Evolving Hub-and-Spoke Container Transshipment
In a landmark treatise entitled Competing for the Future, one time business Professor C. K. Prahalad focused on “the convergence of technologies” as a significant causal factor of change in the business world. During the mid to late 20th century and into the 21st century, maritime sector innovations include the development of container freight transportation, increasing larger ships and the emergence of automation at terminals that are converging to expand maritime based hub-and-spoke container transportation networks.
While the early airline industry provided mainly point-to-point transportation, the development of larger and faster technology prompted airline companies to develop hub-and-spoke transportation networks that involve the transfer of passengers and freight at major transportation terminals. For centuries, the maritime sector operated small vessels between voyage endpoints and sometimes making intermediate stops at ports of call. As river transportation developed, freight often transferred between ocean going and inland waterway vessels. The development of railways gave rise to the interlining between trains and ocean going ships, a trend that continues to the present day and includes truck transportation.
The Suez Canal Authority is implementing a business plan that will eventually transit more and larger vessels in less time. Their initiative has potential to prompt new development in ship technology and when combined with evolving automation at container terminals, will effect change in operations at distant terminals as well as in future container shipping. At the present day, and as a result of current dimension restrictions at the Suez Canal, container ship technology is approaching a maximum in physical size. Revised dimension restrictions to transit larger vessels would prompt change in the container maritime sector.
Revised Suez Canal Dimensions
The development of twin parallel navigation channels of 315-meter width each at Suez Canal and 20-meter sailing depth would challenge Asian shipyards to evaluate possible development of larger ships. A ready market sailing between East Asia and Western Mediterranean transshipment terminals already exists. Several Asian ports are located within close proximity to each other, setting the stage for future development of new transshipment terminals to serve the nearby ports. One group of nearby ports includes Hong Kong, Shenzhen, Guangzhou and Yantian, with potential to expand to include Xiamen, Fuzhou and Taiwan main ports.
On the Yellow Sea, nearby ports include Shanghai, Ningbo, Qingdao and Yantai, with potential to include Busan and Western Japanese ports. Future potential to transit larger ships through a redeveloped Suez Canal has potential to prompt development of container transshipment terminals for extreme sizes of container ships at two locations around China. It would also prompt expansion and redevelopment of port areas at Western Mediterranean transshipment terminals located within close proximity to the Strait of Gibraltar. These ports will offer connections to multiple Western European ports, Northwestern African ports and even some North American ports.
Northwestern Atlantic Region
Western Mediterranean transshipment ports located near Strait of Gibraltar would offer interlining connects to multiple European ports located on or near the Atlantic Ocean, including ports around the U.K. and Ireland, along with African ports. The volume of trade between South America and Asia would likely require a ship size that is presently being used. Trade between East Asia and the east coast of the U.S. involves some five million containers annually and an average of around 400,000 containers per month, providing a market application for a ship of over 32,000-TEUs arriving every third day at a transshipment terminal.
The sailing distance between Hong Kong and Western Mediterranean region is 76 percent of the sailing distance to Eastern Nova Scotia. Combined East Asian trade destined for Eastern North America and Europe could sail aboard super mega-ship to Western Mediterranean transshipment terminal, with smaller trans-Atlantic vessels carrying trade from China, India and Mediterranean Europe to North America. A mega-ship carrying East Asian trade for North America and Europe would partially offload at Western Mediterranean terminal before carrying combined East Asian, Indian and Mediterranean European trade to Eastern Canadian transshipment terminal, for transfer to ships sailing to American east coast ports.
Northeastern Pacific Region
Several west coast American ports and a pair of Canadian west coast ports are able to provide service to some of the largest container ships on the ocean, ship size being limited mainly by market conditions. The development of future Suez-max container ships to mainly serve the East Asia – Western Mediterranean service would likely prompt some shipping companies to explore the option of sailing such ships on the East Asia – Western North American service, provided that a suitable transshipment terminal is develop at a suitable location along the North American Pacific coast.
Pressure along Canadian railway lines would ultimately limit the size of container ships that sail to Vancouver and Prince Rupert. A future ship technology could carry a combined load of containers for both Prince Rupert and Vancouver, with future potential to even include the Port of Seattle. A transshipment terminal at Vancouver Island might be a possible option to serve the three northwestern ports. Future ship technology could also carry the combined load of containers destined for San Francisco and Los Angeles, perhaps requiring a transshipment terminal as far offshore as Hawaii.
Brazil represents a major market in the southern hemisphere, with most of their population living in cities located along the Atlantic Coast. Whether sailing from Hong Kong area, Shanghai region or from India, the route via Cape Town represents the shortest sailing distance, with potential for a transshipment port located at either Rio de Janeiro or Santos. Transshipment interlining with smaller coastal vessels would provide low-cost container transportation to Argentina, Uruguay and via river to Paraguay. The close proximity between Montevideo and Buenos Aires, also Santos and Rio de Janeiro allows for dual port operation of a single ship.
The depth at Richards Bay, South Africa, could invite transshipment, where ships from China and India could meet. The mega-ship sailing to Brazil will partially offload containers while the ship sailing from India would unload all containers, with a portion of the containers being loaded aboard the Brazilian bound ship and remaining containers to be transported to domestic Southern African destinations via truck, railway and local maritime services.
Regularly scheduled long-distance mega-ships will sail between transshipment terminals and interline with smaller ships that sail comparatively short distances to regional ports. Automated transfer of containers between mega-size and smaller ships provides the foundation of a viable hub-and-spoke system of container transshipment that can offers the combination of lower transportation costs for customers along with improved fleet productivity for ship owners. As a result, hub-and-spoke operation will replace a large proportion of direct sailing of smaller ships at comparatively higher per container transportation costs between East Asian and European ports, also North American ports.
Sailing between transshipment ports creates a market for much larger container ships that would carry anywhere from 50 to 100 percent additional payload. Expanding the Western Mediterranean transshipment ports through deep dredging, upgraded crane technology and automated port operations would allow these ports to expand their interline connections to include trans-Atlantic ports located along the St Lawrence River, Eastern Canada and northeastern U.S. The sailing distance between ports in Hong Kong region and St Lawrence River region is shorter via Suez Canal than via Panama Canal.
Increased Ship Size
Over the next decade with Suez Canal planning to offer 20-meter sailing depth and 315-meter channel width, the combination of shipowners and transshipment ports would be able to discuss the potential operation of larger ships that carry in excess of 24,000 TEUs. Given the precedent of oil tankers having been built to 1,600 feet (490 meters) length, there would be potential to combine 18.5-meter sailing draft or one additional level of containers sailing below water line, and additional three container widths to increase beam to 67 meters along with additional three to four levels of containers above the water line.
With 70-meter air draft below the bridge across the Suez Canal, an additional four levels of containers above the deck of the largest container ships would raise the top of the ship’s bridge to as high as 68 meters above the water line. One option would be to install a low-height forward bridge above the ship bow, leaving ship designers to explore the installation of a corridor or passage to allow crew to move between the bow and engine room and crew quarters sections of the ship. Over the next decade, a ship of 30,000 to 35,000 TEUs may be possible.
Future Super Ship
A study undertaken by the McKinsey Consulting Company suggested the future container ships of 50,000 TEUs by 2050. With 400,000 TEUs arriving per month at American east coast ports, a container ship of 50,000 TEUs would arrive eight times per month at a Canadian transshipment terminal, or every fourth day. It would likely sail 21-meter water draft, 550-meter length with 72-meter beam and near 70-meter air draft, possibly achieving passage via the Suez Canal sometime after 2030. Designing a ship of such dimensions poses major challenges to naval architects who would need to explore construction methods from other area.
Ship designers may evaluate a bridge building precedent that use tension cables inside hollow, box-section structural members that extend the length of a ship hull at different levels. Several years ago, the Freedom Ship Group of Florida hired naval architects to design a proposed passenger ship of greater length than then the largest oil tankers afloat. There may be scope to incorporate design ideas from that ship into a future concept container mega-ship that will sail between transshipment terminals, possibly including ideas that will allow rapid loading and unloading of containers while at port.
Partial transshipment would involve mega-ships sailing from East Asian terminal to a Northeastern North American terminal and stopping to offload European bound containers at a Western Mediterranean terminal, then taking on North American bound containers. Alternatively, an interlining ship sailing from Mediterranean terminal to Newark would stop at Halifax to partially offload containers destined for the ports of Boston, New haven and Portland. A smaller interline ship sailing to the St Lawrence River would partially offload containers at Quebec City to sufficiently reduce sailing draft to sail to Montreal.
In the Pacific region, ships sailing between Asia and North America may briefly stop at a future transshipment terminal at Hawaii, where ships sailing between Asia and Central/South America, also between Australia and North America may also briefly stop to exchange containers. The Asian portion of the voyage of some ships would include brief stops at a port in India and well as Singapore, or combination of Singapore and Hong Kong. Some of the smaller ships will sail between Australia and Hawaii and between Central/South America and Hawaii in a trans-Pacific hub-and-spoke container transportation network.
Dual Port Service
A trans-Pacific mega-ship could sail to San Francisco for partial offloading then carry remaining containers to Los Angeles. Another trans-Pacific mega-ship could carry containers destined for the ports of Vancouver and Seattle, partially offloading containers at one terminal before sailing to the companion port. Along the American east coast, the same ships could carry containers from northeastern transshipment port to Norfolk and Baltimore, Charleston and Savannah, or Savannah and Jacksonville. With mega-ships arriving at transshipment terminal every third or fourth day, new-Panamax ships would have to sail dual port service along the American east coast.
There is potential for smaller ships interlining with future mega-ships at Western Mediterranean transshipment terminals to operate dual port service to several nearby pairs of European ports, to reduce transportation costs. Western Mediterranean combinations would include Valencia and Barcelona, Marseilles and Genoa along with Rome and Napoli. Irish Sea combinations could combine Dublin, Belfast and Liverpool. Iberian combinations could include Lisbon and Oporto along with Vigo and Bilbao. French dual port service could serve Le Havre and Dunkirk while Baltic region dual port combinations could include any of Gothenburg, Malmo and Copenhagen.
While restricted navigation depth along the Russian Arctic can only transit comparatively small vessels, greater navigation depth through the Canadian Arctic can transit much larger vessels. Due to environmental concerns, future Canadian Arctic ship navigation would involve LNG powered ships. It is expected that within a decade, the Canadian passage via Barrow Strait may become navigable during the months of July, August and September. During this period, ships sailing between East Asian terminals and terminals located in Eastern Canada and Western Europe would follow the Arctic route, enhancing the viability of the Eastern Canadian terminal.
The commercial airline industry has long operated using hub-and-spoke routing networks, with passengers and freight being transferred between connecting flights. In the maritime sector, intermodal hub-and-spoke networks involve freight transfer between maritime and any of railway or truck transportation. At the present time, intra-modal maritime hub-and-spoke networks involve bulk freight transfer between ocean going and river vessels, with ocean - river container freight transfers occurring as some European and Asian ports, also at Buenos Aires and New Orleans. Construction of progressively larger container ships enhances future prospects for hub-and-spoke container transshipment between international ocean ships and regional ships.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.