Page 1: Port 1.0

Page 2: Port 4.0

Page 3: Terminal Complex…ities

 <p><b>Terminal Complex…ities </b></p>

 <p>While a smarter box will improve supply chain visibility, it won’t address the on the dock terminal issues associated with rising container volumes. <i>Drewry’s</i> recent container port five-year demand forecast is anticipating global growth of 4.4% per annum on average, increasing world container port throughput from 784 million TEU in 2018 to 973 million TEU by 2023. From another perspective, <i>Drewry’</i>s is forecasting an increase of nearly 190 million TEU for that time period.</p>

 <p>And while the volumes are larger so are the ships. In a recent newsletter, <i>Alphaliner</i> reported global containership capacity had just eclipsed the 23 million TEU mark with the September 11<sup>th</sup> delivery of two Pegasus class 23,000 vessels to MSC (Mediterranean Shipping Company). The two mega-max deliveries underscore the trend of building fewer but larger containerships. Both the total capacity and the launching of the two Pegasus class vessels is part of an important trend challenging container terminals. </p>

 <p>The consolidation, both in the number of ocean carriers and carrier alliances (currently there are three major alliances), coupled with the increase in container ship size has created the nearly untenable situation of fewer calls by larger ships, creating uneven demand and highly complex loading and unloading scenarios. And some experts believe there is a reasonable chance that another round of ocean carrier and alliance consolidation could happen in the near future, further complicating the terminal side of the equation. </p>

 <p>For example, in the U.S. there is an uneven flow of inbound containers to outbound. The inbound freight is often from the Far East and is full of consumer goods while the outbound freight is mixed and rarely matches in either volume or value the inbound side. This disconnect has long made it hard to match equipment – particularly containers and chassis – to demand. But there are now additional problems that come with shared space. In the decades of a plethora of carriers, each competing shipping line had its own loading hierarchy. With the alliances and vessel sharing agreements [VSAs], a container ship may have three or four carriers all sharing space and all with a separate loading hierarchy - a real puzzle when trying to build an on-dock container train or organizing a terminal’s container yard stacking regime.</p>

 <figure class="rte-img-chosen" style="text-align: center;"><img alt="The EagleRail system is an automated, short-haul, suspended overhead container movement system." src="https://www.ajot.com/images/uploads/article/697-eagle-rail.jpg"><figcaption>The EagleRail system is an automated, short-haul, suspended overhead container movement system.</figcaption>

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 <p>Ted Prince, chief strategy officer at Tiger Cool Express, at the CONECT November 6<sup>th</sup> Northeast Cargo Symposium, made the argument that the inherent handling inefficiencies of on-dock rail are too land expensive for a new generation of terminals trying to keep pace with larger boxships and bigger volumes. </p>

 <p>Of course, adding more drays (trucking) is also a zero-sum game. The highways in most urban port areas are already jammed – for example, a 10,000 TEU ship (now the average size for the U.S. East Coast) if it was to discharge its entire compliment of containers, the distance would be equal to 38 miles. And with 18,000 TEU ships becoming commonplace it takes very little math to realize how untenable the situation is without addressing terminal velocity.</p>

 <p>There are a number of solutions in the making.</p>

 <p>In October, Chicago-based EagleRail Container Logistics (which is partnering with container crane manufacturer ZMPC on designing and building the system) announced an MOU with Chittagong Port Authority (CPA) in Chattogram, Bangladesh for the installation of an automated, short-haul, suspended overhead container movement system. The system lifts containers and shuttles them to local yards or intermodal transportation hubs, and can bypass ground obstacles, including roadways and open water. The innovative rail system has the potential to alleviate some of the short haul problems for container terminals operating in urban areas. Whether the EagleRail system is a true “disrupting” technology is difficult to say at this point but it is a promising alternative to existing methods. And thinking farther ahead, could a system like EagleRail’s be deployed to inland destinations to create inland satellite terminals taking the pressure off the quayside operations. </p>

 <p>There are also a number of plans for container “towers” or “hi-bay warehouses” where the yard storage goes vertical in moveable slots not vastly different than is used for boats and autos. How feasible is vertical storage? In practical terms, it is largely dependent on how practical it is to shift the boxes in and out of storage for deployment in the supply chain. And how much additional expense it adds to the TO’s capital costs.</p>

 <p>Nonetheless, for terminals in an urban setting with little land area available for expansion, the only option <i>is</i> going vertical or off site – and both solutions bring with them their own sets of complications.</p>

 <p><b>4.01 – The Body Electric</b></p>

 <p>A 2018 research report by Market and Markets projected that “The automated container terminal market was valued at $8.84 billion in 2017 and is expected to reach $10.89 billion by 2023, at a CAGR [compound annual growth rate] of 3.7% during the forecast period.”</p>

 <p>According to the report the “inefficiencies” with terminals and carriers cost the shipping industry $17 billion per year and estimates are that fully automated container terminals could reduce the waterfront workforce by 45%. It is reported at the fully automated terminal in Qingdao, China the number of longshoremen needed to unload a box went from sixty to nine and labor costs dropped by 70% while efficiency increased by 30%. These are numbers that are hard for terminal operator - and waterfront labor – to ignore.</p>

 <figure class="rte-img-chosen" style="text-align: center;"><img alt="In Qingdao, China, the number of longshoremen needed to unload a box went from sixty to nine and labor costs dropped by 70% while efficiency increased by 30%." src="https://www.ajot.com/images/uploads/article/697-Qingdao-China.jpg"><figcaption>In Qingdao, China, the number of longshoremen needed to unload a box went from sixty to nine and labor costs dropped by 70% while efficiency increased by 30%.</figcaption>

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 <p>Worldwide there are around fifty fully automated terminals just completed or under construction – not a really large number considering the volume and nature of container shipping. </p>

 <p>Some years ago, at a Navis conference in San Francisco, there was a modest sized group of terminal executives at a presentation on automation. In the ensuing coffee break the conversation turned to the question, just how far automation could go and how fast it would occur – could they run terminals say from stations thousands of miles away – a truly automated terminal operated like a drone or a rover on Mars. At that time the answer was a solid ‘maybe in a decade or so’ as they collectively added caveats to the likelihood of a fully automated terminal. They were wrong.</p>

 <p>Technologically speaking we are already there. For most functions a fully automated terminal is already site independent – whether that is operationally desirable is another story. </p>

 <p>The technological underpinnings of terminal automation have lifted the concept into reality and McKinsey’s <i>Port 4.0 </i>is already under construction. Can <i>Port 5.0</i> be far away?</p>

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