What: Shipping lines share operations on certain trade routes.
Why: Companies are seeking ways to increase efficiency amid declining volume growth and over-capacity.
How it works: The lines share vessels, therefore allowing more weekly sailings in network than individually.
When: Some alliance agreement sailings have already reached the Port of Charleston, with more planned to start next year.
The NYK Arcadia cargo ship eclipsed other vessels in Charleston Harbor as it steamed through the waterway to the S.C. State Ports Authority’s Wando Welch Terminal in Mount Pleasant last month.
The three shipping alliances
P3: Maersk, MSC, CMA CGM
G6: Hapag Lloyd, OOCL, NYK, APL, MOL, Hyundai, Zlm
CKYHE: Cosco, K-Line, Yangming, Hanjin, Evergreen
Source: S.C. State Ports Authority
The 1,090-foot-long black and white ocean vessel marked the largest ship to tie up at the Wando Welch Terminal when it arrived on Oct. 14. It has the capacity to hold the equivalent of 9,592, 20-foot-long containers, 12 more containers than the 1,102-foot MSC Sindy that held the largest ship title when it called on Charleston in August 2011.
Sample of large ships to call on Port of Charleston
Arthur Maersk: The 1,157-foot-long vessel marked the longest ship to call on Port of Charleston when it arrived at Wando Welch Terminal in Mount Pleasant in May.
NYK Arcadia: The 1,090-foot-long vessel called on local waters on Oct. 14. With capacity to hold the equivalent of 9,592, 20-foot-long containers, it marks the largest vessel to call on Charleston.
Axel Maersk: The 1,155-foot-long vessel arrived at Wando Welch in April.
MSC ASYA: 1,104-foot-long ship called on Wando Welch on Monday, Nov. 25.
MSC Esthi: 1,105-foot-long vessel is scheduled to call on Wando Welch on Dec. 5
Source: S.C. State Ports Authority
The NYK Arcadia’s visit was the result of a vessel-sharing alliance called G6, a consortium of ocean carriers APL, Hapag-Lloyd, Hyundai Merchant Marine, Mitsui OSK Line, NYK and OOCL. The G6 network is one of three such vessel-sharing agreements among a total of 15 separate ocean carriers.
Such partnerships have SPA officials poised to handle more big vessels next year, a scenario that puts pressure on to add more landside capacity and deepen Charleston Harbor from 45 to 50 feet.
“The name of this game is to employ the biggest ship you can on a trade route consistent with cargo demand and size of the trade and the capabilities of the harbors,” said Jim Newsome, president and CEO of SPA.
Industry experts also warn that the stream of larger vessels could strain some landside infrastructures due to the higher volume of cargo arriving at once.
The vessel-sharing agreements are the result of shippers seeking ways to improve efficiency amid declining volume growth and over-capacity. The pact lowers the cost to ship each container. Ocean vessels have already implemented other means to slim costs, including slowing vessels to save on costly fuel.
“These alliances are the same number of ships, but carrying more cargo,” Newsome said. “That’s good because the bigger ships are newer and more fuel efficient and they’re more environmentally efficient with less environmental impact on the harbor.”
Newsome said ocean carriers have pulled some of their larger vessels from European trade routes due to the sluggish economic growth in the region. Now, armed with the larger vessels, shippers are eyeing routes that point such behemoths toward East Coast ports, Newsome added.
“They have these large ships and they have to employ them,” he said.
The partnerships also allow carriers to offer more weekly sailings in their combined network than they do individually.
The ships on the shared-vessel agreements typically carry the equivalent of at least 8,000, 20-foot-long containers, part of the Post-Panamax category of vessels that more lines are using. Post-Panamax describes vessels too long or wide to squeeze through the Panama Canal.
The Port of Charleston handles seven Post-Panamax ships a week. That includes such vessels as the 1,108-foot-long Maersk Altair, which is scheduled to call on the Wando terminal today.
Charleston’s shipping channel is 45 feet deep, but the goal is to take it to at least 50 feet. It currently can receive big ships that draft 48 feet of water and carry the equivalent of more than 9,500, 20-foot, shipping containers when the tide is high enough.
Plans for the deepening of Charleston Harbor are currently being studied by the U.S. Army Corps of Engineers.
The SPA wants to have the harbor deepened by 2018, a timeline that mirrors the added capacity of the new $700 million container terminal opening that year at the southern end of the old Navy base in North Charleston.
The SPA board of directors also recently approved $840,990 for the engineering firm Parsons Brinckerhoff to study improvements that will be needed to accommodate larger vessels and cranes at the Wando Welch Terminal in Mount Pleasant.
Charleston joins several ports along the East Coast in a race to deepen shipping lanes for bigger ships to come through an expanded Panama Canal, a project to be completed by 2015.
But, not all big ships are planned to flow through Panama Canal, including those that call on Port of Charleston, officials warn.
The behemoth NYK Arcadia is part of CEC service, a product of the G6 vessel-sharing agreement.
The CEC service reached Charleston Harbor on June 23 when Hapag-Lloyd Line’s Seattle Express arrived at the Wando terminal. The Asia-East Coast service uses the Suez Canal in Egypt to move cargo to and from destinations like Hong Kong and Singapore.
More shippers are already bypassing the Panama Canal.
That includes the world’s largest container shipper Maersk Line, which announced earlier this year that it is using the Suez Canal for its larger vessels on Asia-to-U.S. East Coast routes.
That decision led to the arrival of the Arthur Maersk this spring. The 1,157-foot vessel marked the longest ship to call on Charleston when it tied up in May at the Wando terminal.
The Suez Canal also led to the arrival of the 1,155-foot Axel Maersk, which docked at the Wando terminal in April.
Maersk, which is a major customer for the Port of Charleston, recently formed an alliance with mega-vessels MSC and CMA CGM for Europe, Trans-Pacific and Trans-Atlantic trade routes.
Newsome said it is not yet fully known how the agreement, which starts next year, will impact Charleston.
The deal allows the three companies, which account for 34.6 percent of all capacity market share, to share loads on some single-vessel routes.
“The near-term growth will be the same number of ships with bigger shipments and I think it puts more of a premium on harbor depth and harbor capability and harbor infrastructure,” he said.
The uptick in larger vessels is good for carriers, but it could spell trouble for some port operations along the East Coast, according to Jim Drogan, a maritime professor at State University of New York Maritime College.
“A more important question is whether or not these facilities have enough equipment to handle the shipments,” he said. “Do you have enough capacity to ground the containers ...”
Similar concerns about port infrastructure were mentioned by logistics experts during the S.C. International Trade Conference at Wild Dunes Resort on Isle of Palms in September.
Drogan said this week that the cargo-sharing alliances could pressure some ports into a tough situation.
“I can understand what the P3 is trying to do here and it makes sense,” he said. “They’re arrogant about it though, they’re doing what they have to do and [the ports] have to adapt.”
Reach Tyrone Richardson at 937-5550 and follow him on Twitter @tyrichardsonPC.
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