High cubes a growing phenomenon

Shipper demand for 40ft high-cube containers is still increasing, creating stowage problems for ocean carriers and analytical difficulties for trade forecasters using teu measurements.

The proportion of 40ft high-cube (9ft 6in high) containers in the global maritime container fleet is predicted to exceed 50% by the end of this year for the first time. According to Drewry’s 2013 Container Census, the equipment’s market share reached 49% in 2012, and is expected to grow by at least another 1% this year.

The number of high cube containers in the fleet grew by another 8% growth last year, up to 15.4 million teu, taking the rise in demand between 2007 and 2012 up to a remarkable 49% (see Figure 1). It meant that 40ft HC’s share of the total maritime equipment market increased from 41% up to 49%, or just over 1% per annum, almost entirely at the expense of normal 40ft 8ft 6in high boxes. On the other hand, the proportion of 20ft containers remained constant at around 33%.

Figure 1
Global Maritime Container Fleet (teu)

Source: Drewry Container Census 2013

The popularity of 40ft HCs is easy to understand. Being around 13% larger than ordinary 40ft boxes, shippers can load that amount of extra cargo at little to no extra freight cost. Moreover, inland transport is usually charged on a per container basis for light cargo, so there are no extra haulage costs too.

Although much growth in demand for 40ft high-cube containers has come from reefer shippers, with almost 92% of all refrigerated cargo being shipped in the equipment last year, it only took the sector’s volume up to 2 million teu. Dry cargo still accounted for the vast majority, as shown in Figure 2.

Figure 2
Growth of 40ft HC Containers, 2009-2012 (teu)

Source: Drewry’s 2013 Container Census

There are two interesting messages that come of this. The first is that the need to stow 9ft 6in containers below deck, which results in loss of cargo space for shipping lines, is reaching a critical junction. Whereas nearly all the equipment has been stowed on deck so far, particularly reefers, this cannot continue much longer, bearing in mind that just over 50% of a ship’s cellular capacity is located on deck. When under-deck stowage is required, as much as 7ft (2.1m) can be lost between the top of the last tier of a stack and the main deck, as ship holds are usually designed for 8ft 6in boxes. Line of sight (from the navigating bridge) rules will also prevent more containers from being loaded on deck.

The problem explains why Maersk, a strong supporter of 9ft 6in equipment, has recently been raising the bridge heights of its S class vessels, reportedly increasing capacity from 8,400 teu to 9,500 teu.

The second message is that containerised cargo growth measured in teu has increasingly been underestimated over time. This is because a 40ft HC container usually only counts as two teu, the same as 2 x 20ft (8ft 6in) boxes, or  1 x 40ft (8ft 6in) container, even though it is approximately 13% bigger.

So, in a major tradelane like the eastbound transpacific, where 40ft equipment is the norm due to light average cargo weights, although year-on-year growth in the first seven months of 2013 was only 1.856% measured in teu, it was over 2.2% measured in ‘constant’ teu. The difference may not seem much, but it makes a big difference to economists trying to make sense of the changes between GDP growth and cargo growth. It is also cumulative, so gets bigger over longer periods of time.

In conclusion, measuring trade growth purely in teu terms should only be seen as an approximation. A more exact method is to examine cargo measured in tons or cubic meters, although cargo mix can be a problem here, and customs data measured in both units rarely separates containerised traffic from break-bulk and bulk cargo.

Our View

The share of 40ft 8ft 6in high containers in the global maritime fleet will continue to decline over the next 10 years, thereby increasing the need for more high-cube friendly vessels. This could include the construction of wider – and hence slower – ships with greater deck capacity.