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Megaships’ impact on Philippine maritime industry

Megaships’ impact on PH maritime industry

The Philippine maritime industry may see a literally huge change in the future of shipping as more cargo companies are investing in large-scale vessels or megaships. They expect more than 40 huge container ships to arrive this year and next. Bloomberg reported that these vessels were ordered at least two years ago and are now ready for delivery.

Megaships refer to vessels carrying 18,000 20-foot equivalent units (TEUs) or more. More shipping companies are having them now after Maersk Line introduced its large-capacity ships years ago. Since then, most of Maersk’s competitors, including CMA CGM, Evergreen Line, Mediterranean Shipping Co., and China Shipping Container Lines, have also unveiled their own megaships. These are expected to dominate the maritime sector in the next two years.

New shipping standard

Experts believe that these large vessels will be the new standard of shipping, and will most likely be more functional by 2020. Since megaships have become popular in the international maritime industry, ports and shipping sectors from different parts of the world are now adapting to this change.

In fact, several Philippine ports have prepared bigger cranes, as well as enhanced their infrastructure and system, for the entry of megaships.

In 2016, nine US ports invested a total of $30 million for essential dredging and other infrastructure improvements. European ports are also ready for megaships, as they have put up large cranes to carry them. In fact, these cranes have been operational for the past two years and have cleared almost 100 megaships.

Meanwhile, a large number of megaships are deployed to and from Asian ports, since most of these ports can receive 19,000 TEU vessels. This makes Asia more competitive in the maritime market.

Preparing for expansion

APL CEO Nicolas Sartini said in an interview that the Philippines should also invest in refining its port structures and systems if it wants to handle the major cargo shipping lines plying the main East-West trade routes.

The country can continue to grow as part of the trade network if its ports would be able to accommodate the largest vessels, he added.

With regard to the growing need for more improved ports, the Manila International Container Terminal (MICT) is already planning to expand its facilities and provide services to the intra-Asia trade’s biggest container ships.

For its part, International Container Terminal Services Inc. (ICTSI) has already placed orders for 20 rubber-tired gantry cranes and five quay cranes that can carry a maximum of 13,000 TEU vessels. Two of the quay cranes will be positioned at MICT’s Berth 5, while the rest will be deployed to Berths 3, 6, and 7. Three of these cranes are scheduled for delivery this year, and the rest in 2019.

As part of its capital equipment program, ICTSI has invested $80 million to build another dock and buy more equipment for MICT. On top of that is the multibillion-peso capacity improvements that the terminal has committed to the Philippine Ports Authority (PPA).

ICTSI Senior Vice President and Regional Head of Asia-Pacific and MICT Christian Gonzalez said the Philippine port system was indicating further expansion, since the country’s ports hit the 2-million mark in 2016. This just shows that the market is heading for better and more positive growth.

More trade, less fuel use

One major benefit that megaships offer to the global maritime industry is their energy efficiency and environmental influence. The World Shipping Council believes that larger ships are going to handle trade that is less costly and more environment-friendly.

In container shipping operations, the largest cost goes to fuel. This means that if more cargoes are transported using one large ship, fuel consumption—and consequently air emission per TEU—would be reduced. In addition, larger ships broaden the service coverage of shippers, because carriers need to fill space to save on energy.

Megaships also mean bigger and better trade systems, since their impact can be felt on land, including trucks, intermodal yards, ports, highways, and railroads, as well as distribution centers. Using megaships should be aligned with the improvement of these land-based facilities and should be ready to handle over 18,000 TEUs.
Upgrading ship carriers also means upgrading ports and roads, facilities, and the whole logistics chain.

Unfortunately, some are just not yet ready for it, and one has to invest in upgrades first before they can catch up with the market.

It’s not all positive, though: One big downside of megaships in the shipping industry as a whole is that, although it can reduce the number of transactions annually, they can also generate more workload.

For example, a facility may be able to accommodate a million TEUs a year, but may only receive fewer ship requests. The problem is that these vessels contain large amounts of boxes that need to be unloaded within a day for efficiency’s sake. Aside from that, these boxes should be transferred through rail and road as smoothly as possible.

Clearly, megaships can also affect transactions at ports, where peak seasons demand more labor and equipment, while needing less work the rest of the time.

While the advantages and disadvantages of megaships have been discussed worldwide, shipping lines are still pushing through with having them. In fact, the next generation of megaships are expected to carry 24,000 TEUs.

This means that ports have nothing else to do but adapt and evolve in order to face this new challenge, just like what the other ports have done.
Source: Manila Times