Christening ceremonies were held Friday in Los Angeles for the APL Savannah, a container ship capable of carrying 9,200 20-foot container units that exemplifies the direction the carrier is taking with its massive vessel order book.
While the Savannah and its 11 sister ships will be the largest vessels in APL’s trans-Pacific services, deploying bigger vessels is not the primary objective in APL’s expansion program.
“It’s all part of fleet modernization designed around efficiency rather than growth for the sake of growth,” APL President Kenneth A. Glenn said.
Certainly in the short term, carriers in the east-west trade lanes cannot count on higher freight rates to ensure profitability. While global trade continues to grow slowly, there is still a global capacity surplus that keeps a lid on freight rates, Glenn said.
APL is therefore replacing older, less-efficient vessels with new ships that reduce operating costs and are significantly more sustainable than previous-generation vessels.
The Savannah is part of APL’s 34-vessel order book that began deliveries last year and will be completed by mid-2014. The largest vessels, with capacities of 14,000-TEUs, are being introduced into the Asia-Europe trades.
APL’s 9,200-TEU ships are purpose-built for the trans-Pacific trades, which means they are right-sized for the cargo volumes APL projects for its services between Asia and the U.S. in the coming years.
The Savannah is deployed in the South Asia Express linking Los Angeles with South Korea, Taiwan, South China and Singapore. Unlike other services that call Southern California inbound and Oakland outbound, vessels in the express service will have 100 percent discharge and reload in Los Angeles and will return directly to Asia.
APL’s terminal operating affiliate Eagle Marine Services is working the big vessels in less than three days, although the goal eventually is to complete loading and unloading each 9,200-TEU vessel in less than two days, Glenn said.
With their fuel-efficient engines and green features such as hulls optimized to reduce friction and self-polishing paint, the new vessels will reduce both fuel consumption and carbon emissions. Also, the 9,200-TEU vessels will operate from shore-side electrical power at berth, thus helping APL to meet California’s cold-ironing requirement that will take effect on Jan. 1, 2014.
Glenn said APL’s new ships will steadily improve the carrier’s operating performance as they replace older, less-efficient vessels. Some of the ships that APL is replacing will be redeployed in other trade lanes, but displaced chartered vessels are being returned to their owners. APL now owns more than 50 percent of the vessels it operates, which is up from about 30 percent less than two years ago, he said.
APL is also reducing operating costs and asset requirements by working closely with its partners in the G-6 Alliance. Glenn sees continued reliance upon vessel-sharing agreements as being an important strategy for the liner industry in the foreseeable future.
However, vessel alliances need not translate to commoditization of the liner industry, as some industry analysts and shipper groups maintain. APL, for example, has won numerous awards for customer service including processing of shipping documents, equipment availability, intermodal transportation service and other customer services, Glenn said.
“These are the ways we differentiate our services outside the scope of the alliance,” he said.