Canadian ports brace for impacts of super-sized ­container vessels

 By Keith Norbury

Mammoth container ships already in service, as well as even more massive ships now being built, are expected to have huge impacts on international shipping in the coming years.

Industry insiders don’t expect these gargantuan vessels, capable of carrying 15,000 or more standard containers, to call at Canadian ports any time soon. However, they anticipate that the huge ships will have a “cascading effect” in which they bump other large vessels off the Asia-Europe trade lanes and into service between Asia and North America.

“These new ships are about three times the current average size,” said Darryl Anderson, a Victoria, B.C. transportation consultant. “And the other thing is the container ship fleet is probably one of the youngest fleets in the world in terms of the order book. The average age is under 10 years.”

First 18,000-TEU ship expected in 2013

The largest container ships currently in service are Maersk Line’s eight E class vessels, such as the Emma Maersk, a 396-metre long (1,302 feet) giant capable of carrying 15,500 TEUs (twenty-foot equivalent units). Completed in 2006, the Emma Maersk won’t be the biggest container ship for much longer. Based in Copenhagen, Maersk has contracted with Daewoo Shipbuilding & Marine Engineering Co. Ltd. of South Korea to build 20 Triple-E class ships each with a capacity of 18,000 TEUs, or 16 per cent more than Emma’s capacity. The first of the Triple-E vessels is expected to go into service in 2013, on the Asia to Pacific route.

“We recognize that East Coast North American ports will not suddenly be home to the world’s biggest ships,” said Michelle Peveril, Senior Manager of Strategic Relations for Halifax Port Authority. “The trade volumes are different than those that are available, say in Asia.”

The Triple-E ships will be only four metres longer and three metres wider than the Emma, according to Maersk on its website devoted to the Triple-E project,

The three Es stand for “economy of scale, energy efficiency, and environmentally improved,” according to Maersk. One could add a fourth E: engineering. The Triple-Es gain their capacity from “feats of innovative engineering,” such as a U-shaped hull, space on the deck for an additional row of containers, and by reconfiguring the navigation bridge and engine room.

“The V-shaped hull of Emma Maersk is sleek and limits resistance in the water, but also limits space for containers towards the bottom of the ‘V’,” says an explanation of the benefits of the U design on the site. The design also enables 23 rows of containers across its width. A “two-island” design, in which the bridge is moved five bays forward, and the engine and chimney placed six bays back, enables even more container capacity.

“With the more forward navigation bridge, containers can be stacked higher in front of the bridge (approximately 250 more) without losing visibility,” according to Maersk. “And approximately 750 more containers fill the space behind the bridge above deck and below deck using the space created by the engine room’s position further to the back of the vessel.”

MSC Fabiola sets North American record

While Maersk’s are the biggest container ships, they aren’t the only massive container vessels plying the seas. Nor are the Triple-Es the only big ships being added to the world’s fleets.

Geneva-based Mediterranean Shipping Company’s MSC Fabiola, at 336.08 metres (1,201 feet) in length, made waves in March when it became the largest container ship to call at a North American port, as several media outlets reported at the time. The Fabiola called first at Long Beach, Calif., and then made more headlines when it sailed under the Golden Gate Bridge, becoming the largest vessel to enter San Francisco Bay, according to a San Francisco Chronicle report.

Capable of carrying 12,600 TEUs, the 48.2-metre- wide Fabiola is among several large MSC container ships with that capacity, according to Germanischer Lloyd’s register online. MSC Faustina and MSC Fillippa, both completed in 2011, can also carry 12,600 TEUs, as can MSC Filomena, completed in 2010. MSC Genova, completed 2010 and with an overall length of 365.83 metres, has a capacity of 14,000 TEUs. And MSC Maria Saveria, built in 2011 with a 365.85-metre overall length, has capacity of 12,400 TEUs plus 1,000 40-foot containers, according to Germanischer Lloyd online.

Other big vessels on the horizon

More big ships are on the way. STX Offshore & Shipbuilding, based in South Korea, announced in November 2011 that it had concluded a contract with an unnamed European shipping firm to build six 16,000-TEU container ships. A related deal involved increasing to 16,000 TEUs four other ships that had been ordered the previous October, STX said on its website. Those ships are to be built at the Jinhae Shipyard, with delivery to start in 2014. Total value of the ships is US$1.6 billion, or $US160 million per vessel.

STX said in a 2009 news release that it had successfully developed a 22,000 TEU class container ship the previous year. “The 460-metre-long, 60-metre-wide, and 30-metre-deep ship would become the largest of its type. It will be available in one- or two-propeller configurations and the deck area will be about the size of four soccer fields,” STX said in May 2008.

However, no such monstrous vessel has actually been built. Attempts to talk with someone at STX in Canada were not successful by deadline. Nor were attempts to get comment from Maersk Lines or MSC.

Canadian Sailings did, however, talk to a few transportation consultants, port officials, and coast pilots about the super-size ships. With one exception, they agreed that the biggest container ships will ply the Asia to Europe routes, through the Suez Canal, for the foreseeable future. The most likely “knock on” or cascading effect will be to see more vessels of about 10,000 TEUs, which are still massive, becoming more frequent visitors to North American ports.

Canal to enhance cascading effect

Another factor to consider is that most liner services now involve vessel-sharing alliances, said Vancouver transportation consultant Phil Davies. As a consequence, the firms building the big vessels are hoping to take a larger share of the high-density traffic on the Asia-Europe route.

“So they would displace smaller vessels on that route,” Mr Davies said. “Typically there is a cascading effect. They wouldn’t necessarily push the very large vessels onto the Asia-North America route and certainly not the transatlantic Europe-North America route,” Mr. Davies said.

Also enabling that shift toward larger vessels is the US$5.25-billion Panama Canal expansion, which was scheduled for completion in October 2014. (That has been delayed for six months because of a dispute between the Panama Canal Authority and a contractor over the quality of concrete in the locks, according to an Agence France-Presse report.) A new set of locks will enable ships up to 160 feet wide and with a draft of 50 feet.

“Completion of the Panama Canal in 2014 will influence the timing of their arrival at certain ports. However, post-Panamax vessels will dominate world trade and call at U.S. ports regardless of the Panama Canal expansion as they are expected to represent 62 per cent of total container-ship capacity by 2030,” noted a report this June from the U.S. Army Corps of Engineers.

As that report noted, a Panamax vessel is one that fits the current dimensions of the canal’s locks. The current vessel limits are 294.1 metres (965 feet) in length, 32.3 metres (106 feet) in width, and 12.4 metres (39.5 feet) of draft. That limit is 4,800 or 5,200 TEUs depending on where one looks in the report. The new locks will accommodate ships of 366 metres (1,200 feet) long, 49 metres (160 feet) wide, 15.2 metres (50 feet) of draft, and a capacity of 12,600 TEUs. These formerly post-Panamax vessels will become known as new Panamax. Ships too large for the new locks are called super-post-Panamax, neo-post-Panamax or ultra-post-Panamax.

Many ports lack depth for giant ships

The Panama canal expansion notwithstanding, the limiting factors with even 10,000-TEU class ships are that many North American ports, particularly on the Atlantic coast, lack sufficient water depth at the dock, have bridges that are too low at their entrances, have cranes that are too small and old to unload big vessels efficiently or at all, or don’t have enough space in their harbour basins for the big ships to turn around.

“We’ve been in some discussions about configuring potential deep draft channels if we do get these vessels on a regular basis,” said Capt. Andrew Rae, Vice-President for the Atlantic region of the Canadian Marine Pilots Association. The largest container ship to call on Halifax to date was the 6,200-TEU Regina Maersk, which made a few visits to Halifax in the late 1990s, Capt. Rae said. The Regina Maersk was the world’s largest container ship when built in 1996.

Some dredging was done about that time to allow for vessels to call at a proposed container terminal in the harbour’s Bedford Basin. But that was never built. “I guess global economics sort of took its toll on that,” Capt. Rae said.

Pilots are now being advised to prepare for an increase in traffic from the Panama Canal expansion. “And I think probably the 8,000-TEU would be the maximum that would transit the new canal,” Capt. Rae said.

Halifax prepared — just in case

The Port of Halifax, though, is ready for even bigger ships, Ms. Peveril said. However, she doesn’t expect Triple-E class ships, even though there are no physical barriers to ships that size calling at Halifax’s South End Container Terminal, which completed a $35 million expansion project this summer. Instead, she anticipates more “workhorse” vessels in the 5,000 to 8,000 TEU range calling at Halifax.

“Although we are building to be flexible and ready for any size ship that will be deployed on this coast, realistically we know that every day of the week we won’t be receiving a 15,000 TEU vessel on this coast,” Ms. Peveril said.

The South End terminal now has two super-post-Panamax cranes capable of handling ships with containers stacked 22 wide, as on the Emma Maersk. The Triple-Es will carry 23 rows of containers, which raises the question of whether the super-post-Panamax cranes can handle them. Capt. Rae said a wide vessel could be turned around to enable a crane to reach containers on the far side, but such a manoeuvre would be costly and time-consuming.

The port’s cranes can unload containers stacked seven high on a ship’s deck, he noted. How high the Triple-E containers are stacked wasn’t apparent from the specs on Maersk’s website, although a diagram indicated they are stacked higher than on the Emma Maersk.

That aside, unlike many other East Coast ports, Halifax has few restrictions, Capt. Rae confirmed. To reach the Fairview Cove Container Terminal in the Bedford Basin, ships have to cross under the MacKay and Macdonald bridges, which have published clearances at high tide of 49 metres. The South End terminal has no such obstacles.

As a result, Ms. Peveril said, Halifax is marketing itself as a gateway portal for North America.

“We certainly have the lay down space,” Ms. Peveril said. “We have the depth. We have the super-post-Panamax cranes. Even our rail provider, CN, has mentioned in the past few years that they could also triple containers volumes on their existing CN rail connections before they would make significant investments.”

Jean-Jacques Ruest, Canadian National’s Eexecutive Vice-President and Chief Marketing Officer, confirmed that the railway does have such excess capacity in the Atlantic region. That’s because CN is no longer carrying the volumes of forest products and logs that were once a mainstay.

“So we hope that the shipping lines that we do business with today, and we are also are talking to others, will look at Halifax for the bigger ships as a first port of call,” Mr. Ruest said.

He envisions carrying those commodities into the U.S. Midwest – to such destinations as Chicago, Detroit and the Ohio Valley. At present, Halifax has an advantage over other Eastern ports, such as New York and New Jersey, which lack the depth and are hampered by low bridges at their entrances. However, Mr. Ruest noted, projects are underway to deal with those shortcomings, such as a $1 billion project to raise the deck of Bayonne Bridge connecting Staten Island with New Jersey.

“We’re not fooling ourselves and sitting on our laurels,” Mr. Ruest said. “We recognize in some cases that we do have a time-limited advantage and it’s up to us and our partners to exploit that. I don’t believe it’s there forever.”

More competition coming for big ship business

Halifax also faces competition for the bigger ships from a proposed container terminal on the Strait of Canso between Cape Breton Island and the Nova Scotia mainland. Richie Mann, vice president of marketing for Melford International Terminal Inc., said that construction could start as early as this year with the terminal in service by 2015.

“We’ve indicated from the start that we would have a cargo commitment before we would break ground,” Mr. Mann said, hinting that there have been “serious discussions” with cargo owners and carriers without revealing any details.

Like others, though, he doesn’t expect Triple-E or E class ships to call at the terminal, even if its 60 foot depth at the dock can easily accommodate them. “With no bridges, no draft issues, there are no limits,” he said.

“When you talk about accommodating these vessels, it’s a lot more than simply draft – air draft or water draft – it’s also efficiency,” Mr. Mann noted. “If you’re going to achieve the economy of scale that these provide, then you have to have a very efficient handling system to offload these vessels and to reload them quickly and then get them back out on the water where they’re making money.”

Economies of scale save money with reduced emissions

Making money is the motivation for the big ships. Mr. Anderson, Managing Director of Wave Point Consulting, calculated that the US$190 million price tag of a Triple-E vessel works out to a construction cost of about $11,000 per container slot. That compares favourably with smaller vessels. Maersk is also touting the improved fuel efficiency of the big ships. The company says a Triple-E will emit 50 per cent less carbon dioxide per container than the industry average. Much of this comes from its more efficient engines.

“The Triple-E is designed for a top speed of 23 knots, compared to Emma Maersk’s top speed of 25 knots,” says an item on Maersk’s website. That small reduction reduces power by 19 per cent, resulting in greater fuel economy. Enabling that is a “twin skeg” configuration of “two slow-running, ultra-long stroke engines and two large propellers.” A waste heat recovery system further cuts fuel consumption by nine per cent.

“So these new ships, when you look at the overall fuel cost and the fact that they’re built with new technology, are going to lead to a better environmental output because they’re carrying way more TEUs for roughly the same amount of transportation power,” Anderson said.

However, that doesn’t address another environmental criticism of big ships that they burn high-sulphur content bunker fuel when in international waters. As the Guardian reported in 2009, bunker fuel contains about 2,000 times as much sulphur as diesel fuel used in cars. In 2010, the International Maritime Organization designated a 200-mile emission control zone on the Pacific and Atlantic coasts of Canada and the U.S. to phase in cuts to sulphur dioxide and related pollutants from ships. According to the U.S. Environmental Protection Agency this would prevent up to 14,000 premature deaths a year.

“Shipowners for a while have been fairly conscious of the fact that this is an emerging issue and they have to address it in the ship design,” Anderson said.

Another consideration of shipowners when it comes to the big ships is that they achieve the benefits of the economies of scale only when they are carrying big loads. The full benefits don’t kick in until a ship is at about 80 per cent capacity, Anderson estimates.

Maximizing the benefits also means spending less time in port, Mr. Davies said.

“The ideal ports of call for these ships are ones where they can load and offload the whole vessel at a single point,” Mr. Davies said.

That means large ports, such as Los Angeles-Long Beach that have substantial local markets, he said.

“But having said that, these economies of scale are based on the density of the traffic on the routes,” Mr. Davies said. “So if they’re going to use the very large vessels, they have to have sufficient business to operate them.”

Capt. Rae, however, pointed out that a container ship now will typically drop off only about 400 containers at a port stay in Halifax. “You’re not going to totally unload because we are in a port rotation,” he said.

Vessels sizes and numbers projected to rise

According to the U.S. Army Corps of Engineers report, companies are employing giant vessels in increasing numbers. The report predicts that the number of container ships of all sizes will increase steadily by 2020. Vessels exceeding 12,000 TEUs, which did not even exist in 2000, will jump from 47 in 2011 to 232 in 2020, and to 458 in 2030. Vessels in the 7,600 to 12,000 TEU range are expected to follow a similar growth pattern, going from zero in 2000, to 291 in 2011, to 515 in 2020, and to 742 ships in 2030.

For smaller classes — from 1,300 to 7,600 TEUs, numbers are also expected to rise. The sole exception is the smallest class — 100 to 1,300 TEUs — which the report expects to plateau at 1,706 ships in 2020 and drop off to 1,537 ships in 2030 from 1,604 ships in 2011.

The Engineers’ report cited a recent Journal of Commerce article that reported that as of October 2011, vessels of 10,000 TEUs or more accounted for 48 per cent of the order book. “It is evident that large ships are displacing smaller ships in all trade routes due to cost efficiencies of larger ships, which leads to a growth in average container vessel size over time. In 2000, the average container vessel size was 2,900 TEUs. In 2012, the average vessel size has grown to 6,100 TEUs,” the Engineers’ report noted.

Pacific ports also super-post-Panamax ready

On the Pacific Coast, container terminals at Prince Rupert and Port Metro Vancouver certainly have the super-post-Panamax cranes for unloading the ships. Those ports also have adequate depth and are not encumbered by bridges.

Prince Rupert, with a depth of 18 metres at the dock, is the deepest natural port in North America and one of the deepest in the world, said Dave Charlton, Manager of Port Operations for Prince Rupert Port Authority.

“So from that perspective alone, because of the natural depth available in the harbour, we can handle very large ships,” Mr. Charlton said.

When that might occur would be up to the operator of the port’s Fairview container terminal, he noted. However, he also observed that a proposed expansion of the Fairview facility would make it even more attractive to large ships. Even based on its current configuration, Prince Rupert can accommodate container ships of 12,500 TEUs, he said. The port already often handles vessels in the 8,500-TEU range, he observed.

At Deltaport, the largest ship today is about 10,500 TEUs, Lori Janson, Director of Corporate Communications for Global Container Terminals, said in an email message. In 2010, Deltaport put into service three new 80-tonne super-post-Panamax quad cranes – manufactured by Zhenhua Port Machinery Co. Ltd. of Shanghai, China – as part of the Port’s $400-million Third Berth Pproject.

Another major tool for moving big ships in and out of ports safely is the tugboat fleet, said Capt. Fred Denning, President of the 97-member British Columbia Coastal Pilots. The tug fleet in Vancouver and Prince Rupert has improved considerably in recent years and is quite capable of handling the current container ship traffic, he said.

“Do we need more tugs or different tugs as the ships increase in size? Possibly,” Capt. Denning said. “Maybe we just need more of what we got.”

Capt. Denning said that before the Fairview container terminal opened in Prince Rupert in 2007, coastal pilots undertook simulator training in Seattle to prepare for the arrival of bigger ships. So far, there has been no call for pilots to engage in any special training for the monster classes of container vessels.

“Shipping patterns are changing all the time,” Capt Denning said. “We do whatever is necessary to ensure that whatever ships are brought to this coast that their movement is within very high standards of safe operations.”

Rail links in place to handle the cascade

Mr. Ruest said CN also has the infrastructure to handle more containers at Prince Rupert and Vancouver. He also pointed to a capital program in which CN has spent $150 million since 2004 on upgrades to the Edmonton-Prince Rupert corridor, as well as the company’s plans to spend $1.8 billion this year on its North American rail network.

Already about 30 per cent of the combined freight CN handles through Prince Rupert and Vancouver either originates or terminates in the U.S., Mr. Ruest said. As with the East Coast, he sees great potential for that proportion to increase.

“In the case of Maersk, for example, we are in discussion with them about them using much bigger ships in the Vancouver service,” Mr. Ruest said. “So those big ships of Maersk (that go) to Vancouver that they use today will eventually be upgraded to bigger ships — no question,” Mr. Ruest said.

As Maersk makes clear, the Triple-E ships are coming into existence only because of “the remarkable economic growth of China,” and are destined for five Chinese ports – Shanghai, Ning-bo, Xiamen, Yantian and Hong Kong – shipping goods to Europe.

Mr. Anderson, however, noted that the Triple-Es are arriving “just in time for the softening of the European economy,” something he doubts the shipping line had anticipated. That raises the prospect that, to take advantage of the economies of scale, ship owners might need to move some of the big ships to the Asia-North America routes.

Mr. Ruest of CN doubts that will happen because he expects trade volumes between Europe and Asia will remain historically high despite the economic downturn. “People are quite doom and gloom about Europe, maybe for good reason, but it’s not like the business has collapsed 20 per cent, like this economy is done forever and ever,” Mr. Ruest said. “I think that those ships will definitely go in European service, and after that there will be bigger ships on the East Coast and West Coast of North America, including ports served by CN.”

Pacific Coast potential explained

Anderson, however, offered another compelling reason for why the Asia-North America route might attract the big ships. “Historically there is a little bit more export cargo going back to Asia than there has been on the European routes,” Mr. Anderson said.

And even Mr. Ruest sounded intrigued by that prospect. “I never thought of it that way but maybe there’s something there,” Mr. Ruest said. He then went on to list various Canadian commodities now being shipped by container to Asia: pork, beef, chicken, grain, pulp, lumber, and polyethylene.

“Maybe there’s a silver lining that makes Canadian West coast ports more attractive because we can give them as much exports as the ships can physically carry,” Mr. Ruest said.

Limit, what limit?

Which leads to the question, how much bigger can container ships get?

About a decade ago, Mr. Anderson wrote a paper where he noted that the “most efficient scale,” or MES, for a liner ship was 6,000 to 8,000 TEUs.

Now it looks as though the only practical limit is the width and depth of the Suez Canal as well as the 68-metre air draft under the Suez Canal Bridge. The Triple-Es will be very close to that limit, making them Suezmax. Of course, the canal has been expanded before and could be expanded again. The Suez Canal Authority is conducting feasibility studies to increase the allowed draft and even double the canal’s width.