When BIG gets difficult
As back in March 2021 the “Ever Given” grounded in the Suez Canal, a major artery of world trade was blocked for an initially uncertain period. As after about a week the blockade got cleared, the effect of this everybody still noticed for quite a long period, also beyond the transport and logistic branch. Having this in mind, it could also give a much stronger dynamic to another issue: the ongoing trend of still bigger vessels is contributing to a more efficient and more environmentally friendly world trade versus if the changing global container transport market could collapse when this will not stop.
After years of crisis, shipping lines are back on top and having full control of the market. They managed to reduce costs and increase efficiency as well as freight rates. The loading capacities also have their role here – with today’s mega-freighters, the individual container can be brought from Asia to Europe or North America, for example, cheaper and with proportionally lower CO² emissions. And contrary to what experts initially expected, the shipping lines did not have to accept billions in losses resulting of the Covid pandemic: Analysts even consider a total operating profit of USD 200 billion to be possible in 2022, which would be approximately USD 50 billion more as in the extreme good 2021.
On the other hand, European associations of the shipping industry, freight forwarders, port and terminal operators are looking at the growing container vessels with concern. For a long time, they have been criticizing the fact that they must absorb the negative side effects of a more efficient sea transport: all kind of costs for having these big vessels operate smoothy in the ports all over the world. Here are only a few effects: sufficient port basin capacities, stronger quay walls, workable operational structures to cope with bottlenecks during peak seasons, storage space and handling capacities.
According to European port operators, in case of a vessel out of its schedule or with a different number of announced containers, this leads to massive problems in the management of the supply chain.
The blockade in the Suez Canal made the situation even worse. The container giants, which were initially late and then arrived in quick succession, have sometimes exceeded the capacities of European ports, freight forwarders and hinterland transport companies. After the „Ever Given“ accident, the question arose as to whether the global transport infrastructure could cope with bigger and bigger container vessels.
More and more European haulers stating things are going in the wrong direction. Operating bigger vessels have not increased the available freight space, as on the other hand many smaller vessels have stopped their service, which effected many routes and sailing schedules also. The European Shippers Association complains that many smaller European ports could no longer be called by the bigger vessels and can only be served by short sea shipping, inland waterway vessels, trucks, and freight trains. If containers are initially backed up in – increasingly congested – major ports and then must be reloaded several times before they reach their destination, the total transit time of the goods will increase. The shippers complain that the climate balance is also getting worse. Efficiency needs to be assessed across the entire supply chain, not just the main ocean voyage. The ESC therefore calls for a discussion about a size limit for vessels in EU ports.
In the dispute over the competitive conditions, the EU Commission moderates discussions between all those involved in the supply chain and emphasizes that it is observing market developments. However, it cannot be pinned down to regulatory intervention. The topic of mega-freighters, which has become topical because of the Suez Canal issue, could perhaps lead to a review of today’s container traffic. As no matter how you feel about ongoing growing container vessels, European transport planning must find a way to deal with this.
