Get ready, here they come

Get ready, here they come

Capt. Tang Yiu Tzu was at the helm of one of the largest container ships afloat, the 8,063-TEU OOCL Ningbo, recalling how different the trans-Pacific trade is from when he first went to sea in the 1960s. Back then, container ships of less than 1,000-TEU capacity took three weeks to steam from Hong Kong to Long Beach. Orient Overseas Container Line's Ningbo, with a top speed of 25 knots, made the trip in 11 days on its maiden voyage earlier this month.

In the 1960s, several dozen crewmembers shared cramped quarters and had few diversions during the long voyages. The Ningbo's 26-member crew has comfortable accommodations with modern exercise facilities, including an indoor running track and a home entertainment center.

With almost 40 years of experience and a designation as master mariner, Tang is awarded the privilege of captaining OOCL's newest and largest vessels. The Ningbo is the latest in a series of 12 SX-class 8,000-TEU container ships that OOCL will deploy by 2007. The mega-ships that OOCL and other lines will introduce in the coming years are having a profound effect not only upon sea captains such as Tang, but on the port and transportation industries in the U.S., Asia and Europe.

Terminal operators are seeing the most noticeable changes. Long Beach Container Terminal, OOCL's home base in Southern California, is proud of its reputation among truckers for having among the best turnaround times in the Los Angeles-Long Beach port complex. The terminal stores at least 60 percent of its loaded containers on chassis, eliminating the need to pick through stacks of containers to find the right box.

That will change, however, as bigger ships arrive. By late 2005, OOCL will have a full complement of six 8,000-TEU vessels in its service from Southeast Asia. Because OOCL vessels do a total discharge and reload in Long Beach, LBCT will have to go the way of other terminals in Southern California and store most of its containers in stacks.

And those six ships won't be the end of OOCL's expansion in the trans-Pacific. When all 12 of its SX-class vessels are delivered by 2007, will OOCL have two strings of the 8,000-TEU ships calling at LBCT? The carrier isn't tipping its hand, but it's a sure bet that as a member of the Grand Alliance with Hapag-Lloyd, Malaysia International Shipping Corp., NYK Line and P&O Nedlloyd, OOCL will be expected to have more than its current single string of vessels calling at the terminal.

Big ships are having an even greater impact on the landside operations of marine terminals. On its maiden voyage to Long Beach on June 11, the Ningbo carried more than 7,000 TEUs, 92 percent of its listed capacity. Its next few calls will be during the peak-shipping season, so the Ningbo will probably be filled on those voyages, too.

Discharging thousands of containers in a single vessel call places a tremendous strain on a marine terminal's operations. LBCT has installed optical character readers at its gates, but that won't be enough to allow the relatively small, 105-acre terminal to handle a full complement of 8,000-TEU ships. LBCT will have to install OCRs on its container cranes and a computerized container-tracking system in its yard to maintain a smooth flow of containers from the vessel, through the yard and out of the gate. Terminals in Los Angeles-Long Beach move an average of 4,000 TEUs per acre. With the 8,000-TEU ships, LBCT will handle nearly twice that volume per acre. Automation is the only way to do it.

Shipping lines have more than 140 vessels of 8,000- to 9,500-TEU capacity on order through 2007. Most, if not all, of the mega-ships will be deployed in services from Asia to Europe and Asia to North America. The big ships reduce a carrier's per-slot costs. "That's our competitive edge," said Peter Leng, president of OOCL's North American operations. OOCL knows what the per-slot cost is of operating each of its ships at different utilization levels. Although Leng didn't want to get too specific, he said that a small container ship that is not very fuel-efficient may cost a carrier $14 per slot per day, whereas the per-slot costs on a modern, fuel-efficient mega-ship may be a third of that.

Global shipping lines are sending a clear message to ports in the major east-west trade lanes. That message is that the big ships are coming, and that ports need to be ready with 50-foot channels and the terminal and inland intermodal capacity to handle them. It's the cost of doing business, and ports that move too slowly will be left behind.

Bill Mongelluzzo is West Coast editor of The Journal of Commerce. He can be reached at (562) 432-0311, or via e-mail at bmongelluzzo@joc.com.