Mega ship trend close to reaching optimal size limits: OECD official

The global shipping industry has been building increasingly bigger mega vessels but is soon approaching the point where constructing even larger ones will not make much financial sense, a senior official from the International Transport Forum under the Organisation for Economic Co-operation and Development (OECD) has said.

Olaf Merk, ports and shipping administrator for the forum, told reporters on Thursday that increasing ship capacity even further from 19,000 twenty-foot equivalent units (TEU) to 24,000 TEU, for example, would only cut costs by an estimated 5 per cent, which he said was relatively marginal.

Liners are also having difficulty filling their gargantuan vessels, with a capacity oversupply of about 20-30 per cent, he added. "Certainly we're close to that point of optimal ship size."

Container lines have sought to lower the average cost of transporting each box by building bigger ships in a bid to ride on economies of scale. The biggest ship in the world right now can carry slightly over 19,000 TEU, but analysts warn that even larger ones are on the horizon.

Ports have scrambled to cope with this trend, and Mr Merk noted that big ships "only make sense if the handling time is very quick".

Mr Merk was speaking on the sidelines of a lecture he delivered on Thursday at the Ministry of National Development's auditorium, jointly organised by the Maritime and Port Authority of Singapore (MPA) and the Centre for Liveable Cities.