There’s nothing average about the GENERAL AVERAGE
On Monday, 29 March 2021, the MV Ever Given was successfully refloated after it ran aground on Tuesday, 23 March 2021 causing blockage and severe disruptions in the Suez Canal. The vessel’s owner has since declared General Average.
(General Average definition: General Average is a legal principle of Maritime Law under which, all parties who are involved in that voyage, shall be asked to proportionally share the losses resulting from such sacrifice).
The vessel is now anchored at the Bitter Lakes Area for technical inspections, with no clear indication as to a possible date of departure to ports of discharges.
Whilst the reopening of the Suez Canal is welcome news for international trade, it is expected that shippers with cargo aboard the MV Ever Given will be in for lengthy waits for their containers to be released. The declaration of General Average implies an obligation for shippers to pay a bond on cargo interests before containers can be released from the ship, and the exact costs are expected to take some time to determine.
SO DOES SIZE REALLY MATTER?
So it seems that the MV EVER GIVEN has become the scapegoat for many unwarranted criticisms, one of the latest being that some cargo owners and industry commentators have suggested that larger container vessels lead to poor service quality.
The size impact of container vessels has long been a hotly debated topic in the industry and has once again come to the forefront following the Suez Canal blockage and the ripple-effect it caused.
Interestingly enough however, research undertaken by maritime consultancy Sea-Intelligence in 2019 refutes this conspiracy and they have, by and large through sound research, debunked this myth.
The graph above shows the schedule reliability per vessel-size group for both 2018 and 2019 on the Asia-North Europe trade lane. The x-axis shows reliability, whereas the y-axis shows vessel size/capacity.
We can very clearly see that the assumption that larger vessels are unreliable is incorrect. In fact, the +22 500-TEU*vessels that were deployed on the trade lane from September 2019 had the highest schedule reliability of 95.1% across all vessel-size groups in that year.
In 2018, however, we see a slightly different trend, with the 10 000 -12 499-TEU vessels the most reliable with 84.4% schedule reliability. The vessel-size groups from 15 000 TEUs upwards see decreasing schedule reliability with increasing vessel size. However, both 15 000-17 499-TEU and 17 500-19 999-TEU vessel groups had higher schedule reliability than the 12 500-14 999-TEU vessel group.
On the Asia-Mediterranean route in 2019, when looking at vessels of over 10 000 TEUs, schedule reliability increased with increasing vessel-size groups, with both the 20 000-22 499 TEU and the 23 000-TEU-vessels recording perfect 100% reliability, according to the research. Even in 2018, the two largest vessel-size groups in deployment – 17 500-19 999 TEUs and 20 000-22 499 TEUs – had the highest schedule reliability of 85.2% and 84.2%, respectively.
While the ultra-large container vessels are only consistently deployed on the Asia-Europe trade lane, the analysis was extended to the Transpacific, for reference. On Asia-North America West Coast, both the 7 500-9 999-TEU and 12 500-14 999-TEU vessel-size groups recorded similar schedule reliability in both 2018 and 2019, while the 10 000-12 499-TEU group recorded higher reliability in 2019 of 73.3%. The only variation on the Transpacific was on the Asia-North America East Coast trade lane, where the largest vessel-size group had the lowest schedule reliability.
Judging by this piece of research and its results, it is clear that the MV EVER GIVEN has received a bad wrap, and that large vessels like the MV Ever Given and others like it, are no better or worse than their smaller cousins year-on-year. One has to wonder what motivates these industry critics and where they got their information from.
Looking at 2020 and 2021 the picture is rather bleak in comparison however.
The global pandemic has hit the maritime industry hard, and carriers have arrested the slide in global schedule reliability, as the February 2021 figure of 34.9% is marginally higher month-on-month than the 34.8% in January 2021. That said, it is still the lowest recorded figure for any February, and now the seventh consecutive month that schedule reliability has been the lowest for that respective month. Compared to February 2020, schedule reliability was -30.0 percentage points lower year-on-year, with this being the seventh consecutive month that we have recorded a double-digit year-on-year decline. The average delay for LATE vessel arrivals, has been on an increasing trend for six months, increasing month-on-month in February 2021 to 6.76 days, which is the highest recorded delay ever.
What has become very clear to us at NATCO LOGISTICS when looking at these statistics over the past few years, is that we cannot emphasize enough how critical it is to plan for every eventuality, and when the unthinkable happens, that your freight forwarder has given you the right advice and had the foresight to put the right precautions in place to protect your cargo and your investment.
*Twenty-foot Equivalent Unit or TEU.
A TEU or Twenty-foot Equivalent Unit is an exact unit used to measure cargo capacity for container ships and container terminals. There are two common international standardized container types- twenty and forty feet long.