Size matters and scale economies count in every form of shipping
Size matters and scale economies count in every form of shipping, and it makes a lot of sense in the dry bulk trades, where enormous quantities of iron ore need to be carried on extended ocean passages from ports near where ore is mined, to those near the steel mills that will use the cargo.
Until recently, with the exception of the gigantic Berge Stahl at 364,767 tonnes deadweight the world’s biggest dry bulker, which has been shuttling between Brazil and Rotterdam since 1986, most dry bulkers are a good deal smaller. The “Capesize” bulk carriers, which were designed to be too big to transit laden through the Suez Canal (and thus go around the Cape of Good Hope) are around 160,000 tonnes deadweight (meaning that they can carry this tonnage of cargo).
The main iron ore ports in the world in Australia, South America, South Africa and Canada are sufficiently deep to enable these Capesized vessels to load, and the terminal equipment is sized for their dimensions. Discharge ports, in Europe, China and Japan are similarly equipped and dimensioned to take ships of around 290 metres in length and 50 metres beam.
However, the lure of ever larger ships has proved irresistible, although the concern has always been that an owner buying such a vessel will have trouble trading it with far fewer ports available to load and to discharge. But the Berge Stahl’s record has now been broken by the Vale Brasil, at 400,000 tonnes deadweight the largest dry bulk carrier ever built and the first of seven of these giants ordered from South Korean Daewoo Shipbuilding and Marine Engineering Co.
Where ordinary ship owners might have reservations about ordering such monsters because of the difficulty of chartering vessels of such a size, Vale Brasil and her sisters are owned by Vale SA, the biggest mining company in Brazil and thus the owners of the cargo which these huge ships will carry. It is hoped that eventually they will take cargoes from Brazil to China and have been christened “Chinamax” ships.
The commercial justification in respect of these huge ships is that they will be able to carry their cargo significantly cheaper per tonne mile than smaller Capesize vessels, with more than twice the cargo at a capital cost of only one third more, and with each ship doing more than the work of two smaller ships.
They are said to be far more environmentally sustainable than smaller ships with highly economical power plants that will burn only 97 tonnes of fuel per day at a service speed of around 14 knots. The giant ships are divided into seven holds, each with a capacity of around 58,000 tonnes of iron ore. Dimensions are 360 metres length and 65 metres beam, while they will require some 24 metres of water depth in order to float.