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Towards 25,000 TEU vessels? A comparative economic analysis of ultra‑large containership sizes under diferent market and operational conditions

Citation

Ge, J and Zhu, M and Sha, M and Notteboom, T and Shi, W and Wang, X, Towards 25,000 TEU vessels? A comparative economic analysis of ultra‑large containership sizes under diferent market and operational conditions, Maritime Economics & Logistics pp. 1-28. ISSN 1479-294X (2019) [Refereed Article]

Copyright Statement

© Springer Nature Limited 2019

DOI: doi:10.1057/s41278-019-00136-4

Abstract

The introduction of ever-larger containerships is a much-discussed topic in academic and business circles. The largest containership size has evolved from about 5500 TEU in 1995 to more than 23,000 TEU in 2019. The economic rationale for further scale increases in ship size is largely dependent on the current and future market conditions in the container shipping market, the adaptive capacity of ports and terminals (both economically and technologically) and, more recently, environmental requirements and considerations. This paper evaluates under which economic, operational and environmental conditions and expectations, shipping companies are likely to push the ultra-large containership (ULCS) size from 18,000 to 20,000 TEU to 25,000 TEU. Differences in both annual container slot cost and more comprehensive cost–benefit measures are assessed under different key market-based and operational conditions. The basic cost parameters for 20,000 TEU and 25,000 TEU vessels were estimated using a regression analysis applied to actual data of vessels up to 18,000 TEU. Our findings show that a further scale increase to a 25,000 TEU ULCS still generates economies of scale. However, very low freight rates, i.e. even below the poor freight rates of 2016–2017, and low load factors would not be conducive to the economic viability of 25,000 TEU ships, compared to smaller ULCSs. This study complements and updates the findings of previous studies (which focused on much smaller ship sizes) and contributes to the ongoing academic and corporate discussion on drivers and impediments of scale increases in vessel size by explicitly incorporating time- and context-dependent factors affecting optimal ship size.

Item Details

Item Type:Refereed Article
Keywords:containership, economies of scale, cost-benefit analysis
Research Division:Commerce, Management, Tourism and Services
Research Group:Transportation and Freight Services
Research Field:Road Transportation and Freight Services
Objective Division:Transport
Objective Group:Water Transport
Objective Field:Coastal Sea Freight Transport
UTAS Author:Ge, J (Mr Jiawei Ge)
UTAS Author:Shi, W (Dr Wenming Shi)
ID Code:135990
Year Published:2019
Web of Science® Times Cited:10
Deposited By:Maritime and Logistics Management
Deposited On:2019-11-25
Last Modified:2020-04-09
Downloads:0

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