Merc E-trucks : Shaping the Future

It's time for the Merc eTruck to hit the road.

Shaping the future, following outstanding customer reactions the Urban #eTruck (25 tonnes GVW and 200 km range) will hit the market in 2020

The Urban eTruck uses three lithium-ion battery modules that combine to produce an all-electric range of about 124 miles, which is enough for a day's worth of urban deliveries. With a current max payload of roughly 28,000 pounds, it's more capable than your average box truck.

It also looks positively futuristic. Its headlights are about as slim as LEDs allow, and the extreme cladding covering the whole side of the truck should keep its efficiency as high as possible. The interior is a bit more down to earth, with a vertically mounted steering column and a few screens scattered about the dashboard.

The truck isn't on sale yet, per se. Mercedes will first deliver a "low two-figure" number of trucks to German customers, eventually expanding across Europe. There will be two sizes, 18 tonnes and 25 tonnes (based on gross vehicle weight), and it will be offered in three configurations -- refrigerated body, dry box body and platform.

Owners will take possession of the trucks for 12 months, using them daily and charging them as any other EV owner would. Mercedes will take the data from this pilot program and use it to further optimize its truck, based on whether or not it can handle daily use and abuse.

The goal is to set up for a proper rollout some time before 2020. By that time, battery prices should fall and capacity should continue to rise in turn. We're still a few years off from electric long-haul trucks, but it's not for lack of trying.

Whatzup for the smaller TEU fleet?

It is not always a case of bigger being better. Reviewing customers’ needs and being quick enough to react to them can show the way to sustainable profitability.

Can the abandoned smaller TEU vessels become the workhorse for the customer focused container market?

The world is becoming an ever smaller place and the ability to conduct business with the most competitive companies globally is paramount for survival. The emphasis on customer needs now provides competitive advantage, and in the case of the container market, this may present opportunities for smaller TEU vessels.

SMALLER SHIPS WERE THE PIONEERS

These container ships, which generally fall into the 1,000-4,999 TEU size range, were once pioneers laying a foundation for the modern behemoth of the container market. Later, when the focus shifted to their bigger and younger sisters and the economies of scale they provide, smaller vessels started to quickly lose their appeal. 

IS BIGGER ALWAYS BETTER IN SHIPPING?

Now, after the opening of the new Panama Canal locks, they no longer hold their main advantage and many believe they are facing a maybe slow, but certain extinction.However, their fate might not be as dire as all that. With big liner services and the largest ships mostly serving the big hub ports, smaller vessels may still embrace their advantage of flexibility and concentrate on the more niche trades.

The opportunity lies in the fact that logistics costs for the end client do not end once the containers are dropped at the port of delivery. What usually follows is a long inland leg via trucks or trains. And this part of the journey is costly. It is especially so, in the hub ports, where huge demand for carrier services may often inflate the price.

SMALLER SHIPS: A COST SAVING SOLUTION?

Smaller TEU vessels can sometimes be a cost-saving solution, if they take the side street and deliver the required volume of cargo to an alternative port, which is smaller and potentially cheaper in terms of final logistics expenses.

They also may provide a better service for niche arbitrages in commodities like sugar, scrap or petrochemicals. Using smaller container vessels in such cases may allow a leaner, just in time delivery of an entire cargo to a nominated port instead of waiting for a scheduled liner service.

However, such opportunities are not usually frequent and should be grasped early, so the smaller TEU vessels still represent the value-adding cog in the supply chain machine.

PANAMA CANAL EXPANSION

& SMALLER SHIP FLEET DYNAMICS

The smaller TEU vessels have struggled to find a logical home since the Panama Canal expansion as logistics companies are utilizing the neo-panamax gauge for economies of scale.  

The findings showed that 50% of shipbrokers who responded said that shippers will shift focus to larger vessels for economies of scale. From the charterers’ camp, 28% felt that the focus will shift to larger vessels for economies of scale and will decrease ton-mile demand. The shipowners sounded less enthusiastic, with 32% saying the focus will shift to larger vessels.

Key to this is that nearly 55% of world trade is exported or traded within the Far East and Oceania region. Danish Ship Finance estimates this to be nearly 80% of container trade when measured in TEU miles.  

The new alliances, coming into effect from April, should control the lion’s share of these trade routes with neo-panamaxes along with even larger vessels, typically 13,000-20,000 TEU. 

This leaves the 1,000-4,999 TEU fleet fighting for the leftover grasslands for employment. MDS Transmodal estimates that of the 217 vessels deployed on the Far East – North America East Coast trade lane in 2015Q4, 50 (equating to 23% of the total) were in layup during the same quarter of 2016. These vessels contribute approximately 230,000 TEU. 

Therefore the smaller TEU shipowners face the continued problem of meeting their commitments to their financiers through vessel employment revenues or, failing that, selling those vessels for scrap.

CONSOLIDATION PHASE? 
According to Danish Ship Finance : More defaults are to be expected, particularly around small tonnage providers.  This should mean further consolidation and further vessels being scrapped. In 2016 the seeds were sown by scrapping a steady flow of workhorses reducing the overall size of the fleet. 

Yes, there remains an inherent oversupply but the 2017 container market should be focusing on meeting customer needs and providing a focused, flexible approach.