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Contact: Erin Dhand, Manager, Corporate Communications and Community Affairs
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Big Ship Orders Continue to Increase

Charleston, SC - For more than 80 years, one of America's greatest engineering and human accomplishments, the Panama Canal, played a substantial role in the design of commercial ships. Not any more.

Ocean carriers are regularly purchasing ships too wide, too long and too deep to transit the Panama Canal's smallest locks. These so-called "post-Panamax" vessels are rapidly becoming the norm in ocean shipping.

Charleston's A Player

Based on the order book for these new modern marvels, Charleston has a lot at stake. Current customers of the Port of Charleston are purchasing every one of the ultra-large ships on order. Earlier this year, the U.K.-based shipping publication Containerisation International reported that post-Panamax ships represent "a massive 40% of all slots on order."

As recently as two years ago, there were those in government and the private sector that doubted large container ships would come to dominate the industry. They cited several ocean carriers that had not yet committed to these ships, which can cost up to $100 million each. The detractors were silenced in February of this year, when the world's two major holdouts, Geneva-based Mediterranean Shipping Company and Germany's Hapag-Lloyd, both entered the big league with post-Panamax ship orders.

Med Shipping, which relocated its regional headquarters to Mount Pleasant, ordered 10 mega-ships. Two days later, Hapag-Lloyd, another major carrier in the Port of Charleston, placed an order for four of the largest container ships ever built.

Other major Port of Charleston customers that have ordered post-Panamax ships include Maersk Sealand, P&O Nedlloyd, CMA, Hyundai Merchant Marine, NYK, MOL, K-Line and APL. Post-Panamax ships are obviously not a vision, they are a reality.

Is Bigger Better?

The business rationale for moving to these larger ships is quite simple. First, a larger vessel allows the ship operator to achieve economies of scale. The standard benefit is a 20% cost savings. Second, shipbuilding does not lack competition and currency fluctuations have cut prices 25% or more, making today's post-Panamax ships cheaper than yesterday's smaller ships. Finally, ocean carriers are coalescing into global alliances and vessel sharing agreements, concentrating larger volumes into single services. The volume these consolidated carriers offer can justify, and fill, the larger ships.

The largest container ships afloat now carry the equivalent of 6,600 20-foot containers, are 1,138 feet long, 140 feet wide and can draw more than 47 feet of water. Charleston got it first look at super-ships in the summer of 1998, when the Regina Maersk made its maiden voyage to the United States. Charleston was one of three U.S. ports called on her initial visit, which brought real-world attention and a buzz to the undeniable move toward larger ships.

At the time, the Regina was the largest containership to ever call North America. But she was not alone, as several sister ships of the same size began sailing to Charleston without fanfare or media attention. The larger vessels, while profitable to the ocean carriers, present infrastructure, information and operational challenges to ports.

First, you have to be able to reach the dock, so channels must be deeper. While the Panama Canal limits ships to about 40 feet, "single-ocean" or "trans-Suez" ships have virtually no depth restrictions. One post-Panamax ship was stranded off the Charleston coast for nearly a day because of depth restrictions and weather conditions. To serve these larger ships and those already calling Charleston, the Ports Authority initiated harbor deepening in the early 1990s. The Corps of Engineers has already awarded approximately $100 million in contracts to complete the project over the coming three years.

Once alongside, cranes must be able to reach across the ship to take on and off the shipping containers. While the Panama Canal limits ships to 13 containers abreast, or 110 feet, the post-Panamax vessels are currently at 17 containers wide and growing. At a cost of $25 million the SPA ordered four of the nation's largest container cranes, which will be delivered this fall, bringing its inventory of post-Panamax cranes to 14.

Larger ships also mean substantial surges in volume. A single ship can load and discharge 2,000 containers in a matter of hours. Information systems, handling equipment and land access routes all have to be in prime condition to speed the cargo to its destination. The Ports Authority's five-year, $165-million capital investment plan will strengthen these resources.