There may be a (post) recession here in the US, but as Asian trade swells, the demand for massive container ships is booming. “Megavessels–ships longer than the 1,063 foot-high Eiffel Tower”, writes today’s Businessweek , “are in demand again”. Shipping lines are preparing for the 2014 completion of the $5.25 billion expansion of the Panama Canal, plus the recovery of global trade. It takes about 3 years to build a new “big” ship–one that can move more than 8,000 20-foot containers. The Canal can only handle ships with up to 5,000 containers now, but will accomodate vessels with up to 12,600 containers in 3 years.
Global trade is expected to expand 11% percent this year and 7% next year, recovering from an 11% drop in 2009. Currently there are 61 ships in operation that can carry more than 6,000 boxes, with 144 more on order to begin service starting in 2014. All except 12 come from South 
Korean shipyards, especially leader Daewoo Shipbuilding, in Seoul. Daewoo is even taking calls for ships that can carry 20,000 containers, double the current capacity of most megaships.
Manufacturers who ship from several continents–think consumer electronics or appliances–like the massive ships because they can lower transportation costs. One 20-foot container can hold 1,000 42″ LCD TVs. LG Electronics’ Logistics head states: “Although sea transportation is already the most energy-efficient mode of transportation, we are constantly studying…efficiencies…that save money”. Adds an industry analyst: “The trend is big ships. Its not a choice but a must. Its going to be a fight of who can carry more at lower costs”‘.
Discussion questions:
1. Why do the Koreans dominate this industry? Who are US competitors?
2. Why are megaships supply chain and OM issues?
3. Are government policies a part of this industry?