Is this the right time for Ultra Large Containerships?

About five years ago, Maersk was the first to start what Paris based maritime consultants Alphaliner said last week has now become a “race for ultra-large containerships.”  The Maersk E-Class vessels- each with a capacity of 15,550 TEU- were just the beginning for the Danish giant: it later introduced the EEE Class, ordering twenty of these 18,000 TEU behemoths for delivery between 2013 and 2015. Some analysts are viewing these moves- and those of several other ship owners who seem to be on a mega-ship ordering or capacity enhancement spree- with some concern, as overcapacity is one of the biggest problems looming large over the industry today. Recent dread about a global double dip recession will only add to their fears.

Interestingly, Maersk Group CEO Nils Andersen says that shipping lines have been engaged in “reckless ordering” and are putting their businesses at risk by joining the race.

Owners are clearly planning to take advantage of economies of scale, but they are not stopping at just ordering new giant box ships. Maersk recently commenced a 'capacity boost' plan that will increase the carrying capacity of each of its ten existing S Class container ships by approximately 15 percent, from 8,200-8,600 TEU to about 9,600 TEU each. The accommodation on each of these vessels will be raised to allow an extra two tiers of containers to be loaded. This will not increase tonnage, though it will allow Maersk to increase capacity for empty or light containers considerably.

Many other ship owners have upgraded the size of container ships that have been ordered recently. Hapag-Lloyd’s upgrade of six 8,750 TEU units to 13,100 TEU each is a case in point. CMA CGM’s boosting the capacity of three 13,830 TEU ships to 16,000 TEU each, NOL’s renegotiations of ten 8,400 TEU ships on order to 9,200 TEU each and NYK’s upgrade of two 6,350 TEU vessels to 8,000 TEU each are some of the others.