May 13 | 2019
A380’s Demise is Good News for MPVs
By Lars Greiner
The Feb. 14 announcement that Airbus would cease building the A380 once current orders were completed, was a watershed moment in air transport, but also possibly in sea freight as well.
Since starting my career in the early 1990s, the mantra has always been that this is a “numbers game,” so the more units (tonnes or passengers) one can put onto one transport asset, the more economic it will be and costs will come down. This has always ignored the point where economies of scale become diseconomies of scale, where inefficiencies due to size creep in and costs, or opportunity costs, begin to increase again. This is acknowledged by the stopping of production for A380s. More factors than just larger numbers must now be considered.
In designing the A380, Airbus held onto the belief that commuters would prefer flying to major airport “hubs” like Singapore, Tokyo, New York and other big cities, making the twin-deck A380 the ideal choice for airlines. It would ease congestion in these busy ports, offloading up to 800 passengers a time. At the same time, Boeing concentrated on its 777 and 787 Dreamliner, focusing on comfort, environmental aspects as well as smaller size and increased flexibility. The international market responded positively to these moves.
Parallels with Shipping
At an annual dinner in Hamburg in February, Hapag-Lloyd CEO Rolf Habben Jansen outlined that as part of the company’s 2023 strategy, it would no longer focus on cost-cutting, but on providing customers with better and tailor-made services. Something very much against what has been the cry of most container lines in recent times, with many trying to force customers onto online platforms. His words, however, resonate more with the Boeing philosophy: more customer focus and more flexibility.
At the same time, even as ports scramble to accommodate the latest round of behemoth container and bulk carriers, most terminal operators acknowledge that they are very close to the maximum size they are willing to accommodate, if not overmatched, and many have seen port congestion moving from the berth to the gate and to outside their facilities.
What does this mean then for the multipurpose sector, which has never subscribed to the “bigger is better” philosophy, other than in terms of crane sizes? Well, lots actually.
First off, this means that ports will need to rethink their strategies. While the large hub ports in most parts of the world are set, there are new opportunities for second-tier ports to look again at their hinterlands and their value propositions to create and accommodate new business. This may well lead to a return to true multipurpose shipping, vessels which accommodate and carry a mixed cargo of bulk, breakbulk and containers.
Secondly, and more directly for the multipurpose industry, over the past years much of the focus on vessel development has been in the efficiencies of oil and gas support vessels and container vessels. However, the need to explore the development of smaller and more flexible vessels could provide the opportunity for the development of a new generation of MPVs, which have been ignored in favor of specialist vessels.
A new generation of environmentally friendly and highly versatile vessels could well energize and provide input for a rebirth of the MPV fleet. This notion is built on by the growing number of mega-projects with requirements for containers and breakbulk cargoes, as well as the number of small ports that need to be serviced, but are unattractive for container lines. The new CMA CGM order for nine 22,500 20-foot-equivalent ships with “bulbless” bows shows the carrier’s, as with most container lines, commitment to slow steaming of large vessels, opening a gap for smaller, faster vessels for certain cargoes.
All in all, it would seem that those prophesying that all cargo will eventually be containerized were not only wrong, but way off, and as we approach the breaking point for the size of containerized vessels. A window is opening for the development of new concepts and vessels in the multipurpose industry. One can only hope that those in the know and with the means, will seize this opportunity and reinvigorate and recreate the wonderful breakbulk industry and the multipurpose liner trades in a new image.
Lars Greiner is a shipping and logistics consultant with 27 years’ experience in the industry, specializing in support for large and mega project logistics in remote and difficult areas.
Image credit: FLS / Shutterstock
The Feb. 14 announcement that Airbus would cease building the A380 once current orders were completed, was a watershed moment in air transport, but also possibly in sea freight as well.
Since starting my career in the early 1990s, the mantra has always been that this is a “numbers game,” so the more units (tonnes or passengers) one can put onto one transport asset, the more economic it will be and costs will come down. This has always ignored the point where economies of scale become diseconomies of scale, where inefficiencies due to size creep in and costs, or opportunity costs, begin to increase again. This is acknowledged by the stopping of production for A380s. More factors than just larger numbers must now be considered.
In designing the A380, Airbus held onto the belief that commuters would prefer flying to major airport “hubs” like Singapore, Tokyo, New York and other big cities, making the twin-deck A380 the ideal choice for airlines. It would ease congestion in these busy ports, offloading up to 800 passengers a time. At the same time, Boeing concentrated on its 777 and 787 Dreamliner, focusing on comfort, environmental aspects as well as smaller size and increased flexibility. The international market responded positively to these moves.
Parallels with Shipping
At an annual dinner in Hamburg in February, Hapag-Lloyd CEO Rolf Habben Jansen outlined that as part of the company’s 2023 strategy, it would no longer focus on cost-cutting, but on providing customers with better and tailor-made services. Something very much against what has been the cry of most container lines in recent times, with many trying to force customers onto online platforms. His words, however, resonate more with the Boeing philosophy: more customer focus and more flexibility.
At the same time, even as ports scramble to accommodate the latest round of behemoth container and bulk carriers, most terminal operators acknowledge that they are very close to the maximum size they are willing to accommodate, if not overmatched, and many have seen port congestion moving from the berth to the gate and to outside their facilities.
What does this mean then for the multipurpose sector, which has never subscribed to the “bigger is better” philosophy, other than in terms of crane sizes? Well, lots actually.
First off, this means that ports will need to rethink their strategies. While the large hub ports in most parts of the world are set, there are new opportunities for second-tier ports to look again at their hinterlands and their value propositions to create and accommodate new business. This may well lead to a return to true multipurpose shipping, vessels which accommodate and carry a mixed cargo of bulk, breakbulk and containers.
Secondly, and more directly for the multipurpose industry, over the past years much of the focus on vessel development has been in the efficiencies of oil and gas support vessels and container vessels. However, the need to explore the development of smaller and more flexible vessels could provide the opportunity for the development of a new generation of MPVs, which have been ignored in favor of specialist vessels.
A new generation of environmentally friendly and highly versatile vessels could well energize and provide input for a rebirth of the MPV fleet. This notion is built on by the growing number of mega-projects with requirements for containers and breakbulk cargoes, as well as the number of small ports that need to be serviced, but are unattractive for container lines. The new CMA CGM order for nine 22,500 20-foot-equivalent ships with “bulbless” bows shows the carrier’s, as with most container lines, commitment to slow steaming of large vessels, opening a gap for smaller, faster vessels for certain cargoes.
All in all, it would seem that those prophesying that all cargo will eventually be containerized were not only wrong, but way off, and as we approach the breaking point for the size of containerized vessels. A window is opening for the development of new concepts and vessels in the multipurpose industry. One can only hope that those in the know and with the means, will seize this opportunity and reinvigorate and recreate the wonderful breakbulk industry and the multipurpose liner trades in a new image.
Lars Greiner is a shipping and logistics consultant with 27 years’ experience in the industry, specializing in support for large and mega project logistics in remote and difficult areas.
Image credit: FLS / Shutterstock
