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Focus: Global Supply Chain and Logistics

Our Weekly Feature Article on Topics Related to Global Supply Chain & Logistics

From SCDigest's On-Target e-Magazine

- Sept. 12, 2013 -

Global Supply Chain News: Maersk Triple E Cost Advantages are Too Great to Ignore

Drewry Shipping Says 35% Advantage in Bunker Fuel Costs, 30% Lower in Total Operating Costs

SCDigest Editorial Staff

The first of the giant Maersk Triple E ships capable of carrying more than 18,000 TEU set sail earlier this summer (see The First Maersk Triple E has Left the Station, er, Port), and the huge cost advantage these massive ships will achieve really could be a game changer, according to the analysts at Drewry Shipping.

SCDigest Says:

Maersk has some 19 more Triple E's coming over the next few years. United Arab Shipping Co. and China Shipping Container Lines Co. have also placed orders for Triple E's.

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Maersk made a number of claims when the first announcement relative to the Triple E's was made (See Megaship Era Enters New Period as Maersk Places Order for 10 18,000-TEU Ships.)

Drewry recently decided to run those numbers themselves, and agrees that these megaships will have a huge cost advantage over even large ships capable of holding 13,000 TEU.

"The economies of scale offered by Maersk Line's 18,000 TEU vessels are so great that few can ignore them," Drewry notes in one of its recent Container Weekly Insight reports.

Those cost advantages include what Drewry estimates is a 35% advantages in bunker fuel costs per TEU: just $218/TEU for the Triple E's versus $333/TEU for a 13,000-TEU ship.

Interestingly, Drewry estimates total fuel costs for the full tour for a Triple E at some $4.3 million dollars, as shown in the table later in this article.

Drewry gets to those numbers like this: it assumes an average westbound ship speed of 20 knots for both sizes of vessel, and an eastbound ship speed of 14.6 knots, which is the average of Maersk's services between Asia and Europe. The ships are also assumed to be 85% full westbound, and 55% full eastbound.

Maersk has not provided details on bunker fuel consumption for the Triple E's, so Drewry made some additional assumptions and extrapolations from data for ships in the 10,000 to 13,000 TEU range. It also notes that London's Daily Telegraph has reported that the Triple E's westbound fuel consumption is approximately 150 tons/day, compared to normal consumption of over 214 tons/day for 13,000-TEU or so ships.

Drewry estimates there are still other significant advantages in terms of cost per TEU for a variety of other operating costs, such as labor, insurance, stores/lubes, administrative overhead, etc. It says the cost per TEU for these other costs will be about $76/TEU versus $85/TEU for the 13,000 TEU vessels.

(Global Supply Chain Article Continued Below)

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And that is with the Triple E's being manned with 21 crewmen, as it was with its maiden voyage. But Maersk says it can actually run the ships with a crew of just 14, a 33% decrease.

"Putting both IFO bunker and ship operating cost savings together reveals that Maerk's 18,000-TEU ships are a massive 30% cheaper than 13,100-TEU ships on a round voyage basis - $294/TEU carried versus $418/TEU carried," Drewry concludes (see table below).

Source: Drewry Shipping Consultants

Drewry notes this does not include Suez Canal and port costs, which might change the full relative cost comparison a bit, but not meaningfully. The cost advantage is clearly and significantly for the larger ships.

There appears to be cost and efficiency advantages in terminal unloading operations as well. Drewry says . According to APM Terminals, berth and crane productivity for the Maersk McKinney Moller last week already reached a record 215 and 37.1 gross moves per hour respectively in the port of Rotterdam.

This compares with a "normal" berth productivity average of between 140 and 150 moves per hour and a crane productivity average of between 32 and 33 moves per hour for a well stowed 14,000-TEU vessel. Additionally, because of its greater size, an average of seven cranes could be worked on the Triple E's, with the maximum going up to eight, whereas only six can usually be worked on a 14,000-TEU ship.

Maersk has some 19 more Triple E's coming over the next few years. United Arab Shipping Co. and China Shipping Container Lines Co. have also placed orders for Triple E's, and there are now said to be designs out in the market for ships capable of carrying 22,000 TEU.

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