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Towards 25,000 TEU vessels? A comparative economic analysis of ultra-large containership sizes under different market and operational conditions

  • Jiawei Ge
  • Mo Zhu
  • Mei Sha
  • Theo NotteboomEmail author
  • Wenming Shi
  • Xuefeng Wang
Original Article
  • 43 Downloads

Abstract

The introduction of ever-larger containerships is a much-discussed topic in academic and business circles. The largest containership size has evolved from about 5500 TEU in 1995 to more than 23,000 TEU in 2019. The economic rationale for further scale increases in ship size is largely dependent on the current and future market conditions in the container shipping market, the adaptive capacity of ports and terminals (both economically and technologically) and, more recently, environmental requirements and considerations. This paper evaluates under which economic, operational and environmental conditions and expectations, shipping companies are likely to push the ultra-large containership (ULCS) size from 18,000 to 20,000 TEU to 25,000 TEU. Differences in both annual container slot cost and more comprehensive cost–benefit measures are assessed under different key market-based and operational conditions. The basic cost parameters for 20,000 TEU and 25,000 TEU vessels were estimated using a regression analysis applied to actual data of vessels up to 18,000 TEU. Our findings show that a further scale increase to a 25,000 TEU ULCS still generates economies of scale. However, very low freight rates, i.e. even below the poor freight rates of 2016–2017, and low load factors would not be conducive to the economic viability of 25,000 TEU ships, compared to smaller ULCSs. This study complements and updates the findings of previous studies (which focused on much smaller ship sizes) and contributes to the ongoing academic and corporate discussion on drivers and impediments of scale increases in vessel size by explicitly incorporating time- and context-dependent factors affecting optimal ship size.

Keywords

ULCS Containership Economies of scale Economic viability Cost–benefit analysis Cost model 

Notes

Acknowledgements

We would like to thank the reviewers and the EiC for their valuable comments on an earlier draft of the manuscript. We are grateful to COSCO Shipping and CSSC for providing statistics to support our research work. This research was supported by the China Scholarship Council (201908310090).

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Copyright information

© Springer Nature Limited 2019

Authors and Affiliations

  • Jiawei Ge
    • 1
    • 2
  • Mo Zhu
    • 3
  • Mei Sha
    • 3
  • Theo Notteboom
    • 4
    • 5
    • 6
    • 7
    Email author
  • Wenming Shi
    • 2
  • Xuefeng Wang
    • 3
  1. 1.Institute of Logistics Science & EngineeringShanghai Maritime UniversityShanghaiChina
  2. 2.Australian Maritime CollegeUniversity of TasmaniaHobartAustralia
  3. 3.College of Transport and CommunicationsShanghai Maritime UniversityShanghaiChina
  4. 4.Center for Eurasian Maritime and Inland Logistics (CEMIL), China Institute for FTZ Supply ChainShanghai Maritime UniversityShanghaiChina
  5. 5.Faculty of Business and EconomicsUniversity of AntwerpAntwerpBelgium
  6. 6.Maritime InstituteGhent UniversityGhentBelgium
  7. 7.Antwerp Maritime AcademyAntwerpBelgium

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