month, consuming a ‘super-sized’ meal every time. A casual glance at industry headlines over recent years would reflect the fact that shipping is involved in its own super sizing experiment, with news of larger and larger ‘megaships’ hitting the water in many sectors.

Super Sizing

The average vessel size in the world cargo fleet covered by Shipping Intelligence Weekly has increased from 17,470 dwt at the start of 2000 to 28,572 dwt today. Whilst broad ship size ranges are often well established, owners still search for economies of scale, and there can be a tendency for ‘size creep’ with designs increasing incrementally in capacity over time. But in many sectors there have been landmark steps forward to new larger vessel sizes, such as the containerships up to 18,000 TEU in size being delivered today. Demolition of older ships following the downturn has also supported upsizing. In 2013, the average size of a delivered ship was 53,235 dwt, whilst the average size of a unit demolished was 44,238 dwt.

Bigger Than Mac

But upsizing isn’t universal, and the graph illustrates the trends in the three main sectors. The tanker fleet has hardly upsized at all. The average size at the start of 2000 was 85,323 dwt, and today that stands at 86,248 dwt. However, the containership fleet has seen significant upsizing as operators have searched for lower unit costs. In 2000 the average size of a boxship was 24,716 dwt and today that figure is up 71% to 42,496 dwt. Consistent ordering of larger ships has driven this trend, and in TEU terms the average size has risen even more rapidly, by 97% from 1701 TEU to 3367 TEU. The size of the largest ship in the fleet has increased from 9,600 TEU to 18,270 TEU. That’s a long way from the 58 containers loaded onto Malcolm McLean’s Ideal-X which undertook the first container voyage in 1956.

Interestingly, the bulkcarrier upsizing trend has been just as strong. The average bulker size has increased from 50,235 dwt in 2000 to 72,640 dwt today, helped by heavy Capesize deliveries, the introduction of VLOCs, and upsizing into the Supramax (and now Ultramax) and Kamsarmax size ranges. Growth in the average size of 44% is lower than in the container sector, but equivalent to an average rise of 1,590 dwt pa compared to 1,262 dwt for box-ships.

Going Large

So, the shipping industry has had its own bout of supersizing. Yet, although some sectors have definitely ‘gone large’ it hasn’t been universal. In previous eras, upsizing has often found a limit, but today there’s no clear end to the trend yet. The average vessel on order is currently a whopper of 64,370 dwt. With the right amount of seaborne trade, there will hopefully be enough to feed everyone, but upsizing creates additional capacity and shipowners will be hoping they don’t get left with a nasty bout of indigestion.

SIW1101In the Financial Times last week Bill Gates gave the shipping industry a nice tribute. Asked to recommend a book for Christmas, he chose ‘The Box That Changed The World’. Explaining his choice he described shipping as “one of the cornerstones of globalization”, and said that since reading the book he “won’t look at a cargo ship the same way again”. A small but significant step along the road to wider public recognition.

Unsung Heroes

In 2013 the shipping industry will prove its worth by moving 10 billion tonnes of cargo. An amazing number and a reminder that whatever the state of the market, shipping companies must still deliver the goods. Another statistic that might impress Bill Gates is 1.5 tonnes of cargo delivered per capita. An astonishing number, which includes every man, woman and child on the planet. Of course some import more than others, and as this changes it will challenge shipping in the coming decades.

Must We Do Better?

All this is positive, but looking ahead the the focus is now on delivering more cargo with less carbon emissions. Doing this is hard enough, but how can the industry monitor its progress? One perspective is provided by tracking the tonnes of cargo delivered per dwt per annum. The industry’s performance over the last 20 years shows the complexity. Back in 1986, during a deep depression, the world fleet delivered 6.3 tonnes/dwt. But by 2004 this had surged by 30% to reach to 8.2 tonnes/dwt.

Ship to System Gains

This improvement was driven by a tightening market. With higher freight rates, charterers used ships more efficiently. Ships sailed faster, emitting more carbon, but logistical inefficiencies like multi-port discharge, dead-freight and waiting were squeezed out. For example the US Gulf-Japan grain trade, previously a 55,000 tonne parcel in a Panamax bulker for Panama Canal transit, was downgraded to Supramaxes loading a full cargo with no dead-freight.

Cheap and Cheerful

This performance surge did not survive the downturn. After 2009 the ratio fell to 6.6 tonnes/dwt and by 2013 to only 6.1 tonnes/dwt, lower than in 1986. Slow steaming driven by sky high bunker costs has played a big part in this reduction, whilst rock bottom freight rates encouraged charterers to use cheap ships less intensively. In fact the average global transport performance of the fleet may not be any better than 27 years ago; the flat trendline confirms this.

Living up to Bill’s Accolade

So there you have it. Bill Gates is impressed by shipping’s contribution to the global economy. But shipping is not delivering much more cargo per dwt than nearly 30 years ago. Could tighter logistics help it meet IMO’s carbon footprint target? How does 10 tonnes/dwt in 2030 sound? Certainly challenging, but is it theoretically possible? Now that’s a question worth a closer look. Have a nice day.