Executive Briefings

Just How Big Can Container Ships Be Before Point of Diminishing Returns Reached?

Recent discussions in the maritime sector suggest the possibility of constructing container ships of 26,000 TEU.

While the economics of ship transportation improves by increasing carrying capacity relative to operating costs, ship size eventually reaches the size of diminishing returns and especially when sailing between two main ports.

Such supersize ships would be too big to sail through the new, expanded Suez Canal and would be relegated to sailing a few routes such as the trans-Pacific routes between Asian and West Coast American ports, as well as sailing via Cape Town.

Industry discussions have focused on alliances between ship companies that could realize the economic benefit from sailing supersize ships. To be viable, supersize ships may need to sail between major transshipment ports and interline with smaller vessels at both ports. 

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While the economics of ship transportation improves by increasing carrying capacity relative to operating costs, ship size eventually reaches the size of diminishing returns and especially when sailing between two main ports.

Such supersize ships would be too big to sail through the new, expanded Suez Canal and would be relegated to sailing a few routes such as the trans-Pacific routes between Asian and West Coast American ports, as well as sailing via Cape Town.

Industry discussions have focused on alliances between ship companies that could realize the economic benefit from sailing supersize ships. To be viable, supersize ships may need to sail between major transshipment ports and interline with smaller vessels at both ports. 

Read Full Article