In the early 80s, the average containership was designed to carry about 3,000 20-ft equivalent (TEU) shipping containers, mostly on international voyages between the five main continents.
Last year, Taiwan’s top shipping line took delivery of the world’s biggest containership, a 24,000-TEU behemoth that represented an eight-fold increase in unit ship capacity over the past 40 years.
The global impact of this dramatic rise in containership capacity cannot be overstated; today about 60% of all cargo traded internationally by sea is moved in containers.
What is not debatable is that the industry sectors that support shipping – regulators, ports and terminals operators and insurers, etc. – have been hard pressed ever since to keep their rules, products and infrastructure aligned with the rapidly changing ship sizes.
In the early 80s, the quayside cranes that served Panamax ship sizes required a span that could reach across ship breadths (known as ‘beams’) more than 12 containers wide, or roughly 108ft. The width of today’s ships, such as the 24,000-TEU varietal introduced above, is closer to 180ft, which requires a whole new class of crane known as Super Post-Panamax.
For hard-pressed port owners, it seems like the almost biannual incremental advance in average containership capacity compels them to consider the next generation of cranes even as new ones are being installed. Failure to keep up would be one of the factors that could see them removed as a regular port of call on some of the world’s biggest trade lanes.
This 40-year era of constant upgrades has probably increased the business risks for port owners and operators, but it has been a windfall for crane manufacturers. According to one recent forecast, the global market for ship-to-shore cranes, which encompasses all models and sizes, is expected to reach $2.89 billion this year, an almost 20% increase compared to 2022.
The ship-to-shore crane market is expected to see annual sales reach $5.14 billion by 2027, after realizing a compound annual growth rate of 15.5% for the next four years, according to the report.
Not all of that will be driven by the sub-market for container cranes, but the global appetite for containerships is presently going through another strong bull cycle, which means ports can expect demand for related shore-side services, equipment and project-cargo logistics to continue building in the medium term.
It isn’t just increases in vessel sizes that have been driving the demand for container cranes, the construction of new container terminals and the expansion of existing container terminals have also been major factors.
One U.S. port has suggested recently that they will be achieving a 25% increase in productivity for one berth through renovation to accept larger vessels and by using eight new all-electric cranes to load/unload the vessels.
The transportation of cranes – from loading from manufacturer to offloading at destination ports – features its own set of risks for port owners and operators.
For one, managing the risks of lifting and moving them requires specialist expertise from both the manufacturer and the vessel owner/operator. The world’s biggest container cranes can rise more than 300ft above the quay, offer outreaches of more than 230ft (or 26 container rows) and weigh up to 2,000 tonnes.
As the largest cranes are almost always shipped with booms attached, they can be affected by inadequate securing or by external impact to exposed parts. Risks (loss/damage) also can arise when the cranes are being loaded or unloaded.
With manufacturers and destination ports often located on different sides of the world, delivery voyages can involve thousands of miles. While in transit, cranes will face daily risks of physical loss or damage from weather conditions or vessel-associated incidents such as engine failures or accidents.
Unit prices for these massive cranes have been recently reported between $25 million and $35 million, and they are commonly shipped in a series of three or more. As such, the financial risks of shipping them can be considerable, so it is important for the buyer to ensure that risk transfer products are up to the task.
Project cargo insurance is a sub-set of marine cargo insurance. For cranes, the right insurance product can help to protect owners and operators against:
With cranes being purchased either to generate new revenue streams (the biggest ships) or to enhance revenue by improving container handling speeds, including through automation, it is prudent to consider the use of insurance products to protect against any loss or shortfall in revenue that may result from physical loss or damage during delivery. The long lead times (about two years, depending on demand) for newbuilt cranes can extend the financial impact of total losses to the longer term, with ‘work arounds’ not usually possible.
Aside from cranes, coverage can also be extended to include the seaborne delivery of other equipment.
Project cargo insurance is traditionally purchased by the terminal owner/operators; manufacturers have been known to offer marine cargo insurance to their customers, but the full scope of the insurance coverage and the attitude of insurers to loss incidents is likely to be unknown by the terminal owner/operator. Also, any coverage offered by manufacturers is unlikely to include protection for revenue lost as the result of physical loss or damage.
Although under project cargo insurance policies coverage for financial consequences is designed to benefit the owner/operator, this benefit can be extended to include lenders and financiers where required under lending/funding conditions.
Please contact us for more information on how we can support your project cargo insurance risks.
Mike has over 40 years’ experience in the industry, including a total of 29 years with WTW. Particularly over the last 20 years Mike has taken a key role in the marketing, placement and day-to-day handling and management of a large number of Project Cargo insurance programmes for high-profile international clients. The clients have involved both Project Owners and Project Contractors and the projects have been spread across various business sectors including, but not limited to, Power, Refining, Nuclear and Renewables.
Simon Lockwood, Head of Shipowners GB, Marine, discusses the current market conditions for the Marine industry.
