The Impact of Mega-Ships and Carrier Alliances on Ports and Terminals

Over the last decade the capacity of containerships has nearly doubled, as shipping lines compete to reach for maximum economies of scale. Economies of scale, however, is only achieved when a vessel is sailing at full capacity. A weak economy has forced shipping lines to create alliances with other carriers in order to minimize the number of empty slots for each sailing. The emergence of mega-ships and carrier alliances has drastically impacted port and terminal operations. Larger vessels have increased cargo throughput, which has challenged terminal operations, and requires a magnitude of infrastructure improvements. Many ports and terminals are taking the steps necessary to upgrade infrastructure that otherwise inhibits larger vessels from berthing; unfortunately, upgrades are costly and federal funding is not always available in a timely manner. Some ports have created alliances in order to collectively fund projects and increase terminal capacity needed to gain business from mega-ships. While ports and terminals are addressing dimensions and capacity for current vessel sizes in the market, bigger ships are coming: 19,000-20,000 TEU vessels are on order and industry professionals believe 24,000 TEU vessels will join the marketplace by 2020. With even larger ships to hit the market, ports and terminals will need to adapt in order to remain productive in a highly competitive environment.