SPOTLIGHT: Bigger container ships drive Nicaragua canal project

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Thursday, April 30, 2015

One of the strong arguments put forward by backers of Nicaragua's interoceanic canal project is that its dimensions will allow the passage of new generation container ships, putting it in a better position to compete with the expanding Panama Canal.

In their favor is the history of container ships, which have grown bigger over the years, a trend that has accelerated since 2004 (see chart).

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Evolution of Containership, 1970-2013, in TEUs (CREDIT: Dr. Jean-Paul Rodrigue, Dept. of Global Studies & Geography , Hofstra University, New York, USA.)

The twenty-foot equivalent unit (TEU) refers to the capacity of an ISO shipping container, approximately 39m3.

At 366m long and handling about 12,500 TEUs -longer than the Eiffel Tower (324m)- the New Panamax vessel takes its name from the fact that its dimensions were designed to fit in the locks of the expanded Panama Canal. Meanwhile, the next two generation of containers, known as the E class and the triple-E class, will not go through the expanded Panama canal. The new expansion works in the Panama Canal are about 90% done.

If shipping companies don't want to confine their new ships to routes between Asia and Europe, then they would need to go through the Nicaragua canal.

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At a presentation before the Economic Commission for Latin America and the Caribbean earlier this month in Chile, Nicaragua's public policies minister Paul Oquist said 18 shipping companies reported a total of US$6bn in losses in the 2009-13 period. These firms will need to use the largest container ships to achieve economy of scale.

Shipping giant Maersk begun the migration to larger ships in 2006 when it built the Emma Maersk – the first one with capacity of 11,000-14,500 TEUs, named the E Class.

In 2011, Maersk awarded Daewoo Shipbuilding two US$1.9bn contracts to build 20 ships of the triple-E class, named for its three design principles: economy of scale, energy efficient and environmentally improved. At 400m long and 59m wide, they will be the world's largest ships in service. The first six are expected to begin operations in 2017.