Risk Ahoy: Maersk, Daewoo Build the World's Biggest Boat

A brand-new behemoth prowls the seas. It’s the largest ship ever built and the most gigantic risk Maersk has ever taken

Behind this week’s cover
Photograph by John Francis Peters for Bloomberg Businessweek
Every weekday morning in Okpo, a former fishing village near the heel of the Korean Peninsula, the streets fill with men and women—on bicycles, motorcycles, scooters, and on foot—in the matching gray jackets of Daewoo Shipbuilding & Marine Engineering. The commuters stream down the hill from the residential neighborhoods toward the harbor. They pass the small marina strewn with bits of netting and plastic patio furniture, where a few trawlers are tied up, and the pier where a replica of a famed 15th century armored Korean warship floats. Just beyond the harbor, some workers split off into a complex of DSME office towers. The rest continue on to the gates of the shipyard. There, after forming up with their teams for calisthenics, they get to work.

Geoje Island, where Okpo is situated, is the global capital of shipbuilding. On the other side of the island is the Samsung Heavy Industries yard. Up the coast is Ulsan, home of Hyundai Heavy Industries, the world’s largest shipmaker. DSME, formerly part of the Daewoo conglomerate, is No. 2. These facilities produce supertankers that carry millions of barrels of crude, and natural gas carriers with insulated tanks that hold hundreds of thousands of cubic meters of liquefied methane. They make $600 million drill ships, whose rotating azimuth thrusters can keep them hovering in place, hummingbird-like, in rough seas while boring exploratory wells in the ocean floor 6 miles below. To transport autos, the yards produce roll-on/roll-off ships; to transport ore, grain, or coal, they produce bulk carriers with 400,000-metric-ton capacities. For just about everything else, they make container ships.

The biggest of all the behemoths—the biggest ships in the world—are being built at the DSME yard for the Danish shipping line A.P. Møller-Maersk. They’re container vessels that will ply the route between Northern Europe and China. The new class of ship is called the Triple-E, and Maersk has ordered 20, at a cost of $185 million each. They’re 1,312 feet long, 194 feet wide, and weigh 55,000 tons empty. Stand one on its stern next to the Empire State Building, and its bow would loom over the heads of those on the observation deck; a single link from its anchor chain weighs 500 pounds. In early May the first Triple-E, the M/V Maersk Mc-Kinney Møller, named after the shipper’s former chief executive officer (and the son of its founder), was moored at one of DSME’s quays, nearing completion.

A cargo vessel of this size was unimaginable a half century ago, when the first container ship sailed from Newark, N.J., to Houston carrying 58 containers. Twelve years later the biggest container ship carried 1,200, and by 1996 the Regina Maersk class had a capacity of more than 6,000 20-foot equivalent units, or TEU. The size of the vessels and the economies of scale they bring have made transportation a vanishingly small part of the prices consumers pay and made possible a world in which Americans eat bananas grown in Ecuador while wearing designer knitwear from China.

A single link of the anchor chain weighs 500 pounds
Photograph by John Francis Peters

The Triple-E’s capacity is 18,000 TEU. (Most containers today are 40 feet long, so the number carried will be closer to 9,000.) Laid end to end, a single Triple-E’s shipping containers would stretch for 68 miles. “In the late 1990s we were like, ‘Oh my God, a 6,000-TEU ship,’ ” says Peter Shaerf, a managing director at AMA Capital Partners, an investment bank specializing in the maritime industry. “Then you go to 13,000 and now 18,000. I don’t know where it stops.” Practically speaking, a Triple-E, in one trip, could take more than 182 million iPads or 111 million pairs of shoes from Shanghai to Rotterdam. Such a trip would take 25 days and burn 530,000 gallons of fuel. That comes to 0.003 gallons per iPad.

Maersk is the world’s biggest shipper, and its size affords it some protection from the vicissitudes of the shipping industry—it has interests in everything from oil-drilling platforms to supermarkets and banks. Nonetheless, the Triple-E is a giant financial risk. “For Maersk and every other ship line, these are big, big decisions, because if you get it wrong, you can end up dead,” says Marc Levinson, an economist and author of The Box, a history of the container-ship industry. “When a company like Maersk orders these vessels, it’s betting the company.”
Freighters used to carry loose cargo in sacks and crates of various sizes, crammed into holds and piled on deck by stevedores. That began to change in 1956, when a Texas trucking magnate named Malcom McLean refitted an oil tanker with steel frames on its decks to stack shipping containers. Standardized containers—modular units of a uniform size that would be filled at the factory, loaded onto truck trailers or trains, then stacked by cranes on the ship—made shipping orders of magnitude more efficient. At the time, according to Levinson’s book, the cost of loading cargo onto a break-bulk freighter was $5.83 per ton; for McLean’s jerry-rigged container ship, the cost was 15.8¢. It was only a matter of time before container ships took over.

Maersk didn’t build its first container ship until 1973. It made up for its late start by buying up many of the pioneers, including McLean’s company, Sea-Land. Since then, Maersk has driven the arms race in vessel size. The number of ships in its fleet allows the company to offer clients more sailings to more ports, and the size of the ships themselves allows it to offer more container slots on each trip. It’s the maritime Wal-Mart.

The company has a 35-person department that manages capacity on its 100 routes, ensuring that the number of containers it can carry between, say, Long Beach, Calif., and Qingdao matches up with the amount of stuff its clients want to move between those two ports. In early 2010, as the industry started to come back after the global economic crisis, the network department saw room to grow, especially on Asia-Europe routes. “Those are where we have some of the largest ports, and we thought we could utilize that scale,” says Michael Heimann, the project manager for the Triple-E.

Photograph by John Francis Peters for Bloomberg Businessweek
Heimann’s task was to put together a ship that amplified the natural efficiencies of megascale container ships. Maersk’s senior management mandated that the ship be at least 30 percent more fuel-efficient than competitors’ biggest vessels. That requirement was partly for environmental reasons. Maersk’s ships account for 0.1 percent of humanity’s carbon emissions; if the shipper were a country, its emissions would fall between Algeria’s and Vietnam’s. In addition, cargo vessels run on “bunker fuel,” a thick, tar-like substance that’s much dirtier than gasoline or jet fuel. It’s what’s left over, along with asphalt, when everything else is distilled out of petroleum. A 100,000-horsepower engine such as the one in Maersk’s 15,500-TEU E-class—until now the biggest ships in the world—burns 33,000 gallons a day. Fuel costs for a one-way trip from Rotterdam to Shanghai can easily reach $2.5 million.

The Triple-E was able to meet the efficiency requirements without any revolutionary propulsion or metallurgical technologies. Rather, Maersk used a set of clever tweaks to adapt existing ship features to its size. On the most basic level, the ship was designed to maximize container space. The bridge tower, with the crew accommodations inside, was moved forward, so that containers could be stacked higher without obscuring the pilot’s view of the sea ahead. The engine was moved aft to shorten the propeller shaft, allowing more containers to fit in the hold. “It’s quite a simple little trick,” says Troels Posborg, the Maersk naval architect who drew up the preliminary design for the vessel.

To save fuel, Maersk designers included a system, increasingly used in cargo ships, to capture the heat from the massive engines and use it to turn water into steam to drive a secondary turbine. The power generated by the waste heat recovery system is fed back to the propeller shaft. It also provides electricity for crew quarters and for refrigerated containers that hold perishable goods.

Much of the efficiency will come simply from going slower. Just as in a car, decreasing a ship’s speed, up to a point, is more fuel-efficient. The effect is more pronounced at sea because boats are pushing through water as well as air. As naval architect Charles Cushing explains, “that means if you go, say, from 20 knots to 23 or 24 knots, it will double the fuel requirement, and if you go up to 25 or 26 knots, it’s going up four or five times.” The Triple-E is designed to cruise at 16 knots. Building a ship for slow steaming meant the engines could be less powerful and the hull wider, allowing for more containers. According to Posborg, the company considered 500 different hull forms.
Even before Maersk settled on a shipbuilder, its designers were talking with DSME about what a Triple-E might look like and what it would cost. The document describing the specifications grew from 80 to 500 pages before the final contract—for 10 ships, with two options of an additional 10 ships apiece—was signed in February 2011. “What we do is make a high-level description of the ship,” Heimann says, “and then the shipyard does the detailed design.” The contract specified everything from the speed of the ship to the payment schedule to the length of its warranty. (The industry standard is one year. Maersk negotiated for two, which is a year less than it would get with a $100 Black & Decker hedge trimmer from Home Depot.) Maersk wanted the Triple-E to have an unusual “twin-skeg” design—two engines, two propellers, two rudders—and required DSME to conduct testing in a specific way: computer simulations first, then scale models in a pool.

It takes a year to build, test, and deliver one Triple-E
Photograph by John Francis Peters

DSME’s naval architects spent the next year turning the long list of specifications into a blueprint. Four months into the process a team from Maersk arrived in Okpo to work alongside the DSME engineers and designers. Even with the exhaustive, novel-length building specs, the two teams argued like Talmudic scholars over the language. A dispute over what sort of glass to install along the bridge wings dragged on for two weeks. Unlike on most container ships, where the walkways on either side of the pilothouse are open to the elements, the Triple-E’s were to be enclosed. Pointing out that international standards required a “clear view” from the bridge, Maersk insisted that the glass in those wing windows be heated, with windshield wipers, as it was for the pilothouse. But DSME argued that heated glass and wipers, while clearly required for the pilothouse, were unnecessary on the bridge wings, and that “clear view” simply meant “window.” At stake was $100,000 in costs.

The companies appealed to the American Bureau of Shipping, an international classification society, which was unable to resolve the dispute. Eventually they reached a compromise: a mix of heated and unheated panes on each bridge wing; some with wipers. “This kind of argument, it happens all the time,” says Daniel Cho, the DSME engineer in charge of the project. He’s wearing his company jacket and sitting at a long table at the DSME offices with a copy of the ship’s building specs—those 500 pages bound in blue—in front of him for reference.

In May 2012, the blueprints approved, the shipyard began to cut and shape steel—the Danish royal couple attended the ceremonial first cut. Steel plates and bars and tubing were cut with plasma torches, bent, and fused together into Lego-like basic building blocks, 425 per ship. Those blocks were then lifted into place by cranes and welded into 21 megablocks or “rings”—cross-sections of the ship—or assemblies such as the bridge tower or the engine-room casing. Much of the megablock construction takes place at subcontractor yards, and at a DSME shipyard in Shandong, China. Heavy-lift ships—low-slung vessels designed to carry oil platforms and other gargantuan structures—ferry the megablocks across the East China Sea to Okpo.

The megablocks are stashed all over the yard, looming over the pretreatment and cutting and block assembly sheds, as well as the yard’s own fire station and hospital. Workers in helmets and harnesses bicycle in and out of their shadows. Hull assemblies and ship bridges waiting to be lifted into place sit on rafts out in the harbor. Occasionally part of the yard’s megablock skyline will slowly shift as a structure is taken from storage to the docks via special movers—broad, beetle-like trucks. In a back lot of the yard is a row of gleaming, four-bladed Triple-E propellers. They’re 32 feet in diameter and were fabricated at the Mecklenburger Metallguss foundry in Germany, the molten metal poured into molds at 2,174F and then cooled for 10 days.

The final assembly process has the simplicity of a child’s model. The keel-laying starts in DSME’s dry dock and then moves to its floating dock, a 436-meter-long high-sided raft that can be flooded to allow the finished vessel to float out. One by one the blocks are put in place by barge cranes whose massive arms can lift 3,600 tons. (When a South Korean destroyer was sunk three years ago, allegedly by a North Korean torpedo, one of these cranes lifted the wreck off the seafloor.) Then a Goliath gantry crane on rails picks up the ring and maneuvers it into position—it’s accurate to a 4-millimeter tolerance. Workers rise from the floor in boom lifts to start welding the pieces together. Even as the hull blocks are being lowered in, the already completed section is having the lashing bridges—the frames along which the containers will be stacked on deck—dropped in and affixed. After the hull is completed and painted, the ship is launched, and workers turn their attention from the ship’s exterior to its interior.

Once a Triple-E’s afloat, workers finish painting the superstructure, install electronics in the bridge, and furnish the cabins—the quarter-mile-long ships will be manned by crews of 22. For weeks they test and retest the equipment, even before the ship goes out on sea trials.

Today, at least three Triple-Es are being built at the DSME shipyard at any one time, along with around 40 other ships and oil platforms. When the first one entered the water this spring, a second took its place in the floating dock, resting on hundreds of concrete, steel, and wood blocks, and steadied by steel support towers several stories high. The lines where the rings were welded together hadn’t yet been smoothed down and painted over, giving the hull a stitched-together, Frankenstein aspect. According to Lee Sang-boo, a DSME construction supervisor, around 250 workers are on the ship at any given time. Working with 3,000-ton pieces of steel is inherently dangerous. In January the maritime website gCaptain reported that a worker had been crushed and killed by a falling piece of the hull. DSME declined to comment on the accident, beyond saying that investigations carried out by South Korean prosecutors and the Ministry of Employment and Labor are now closed.

From start to delivery, the entire construction process takes just over a year. For the next two and a half years, a new Triple-E will be entering service every six or seven weeks.
It may be a while before anyone else commissions cargo ships this big. The same economies of scale and the pressure they exert to supersize have helped make shipping a wildly cyclical industry. When the global economy is booming and trade healthy, shippers scramble to meet demand with more and bigger ships. But the time it takes to build them is just long enough, in many cases, for booms to end and global trade to sputter. As more and more new vessels come online, the glut exacerbates the collapse in shipping prices, the industry scales back, companies go out of business, and the process begins again. Somewhere in the trough of that cycle is where the Triple-E is being born. A year ago, according to the British shipping consultancy Drewry, it cost $2,900 to ship a container from Hong Kong to Los Angeles. Since then rates have dropped by a third.

The industry today has largely resigned itself to slow growth and low shipping rates. “Even if the economy improves, we do not see any return to the historic growth rates that we saw leading up to the financial crisis in 2007,” Maersk Group CEO Nils Smedegaard Andersen said on an earnings conference call in May. In the end, Maersk elected not to pick up the second option in its contract, buying 20 rather than 30 of the ships. And for all the attention that’s been paid to its size, the Triple-E won’t be running at full capacity—it will be carrying just 14,200 TEU, less than the capacity of the E-class. For the time being, Maersk doesn’t expect to fill its new megaship.

The Maersk Mc-Kinney Møller left on its maiden voyage from Busan on July 15, calling at Shanghai’s Yanshan Port, the largest in the world, then proceeding south to Ningbo, Yantian, Hong Kong, Singapore, and Malaysia’s Tanjung Pelepas. On Aug. 9 it passed through the Suez Canal, and a week later it arrived in Rotterdam, its containers full of televisions and action figures, DVD players and crankshafts, chairs, tables, shirts, and shoes. The passage, by all accounts, was uneventful.