McKinsey predicts boxships of up to 50,000 teu in capacity

McKinsey predicts boxships of up to 50,000 teu in capacity

Consultant McKinsey has issued a report looking at container shipping 50 years from now, a time when it predicts ships will be autonomous and capable of carrying up to 50,000 teu.

By 2067, McKinsey predicts autonomous 50,000 teu ships will plow the seas, perhaps alongside modular, drone-like floating containers — in a world where the volume of container trade is anything from two to five times greater than it is today.

In terms of scale, the current record breaking 22,000 teu ships under construction for MSC and CMA CGM could be dwarfed in years to come, McKinsey believed.

“On balance, we do not view 20,000 TEUs as the natural end point for container ships—50,000-TEU ones are not unthinkable in the next half-century. However, progress will probably be much slower than it was in the past decade: overcapacity means that new ordering will be slower over the next five to ten years. Lower slot costs materialize only when demand fills up larger ships, which hasn’t happened recently. But if demand catches up with supply, as it may well do in the early 2020s, the logic of scale will once again drive orders for bigger and bigger ships,” the consultants wrote, while admitting that returns to scale decline with increasing size, so a move from 20,000 to 40,000 teu would not reduce unit costs as much as a move from 10,000 to 20,000 teu.

Short-haul intra-regional traffic will increase, the consultants suggest, as manufacturing footprints disperse more widely because of converging global incomes and the increasing use of automation and robotics. Container flows in East and Southeast Asia will continue to be huge, and the second most significant tradelane may link that region to Africa, with a stopover in South Asia.

On further consolidation within the sector, McKinsey predicts: “After multiple value-destroying cycles of overcapacity and consolidation, three or four major container-shipping companies might emerge. These businesses could be either digitally enabled independents with a strong customer orientation and innovative commercial practices or small subsidiaries of tech giants seamlessly blending the digital and physical realms.”

Fifty years from now, McKinsey suggests freight forwarders might not exist.

“Freight forwarding as a stand-alone business will be virtually extinct, since digital interactions will have reduced the need for intermediaries to manage logistics services for multiple participants in the value chain. Across the industry, all winners will have fully digitized their customer interactions and operating systems and will be closely connected via data ecosystems,” the report noted.

The McKinsey report has been greeted with some caution by some. Notably, Dr Roar Adland, shipping chair professor at the Norwegian School of Economics and an occasional Splash contributor, asked via LinkedIn: “If automation/digitization brings more local production then why would you need 50,000 TEU containerships? Higher volumes, yes possibly, but lower distances and a more distributed network = smaller energy efficient vessels. Think A380 vs 787 planes.”

Adland went on to muse: “If we get autonomous ships on a large scale then they will be electric. Electric vessels will bring operating costs down to a fraction of current fuel costs and similarly make a network of smaller vessels on a more distributed network more competitive.”

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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8 Comments

  1. Andy Lane
    October 23, 2017 at 7:03 am

    The “forecast” of 2-5 times greater volume (than today) is somewhat wide, but presumably a key input for the conclusion. The industry has historically however struggled to predict “accurately” 6+ months out into the future, so some wriggle-room is prudent.

    I would tend to side with Dr Adland, that many indicators point to greatly reduced travel distances and a less concentrated origin/destination pairs.

    A 50,000 TEU ship would require 125,000 (terminal) moves on its round trip, which at today’s best in class terminal performance, would require 21 days port time. I think that will not work on Intra-Asia.

  2. Bill Brassington
    October 23, 2017 at 9:23 am

    Andy,
    The concept of 50 kteu vessels is a logical progression, especially when looking at the environmental impact, but associated with this would have to be a complete change to the infrastructure. Consider the congestion inland of the terminal of received and exporting containers. Of course, larger vessels require larger cranes, or a completely new method of loading and unloading, enabling multiple packed container lifts at one time, we already can lift multiple containers, so the concept is there. But in the end getting the containers to and from the terminals is going to be the trick. Get that right and suddenly the size of vessel becomes a smaller concern

  3. Chris Morgan
    October 23, 2017 at 12:04 pm

    A 50k boxship will require cranes with such a massive over-reach that they lose efficiency past a certain size. For ships this large we would probably see individual slot berths with gantry cranes on both sides that may or may not meet in the middle. Point is, who is going to invest in installing such berths?

    And more crucially, who out of Hong Kong, Singapore, Rotterdam, Shanghai, Ningbo, Long Beach, Oakland, Sea-Tac, Hamburg and Bremerhaven have room to expand to accommodate them? Jebel Ali yes but pretty much nobody in Europe or the US – unless we start looking at floating terminals. We’re a long way off that I think.

    As regards the ships themselves, they’ll need to have a max laden draught of circa 25m (unless the container majors want to start paying to dredge the major port basins and canals of the world) I’d have thought so will need to be very wide indeed. 50kTEU would mean a LOA of 650m+ and few ports in the world have turning basins large enough to allow this at all tidal states.

    Moving such leviathans would be prohibitive – there’s almost no chance you could run these single shaft so two or even three or more shafts would be required which will increase MX costs and burn more fuel. If the massive mega-post Panamax ladies of 22kTEU+ now are lifting 5,000MT of fuel oil at a go now, how many bunker suppliers have tankers able to do that in one supply? How many then have tankers able to supply 10kMT plus or more for these mooted 50kTEU beasts? How long does it take to pump that much fuel? Is there room in the schedule to allow this? Unlikely based on the current model.

    There was a suggestion that nuclear power could make a comeback for the biggest box ships of the future but they would need to be manned which goes against how most people see shipping ops of the future panning out.

    Lastly the cost will be out of this world. Not so much the purchase price which will be a lot lower than most might think (unless they are nukes in which case you are looking at aircraft carrier sort of cash), but to insure them. Claims on the loss of a 8kTEU ship these days can total into tens of billions. The reinsurance market is unlikely to price a potential loss of several times this amount in a competitive way.

    I can see us getting to 28-30kTEU which is the approximate maximum you can or will likely be able to achieve on one shaft with only minor alterations to ports etc without a massive rethink of insurance, metallurgy, design philosophy, propulsion, scheduling, crewing and the likes. The box market right now is probably unable to sustain five or six of these monsters every day (plus a flotilla of smaller post-Panamax vessels) in each direction Asia-EU without consolidation as things stand so there is some way to go for the market to be able to demand even this sort of size.

    50k TEU is miles and miles off. In 50 years we will be colonising Mars and other places and manufacturing will be much more widely spread as 3D printing becomes more and more widely used.

    The question then becomes – when will we see a 50k TEU space freighter?

    Times they are a changin’.

  4. Lars Jensen
    October 23, 2017 at 12:51 pm

    Interesting that McK talks about “rethinking everything”, and that the rethink results in “larger vessels”……

  5. George
    October 23, 2017 at 1:58 pm

    Consultants’ knowledge escapes whatever is further than their noses.
    They have no skin in the game so i do not tend to take whatever they say at full value.

    In an age of 3d printing, i very much doubt that these behemoths, even if technically feasible would be economically viable. Let alone insurable at all. Beyond sensation lies reality, and its outlook is i believe, a lot different than the one McK suggests.

  6. Lars H. Bergqvist
    October 23, 2017 at 3:21 pm

    The one million dwt crude oil tanker deja vu.

  7. Gunther Ginckels
    October 28, 2017 at 9:15 am

    Never say never. When the Nautical Engineers showed me the 11,000 TEU vessels on the drawing table in 2001 I had after scanning the ports and terminal capability to handle such vessels as 2 in the whole world. Today 18,000 TEU vessels disrupt mainly terminal and intermodal operations and only few ports are able to host such vessels. Next hurdle is the ability or willingness or Terminal Operators to invest massively in the superstructure unless carriers are willing to enter into long-term commitments or expand their own facilities. Rethinking out of the box will not only relate to the vessels – will they be longer with consequent deeper drafts and nautical challenges, will they be wider with consequent lower berth productivity etc.. The only way a 50,000 TEU vessel will be able to operate economically will be to configure a totally new ships type (lashbarge alike?) and also to create off-shore handling facilities able to move containers between the respective modes. And than we have the element of how much cargo will we need, want and can move by 2067 or will we all reply on domestic and self-sustainable economics – the Tump way? I will not say that these ships will never exist – I was wrong before over some of these predictions but equally often I have been right in my analysis. So lets see and thanks to medical progress by that time I will be a healthy 115 year young shipping watcher 🙂

  8. Andrew Craig-Bennett
    October 28, 2017 at 7:34 pm

    When the late John Newton predicted the 10,000 TEU container ship, to near universal disbelief and derision, he was the Technical Director of P&O Containers., at the culmination of a career which had taken off when he was the youngest ever Chief Engineer of a British passenger ship (the “Queen of Bermuda”, quadruple screw, turbo electric, two pressurised boiler rooms, an engineering staff of eighty – quite a beast!)

    What John said therefore carried the weight of professional qualifications and practical experience, and those of us who doubted, asmost did, did so on the basis of economics.

    McKinsey have no such background. But by throwing their prediction as far into the future as 1967 iws behind us – and who foresaw that containers would dominate the trade lanes in 1967? – they can make themselves safe.

    The whole report is airy persiflage.