Is it the end of Mega container ships?

The mega ship the Ever Given was a familiar name in the news when it got stuck in the Suez canal and thus preventing any marine traffic in both directions. The Ever Given is operated by the Taiwan-based firm Evergreen and is a so called mega ship and was carrying over 18,000 containers.

Mega (container) ships have been built in increasingly larger sizes to take advantage of economies of scale and reduce expense as part of using multiple forms of transport without actually handling of the freight itself. The big container ships can carry up to 23,964 twenty foot equivalent unit (TEU) whilst the smaller capacity ships have a maximum capacity of 1,000 TEU.

However with the threat of environmental regulations and trade disruptions – including last year’s attacks on ships in the Red Sea – have also hit demand for the bulkiest carriers. Add to this the Trump Administration threatening to put high tariffs on imports from China which in turn could see supply chains spreading to smaller manufacturing hubs elsewhere in Asia.

Mega container ships make economic sense when they are full – i.e. achieving economies of scale. With manufacturing already shifting to Vietnam and India it doesn’t make sense for large container ships to dock at 2 or 3 ports in order to fill to capacity – diseconomies of scale. Therefore the rerouting of global trade from China to other Asian ports is getting shipowners to switch to smaller vessels instead to reduce costs and achieve economies of scale.

While the push for larger ships was a natural response to increasing global trade companies are wondering if this is the best option with rising environmental pressures and uncertain fuel requirements. The International Maritime Organisation aims to achieve net-zero emission by 2050 which will definitely influence ship design.

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