How big is too big? A shipping tale ?

In the container shipping industry, we are always thrilled by the battle over the biggest ship. Every time a new order is confirmed, with a ship slightly bigger than the previous one, the world of shipping start wondering about whether this trend would ever stop, or if we will soon witness ships too big to even dock in a seaports.

But if we analyze today’s container ships, we might be surprised that container vessels are still relatively small compared to one of the most famous tanker of all time, the Seawise Giant.

Introduction

Until 1950 the oil trade was quite small and mostly fulfilled by the use of small tankers. However, in the next few decades, like in many other shipping segment, a steep increase in ship size can be observed, supported by demand growth, technology and outsourcing of processes. The average size of tanker from 1900 to 2005 is displayed in Figure 1.

Figure 1. Escalation of tanker size (Stopford, Maritime Economics, 2009)

Furthermore, at the end of the 1960s, the oil trade is shocked by a major political events: in June 1967, during the Arab-Israeli war, Egypt unexpectedly and abruptly decided to close the Suez Canal. This event generated a spike in the freight rates, because of the sudden increase on the average haul and the immediate shortage of tonnage. Suddenly, tankers were forced to circumnavigate the Cape of Good Hope, de-facto eliminating the Suez Canal’s draft limitations (at the time 15.5mt ). This explains why in 1969, ULCCs started to appear on the global scene.

The Seawise Giant

"To my great regret, I do not think another vessel of this size will ever be built". Capt. Surrinder Kumar Mohan

In this market environment, in 1974 an unnamed Greek shipowner ordered a vessel destined to make history. She was a 480,000 tonnes ships, to be built at Sumitomo Heavy Industries in Japan. At that time, the Japanese shipbuilding was producing about half of all the new ship tonnage in the world. The ship was ready for delivery in 1979, but the Greek magnate refused to take delivery, due to massive vibration issues, or most plausible, due to his financial distress caused by the oil crises of 1979-1983. The case went to arbitration, and the shipyard exercise their rights to sell the ship. The vessel, at that point still unnamed, attract the interest of the “Onassis of the Orient”, Mr. C.Y. Tung.

Mr. Tung, founder of Orient Overseas Container Line (OOCL) was not satisfied with the ship’s size, and ordered to extend it through “jumboization”, a technique to enlarge the ship by adding an entire mid-section. This added over 140,000 tonnes, reaching an astonishing 1,504 feet length, 225 feed width and 564,763 dwt. As a comparison, today’s biggest container ship (interestingly belonging to OOCL) is the OOCL Hong Kong and she is roughly 200,000 dwt, 1,312 feet long, 193 feet wide.

Figure 2. Comparison between Seawise Giant and OOCL Hong Kong (Elliott, 2018)

The Seawise Giant was very difficult to maneuver, with 2-mile turning circle and it took her more than 5.5 miles to stop from her full speed of 16.5 knots (due to the massive inertia). Fully loaded she was 80 feet under the surface, and her size represented a tremendous limitation for ports, forcing its loading and unloading operations offshore. Furthermore, her dimensions did not allow her to cross the English Channel, nor to pass through the Suez or Panama Canal.

She transported oil between Middle East and US for seven years, until May 1988, when the ship was bombed in the Strait of Hormuz by twelve 500-pound parachute bombs belonging to Iraqi forces. According to the New York Times (1988) these attacks were part of Baghdad’s effort to cut the export revenue that Teheran used to finance the war against Iraq. Unsurprisingly, the whole tanker sank to the ocean.

Figure 3. Seawise Giant burning after being bombed by Iraq at Hormuz 14 May 1988 (shipspotting.com, 2007)

The Happy Giant

"You can't keep a good ship down". ( Trex, 2011)

The ship was declared a total loss, however a Norwegian consortium decided to buy the vessel and rescue it a year later, after the war ended. It was re-floated and towed to Singapore, where 3,200 tonnes of steel and 32 kilometers of pipeline were used for the reconstruction. It was then renamed "Happy Giant" and by October 1991 she was back in operation.

After the repair process, the ship was sold to the Norwegian shipping star Jorgen Jahre for $39 million, who renamed it again into “Jahre Viking”. For the next 13 years the ship sailed under Norwegian flag.

In 2004, she was sold to Norway’s First Olsen Tankers and renamed “Knock Nevis” and operated as a storage facility in the Persian Gulf. In 2010, after a 30-year career, the ship was sold for scrap to an Indian breaking yard. She was renamed one last time to "Mont", for her final voyage. Mont was finally scrapped in India by Priyablue Industries ship-breaking . It took more than 1 year to strip her down.

Her 36-tonne anchor remains on display at the Hong Kong Maritime Museum.

Figure 4. Knock Nevis (shipspotting.com, 2011)

Conclusion

Apart from the wonderful story, this case teaches us some valuable lessons about shipping:

• First, in the shipping market,the impact of outside forces cannot be underestimated: from the closure of the Suez Canal, to the bombing of the Seawise Giant, we can never underestimate how political, economical, social, technological events will shape the maritime industry. And most of the time, these shocks are completely unpredictable! Little did the Greek shipowner know that Suez canal was about to be re-open, or that new oil fields closer to major oil-consuming markets were soon to be discovered, or that infrastructure improvement in the Suez canal would made the usage of smaller tankers more convenient.

In the shipping market,the impact of outside forces cannot be underestimated

• "By the time ULCC were built, the business was already changing" (Queegan, 1986). Change is everywhere, but contrary to common belief it is not constant. Change is sudden, unexpected, not controllable. It happens very often, and its effects cannot be anticipated, not even by the soundest risk management strategies. Shipping is like poker: for each winner, there is a looser. Resilience and the ability to find creative solutions, while anticipating what your opponents will do are the main skills, and the shipowners' job at the poker table is to estimate how much risk they can afford, while trying to still be there for the next hand.

The shipowners' job at the poker table is to estimate how much risk they can afford, while trying to still be there for the next hand.

• Finally, the story teaches us that vessel design and technology are not the only factor when it comes to building large ships. Technical feasibility does not necessary imply that economies of scale will be reached and maintained over time. The Seawise Giant it is a demonstration that naval engineers can design ships much bigger than what we see today. There are indeed even traces of a 1,000,000 dwt tanker design, but after the oil crisis no bigger tanker than the Seawise Giant was built. (Okumoto, et al., 2009). It is clear how today, economics and flexibility, rather than engineering and design control the increase in ship size.

Economics and flexibility, rather than engineering and design control the increase in ship size.

Disclaimer: the opinion expressed in this post reflect the author's personal views and are not shared, supported, or endorsed in any manner by my employer.