Bulk Cargo Vessels – cheap as chips

I recently posted an article about how the costs of chartering an LNG carrier were cheaper than booking rooms at a 5-star hotel. As a follow-up, I had a short but spirited debate with a couple of colleagues earlier this week about how to describe something that is really big. The colleagues in question happen to be Dutch marine engineers, not a crowd known for whimsy. They were dismissive of my attempts but, in my humble opinion, didn’t do significantly better.

We were trying to describe the hold capacities of Ultramax and Panamax bulk cargo ships. It’s a bit like trying to describe the Grand Canyon. You can read all the statistics and look at photos but, at least in my experience, be completely floored when your mind tries to make sense of seeing it firsthand. These carriers aren’t the largest vessels working on the oceans, but they are incredibly large and trying to get that point across to someone who has no experience with them is hard.

I’ve worked in marine environments for the past 25 years and have been on my share of seafood/aquaculture vessels, but they are all toys when compared with these ships. Here are the basic dimensions:

Ultramax carrier – length 190 – 210 meters (623 – 688 ft), beam 32-36 meters (105 – 118 ft)

Ultramax carrier

Panamax carrier – length 230 – 240 meters (755 – 787 ft), beam 32 meters (106 ft)

Panamax carrier

For reference, well boats are typically the largest vessels working in the salmon farming industry, (certainly the most expensive), and an average well boat with a capacity of 3,000 cubic meters of hold capacity, is likely 70 meters long (230 ft) by 15 meters wide (49 ft). Bulk carriers are approximately 3 times longer, twice as wide and with a much deeper draft.

That doesn’t tell the whole story though, the hold capacities are massive.

Hold capacity examples

A single hold in either vessel is five times larger than the holds of an average well boat and significantly larger than the largest well boat in operation (12,000 m3).

Capturing the scale.

My initial comparison, which the Dutch guys didn’t like, was to an Olympic swimming pool which contains 2,500 m3 of water. On that metric, the Panamax could contain the equivalent of 40 Olympic swimming pools and 32 for the Ultramax. Measured in elephants, a Panamax vessel would hold 19,800 African elephants while an Ultramax would hold 16,400. The Arc de Triomphe in Paris could fit twice in the holds of a Panamax and 1.65 times in the holds of an Ultramax. For Americans in the crowd, the Lincoln Monument in Washington DC could fit 1.6 times in the holds of a Panamax and 1.3 times in the holds of an Ultramax.

Comparison to the costs of aquaculture vessels

My dedicated readers will also know that I’ve been thinking about large, ocean-going vessels and their costs compared to aquaculture vessels, site licenses and other barriers to entry in the salmon farming sector. Here is a snip from a website which provides charter rates for a variety of cargo vessels.

Published bulk carrier charter rates - handybulk.com

Those numbers work out to be $5.1m US per year for the Ultramax and $4.4m US per year for the Panamax. On a time charter, the owner of the vessel pays for ownership of the vessel (including depreciation and interest costs) maintenance and crew while the charterer pays for fuel and port services. If you assume an economic operating speed going continuously from A to B, fuel will add somewhere around $4m.

A 10 year-old Panamax or Ultramax gearless cargo vessel can be purchased for $16 – 18m US.

So, what does $9m US get you in wellboat and aquaculture service vessels? Costs are probably lower in some major markets but, in the areas where I have worked, that amount would cover the costs of chartering a well boat with 3,000 – 4,000 m3 of capacity. Obviously, it is not the same application and a well boat has a level of complexity around pumping, refrigeration, maneuvering etc. that a bulk tanker would not, but does this justify a 25x cost multiple?

My editorial opinion is that it does not. As I mentioned in a previous blog post, growth in salmon farming, in the few regions where it is possible to grow, is going to rely on increasingly sophisticated vessels for mooring, cage and net maintenance, smolt delivery and harvesting. In areas with sufficient volumes to keep these vessels working on high value tasks, they might make financial sense but for the rest of us, the barriers to growth and development will become even steeper.

In my years of living and working on the coast, I had always assumed these extremely large vessels would have a cost structure in the range of $80m - $100m US per year - $250k/day but I could not have been more wrong. They are seaworthy, safe and extremely cost effective for work they can do. Why is the situation so different for salmon farmers?

Feedback welcome via the comment section below, my Linked page or by email at info@AlanWCook.com.