The current practice of some of major shipping
liners placing indiscriminate orders for megaships may not last due to
combinations of factors in the international market including financial
constraints, latent market over capacity and the size of the existing order
book according to Global shipping consultancy Drewry.
On the heels of the two recent Mega orders by
Containership majors CMA CGM and MSC for 22,000 TEU ships, the Shipping market
fears there is a risk other Carriers might follow suit further distorting the
delicate demand-supply balance, which is already suffering from tonnage
Mediterranean Shipping Company has opted for
Daewoo Shipbuilding and Marine Engineering (DSME) to build eleven 22,000 TEU
containerships for the company. On the other hand, French liner CMA CGM has
placed another mega order for nine 22,000 TEU containerships which will be
built by Chinese Shipyards Hudong-Zhonghua Shipbuilding and Shanghai Waigaoqiao
The international banks have reduced their
financing of the highly volatile shipping sector amid regulatory pressures to
increase impairments associated with shipping loans. This has, in turn,
resulted in shipping companies having to resort to alternative financing means,
which are rather scarce.
Furthermore, Drewry doesn’t believe that a new
generation of large vessels will emerge in the long term. This is attributed to
the diminishing economies and the fact that unit cost savings at sea are
countered by higher costs at port.
As a result, this is expected to reduce the
incentive to invest in large vessels and act as a break on over ordering and
The port sector has already been faced with
growing pressure from ever-larger ships as ports had to invest considerably in
infrastructure so as to be able to accommodate these giants of the seas.
A total of USD 68.8 billion US Dollars in private
investment was committed across 292 port projects between 2000 and 2016 aimed
at improving port infrastructure and superstructures, according to the data
from UNCTAD’s latest report Review of Maritime Transport 2017.
Pressure from shipping lines to expand and dredge
so as to accommodate ever larger ships, especially for transshipment
operations, may not be worth the extra cost. Without additional volumes,
increasing ship size alone will reduce the effective capacity of seaports as
they would require larger yards and additional equipment to handle the same
total volume,” the UNCTAD report adds. Oct 30