Can a Container Ship Be Too Big?

We often complain about buildings that are too tall or cars that are too heavy, so it should be no surprise that we might wonder if the Ever Given – the giant container ship that was stuck in the Suez Canal – is too big.

This question doesn't come out of the blue. Many years ago, my first summer job was sitting in a yard in Brampton, Ontario just north of Toronto, watching over a few hundred shipping containers and marking up an interchange form (like the ones used for car rentals) with every dent and scratch on the boxes. My dad was in the container business and I have been watching the industry my entire life, so I have been glued to the saga of the Ever Given.

I started counting the rows and gave up, looked it up, and found that the ship has a capacity of 20,124 TEU (twenty-foot equivalent unit, the standard measure, because that was the standard container size in the late sixties) – so there are probably 10,000 40-foot containers on that ship, likely more than existed in the entire world when I was sitting in that yard.

I wondered what others who had been in the business for years thought about this ship and dropped a note to engineer, historian, and author Mike Hand, standing on the right next to my father in the photo above. He replied:

"Yes, I have been watching the efforts to get this ship out of the mud. The cost to the rest of the industry is going to be awesome when most of those are going to have to detour around South Africa - to say nothing of the delays to the customers. Just shows how the world has become so reliant on the steel box that your Dad and I worked hard on in its pioneering days. Like you, I am always amazed at the size of the container ships. And I too found myself looking closely at the photos of the grounded ship and counting the number of container rows and calculating how many were on it."

Much has changed since the first container ship, the Clifford Rogers, did the Vancouver-to-Skagway run. (Americans have an alternate history as told by Mark Levinson in his book "The Box," but I tend to go with Peter Hunter's 1993 book "The Magic Box," because he was there and hey, he worked for my dad.)

Since then the size of the ships has grown massively, in search of greater efficiencies. A 2015 report from the OECD, The Impact of Mega-Ships, raises some questions about whether this was a good idea. Notably,

"Supply chain risks related to bigger container ships are rising. There are concerns about insurability of mega-ships and the costs of potential salvage in case of accidents. Mega-ships also lead to service and cargo concentration, reduced choice and more limited supply chain resilience, especially since bigger ships have coincided with increased cooperation of the main shipping lines in four alliances."

The report also notes the problems that these large ships cause in ports, which we were seeing before the Ever Given bunged up the Suez. Ships were backed up in ports around the world because of the pandemic, and the inability to handle it all when the industry was suddenly short-staffed. The report was prescient about this, noting that these large ships create peak demand in ports which can be hard to deal with. The study also points out that this increase in size is being driven by the shipping companies looking for scale, not the shippers who use the ships to move goods.

"Shippers are interested in frequent and reliable maritime transport links, but bigger ships would reduce the service frequency, unless cargo streams grow at the same pace of ship size development; moreover, large shippers might have a preference to hedge risks by parceling out deliveries in different ships rather than concentrating everything in one ship. Terminal operators are confronted with the need to adjust equipment and to handle peaks that are challenging within current configurations. Similar story for ports confronted with new requirements on port-related infrastructure and transport ministries with regards to port hinterland infrastructure and connectivity. Freight forwarders and logistics operators will be concerned with any disruptions or delays of mega-ships that might cause additional transaction and coordination costs. Finally, the peaks associated with mega-ships could cause congestion and delays for truckers, barge and railway companies."

Marc Levinson tells the Financial Times that shipowners are responsible for this mess by ignoring the problems that come from dealing with such large ships. From their cleverly titled article Too Big to Sail?

“Their attitude was, ‘We will do what’s best for us and ignore the rest of the logistics industry,’ he said. Larger vessels 'worked when the ships were at sea but totally fouled up the land side of the transport system.'"

So when the big boats arrive in these pandemic times there are not enough trucks and drivers to get them out of the port.

Essentially, the ships have got so big that they cannot go to as many ports, there are too many containers to be handled efficiently all at once, and we now have seen that they can be blown around in the wind. The owners of the boats reap the savings but everyone else is paying the costs. And when something goes wrong, it is a big deal; we have too many shipping container eggs in one basket.

According to the OECD report, we have much of the world trade concentrated in two big red and blue bands, going from China to the West Coast of the USA and from China to Europe, ending up in a few large ports that can handle it all, and all passing through a few narrow spots: "The main containerised trade flows are East-West flows, which come together in and are to a more and lesser degree constrained by three main choke points: the Panama Canal, Suez Canal and Malacca Straits." We have now seen what happens when one of the three gets compromised.

Why Is This on Treehugger?

The shipping container that made globalism possible has raised at least a billion people out of poverty around the world. But as we noted in a recent post on the bike shortage during the pandemic, the whole system is so interconnected – it's not just that you can't buy a bike right now, but even simple parts like bike chains are out of stock because of lengthy shipping delays.

The never-ending drive to reduce shipping costs leads to ever-increasing dependence on production in Asia, with almost everything that we use depending on three narrow channels that the ships travel through, a couple of ports big enough to handle the ships, and the continuing commercial relations among the countries. It's become so ridiculous that Scottish fish are shipped to China for filleting and sent back to British stores. No doubt there are a few containerfuls of cod rotting in Suez as this is written.

The pandemic and the Ever Given have demonstrated how fragile this system is, and how critical and important it is to build and support a strong and resilient local economy.