A comparative advantage gives a company the ability to sell goods and services at a lower price than its competitors and realise stronger sales margins. That is the theory that has led us to economies of scale and the continuous upsizing of ships when other costs could no longer be reduced.<\/p>\n
In the shipping industry this has been a continuous phenomenon. As trade grew, ship sizes grew in tandem until the idea of economies of scale caused a disproportionate explosion in size. We saw this with tankers, bulk carriers and containerships. This rationale works as long as trade volumes continue to expand to match the capacity but as we know so well the shipping industry is prone to highly volatile cycles and the lemming instinct causes too many to join the surge to build ever larger ships. The result is plain to see; financial losses are the end result.<\/p>\n
The impact on ports is dramatic. We have seen ultra large crude tankers parked offshore to unload as they cannot gain access to terminals. Container terminals are suffering similar problems with the handling of ships with teu capacities in excess of 18,000. These can only call at a minimal number of ports.<\/p>\n
Most terminals are not set up on the inland side to deal with the 4,000-5,000 container discharge and a similar load. They have also not managed to increase their hourly crane productivity to match carrier\u2019s requirements. The easy answer has been to throw more cranes into play, but we are seeing congestion on all the trades where large ships appear.<\/p>\n
There is no simple solution to this; only time and experience will help. One thing is certain, ships get bigger up to the point that they no longer provide a unit cost saving due to rising inefficiencies. Where is that point? Perhaps at 24,000 teu for containerships.<\/p>\n","protected":false},"excerpt":{"rendered":"
COMMENT: Like all things in our world we try to keep up with new trends in order not to be at a disadvantage. In economic terms this is known as comparative advantage, defined as the ability of a firm to produce goods and\/or services at a lower opportunity cost than other firms or individuals, writes Ben Hackett.<\/p>\n","protected":false},"author":8,"featured_media":9302,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66],"tags":[],"sponsor":[],"class_list":["post-9301","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-economist"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/9301","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/comments?post=9301"}],"version-history":[{"count":1,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/9301\/revisions"}],"predecessor-version":[{"id":9303,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/9301\/revisions\/9303"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/media\/9302"}],"wp:attachment":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/media?parent=9301"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/categories?post=9301"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/tags?post=9301"},{"taxonomy":"sponsor","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/sponsor?post=9301"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}