The principle of economies of scale is fundamental to maritime transportation economics as the larger the ship, the lower the cost per unit transported. This trend has particularly been apparent in bulk and containerized shipping. For instance, the evolution of containerization, as indicated by the size of the largest available containership, has been a stepwise process. Changes are rather sudden and correspond to introducing a new class of containership by a shipping company (Maersk Line tended to be the main early mover), quickly followed by others. The major ship classes include L “Lica” Class (1981; 3,430 TEU), C10 Class (1988; 4,500 TEU), R “Regina” Class (1996; 6,000 TEU), S “Sovereign” Class (1997; 8,000 TEU), E “Emma” Class (2006; 12,500 TEU) and “Triple E” class (2013; 18,000 TEU).
A new class generally takes the name of its first ship. There are some variations concerning how many containers can be carried by a containership depending on the calculation method. For instance, for the Emma class, a ship could carry about 15,200 TEUs of containers if they were all empty, representing all the available container slots. If all the carried containers were loaded with an average load of 14 tons per container, about 11,000 TEUs could be carried (25% less). The official capacity figures used are 12,500 TEUs, which consider that containerships carry a mix of loaded and empty containers, but containerships can usually carry slightly more. Thus, container capacity figures should be treated with some caution because they depend on the cargo mix and are estimated conservatively.
Since the 1990s, three substantial steps took place in the evolution of containership sizes. The first involved a jump from 4,000 to 8,000 TEUs, effectively moving beyond the “Panamax” threshold of around 5,000 TEU. This threshold is particularly important as it indicates the physical capacity of the Panama Canal and thus has been an important operational limitation in maritime shipping. Most modern container ports were designed to handle Panamax class ships since this standard has been around for a century. Ships of the “C10” class were introduced by APL in 1988 and were the first post-Panamax ships with 14 containers across deck with a capacity of 4,500 TEUs (a Panamax ship is limited to 13 containers across).
The second step took place in the 2000s to reach the 12,500 TEU level, which is essentially a “Suezmax” level, or a “new Panamax” class when the extended Panama Canal will come online in 2016. However, this 12,500 TEU capacity is assessed from a ship fully loaded with containers averaging 14 tons. Using a load configuration that includes empties can result in effective capacities of 15,200 TEU for an E class ship. From a maritime shipper’s perspective, using larger containerships is a straightforward process as it conveys economies of scale and thus lowers costs per TEU carried. From a port terminal perspective, this places intense pressure in terms of infrastructure investments, namely portainers.
A third step is unfolding. In 2011, China Shipping Container Lines took delivery of the first container ships whose theoretical capacities are 14,100 TEUs, setting a new landmark. The introduction of the Triple E class (about 18,000 TEU) by Maersk Line in 2013 was followed by even larger vessels of competing lines, such as COSCO Shipping (ships of up to 21,237 TEU), CMA CGM (up to 20,954 TEU), and OOCL (units of up to 21,413 TEU). The 18,000 TEU threshold was overtaken in 2014 and by 2017, ships above 20,000 TEU were available. The first ULCSs of 23,000 TEUs were delivered in 2019. As of 2020. the world’s largest container vessel was the HMM Algeciras, with close to 24,000 TEU. In October 2019, the average container vessel on the Asia-North Europe trade measured 16,100 TEU compared to 11,711 TEU in 2015, 9,444 TEU in 2012, 6,164 TEU in 2006, and 4,250 TEU in 2002. This step is likely to level around 25,000 TEU, close to the limit of the Strait of Malacca.
Several converging factors underline that further economies of scale in maritime shipping are unlikely to unfold within the foreseeable future, or at least come at a high cost. The more economies of scale are applied to maritime shipping, the lower the number of ports able to handle such ships, limiting commercial options and accessibility. Economies of scale involve higher costs for inland operations as a large number of containers arrive at once and must be handled effectively to maintain a level of service. In all the dimensions it involves, economies of scale require capital intensiveness in infrastructure and equipment (ships, portainers, terminal facilities) that are prone to risk. The challenge is no longer about economies of scale, but about finding paying cargo to fill the ships. Therefore, it is a possibility that the optimal size of a containership would be in the 8,000 to 10,000 TEUs range.