In 2015 terminal productivity is the key

In 2014 Asian ports were hit with congestion. With reduced box volumes, terminal congestion has fallen by the wayside. But the issues inherent to a twisted and choked supply chain are still in place. Terminal productivity is the key, but is it enough to unlock port potentials? Port Math. “Bunching” ship calls together at ports on the weekend, uneven cargo flow, arrival of mega-ships and trucking and labor issues together can create a deadly cocktail for Asian terminal operators that could lead to chronic congestion like they experienced in 2014. At the recent TPM Asia Conference in Shenzhen (China), Andy Lane of Singapore-based Container Transport International (CTI), said, “While vessel size increased significantly over the past two years, terminal productivity has not.” Lane added, “The 12 largest ports, including the twin ports of Los Angeles and Long Beach, handle on average 187,000 TEUs per quay crane per year. Those cranes show an average 28 moves per hour so those cranes are at best 48% utilized and cost US$10 million apiece. Just say we can increase crane utilization to 60% and have crane moves at an average of 32 moves per hour. That would represent an increase in utilization and therefore capacity of 44% or 80,000+ TEUs per year. With an operating profit margin of $10 that would be $800,000 per crane to the bottom line and as these 12 ports have 1,295 cranes that would be a net savings of $1 billion.”

Port productivity issues often beg the question of whether mega-ships are the problem? Lane said only 27 major ports can handle mega-ships, that is those above 10,000 TEUs, and they are not solely responsible for the congestion. Only 12% of ships above 10,000 TEUs deliver 22% of total volume. As Lane explains, “Severe peaks existed long before ships exceeded 10,000 TEUs. Ships bunch together in East and South China at the same time in order to meet weekend closing schedules. As most ships sail at similar speeds, they arrive in ‘bunches’ at Southeast Asian hubs. It also influences Korean hubs…then cascades to the feeder ports and as ocean crossings also sail at similar speeds, it spreads further to Los Angeles and European markets.” Alpha Liner’s Tan Hua Joo concurs with Lane’s remarks and puts the onus on ports to adjust, “The issues of larger ships, vessel bunching, uneven cargo flow and weekend rush will not go away. It is time for ports to stop complaining and deal with the issues through additional berth space and equipment, improved productivity and increased automation.’’ While much of the focus concerning terminal productivity centers on gantry crane moves, it is clear that terminal velocity doesn’t solely revolve around quayside moves. Stephen Ng of Hong Kong-based OOCL said, “We cannot look at crane usage … in isolation, as productivity and capacity are impacted by many different factors. And we need to see the actual numbers before we can draw any conclusion on cargo flow, GRI and congestion.’’ Ng added, “Collaboration would definitely help… carriers are working with terminal operators through their respective trade associations to find a better solution in this regard.’’ Challenges for Southeast Asian Ports Manila’s congestion is not as severe as last year. Port operator International Container Terminal Services Inc. (ICTSI) has launched a new container booking system at Manila International Container Terminal (MICT), which the TO believes will avoid a repeat of the chronic congestion of 2014. The Terminal Appointment Booking System (TABS) was specifically developed to minimize road traffic and prevent container build-ups, especially with the approach of the holiday season. With container volume expected to increase heading into Christmas, the launching of TABS will address the unpredictable surge of trucks that regularly choke the city’s roads, ensuring a more organized flow of containerized cargoes in and out of the MICT while providing real-time information on container status, according to an ICTSI statement. But the Philippine Chamber of Commerce and Industry (PCCI), the country’s largest business organization, believes what the city needs is more roads to avert severe congestion. PCCI expressed support for a proposal for an elevated expressway project that would ease port congestion at the port of Manila and help spare consumers, exporters and importers from high costs of deliveries. “Our membership is concerned over the repeat of the port congestion in 2014 if no new road infrastructures are put in place in the medium term,” PCCI president Alfredo Yao said. “From our point of view, the so-called port congestion is only the result of the real problem of road congestion,” he added. Yao said PCCI is hoping the Toll Regulatory Board (TRB) would approve early the implementation of an elevated expressway project from the port of Manila to the Stage 3 of the Skyway. He said the proposed expressway would give 24/7 accesses to trucks and other vehicles traveling along the stretch of North Boulevard and R-10 to the Skyway Stage 3 project. In Vietnam, the situation is quite different. While many ports in the southern region, especially Ba Ria-Vung Tau Province, are grappling with under-capacity, Cat Lai Port on the other hand, serving Ho Chi Minh City and its economic hinterland, suffers from congestion because of its favorable location close to the centre of the northern Vietnamese economy. The Cai Mep-Thi Vai port complex is operating at 15% capacity. The transport ministry has taken a slew of solutions, including a pilotage reduction, but the number of ships using the port complex has remained woefully low. This is attributed to weak cooperation between provinces and the competition between Ho Chi Minh City (HCMC) ports and Ba Ria-Vung Tau Province to lure cargo vessels to their ports. To solve the problem, the ministry has been asked to apply a throughput limit plan at HCMC’s ports to enable the Cai Mep-Thi Vai port complex to handle more cargo based on the experience in developing Laem Chabang Port in Thailand when the Thai government imposed a cargo volume ceiling on Bangkok Port. As a result, more shipping lines dispatched their vessels to Laem Chabang. To ease cargo congestion at Cat Lai Port, the ministry has allowed Saigon Newport Corporation (SNP) to build an inland container depot on over 11 hectares in Phu Thach Commune, Nhon Trach District of Dong Nai Province, with a designed capacity of 150,000 TEUs per year. The Thai port of Laem Chabang has experienced little congestion, although docking in the port has its challenges, namely traversing the often-congested Strait of Malacca to enter the Gulf of Thailand. Thailand is pursuing new developments aimed at easing that congestion and opening new trade avenues, developments that now include Laem Chabang’s new harbor as well as a new deep-sea port at Pak Bara — on Thailand’s west coast near its southern border with Malaysia. Indonesia’s largest harbor, Tanjung Priok in Jakarta, has been struggling with a devils-brew of infrastructure problems that is causing serious congestion. Jakob Friis Sorensen, president director of Maersk Line Indonesia, says infrastructure access in and out of ports is one of the main problems. For example, channel and road access in some ports are still inadequate and create difficulties for exporters/importers as well as shipping lines, and this impacts efficiency and increases the overall logistics cost. Tanjung Priok remains congested during peak periods. Plans are under way to build a new integrated port and industrial estate in Surabaya as well as a new container port in Jakarta to help ease the congestion at Tanjung Priok. The new Kalibaru Port, an upgrade to the Tanjung Port complex, aims to open the first of its three new terminals in the middle of next year, which will offer a deeper draft. The new port will enable shipping lines to make direct calls at Jakarta, improving transit times and reducing logistics costs. To upgrade infrastructure the government has been focusing on developing new ports in rural areas, especially in the eastern part of Indonesia. Indonesian president Joko Widodo has made upgrading the country’s ports infrastructure one of his priorities. Criticism of the existing nation’s ports infrastructure include, the limited size of second-tier ports, inconsistencies of rules, turnaround times and the lack of a nationwide framework.