Trans RINA, Vol 153, Part A4, Intl J Maritime Eng, Oct-Dec 2011
more flexible between trades conferring better access to cargoes7.
For this reason the demand for smaller ships is not likely to disappear with the relaxation of the Panamax constraint. The question is, however, are class sizes likely to be optimised upwards to take advantage of the relaxation and, if so, by how much?
5.2 THE PARCEL SIZE DISTRIBUTION FUNCTION
Ship size categories are not random; they develop to accommodate the size and type of cargo parcels that shippers want
to transport. This can be examined
through analysis of the Parcel Size Distribution Function (PSD) [15]. This examines the size of shipments fixed in the charter markets. A review of how the PSD has developed in the dry bulk sector is shown in Figure 4, comparing spot market dry bulk fixtures in 2008/9 with fixtures in 2001/28.
The spread of Sub-Panamax parcels has reduced and skewed significantly towards the upper end of the Panamax sector.
The peak of Panamax parcel sizes has increased from between 45,000 and 65,000 tonnes previously to concentrate in the 75,000 to 85,000 tonne range currently.
The implications of the changes in the Sub-Panamax sector are that parcel sizes are now skewed towards the maximum size that the Panama Canal can accommodate suggesting that further increases in parcel sizes are constrained by the Canal.
This, coupled with the
increasing use of Capesize rather than Panamax or Sub- Panamax vessels, strongly suggests that there is pressure from the market for parcel size in the Panamax sector to increase.
5.3 ECONOMY OF SCALE
The underlying reason for increasing ship size over time is found in the sea transport unit cost function [15]: Unit cost = (LC + OPEX + CH) / PS
In this equation LC represents the capital cost of the ship, OPEX the operating costs, CH the cargo handling costs and PS the parcel size. As Stopford states “The unit cost generally falls as the size of the ship increases because capital, operating and cargo-handling costs increase proportionately with the cargo capacity”.
do not
Figure 4: Development of dry cargo PSD (proportion of number of spot market fixtures recorded by Clarkson)
The two parts of the distribution represent the market for parcels
below 85,000 tonnes (including Panamax,
Handymax and Handysize cargoes) and the market above 85,000 tonnes (Capesize cargoes). A number of trends can be seen in this comparison:
Capesize cargoes have increased in importance over the past decade.
The size of Capesize cargoes has increased, peaking now in the range 155,000 to 165,000 tonnes as opposed to 145,000 to 155,000 tonnes in 2001/2.
The change in capital cost of dry bulk carriers with size is shown in figure 5, showing prices per dwt at the peak of the market in 2007 and prices prevailing in 2010.
1,000 1,200
200 400 600 800
- - 50,000 100,000 Dwt (tonnes) Figure 5: Newbuilding price for dry bulk carriers [13]
7 This flexibility may be reflected in freight rates. The average earnings for trip charters at 04.03.2011 was $5,500 per day for a capesize compared to $15,900 for a panamax bulk carrier. [Clarksons “Shipping Intelligence
Weekly” 04.03.2011] 8 Sourced from Clarkson’s Shipping Intelligence Network,
http://www.clarksons.net/sin2010/
On this basis the unit capital cost of a 110,000 dwt vessel is about 11% lower than an 80,000 dwt vessel, assuming 110,000 dwt to be a possible typical size for a post- expansion Panamax ship.
The most significant difference in operating costs will be felt in Fuel. Figure 6 shows the change in fuel consumption of modern dry bulk carriers (post-2005 build only) as size increases.
150,000 200,000
2007 2010
©2011: The Royal Institution of Naval Architects
A-219
$ per dwt
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