Mega Ships: A threat to your supply chain?

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Agenda

•  Introduction to Participants

•  Mega container vessels, history on the market •  Market developments.

•  Trends which effect the supply chain.

•  How to respond to these trends?

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•  Commercial Container transport existing almost 60 years.

•  Container demand has been growing 10% year on year far above the 6% growth rate of global trade.

•  Transport capacity per ship grew from 4,000 to 15,000 TEU over a period of only 15 years.

•  The Economic crisis in 2008 disrupted the traditional container market and forced carriers to think differently.

History

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The  first  dedicated  vessel  capable  of  transpor7ng  600  containers  started  service  in  November  1955    between  North  Vancouver,  Bri7sh  Columbia,  and  Skagway,  Alaska.    

Vessel Extension

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Main Container Ports Before the Mega Vessels arrived

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Market Developments over the last few years

•  New vessels developed to adjust to new Service network. •  Rapid introduction of larger cost efficient vessels •  Large overcapacity on Main routes •  Reduction of ports to call

•  Effects on service network –  2de Sues channel –  New Panama Channel April 2016 –  US west coast ports upgrade.

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Trends which effect the supply chain:

•  Mega Ships have a negative impact on supply chain operations. –  Congestion and Trans-shipments –  Transit time increase –  Risk on disruption increases. –  Responsiveness to disruption is poor.

•  Mega Ships have disrupted the supplier market. –  Carriers overinvested to maintain market position. –  Competition between carriers will be reduced. –  Joint efforts needed to reduce huge overcapacity.

•  Mega Ships do not reduce the total supply chain cost. –  Cost reductions on the Sea-leg will be minimized by cost increase on

terminal handling and regional transport.

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Transport Risks on Sea

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•  10,000  containers  go  overboard  yearly.  (0.002%)  

•  On  average  20  cargo  vessels  are  lost  every  year.  

 

Ø  This  is  0.03%  of  a  commercial  fleet  of  85,000  vessels.  

•  Approximately  2,000  lives  are  lost.    

How to respond to these trends?

•  Adjust network to main ports?

•  Extend the sea transport leg with additional transshipments?

•  Risk reduction with alternative routing contracted?

•  Safety Stock adjustments?

•  Container tracking and tracing?

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Carrier alliances

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Closing

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