Diversity of ship size and ship types

To reduce costs and increase efficiency in transport the shipping industry over the years has designed different types of vessels suited to carry specific cargoes or groups of cargoes. The main types of vessels are tankers carrying wet cargoes in bulk, dry bulk carriers, container vessels, car carriers, reefers, cruise vessels, ferries, high-speed crafts and specialist ships. For a brief introduction to the main types, see Marisec (2012b).  http://www.marisec.org/shippingfacts/worldtrade/types-of-ship.php 


The world fleet sums up to more than 50 000 ships. The fleet consist of several categories of ships as illustrated by Figure 3.4.





Picture 5


Figure 4: Ship types and number of vessels, 20101031

Source Marisec (2012c)




The carrying capacity of the world fleet has grown strongly partly reflecting the growth in seaborne trade.  Seaborne trade fluctuates with variations in economic activity in the different regions of the world economy, whereas vessels typically have an economic life of 25-30 years. Consequently, there periodically is a mismatch between the carrying capacity in the world fleet and the volume of seaborne trade.






Figure 5: Merchant fleet by type of ship 1980-2012, (thousand dwt) Source: Unctadstat (2012,)  


Such periodic mismatch results in wide fluctuations in the freight rates paid to shipowners and hence in the revenue earned in the shipping industry.  Figure 3.6 below shows variation in 12-month T/C freight rates for dry bulk carriers. That is the daily revenue in 1000 USD dollar paid to the shipowner for a dry bulk carriers hired out for 12 months. The Figure shows freight rate developments 1999- 2009 (August) for 4 different size groups of dry bulk carriers;  Handysize 10 – 40 000 dwt cargo carrying capacity, Supramax 40 – 60 000 dwt, Panamax 60 – 80000 dwt, and Capesize 100000- 200 000 dwt.




Figure .6:  Freight rates for 12 months Time Charter for tankers of different sizes. 1000 USD/day

Source: Platou (2012)



Economies of scale are important in shipping. Both construction costs and operating costs display scale economies, i.e. costs per passenger or per tonne cargo carried fall with increasing vessel size. Steel requirements and engine strength increase less than the cargo carrying capacity for large compared to smaller vessels, thereby reducing construction costs relative to carrying capacity. Large vessels similarly do not require proportionally larger crew than smaller vessels.  Hence, operating costs also exhibit economies of scale.


Ship size dwt

Total cost dwt $ p.a.

Daily ’000 $/day













170000  dwt cost  as %  of 30000 dwt cost

39 %



Table 1:  Economies of scale of ship size, total cost in USD per year and USD/day

Source: Stopford (2009, 224)


So why do we see such a wide variety of vessel sizes? The trade-off between scale economies and frequency of service is important in seaborne trade as in most transport industries. Large vessels imply large unit cargoes and induce high storage volumes and costs for cargo owners.  Contrary to this the trend in manufacturing is to reduce storage and arrange supplies to arrive “just in time” for use in the production process. Vessels size therefore reflects the transport volume and the haul length, with larger vessels operating on longer routes and in trades with a high annual volume of cargo relative to vessel’s carrying capacity. Larger vessels furthermore are less flexible in switching among trades following changes in trade flows, since they can visit a restricted number of ports only, e.g. the ports that are equipped to handle big vessels. The largest vessels are those moving the major bulk cargoes; crude oil, iron ore and coal in intercontinental trades and container vessels in the “around the world” routes, whereas regional feeder vessels and coastal vessels are smaller.


The average age of the fleet, also vary with the fluctuations in market conditions.  When trade is expected to increase in one or more segments, contracting of new vessels increase above the pure number needed to replace technically or economically obsolete vessels.  Time to build the new vessel increases when contracting booms.  In such times, many shipowners accept to sign a contract for delivery 3-4 years into the future in order to secure a berth at the yard.  Under such market conditions, shipowners postpone deletions as far as possible. Hence, the average age of the fleet first increases because scrapping activity is lower than normal and thereafter the average age falls with the delivery of new vessels.


Changing regulations may also affect the  age of the vessels in the fleet. The requirement for double hull tankers forced shipowners of single hull vessels to convert them to double hull, to other uses or to scrap the single hull tankers at a lower than normal age.  Following this regulation, several single hull tankers were converted to Floating Production Storage and Offloading unit (FPSO) that is using the vessel in the offshore industry to process and store oil.




Figure 7:  Scrapping of tankers above 200 000-dwt carrying capacity.

Source: Platou (2012) http://www.platou.com/dnn_site/Tables/Tankerslostandbrokenupandconverted.aspx


Losses and incidents hit the merchant fleet every year.  When the fleet is growing and the transport activity is high more incidents happen. ’we see this from Figure 3.8 that shows a steep increase in incidents in later years with high activity; see Figures 3.2a and 3.2b above for activity level. There has been a clear reduction in the frequency of total loss of vessel and the number of incidents relative to the transport capacity or fleet size, however.







Figure 3a):  Serious and total losses, number of vessel and 3.b): Total losses as share of the world fleet, number of vessels

Source: International Union of Marine Insurers (Graham, 2012)