This could lead to concern over the commercial viability of such behemoths – a topic I have looked at in multiple previous posts here as well. Essentially larger vessels have lower unit costs provided they can be filled. Low demand growth leads to a reduction in service frequency when a new generation of larger vessels arrive. Reduction in service frequency result in a higher incidence of transhipment and feedering which increases costs. And that is before taking land-side cost impact into account. Seen from a holistic supply chain perspective it is quite likely such vessels would have a net negative commercial impact, even if the unit slot costs for the carrier improved.
It is therefore good news for the industry that the newly appointed vice-chairman of Cosco Shipping Holdings, Wang Haimin, today very clearly states that Cosco will not order any such vessels presently, as past history has shown that every time a carrier launches a new generation of larger vessels it has led to an “arms-race” with all and sundry – inexorably creating massive overcapacity.
Overall this supports the notion that the industry is entering a new phase where the aggressive pursuit of marketshare and ever larger vessels have come to an end, and the name of the game is to focus more on optimizing the value to be gained from existing assets. A notion further supported by the fact that the current orderbook is historically low, and has been for a while.