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LUSIVE STUDY Ocean Freight: Ports as Inhibitors and Enablers of Global Supply Chain Ecosystems

How will
ports cope?

More and larger vessels coming on stream will result in additional excess capacity, which risks driving
freight rates down even further, challenging the financial future of several shipping lines. However, the
cascading effect will result in medium size vessels being deployed in smaller trades, with the overall
result that even the smaller ports will be expected to accommodate bigger ships.

Container shipping is a capital intensive sector and out of all the fixed assets, the Port is the most fixed
of all – the ships can go elsewhere, but the port is stuck where it is – with expansion quite often
limited by landside and or waterside constraints. Investing in longer docks, deeper ports, larger
container cranes, and the infrastructure needed to store and ship containers in and out of the port
can easily run into billions of dollars, not easy to justify at a time of global economic uncertainty.

The big and the brave will make the necessary investments to expand their port infrastructure and
capabilities in order to accommodate the largest vessels, but the resulting development of a small
number of ‘Super Ports’ around the world that can accommodate the mega vessels will result in a
two-tier system. We envisage the development of hub-and-spoke business models, whereby large
volumes of containers are unloaded at the ‘Super Ports’ for onward shipment in lower capacity
vessels for delivery to smaller ports.

The first build of the new 24,000 TEU vessels will be complete in 2016/17, but which ports will be ready
for such huge vessels? Only a handful of ports in Europe or even in the Far East will be able to take the
new 24,000 TEU ships, and if these ships cannot enter the leading ports, then few more, if any more,
will likely be built.

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