Splash 247

Shortsea boxtrades set for disruption

Shortsea boxtrades set for disruption

Array
(
    [0] => WP_Term Object
        (
            [term_id] => 56
            [name] => Containers
            [slug] => containers
            [term_group] => 0
            [term_taxonomy_id] => 56
            [taxonomy] => category
            [description] => This is the Splash 24/7 news archive related to containers sector coming from all over the world. They're sorted by release date, from the latest to the oldest. 

Get the updated list of the latest news about containers. Browse Splash 24/7 for more maritime and shipping news.
            [parent] => 54
            [count] => 1486
            [filter] => raw
            [cat_ID] => 56
            [category_count] => 1486
            [category_description] => This is the Splash 24/7 news archive related to containers sector coming from all over the world. They're sorted by release date, from the latest to the oldest. 

Get the updated list of the latest news about containers. Browse Splash 24/7 for more maritime and shipping news.
            [cat_name] => Containers
            [category_nicename] => containers
            [category_parent] => 54
        )

    [1] => WP_Term Object
        (
            [term_id] => 90
            [name] => Contributions
            [slug] => contributions
            [term_group] => 0
            [term_taxonomy_id] => 90
            [taxonomy] => category
            [description] => This is the Splash 24/7 archive related to contributions news and articles. News are sorted by release date, from the latest to the oldest.

Find here the updated list of the latest contributions articles and news. Browse Splash 24/7 for more maritime and shipping news.

            [parent] => 0
            [count] => 349
            [filter] => raw
            [cat_ID] => 90
            [category_count] => 349
            [category_description] => This is the Splash 24/7 archive related to contributions news and articles. News are sorted by release date, from the latest to the oldest.

Find here the updated list of the latest contributions articles and news. Browse Splash 24/7 for more maritime and shipping news.

            [cat_name] => Contributions
            [category_nicename] => contributions
            [category_parent] => 0
        )

)

Kristofer Andrén puts some Scandinavian perspective on the size debate in container shipping.

Shipping in general and the container industry in particular has always sought volume to generate revenue and profit. The theory is that significant volumes will lower the production cost per unit thus enabling a higher profit.

The hunt for volume and economies of scale can be found at all levels everywhere in the entire supply chain of the container trades. But could it be argued that economies of scale only is realisable in the central flow in a hub and spoke value chain, because in the spoke economies of scale are a contradiction in terms?

The last half decade has seen not only a huge increase in container ship sizes and capacity, but has also been coupled with an historic economic downturn and stagnation of world trade growth, leading to a significant increase in a global overcapacity of supply of container transport. This represents perhaps the biggest threat to containers terminals all over the world.

Two questions arise: when does diseconomies of scale occur in the value chain and are containers fully utilised as a multimodal load unit?

The results from four different studies that I have been part of or conducted recently suggest that there potentially could be a correlation between the two questions and that the latter might serve as an indicator of the first. This of course needs to be studied in more depth but here are some of my thoughts.

In the hinterland surrounding the port of Gothenburg there are many depots and distribution centres. Most import containers are stripped here and the goods are distributed to the rest of Scandinavia by trailers. The exporting companies on the other hand would like to use containers for their entire supply chain as it would improve quality, not having to handle the goods. But they struggle to do so as there are a very limited number of containers available in their immediate which could indicate that the container is not utilised to its full potential as a multimodal load unit.

When we ran the numbers for dredging the port of Gothenburg to accommodate for the mega container ships of 20,000 teu we observed that the main obstacle in the port of Gothenburg was not the fact that the fairway and port basin only allowed for a depth of 14.8 m. The performance of the port is more of importance. And although ships have gotten bigger their laytime in port has not changed, which indicates that the parcel size per call is level as well. But it also indicates that for economies of scale to occur the service level towards the customer has gone down with regards to transit times and frequency.

We have gotten clear indications that terminal handling charges in the intermediate sized ports in Scandinavia are the most expensive. This sort of reflects the port’s ambiguity, neither small nor big but wanting to be big and are equipped as the big guys. This of course drives cost and if the volumes do not materialise, terminal handling charges will reflect that.

Unfortunately, this seems to create a downward spiral and instigating a ‘modal back shift’ as handling charges become too stagnant at unhealthy levels failing to attract cargo volumes for transhipment.

Our different observations of the present situation look rather gloomy for seaborne transport up here in the north considering the present state of the shipping companies. Scandinavia and the Baltics are characterised by a low number of inhabitants per sq km and that disqualifies it in the hunt for scale. Yet this is exactly what everyone has been doing in the feeder industry, but economies of scale far out in the spokes are a contradiction in terms.

In a time when everything needs to be available at an click on a smartphone, the shortsea business is ready for some disruption.

It is time to realise that size doesn’t matter it’s the frequency that does the trick.

Share this article

Related Posts