Megamess

The world economy, as you may have noticed, hasn’t been doing so well of late. Economic growth was slowing and international trade languishing even before COVID-19 swept across the globe. Now, we’re tumbling into a downturn that makes the global financial crisis of 2007-2009 look mild. So, of course, it’s the perfect time to introduce the largest containership ever built.

Meet the HMM Algeciras, which was just launched by Daewoo Shipbuilding in South Korea. HMM is the new name of Hyundai Merchant Marine, the last big Korean container line left standing after the collapse of Hanjin Shipping in 2016. Hanjin’s bankruptcy and eventual dismemberment was a direct result of a market flooded with excess capacity due to carriers’ blind enthusiasm for very large ships. South Korea’s government made sure Hyundai Merchant Marine survived, and induced it to build 20 ships with extremely generous subsidies. Eleven more the size of HMM Algeciras are to be delivered later this year.

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These megaships, each capable of carrying as much cargo as 12,000 full-sized trucks, are being built not to meet the demands of exporters and importers, but rather to preserve jobs at South Korea’s shipyards, steel mills, and marine equipment manufacturers. South Korean President Moon Jae-in expressed the “hope that HMM continues to secure a competitive advantage as a Korean national flagship carrier.” Elected officials have to say such things, but the reality is that HMM will be hard-pressed to fill its new vessels with Korean and Chinese goods bound for Northern Europe. They might be the most efficient ships at sea when fully loaded. But it’s more likely they’ll lumber half-empty across the oceans, spouting red ink as they go.

HMM Algeciras is just the latest example of megaship mania. Shipyards in China and Korea continue to turn out enormous vessels, even though the boom in container trade ended long ago. Once the COVID-19 pandemic has passed, globalization won’t go away, but it will have more to do with spreading ideas than with moving stuff in metal boxes. Many of the carriers unwise enough to own megaships are likely to need government help once more as they struggle to clean up a megamess.

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