Comments on: Carriers Should Have Spent More to Make Ships Better Not Bigger

By: Jared Vineyard

Jared Vineyard — Tue, 27 Sep 2016 01:22:40 +0000

Thanks again, for commenting, Gary. Good points, as always.

Bringing up the carriers anchoring vessels furthers my point. Doing so, carriers decreased capacity. That made sense in controlling freight rates and decreasing downward pressure on rates. The megaship craze has increased capacity when they should have been controlling it with strategies like anchoring and scrapping vessels.

For Maersk, there was some sense creating bigger ships. They did so with thought and strategy (of course, even Maersk has not been without its struggles either). The rest of the carriers just seem to do whatever Maersk does whether it really makes sense for them or not.

Ships have gotten better in terms of fuel consumption and CO2 emissions because they were forced to by environmental regulations regarding pollution in the international shipping industry.

Cargo tracking is not my biggest focus on ship improvement (although, I do like that for more transparency from carriers, which is certainly lacking) but on things like predictive maintenance technology on ships which could save a lot of money for carriers rather than bigger ships that increase capacity and congestion while pushing freight rates lower.

By: Raymond Rau

Raymond Rau — Mon, 26 Sep 2016 19:55:25 +0000

In reply to Gary Ferrulli. I think the most important technological advancement this industry is the need for full visibility of container location. I believe the best way to achieve this is live tracking on the containers themself.

By: Gary Ferrulli

Gary Ferrulli — Fri, 16 Sep 2016 14:49:24 +0000

Again due respect, you are off base here. Keeping track of containers is NOT a vessel improvement. For every day on the water, containers are 12 days on land, and containers on vessels equal less than 20% of the carriers container fleet. So making sure of where every container on the ships are takes care of less than 20% of keeping track of customers freight.
The vessels of today are intimately “better” than those of ten years ago, even 6 years ago. Fuel consumption has almost be halved by technological advances in engines, and they are far cleaner burning than their counterparts.
Your argument on overcapacity is stating the obvious, except you forget 2010., In 2009 the industry lost $20. Billion due to a great drop in volume (nearly 18%) globally and the concomitant reduction in rates. The response was to anchor over 600 vessels and in doing so, stabilized the rates and eventually raising them and the industry made a profit of $8 Billion – and $28. Billion swing in one year through capacity management. They haven’t
repeated that business model since then and as an industry lost money every year since. But to your point, since 2010 while the industry lost Billions, Maersk Line made nearly $5 Billion. Why, a lot of small ships? Hardly, but better managing their assets and revenue many of which happen to be modern, technologically advanced large container ships deployed in the lengthy Asia/Europe markets.