By Xu Jianhua

All signs indicate that the liner industry has started to enter the big era. The so-called“big era” generally includes four aspects i.e.maximization of vessels (big ships), super alliance (grand alliance), network hub and spoke (large network) and higher grade of terminals (big terminal).

The starting point of liner industry entering the big era can be traced back to the end of February 2011 when Maersk confirmed a rumor which has spread for three months,claiming that it has ordered 10 18270 TEU container ships,and then added an additional 10 ships. These so called 3E class container ships would give Maersk huge scale economy benefit. “3E” represents Economy of Scale,Energy Efficiency and Environment Improved.

Faced with the “3E shock wave” made by Maersk in 2011,the other global carriers kept silent for two years until May 2013 when CSCL and Arabia shipping firstly broke silence and announced that they are to order 5+1 19100 TEU and 18540 TEU container ships respectively. Two months later, in July 2013, the first container ship “M?rsk Mc-Kinney M?ller” of the series of 20 “3E”container ships was delivered.

Next, the Mediterranean Shipping signed a 1ease contract of 11 new container ships close to 19200 TEU with some shipowners. CMA CGM increased the capacity of 8 new container ships under construction to 17700 TEU from original 16000 TEU. With this, the first round of response of the industry to “3E shock wave” was concluded.In November 2014, Orient Overseas announced to order 8 container ships of 18000 TEU, and MOL will order 4 ships of 20000 TEU. Orient Overseas and MOL became the two companies in G6 alliance to firstly order 6 ultra large container ships, and the second round of response to the Maersk “3E shock wave” was initiated.

The other four allies in G6 alliance -- USA president ship,Hyundai merchant marine, Nippon Yusen and Herb Roth will also follow this trend, ordering 12 ultra large container ships. So far, 18000 TEU ship has obviously become the“standard configuration” of the 11 member companies affiliated to the three big alliances, 2M, O3 and G6.

On December 22nd, Evergreen announced a long-term lease of 6 18000 TEU container ships. This event may indicate that the 5 member companies of CKYHE alliance will also join this round of “arms race”.

The liner companies ordering 18000 TEU container ships are absolutely not showing off or following the fashion, they are trying to keep competitive advantage of unit space cost. In 2011,the Chief Executive of Maersk Eivind Kolding said that compared with the 13100 TEU ship, the unit space cost of 3E class ships is lower by 26%. At the end of 2014, the “arms race” between the two powers has again pushed the ship maximization trend a step forward, with Maersk announcing the plan of ordering six 19000 TEU container ships and Mediterranean Shipping announcing that its 19224 TEU container ships would be put into the Asia Europe route, replacing 19100 TEU container ships that CSCL has just put into operation and becoming the world's largest new container ship.

Another effect of ship maximization trend is the promotion of level-to-level improvement of ship allocation in the whole liner industry through “cascade replacement” effect.For example, with 18000 TEU container ships gradually being delivered and put into operation, the ships below 10000 TEU currently operating in Asia Europe route will gradually be nudged to the trans Pacific route; similarly, the ships below 6000 TEU currently operating in transpacific route will gradually be allocated to the cross Atlantic route...... In this way, the capacity of ships serving on regional routes and feeder vessels will all be promoted.