Wednesday, October 28, 2015

Mega containerships and inventory costs: who pays the pipe(r)?

Each export container is nowadays handled about four times at ports and inland terminals until it arrives to its final destination; and transshipment costs money. It is common knowledge that cargo owners dislike mega-containerships and transshipment, preferring instead a multi-porting system, with cargo unloaded closer to its final destination. Research on the optimum size of containerships has rarely taken into account diseconomies of scale at ports and in hinterland distribution, let alone road congestion and the environmental impacts of long distance overland transport. More importantly, the negative relationship between ship size and shippers’ inventory (holding) costs has never been seriously addressed. Recent research, soon to appear in Maritime Economics and Logistics, demonstrates that, were one to jointly optimize system costs of door-to-door transport, i.e. taking into account inland distribution and shippers’ inventory costs, the optimum ship size in the North Atlantic trades should not exceed that of 9000 TEUs. Obviously, the questionable, nowadays, economies of scale in shipping cause a NIMBY effect on system costs that needs to be earnestly addressed in the planning and financing of new infrastructure. HH