Cost Advantages of Far East/Europe Trunk Route Deployment With Port Selection in East Asia

Abstract

To cater to the gradually increasing sizes of ships, several traditional container ports in East Asia built deep-water wharves to attract shipping carriers to berth, a decision that is considered highly reasonable because it allows for shipping carriers to gain a cost advantage. For traditional Far East/Europe (F/E) trunk routes, shipping carriers must deploy vessels that are large enough at hub ports to maintain low transshipment costs. However, for a port to attract shipping carriers, it should be able to first meet the cargo demand of these carriers. The port would also need to improve the loading ratio to enjoy the cost advantage. Simultaneously, the port should leverage the loading and unloading efficiency of the terminal to gain a competitive advantage. Although the port congestion observed at the F/E trunk during COVID-19 was not as serious as that in North American ports, it was sufficient to affect the route deployment and port selection decisions of shipping carriers. Currently, because the size of container carriers is the most critical factor in the reduction of shipping costs, as demonstrated in this study, the upsizing trend of container ships is regarded as a highly relevant aspect in the deployment of trunk routes and the selection of hub ports. © 2023 National Taiwan Ocean University.