Is the cascade effect a threat, an opportunity, or both?

  


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13 Nov 2010

cargo4shipe12345.jpgOutside factors are influencing the plans of both the Black Sea and the Baltic ports Steve Wray of Ocean Shipping Consultants explains that despite the modest recovery,


lines are still being seduced into ordering the larger vessels, because
of the undoubted advantage of the economies of scale – note Maersk’s
latest possible venture with 16,000 teu vessels. And although such
vessels would not be going into either the Black Sea, with its
Bosphorus bottleneck, or the Baltic, there is a “cascade” effect on
other trade lanes.

“The sheer level of ordering for ULCS and ‘new panamax’ vessels is
difficult to justify and overtonnaging – again – will be the most
likely outcome,” says Mr Wray. Although much will be absorbed, the
cascade will lead to 6,000 teu-plus vessels coming on to routes that
used to see much smaller ships.

At the same time, fuel is much more expensive and there is pressure for
slower steaming and dropping port calls. The overall effect will be an
inducement for further concentrating the number of direct port calls
and the growth of transhipment activity to ensure that all the
remaining ports/regions are still served.

Is this a threat or an opportunity, or both? It depends where you are
standing. Mr Wray says the shipping lines have already cascaded large
tonnage into services where there isn’t, at present, the demand. But
demand or not, this still means pressure on the ports to accommodate
the larger vessels.

We should expect vessel sizes on direct calls to reach upwards of
10,000 teu in the next five to 10 years in the Baltic, with the Black
Sea region following closely behind, he says.

So, although the current demand does not justify that many direct
calls, the region is looking at a comeback and ports with sufficient
deep water to berth the larger vessels will be in a better position to
benefit from a growth in trade. For example, DCT Gdansk has already
managed to make itself an attractive proposition and secured direct
calls by Maersk Line vessels of more than 8,000 teu.

As well as slow steaming and less route deviation, the pressure to
reduce costs is leading to new alliances and the merging of routes –
both pointing to a reduction in the number of direct port calls. “This
trend for fewer calls is likely to continue and favour centrally
placed, larger ports, although the remaining smaller ports will still
have a role to play as outports on various feeder rotations,” says Mr
Wray.

If transhipment activity increases, so will the importance of feeder
flows, boosting the need for smaller ports to gear up to handle
containers at dedicated berths.

This will also give the smaller ports leverage, as connection times
will be even more critical in the new cost-saving regimes to ensure
transit times are strictly controlled. “This is where the negotiations
can start for the port, which may be able to get a good deal by
offering particular berthing windows that a shipping line requires.”



Source: Port Strategy

Sources:  www.Shipid.com

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