Port Strategy December 2021

DECEMBER 2021 VOL 1021 ISSUE 10

portstrategy.com

Hydrogen Bubble Bulging | ACCC Mixed Bag | Adani Rollercoaster | Simulation Benefits

TERMINAL TRANSITION… …shipping lines crowd in SUDAN CROSSROADS ‘COAL CRISIS:’ PORT PRESSURES USWC: MORE NEEDED

PORTSTRATEGY INSIGHT FOR PORT EXECUTIVES

The international magazine for senior port & terminal executives EDITORIAL & CONTENT Editorial Director: Mike Mundy mmundy@portstrategy.com Guest Editor: Mike Mundy mmundy@portstrategy.com Features Editor: A J Keyes keyesj186@gmail.com

VIEWPOINT MIKE MUNDY

Climate resilient ports: “the power is in our hands”

Climate policy will have an increasing influence over port development in the coming decades in terms of indirect effects and specifically in terms of sea level rise.

A new report from the European Environmental Agency, that charts various scenarios on sea level rise, throws a spotlight on the potential scale of the challenge and adds a useful dimension to the preparations essential to achieving climate resilient ports

Let’s go back to basics – sea levels.

A subject that is not always high on the list but nevertheless a fundamentally important one.

The European Environment Agency (EEA) has just released a report which provides the latest data on global and European sea level rise.

“Global mean sea level (GMSL),” states the report, “has risen about 19cm since 1900, at an accelerating rate. Climate models,” it says, “project a GMSL rise during the 21st century that will likely be in the range of 0.29 – 0.59m for a low emissions scenario and 0.61 – 1.10m for a high one.”

With a faster disintegration of the polar ice sheets then the EEA predicts a bigger rise, “up to 2,4m in 2100 and to 15m by 2300.”

The Greenland and Antarctic ice sheets are identified as the largest potential contributors to GMSL rise, but it is pointed out that their behaviour is “still rather uncertain, particularly under high emissions scenarios.

“Each five-year delay in the peaking of global greenhouse gas emissions,” underlines the report, “increases the median sea-level rise projections for 2300 by 0.2m and extreme sea level projections by up to one metre.”

On the rate of rise, the report notes that for the period 1993-2019, for which satellite-based measurements are available, there has been a rise of around 3.1mm/year.” This,” it says, is “more than twice as fast as during the period 1900-1992. Further, for the period 2010-2019, the rate of GMSL rise has increased to 4.4mm/year.

Interestingly, the traditional main driver of sea level rise was thermal expansion but today, the Agency confirms, the melting of glaciers and disintegration of the Antarctic and Greenland ice sheets “have exceeded the effects of thermal expansion since about 2000.”

There is, however, also the phenomenon in certain areas of land levels rising because of what the EEA describes as “post-glacial rebound since the last ice age.” As an example, due to this, “sea levels along the northern Baltic Sea Coast and – to a lesser degree – the northern Atlantic coast are sinking because land levels are still rising,” explains the Agency.

The bottom line, however, is that monitoring sea level rise is a fundamental aspect of coastal protection and port planning that requires more attention today and going forward. Furthermore, it is something that with a responsible approach to the environment we can all have a positive influence over. “The power is in our hands,” as the saying goes.

For the latest news and analysis go to www.portstrategy.com/news101

News Reporter: Rebecca Jeffrey rjeffrey@mercatormedia.com Regular Correspondents: Dave MacIntyre; Iain MacIntyre; Felicity Landon; Alex Hughes; Stevie Knight;John Bensalhia; Ben Hackett; Peter de Langen; Barry Parker; Charles Haine; AJ Keyes; Andrew Penfold; Johan-Paul Verschuure; Phoebe Davison Production Ian Swain, David Blake, Gary Betteridge production@mercatormedia.com SALES & MARKETING t +44 1329 825335 f +44 1329 550192 Media Sales Manager: Tim Hills thills@portstrategy.com Media Sales Executive: Hannah Bolland hbolland@portstrategy.com Marketing marketing@mercatormedia.com Chief Executive: Andrew Webster awebster@mercatormedia.com PS magazine is published monthly by Mercator Media Limited, Spinnaker House, Waterside Gardens, Fareham, Hants PO16 8SD UK t +44 1329 825335 f +44 1329 550192 info@mercatormedia.com www.mercatormedia.com

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DECEMBER 2021 | 3

CONTENTS DECEMBER 2021 VOL 1021 ISSUE 10

portstrategy.com

Hydrogen Bubble Bulging | ACCC Mixed Bag | Adani Rollercoaster | Simulation Benefits

NEWS

21 Port Sudan

17 JNPT growth & buys

22 Terminal transition

Expansion theme

18 Russia Plan

Deep water box port

18 Plaquemines progress

SUDAN CROSSROADS

APMT onboard

‘COAL CRISIS:’ PORT PRESSURES USWC: MORE NEEDED

Port Strategy Dec 2021.indd 1

26/11/2021 11:22

On the cover The Fenex Marine Services terminal in Los Angeles, USA. The terminal epitomises the fast-growing interest of shipping lines in securing new terminal capacity. Already holding a 10 per cent stake in the terminal, one of the largest container terminals in North America, CMA CGM recently acquired the balance of the terminal’s equity – 90 per cent – from EQT Infrastructure III for an enterprise value of US$2.3 billion.

19 Standardisation DCSA port calls

19 DPW launch

CARGOES Logistics

11 UK seven

For Intermodal Pro

11 AI in Leixoes

Container reader

17 CIIT plans

Corridor development

18 Operating model… is a proud support of Greenport and GreenPort Congress

Cargotec & Konecranes

18 …and Oz concerns ACCC

GreenPort magazine is a business information resource on how best to meet the environmental and CSR demands in marine ports and terminals.

Sign up at greenport.com

GREENPORT Cruise Congress &

The Congress is a meeting point that provides senior executives with the solutions they require to meet regulatory and operational environmental challenges.

Stay in touch at greenport.com Join leading port executives www.greenport.com/congress

Online portstrategy.com 5 Latest news 5 Comment & analysis 5 Industry database 5 Events Social Media links LinkedIn PortStrategy portstrategy YouTube

FEATURE ARTICLES

17 Durban plans

More on privatisation

TERMINAL TRANSITION… …shipping lines crowd in

DECEMBER 2021

19 Strategic alliance APMT & ZPMC

REGULARS 13 Environmentalist Bulging hydrogen

14 The New Yorker Future fuels

14 The Analyst

At a crossroads Lines crowd in

24 Coal-crisis

Port pressures

26 ACCC Mixed-Bag

Mixed-bag of findings

27 Box market outlook Drewry forecasts

29 Busan has a plan Facilitating transshipment

31 Yellow Sea

Consolidation – North Korea

33 Rollercoaster ride Adani home and away

34 Simulation training Benefits and uses

36 Paraguay new paths

Changing inland logistics

39 Asuncion presence Enter TCP

40 Power solutions Port power supply

42 INSTC gears up

North-South corridor

46 USWC more needed

Performance realities

Big warehousing

15 The Economist

Global trade economics

15 The Strategist

Pandemic +s and -s

Weekly E-News Sign up for FREE at: www.portstrategy.com/enews

For the latest news and analysis go to www.portstrategy.com/news101

DECEMBER 2021 | 5

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PORT & TERMINAL NEWS

DURBAN PLANS UNVEILED More details have emerged of South Africa’s move to secure private sector investment in the port of Durban, the country’s major port.

Pravin Gordhan, Public Enterprises Manager, in a recent briefing stated that national ports operator Transnet is looking to work with private companies to secure the expansion of the port of Durban and cited investment to the tune of R100 billion by 2023.

At the centre of the government’s plans is what is described as a new Super Terminal – Terminal 2 – which is able to handle high-capacity vessels.

The first step in realising this is the establishment of the National Ports Authority as a subsidiary of Transnet – a move in the direction of the classic landlord and terminal operator arrangement with the terminal operated under private sector concession.

The second step is a Request for Information to assess the level of interest from private bidders.

Following this there will be a call for bids and a bid evaluation process. In effect, the traditional path to letting a new container terminal opportunity.

Jawaharlal Nehru Port (JNPT), India’s largest container port, has recorded a 40.40 per cent increase in container traffic in the first half of FY21 compared to the same period in FY20 with this amounting to 2,703,051TEU. Commenting on the performance in the period Sanjay Sethi, IAS, Chairman, JNPT, additionally noted that pilot container train services had commenced which formed part of an initiative to move containers into and out of the port via doublestack services. Rail traffic in the period is reported as accounting for 18 per cent of volume.

BRIEFS CONCOR Stay

It is not clear yet if this will be offered as a full Build Operate Transfer (BOT) development or if Transnet or other arms of government will participate, at least partially, in the development of the terminal’s infrastructure.

2022 was identified by Minister Gordhan as the year in which bid submission and assessment would take place.

Portia Derby, CEO, Transnet, has further stated that the organisation is looking at securing a partner that can realise timely delivery of the new terminal at the lowest possible cost.

Interestingly, Derby has also gone on record to say that Transnet will additionally be

8 Private sector participation in the port of Durban’s development represents a component of a US$7 billion plan to modernise the port which includes channel dredging infilling Pier 1 and the development of Pier 2

looking for partnerships with private operators at Ngqura port in the Eastern Cape.

Earlier this year Cyril Ramaphosa, President, South Africa, told the country’s Parliament that upgrading the port of Durban was an essential component of the government’s plans to achieve the recovery of the nation’s economy after the damage reaped by COVID-19 and over a decade of mediocre growth.

JNPT HITS 40 PER CENT GROWTH AND CONSIDERS ACQUISITIONS JNPT has stated publicly that it intends to double its profits and against this background it is considering the acquisition of three ports in Maharashtra – Dighi which is an operational port and Vijaydurg and Revas which are as yet only undeveloped concessions held by corporations.

Dighi Port has financial problems – it owes RS 1600 Crore to a consortium of banks – and has been facing insolvency 8 JNPT 40 per cent growth at the half year, on the expansion trail and lots of interest in the concession for the state-run container terminal

For the latest news and analysis go to www.portstrategy.com/news101

action in the courts.

Vijaydurg Port is the proposed home for the mega-refinery at Nanar, to be built by state-run oil marketing companies.

Revas Port, where the concession is held by Reliance Industries, is identified as a problem and it is said to require a solution to be found in conjunction with the Maharashtra government.

Meanwhile JNPT continues to progress the privatisation of the state-run container terminal at JNPT with strong interest in this reported. Twelve potential bidders have lined up comprising a mix of independent terminal operators and shipping line affiliated terminal operators. A number of the bidders already have operations in India and overall it promises to be an interesting task to secure a bid which adds to the competitive mix.

CONCOR, the container operating arm of the Indian railways which includes a network of inland depots, is slated for privatisation but this will not happen during FY2021. A recent statement by Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management, explains this is due to the postprivatisation land usage policy still remaining to be finalised by the Ministry of Railways. The Expression of Interest for the opportunity will be issued after this is concluded.

Piraeus Problems

Early November 2021 – workers at Piers II and III at the port of Piraeus, Greece, operated by Cosco Shipping, called off a 48-hour strike after Cosco agreed to implement safety-related reforms. The strike was called following an accident which killed a member of the Union of Piraeus Port Dock Container Workers. Reforms include: establishing a Health & Safety Committee; an end to back-to-back shifts with only eight hours rest in-between and 12 hour shifts, and the signing of a collective labour agreement.

HHLA & Eurogate

An agreement between German terminal operators HHLA and Eurogate, signalling their intent to cooperate in conjunction with domestic terminals in Bremerhaven, Hamburg and Wilhelmshaven, is expected by the end of 2021. Competition issues are not anticipated due to the shareholdings held in terminals by various third parties comprising shipping lines or shipping line affiliated companies – for example APM Terminals in Bremerhaven, MSC/TIL in Bremerhaven, Cosco and Hapag Lloyd in Hamburg.

DECEMBER 2021 | 7

PORT & TERMINAL NEWS Russia has announced a programme to diversify activities at Primorsk, its major Baltic oil port, to include multi-purpose operations with an initial ‘deep water’ container handling capacity of 2mTEU/yr rising to 3mTEU/yr.

The project is on the starting blocks following an agreement signed between Russia’s federal agency FSUE Rosmorport and Primorskky Universal Transshipment complex. The new port area is to be built at a location 1.5 kilometres southeast of the existing oil harbour and will reportedly comprise ten cargo berths offering a total berth length of 3700m and a depth alongside of 18m.

The container element of the new project will feature an 860m quay and will be designed to accommodate high-capacity container vessels offering capacities around the 20,000TEU mark. This dovetails with the stated objective of reorienting transit cargo flows now moving via seaports of other Baltic states and developing Russia’s export potential.

The Gulf of Finland, in which Primorsk sits, is of course subject to sea ice conditions during the winter months and as such during this season it is more appropriate to be served by ice class vessels – how this reconciles with the idea of existing design highcapacity vessels calling direct in Primorsk remains to be clarified.

Ice breakers do operate to provide access to the port but vessels regularly sailing through

BRIEFS Hydrogen Coalition

The International Association of Ports and Harbors (IAPH) is to work with CEM Global Port Hydrogen Coalition to disseminate information related to hydrogen-based projects in ports. The initiative is taking place as part of IAPH’s World Ports Sustainability Program (WPSP) and is reported to be a global forum that brings together ports, governments and industry with a view to accelerating lowcarbon hydrogen deployment.

8 | DECEMBER 2021

ENTER ‘DEEP WATER’ RUSSIAN BALTIC CONTAINER CAPACITY 8 Primorsk – planning to introduce ‘deep water’ Russian container handling capacity in the Baltic

ice normally require diverse areas of strengthening right though from the hull to machinery. Most container feeder vessels operating in the Baltic are ice class and operate with the

support of ice breakers.

The target date for the completion of the new Primorsk multi-purpose cargo facilities is December 2024 with the complex also benefitting from modern

interfacing rail and road infrastructure – rail lines offering an annual capacity of 34 million tonnes and a 42 kilometre long four lane motorway linking Primorsk with the Scandinavia International Highway. Financing will be from the private sector with partial public participation.

Available capacity in Russia’s Baltic container ports is presently significantly in excess of demand which poses significant questions at a market viability level for Primorsk. The prospect has been raised, however, that it may become part of the solution to the idea that appears to be gathering momentum of the relocation of key port facilities in St Petersburg in order to facilitate a range of urban developments.

GREEN LIGHT FOR APMT & PLAQUEMINES Plaquemines Port, Harbor and Terminal District (PPHTD) has signed a Letter of Intent which confirms that APM Terminals (APMT) will become the operator of the new container terminal and intermodal facility to be developed at the port. The agreement follows a six-month review process.

Core to the development strategy underpinning the terminal is extensive use of the Mississippi river system for

importers seeking to access markets in the South and Midwest and exporters looking to secure efficient and economic means to serve overseas markets.

Exploitation of the river system on a scale not seen before in a container context will be undertaken in conjunction with American Patriot Holdings (APH).

APH’s innovative, 2375-TEU liner vessel design will provide Mississippi River transport as far north as Saint Louis.

The terminal will feature 8200ft of Mississippi River frontage, cover up to 1000 acres and will be developed with environmental considerations uppermost in mind – electricity and natural gas will be primary power sources.

Located just 50 miles from the Gulf of Mexico the Phase One construction is expected to be completed in two years and will deliver the capability to handle 22,000TEU class vessels.

Mombasa Probe

VPA Investment

Bulgaria Resale

The port of Mombasa, Kenya is the subject of a police probe into a suspected smuggling racket. Three executives of the Kenya Ports Authority (KPA) are prime suspects in the investigation involving the manual release of containers without taxes being paid. The normal release procedure is via an online system. Mombasa has been the subject of various management changes in recent years in the wake of corruption allegations.

The Virginia Port Authority has placed a US$61.5 million contract to double the Norfolk International Terminal’s rail capacity and a second US$18.5 million contract to acquire three new yard gantries. Work is scheduled to be completed in the latter part of 2023.

Current annual lift capacity is 350,000 and when complete capacity will be 610,000 lifts/ yr. Rail capacity expansion will coincide with the dredging of the port’s entrance channel.

The concession for Bourgas East-2 and Bourgas West in the port of Bourgas, Bulgaria is up for resale. The sale process has been underway for a number of months. In October 2021 BMF Bourgas EAD and the European Climate, Infrastructure and Environment Agency signed a grant agreement providing funding to study the development of the basic infrastructure of the port terminals as part of EU transport corridor development.

For the latest news and analysis go to www.portstrategy.com/news101

DIGITAL NEWS The Digital Container Shipping Association (DCSA) has published a range of new messaging application programming interface (AFI) specifications to help standardise port call data definitions.

Working in conjunction with the Internal Taskforce Port Call Optimization (ITPCO) and the International Maritime Organization (IMO), DCSA has provided interface standards for all 50 event timestamps that it defines in its port call data processes.

There are six main parts of the port call, DCSA explains. These comprise: berth arrival planning; pilot boarding place arrival and service planning, pilot boarding place and berth arrival execution, start of cargo operations and services, services and port departure planning and, finally, port departure execution.

By offering a consistent definition of all of these activities, shipping lines, ports, terminals and other service providers supporting port calls can now exchange data in a consistent, uniform manner and on an automatic data exchange basis.

The process also means that support can be given to digital port call planning, along with increased operational efficiency and optimal resource utilisation.

DCSA confirms that the new standards are currently being tested by a range of different parties involved in the port call process.

Phanthian Zuesongdham, Head of Division Port Process Solution, Hamburg Port Authority, who is After acquiring US-based logistics solutions company, Syncreon, in July 2021 for US$1.2 billion, DP World (DPW) has announced the release of a new digital logistics solution, dubbed CARGOES Logistics. It is a single-window platform solution which DPW claims enables seamless, safe, secure, and efficient movement of cargo.

Clients are able to choose from various multimodal logistics options, arrange shipment of freight via sea, rail and/or road, obtain instant quotes, get swift booking confirmation and utilise multiple secure payment options in three clearly defined steps of

DCSA STANDARDISES PORT CALL DEFINITIONS

involved in the trials, offered an insight into the benefits.

“Achieving just-in-time port calls requires accurate, real-time communication between carriers, ports and terminals. DCSA digital standards are key to enabling this level of communication on a global scale.”

Thomas Bagge, CEO, DCSA, adds: “Customers of shipping services want visibility and predictability, having a complete set of standards for port calls is an important step towards improving the efficiency and accuracy of data exchange between all parties. By adopting DCSA standards for just-in-time port

8 Thomas Bagge: “Customers of shipping services want visibility and predictability… adopting DCSA standards will gain efficiency, cargo visibility and cost savings.”

calls, operational vessel schedules and track & trace, the industry will see an emerging digital ecosystem where these activities turn into collaborative, datadriven, digital processes. Carriers, ports, terminals, service providers and customers of container shipping alike will gain efficiency, cargo visibility and cost savings.”

DCSA Port Call Data Definitions can be freely downloaded from the DCSA website.

DPW LAUNCHES ‘CARGOES LOGISTICS’ SINGLE WINDOW PLATFORM “search, choose and book.”

Phase one of the platform rollout is starting from India to a wide range of different destinations throughout the Mid-East, Indian sub-Continent, Southeast Asia, North Asia and North Africa, while there will be a direct link between the UAE and India.

Ultimately, DP World is planning to offer the new platform on a global basis.

For the latest news and analysis go to www.portstrategy.com/news101

Rizwan Soomar, CEO & MD, Subcontinent, DP World, elaborates: “With CARGOES Logistics, our aim is to build and offer highly efficient, seamless and end-to-end transparent supply chains. The new digital solution will simplify the container shipping experience providing visibility across all modes of transportation through smart enablement of IOT based solutions.”

BRIEFS Portsmouth Twin

In order to demonstrate an achievable modular green hydrogen generation system within a port, IOTICS is generating a digital twin of the UK’s Port of Portsmouth. The £1.5 million project will see the port “twin” inter-operating with existing and developing data from port activities, as well as collating information from a working hydrogen electrolyser. This digital twin approach will generate a scalable model that can be converted for other ecosystems and locations. Portsmouth is targeting becoming the UK’s first carbon neutral port by 2030.

Container Monitor

Nexxiot has confirmed a new wireless connectivity device that can provide better transparency for containers. The specialist logistics provider has developed the Globehopper Edge device that transmits details of location, environment conditions and acceleration to the Nexxiot Connect cloud-based server and helps improve asset utilisation and monitoring of on-time performance. Fitted to the outside of a container, the device is solar powered and offers a guaranteed lifetime of over six years.

Husky Upgrade

Husky Terminal and Stevedoring, LLC, Port of Tacoma, USA has agreed a new subscription agreement with Navis which gives the terminal access to the Navis 360 Managed Services portfolio, as well as implanting the company’s N4 SaaS product. Navis will provide a range of services, including application maintenance, automated testing, database maintenance, EDI monitoring, monitoring and diagnostics.

DECEMBER 2021 | 9

DIGITAL NEWS

INTERMODAL PRO NOW IN SEVEN UNITED KINGDOM TERMINALS

BRIEFS Navis N4 for Durres

The Durres Container Terminal (DCT), Albania, has installed the Navis N4 Saas service package. By switching to a cloud-based solution, DCT confirms it can more effectively streamline daily operations and it will be able to complement further investments as they are implemented. Mariner Adriatic, part of the Maltese group Hili Company, took over the management and operation of DCT in mid2021 after the cancellation of the previous concession agreement.

Rotterdam Drones

Tideworks Technology Inc’s Intermodal Pro and Traffic Control solutions is now in operation at seven terminals in the UK, according to Genesee & Wyoming (G&W).

G&W has multiple terminals in the UK and the latest deployments at Cardiff and Birmingham, owned and operated by Freightliner, include an integration with Advent eModal’s vehicle booking system and the gate management system provided by Camco Technologies (Camco) The benefit of this integration is reported as helping to create the first automated gate solution that has been specifically

designed for rail and terminal operations in the UK. The development of an automated, integrated gate and terminal operating system (TOS) in turn means that advanced appointment requirements can facilitate predictive container planning at G&W’s rail operations.

Mark Bromley, Vice President of Intermodal Rail, Tideworks, notes: “We are proud to deliver an integrated system that helps G&W meet its evolving operating and automation needs, while also improving efficiencies and experiences for customers. The successful go-live and integration of Intermodal Pro with Advent eModal and Camco

8 Freightliner’s Birmingham intermodal terminal has seen a reduction in gate queues from two hours to 20 minutes thanks to Intermodal Pro

validate our solution as an agile, intelligent management system that can play a critical role in improving turn time efficiency and achieving automation goals.”

Tideworks provides implementation services on a fully remote basis. This service package includes project management, software configuration and installation, integration services, user training, and go-live assistance, with 24 x 7 technical assistance and software upgrades.

AI SOFTWARE APPLIED IN LEIXOES Use of artificial intelligence in the Port of Leixões has been successfully tested. The Administration of Douro Ports Leixões and Viana do Castelo, S.A. (APDL) has confirmed the results after partnering with ALLREAD Machine Learning Technologies (ALLREAD) along with the Centre for Computer Vision of Catalonia and The Collider Program.

The installation of the ALLREAD software is being used to undertake reading of BIC and

8 Introducing AI and using existing equipment brings benefits and cost-effective expenditure for the Port of Leixões

tank containers at different access points to the port area.

The software processes the images and video playback with a combination of text and codes,

For the latest news and analysis go to www.portstrategy.com/news101

with an accuracy rating of up to 90 per cent.

The benefit of this set-up is that the software is able to link into cameras already installed at specific access points, thereby avoiding the costs of hardware and implementation needed if more traditional optical character recognition (OCR) is used.

The Port of Rotterdam has confirmed a successful test pilot programme involving use of drones in the Yangtze Canal. The tests were completed in conjunction with Dutch company, Avy, as part of the ‘Drone Port of Rotterdam’ initiative. The drone flights were undertaken above Amailahaven, Arianehaven and Alexihaven focussing on key areas, including sea and inland waterway inspections involving bunkering, air pollution and hazardous substance monitoring.

Intelligent Alliance The Port of Corpus Christie Authority, located in the US Gulf, has signed a Memorandum of Understanding (MOU) with the Autonomy Institute Inc. to exploit the use of intelligent and autonomous projects.

The MoU will focus on the port’s Joe Fulton International Trade Corridor for the testing and deployment of specialist intelligent infrastructure that will utilise Public Infrastructure Network Nodes (PINN), NextG wireless, assured position navigation timing, edge computing and smart IoT devices.

DECEMBER 2021 | 11

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THEENVIRONMENTALIST CHARLES HAINE

THE HYDROGEN BUBBLE IS BULGING UK ports are embracing the party the UK Government has thrown with its Hydrogen Strategy. The goal is to create a world leading hydrogen economy, unlocking £4bn by 2030 through 5GW capacity of production and the promise of jobs galore.

The new sector will be key, initially, for energy-intensive industries such as chemicals and refineries but heavy transport (shipping, HGVs and trains) are already vying for podium placing.

The studies are coming thick and fast. The most meaningful ones include stakeholder engagement. Early discussions between the owners of energy assets and infrastructure, ports, logistics players and financiers are essential to discuss restrictions, and opportunities to find alignment and common ground. A lower carbon future will rely on an efficient supply chain to produce, transport and export the fuel of the future.

The Port of London is leading a consortium of tech research companies, academics – and usefully SMEs – in a £3.4m effort (with match-funding from MarRI-UK) to establish a national hydrogen highway network, integrating the modes of sea, port and land. They will look at backhauling hydrogen into central London, trial power generation for vessels at Denton Wharf and rightfully consider the health & safety connotations.

Saying all that, they’re already using hydrogen in small ferries in Belgium (between Kruibeke and Antwerp). Japan’s Yanmar Power Technology has conducted the world’s first 70 MPa high-pressure hydrogen refuelling of a ship in a demonstrator project. Electrolyser operator INEOS wants to invest €2bn to make zero carbon green hydrogen across Europe but is first focussing on Norway where there’s a plentiful supply of green electricity.

With UK politicians and key figures pinning their hopes on the lightest element in the Periodic Table, and the push on lowercarbon everything from COP in November, we’ll need to ditch bunker fuel for green hydrogen

(from renewable energy – by far the cleaner solution) rather than blue (via gas with carbon capture). With the decent USPs of a 31,000km coastline and waters fit for offshore wind, the UK has the platform to progress this. The backing is there; in October, at the UK’s Global Investment Summit (where Boris Johnson was teasing hundreds of millions out of Bill Gates on stage), investors pledged £10bn for a package of 18 deals to support the hydrogen sector alongside wind, CCUS and sustainable homes.

What an opportunity there is for those involved in technology.

Marine Power Systems has joined forces with Marine2o to develop integrated solutions to support the production of green hydrogen from offshore floating wind and wave energy sources, then using marine vessels to transport it. The Scottish-led HYSEAS III Project aims to build Europe’s first sea-going ferry fuelled by hydrogen fuel cells.

The vessel would store energy made from renewable sources

‘‘

and have the capacity for 120 passengers and 16 vehicles.

It’s hard to keep up with hydrogen news. Daimler Truck AG and BP are supporting the decarbonisation of UK freight transport. More than this, it’s happening on a global scale.

Hydrogen has gathered incredible momentum in North America where the market is gearing up for 3.4 million jobs and revenue of $750bn a year by 2050.

The European Commission has placed hydrogen at the forefront of Europe’s green recovery with targets of 6GW of green hydrogen by 2024 and 40GW by 2030.

Across the media, hydrogen looks like it will be the energy of carrier shipping by 2050. Sceptics say without the refuelling infrastructure and the market dominance of bulk and oil carriers, and container ships (85% of emissions), nothing can power as efficiently as marine fuels.

However, factor in the likely penalties, future carbon taxes and levies and the sheer reputational damage that will ensue from the 2030s for using fossil fuels and

The energy revolution is underway.

Hydrogen is core to this...

For the latest news and analysis go to www.portstrategy.com/news101

8 The Port of London is leading a consortium to establish a national hydrogen highway network, integrating the modes of sea, port and land

change will be inevitable. Global consumer goods companies and retailers that drive trade have also spoken up. The likes of Amazon, Unilever and IKEA have stated an aim to use only zero-carbon ocean shipping by 2040.

Rather than getting sidetracked by the companies leading the rhetorical beauty parade to be net-zero (before competitors’ net-zero target), it really is worth investigating the project activities offering up new opportunities to get involved in the market. The maritime sector, and ports have always adjusted with the times.

The energy revolution is underway. There’s space for innovation, new engineering techniques, and joined-up thinking bringing efficiencies across multiple sectors to the benefit of all.

What a time to be in science, technology and engineering!

What a time to be involved in ports, energy and the maritime sector!

DECEMBER 2021 | 13

THENEWYORKER BARRY PARKER

FUTURE FUELS: FRONT LINE ROLE FOR PORTS As the world looks towards a reduced carbon 2050- there is a tremendous role for port planners and strategists.

Supply chains and decarbonisation have dominated the news during the past months; indeed- this was readily apparent in Glasgow in early October, across the Clyde River from the main COP26 events, and two weeks ahead of the International Maritime Organisation (IMO) meetings (which will be virtual). The importance of ports was stressed during a day-long Shaping the Future of Shipping conference, organised by the International Chamber of Shipping (ICS) on the south bank of the Clyde.

In my column, I’ve already emphasised how ports can be part of the environmental solutions and pathways while gaining a competitive advantage over their neighbours. Rather than me repeating the same mantra, it’s worth quoting leading industry figures appearing at the ICS event,

move to a different level.” And raised the concern “…that there’s not enough dialogue relative to the importance of ports in the fuel discussion, as an enabler.”

making the same observation.

In a session entitled, Shaping the Infrastructure Required to Deliver an Equitable Transition, Chris Wiernicki , Chairman, American Bureau of Shipping (ABS), talking about challenges on the waterfront, as new fuels come in, noted that: “It gets back to port strategies (yes, he said that!)…ports often fall below the radar…when it comes to distribution, handling, and storage connectivity, but they are very important.

Many observers have, for

8 A number of Rotterdam terminals will be ready for hydrogen imports by 2025 and preparatory steps are being taken to meet the new generation fuel needs of vessel operators

example, noted that putting in place supporting landside infrastructure is a major challenge as shipping shifts to “alternative” fuels.

Further, Wiernicki contended that: “The ships of the future are going to be different…likely bigger…which means that port facilities are going to have to figure out how to generationally

IMO CONCLUSIONS By the time that this article reaches print, the IMO meetings will have concluded- possibly laying out the architecture for a path that would bring shipping to net zero carbon by 2050 (versus its “Initial Strategy”, minted in 2018, of getting half of the way there). If the IMO discussions bog down, as some observers predict- the industry may move towards the “net zero” goal on its own (leaving the regulator to play catch up). Either way, cargo interests will exert huge influences on the carriers, including on their fuel postures.

Quite simply, the ports that support the alternative fuel infrastructures will attract vessel visits; those that don’t can watch vessels sail past to facilities in neighbouring locations.

THEANALYST PETER DE LANGEN

XXL WAREHOUSING: TIME TO THINK BIG The port ‘business ecosystem’ includes logistics activities, most importantly warehousing. Most ports have developed logistics zones to attract warehouses. This strengthens the port business ecosystem, as warehouses generate captive cargo for the port. In addition, developing warehousing sites allows the port development company to capture some of the value created by investments in port and terminal infrastructure. Ports are often so attractive that logistics companies are willing to pay a ‘premium’ for a location in the port.

In developing sites for warehousing in the port area, one relevant issue is: what size should a site be? Increasingly, the answer seems to be: very, very large. In Northern Europe, the term XXL warehouses has emerged, to

14 | DECEMBER 2021

denote all warehouses with over 40,000 square meters of ‘warehousing space’. Most new investments were found, in a report from logistics advisory firm BCI, to be in this segment.

Some cases even suggest that a new category ‘XXXL’ is needed, for developments such as: DSV in Moerdijk, which has a 200.000 square metre logistics space on a 20 hectares site. And similarly for Bestseller (a company with brands such as Jack & Jones) that has a 28 hectares in Lelystad or Inditex (with brands such as Zara) that has 35 hectares, also in Lelystad, and DHG which has 30 hectares in the Port of Rotterdam. In Northern Europe, the record may be Katoennatie’s ‘Loghidden City’ a 216 hectares project, under development for two decades, consisting of various warehousing

buildings with a combined capacity of more than 1 million square metres.

A key driver for the increasing size of warehouses is the growth of e-commerce, that requires more storage, as well as operations in ‘return logistics’. In addition, warehousing automation drives large warehousing sizes, as automation creates scale economies in

8 The “Loghidden City” logistics platform in Antwerp, Belgium incorporating 1.2 million m² of covered space epitomises the scaling up of warehousing requirements

warehousing. All of this is relevant for port companies giving consideration to developing or redeveloping logistics sites in port areas. It is very relevant to ‘think big’.

For the latest news and analysis go to www.portstrategy.com/news101

THEECONOMIST BEN HACKETT

THE ECONOMICS OF GLOBAL TRADE Economic growth, or the lack of it, has had less of an impact on trade than was expected, resulting in stronger economic growth.

Over the past year we have spent some time trying to analyse the flow of goods in the environment of the COVID-19 pandemic with its lockdowns and slow return to a new normal way of working. Economists are faced with major obstacles when trying to project the real volume of trade in all sectors of the maritime and port industry as demand has plunged and surged leaving us with, some would say, the happy situation of demand in excess of supply and a breakdown in the logistics supply chain resulting from the pandemic.

Economic forecasting has not done well in this new environment that saw countries shut down in various degrees for 18 months.

2020

2021

2022

US

-3.4

6.0

5.2

Canada

-5.3

5.7

4.9

Euro

-6.3

5.0

4.3

UK

-9.8

6.8

5.0

China

2.3

8.0

5.6

Japan

-4.6

2.4

3.2

India

-7.3

9.5

8.5

ASEAN -5

-3.4

2.9

5.8

Real GDP, annual percent change. Source: IMF, October 2021

This was, and remains, an unprecedented situation.

An analysis of container volumes at the global level shows relatively mild changes, other than in a few individual months, comparing 2020 with 2019 at the annual level. This was likely due to reactions to tariffs which caused a surge of

8 Table 1: World Economic Outlook Growth Projections

inventory building that went into early 2020.

In 2021 the consumer demand was strong enough to deplete most inventories which led to another boom in shipment volumes which is the background

to the lack of capacity as COVID-19 impacted available labour and caused China to shut ports down. The end result was vessel queues resulting in congestion in China, North America, and Europe.

When we look at the IMF historical and projected growth projections in Table 1, we see a lack of connectivity between economic growth and trade volumes in 2020 but that comes back in 2021 and will most likely continue well into next year. This suggests that the pressures on available shipping capacity and the supply chain will also remain with us.

The impact on industrial production is most noticeable in China in 2020 and the Covid incentives of the U.S. and Europe in 2021. The UK recovery is particularly remarkable.

THESTRATEGIST MIKE MUNDY

POSITIVES AND NEGATIVES IN THE PANDEMIC ERA Just as we can cite at an individual level positives and negatives flowing out of the pandemic era – more flexible working arrangements versus travel and social interaction restrictions for example – the container sector is also delivering these plus and minus factors.

A big plus has to be the increased emphasis on the take-up of digitalisation in its various forms and a willingness to adopt more flexible forms of working whether this be extended hours, remote working or greater role flexibility.

At a market level, however, there is not so much that is positive to say unless of course you are a shipping line enjoying a hitherto unparalleled profits bonanza. For the majority, it is a quagmire of much elevated freight rates, difficulties in securing freight space/sailing slots, vessels out of schedule,

port congestion, inadequate rail capacity, trucker and warehouse worker shortages.

While 2023 is cited by most analysts as the time when the pain will subside – with a rebalancing of demand and available capacity bolstered by major new container ship tonnage – will it disappear and leave an industry as we used to know it or will it leave an industry with a markedly different shape to it?

So what could change?

5 The shipping alliances – there are already some murmurs that this format of shipping service may not be an enduring one.

What next a return to smaller, more focused, groupings and some solo operations? A new fracturing of the shipping line alliances could see a changing balance in the terminal sector.

With individual lines (not alliances) striking deals for space. The entire alliance

For the latest news and analysis go to www.portstrategy.com/news101

structure was essentially defensive to protect capacity when the market was oversupplied and profitability negligible/negative. Stronger lines may not need these arrangements in future and this could fracture terminal arrangements…..

5 The loss of some cargo commodities – those that are not viable to ship given today’s elevated freight rates and the departure of other significant volumes from liner services as a result of big cargo owners adopting a DIY approach – like Walmart, Ikea, Home Depot, John Lewis and others. Amazon Shipping is a concept that was being talked about even before the pandemic.

5 More near shoring – this is already underway.

5 The recent mega profits of shipping lines will exert an influence – more investment in

the logistics chain up to and including e-buyer platforms.

5 As part of the above, much stronger interest by lines in investment in terminal capacity and as result more competition for independent terminal operators – see p22.

5 Independent terminal operators ramping up interest in talking to and doing deals direct with major cargo owners…it has been thought about, the next step is wider implementation.

The list could go on and all are factors to consider in formulating forward business strategy. The one big factor that I hope will not occur is more regulation to solve problems encountered in this challenging period. More regulation can be a by-product of challenging times but it can often prove not fit for purpose when more stable times come along – it can have the reverse effect and be a brake on development.

DECEMBER 2021 | 15

Worldwide Performance

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EQUIPMENT NEWS

PORT INVESTMENT FUNDAMENTAL TO MEXICO’S CIIT PLANS The Interoceanic Corridor of the Isthmus of Tehuantepec (CIIT) wants to improve container efficiencies in two Mexican ports in order to support a major Mexican infrastructure project.

CIIT is to invest US$50 million in the renovation of existing equipment at both the ports of Salina Cruz & Coatzacoalcos – the two marine facilities at either side of the country, in the Pacific and Atlantic oceans, respectively.

The Isthmus of Tehuantepec Inter-Oceanic Corridor is one of the flagship megaprojects of President Andrés Manuel López Obrador’s administration. It includes infrastructure for energy projects and industrial development areas and represents an interoceanic dry trade corridor running along 251km of the isthmus of Tehuantepec in southern Mexico.

To help attract investment in the project, the Mexican government will give the corridor special economic zone status offering tax incentives.

Consequently, the role of the two ports at either end of this routing are of crucial importance to help support cargo opportunities.

Rafael Marín Mollinedo, Manager of the Program for the

BRIEFS HMM’s IoT

Hyundai Merchant Marine (HMM) is to utilise Internet of Things (IoT) technology when shipping refrigerated containers. The use of IoT means it is possible to better determine the location of reefers in real time, while also noting changes in temperature, carbon dioxide emissions, humidity and vibration of the units. By the end of 2021, HMM expects 1000 reefers to have this technology in place.

Development of the Isthmus of Tehuantepec, has confirmed that crossing Mexico and linking the Atlantic and the Pacific coasts takes longer and is more expensive than using the Panama Canal. The additional time is between 13 per cent and 44 per cent longer and between seven per cent and 44 per cent more expensive.

“This is why it is necessary to modernise the infrastructure.

Even with an expansion to the Panama Canal, an additional inter-oceanic crossing is required.

The Tehuantepec Corridor can be competitive with the necessary infrastructure,” he explained.

The Coatzacoalcos and Salina

8 Mexico’s government remains invested in improving connectivity between the Atlantic and Pacific coasts – hence a new focus on The Interoceanic Corridor of the Isthmus of Tehuantepec

Cruz Integral Port Administrations (API) will invest in new cranes as well as supporting cargohandling equipment and a new delivery-reception area to support truck and railroad activity.

Currently, Coatzacoalcos does not provide specific containerhandling capabilities and handles less than 1000 TEU per annum.

Salina Cruz box activity is around 15,000 TEU annually. The new investment is designed to improve the competitiveness of each port.

Green Felixstowe

The Port of Felixstowe in the UK has placed orders for 48 battery-powered terminal tractors and 17 zeroemission remote controlled electric rubber-tyred gantry cranes (ReARTGs). ZPMC is supplying the electric tractors in partnership with Chinese vehicle manufacturer, Shacman (Shaanxi Automobile Group).

Konecranes is providing the ReARTGs, which also comprise the latest semiautomation technology.

Nemport RTGs

Nemport Liman Ìsletmeleri (Nemport) in Izmir, Turkey, has confirmed an order for 10 Konecranes Noell Rubber-Tired Gantries (RTGs). The order was booked in July 2021 and the units will be delivered in 2022. Current volume is in excess of 430,000TEU per annum.

New Gavle Cranes

8 Bolloré Ports has ordered two new Gaussin electric terminal tractors and a multi-charge station to equip its Freetown Terminal in Sierra Leone. The APM75T HE tractor is 100 per cent electric and will contribute to 100 per cent carbon-free port logistics, as well as reducing maintenance costs. The acquisition of this new equipment is in line with the Green Terminal labelling process launched by Bolloré Ports in June 2021, with the aim of decarbonising transport of containers at its port terminals.

For the latest news and analysis go to www.portstrategy.com/news101

The Yilport Gävle Terminal, Sweden, has received three new Paceco design ship-to-shore cranes. The environmentally-friendly units were manufactured

by Mitsui E&S Engineering Oita of Japan. This latest investment in new equipment follows Yilport Gävle Container Terminal’s recent order for eight Kalmar heavy terminal tractors booked in Q1 2021. Delivery will be by the end of 2021.

DECEMBER 2021 | 17

EQUIPMENT NEWS

BRIEFS Riga Drones

The Freeport of Riga in Latvia is testing the use of small underwater drones as a way of collecting accurate data on the technical condition of its infrastructure below the surface of water.

The drones are capable of submerging to depths of up to 150m and generate analysis reports automatically.

Bangladesh Seals

The Chittagong Port Authority has confirmed the mandatory use of bullet seals on all loaded import containers to improve security. The port authority says the majority of containers arriving use the original plastic/metal strip seals, which it regards as easily broken.

18 | DECEMBER 2021

CARGOTEC AND KONECRANES OPERATING MODEL Following a decision to merger in 2020, Cargotec and Konecranes have announced the planned operating model of the new unified entity.

The Finnish-based companies are hopeful of completing the

merger by the end of H1 2022, with the new organisation adopting a “customer-centric” model with four independent business units each serving one designated customer segment – industrial, maritime, ports and roads.

Until the merger is officially completed, both Cargotec and Konecranes will continue to operate independently, with existing management focusing on remaining consistent with existing areas of responsibility.

…BUT THERE ARE ISSUES In terms of whether the proposed Cargotec and Konecranes merger will gain all necessary regulatory approvals, there is mixed news. In July 2021, the European Union confirmed it was starting a Phase II review of the plans, with results expected by the end of 2021 or early 2022, In August 2021, the merger was granted approval from the State Administration for Market Regulation (the competition authority) in China.

However, concerns have been raised in Australia. The Australian Competition & Consumer Commission (ACCC) has stated it

has potential competition issues. This is because in this country Cargotec’s Kalmar subsidiary and the Port Solutions business from Konecranes are both supplying equipment such as quay cranes, straddle carriers and reachstackers for container operations.

Rod Sims, Chair, ACCC explains: “The market feedback we have received is that Cargotec and Konecranes are the only proven suppliers in Australia of straddle carriers used at terminals. If Cargotec and Konecranes merge, the only potential

8 The ACCC has competition concerns over the planned Cargotec and Konecranes merger

alternative for customers will be ZPMC, which has never secured sales in Australia.”

In addition, the ACCC has confirmed that it is considering the proposed merger’s impact on the supply of other mobile container handling equipment, plus provision of repair and maintenance services.

The final decision of the ACCC is currently scheduled for February 2022.

For the latest news and analysis go to www.portstrategy.com/news101

EQUIPMENT NEWS Global port operator, APM Terminals (APMT) and equipment manufacturer, Shanghai Zhenhua Heavy Industries Company Limited (ZPMC) have confirmed a new strategic alliance with a key focus on automation.

A major component of the new Memorandum of Understanding (MOU) is an order for 18 ship-toshore (STS) gantry cranes and nine yard cranes, plus a production reservation for a further 25 STS cranes and 62 yard units in the future.

The development and deployment of automated container terminal equipment is a key focus of the new arrangement, which sits comfortably within APMT’s recorded strategy of, “Safer, Better, Bigger.”

Morten Engelstoft, CEO, APMT, explains: “With this alliance, we are leveraging our 23 year-long relationship more effectively, in which APM Terminals demonstrates strong commitment towards ZPMC and

APMT AND ZPMC ALLIANCE

BRIEFS SCPA cranes

in return receives prioritisation of factory capacity, access to the best resources, active involvement in product development according to our needs and a commitment to maintain the relationship on a long-term basis.”

The foundation stones of this relationship are already visible with ZPMC’s automated equipment in use across the

For the latest news and analysis go to www.portstrategy.com/news101

8 APMT and ZPMC are now working under a new, strategic MoU, with a strong focus on automation

APMT portfolio, including at Tanger-Med (Morocco), Lazaro Cardenas (Mexico) and at its new Vado Ligure operation in Italy.

There is also a pilot programme underway in Aarhus (Denmark) utilising ZPMC’s Automated Straddle Carriers.

South Carolina Ports Authority has confirmed receipt of the final two ship-to-shire gantry cranes for its Wando Welch terminal at the Port of Charleston, to complete its programme of 15 new units with an outreach of 24 containers. Assembly of the ZPMC-built cranes will commence immediately, with the aim of being operational in early 2022.

New Dostyk RMGs Eurotransit Group of Companies (Eurotransit) has ordered two rail-mounted gantry (RMG) cranes for its new intermodal terminal in Dostyk, Kazakhstan.

The two new units will be supplied by Konecranes and will be delivered in Q4 2022.

DECEMBER 2021 | 19

SUDAN: PORT POLICY

SUDAN CROSSROADS Port Sudan’s situation is symbolic of that of the country as a whole – in simple terms forward or reverse? The key is removing politics from the decision-making process Port Sudan, Sudan’s main seaport, continues to ride the roller coaster presented by the country’s volatile politics with the road ahead to progress in need of focused and unified leadership.

The beginning of November saw the lifting of a six-week blockade of Port Sudan implemented by the Beja tribal group. It did so with a political agenda and at the centre of this the goal of removing the transitional government.

The lifting of the blockade followed a military coup on 25 October which ended the power sharing arrangement between civilians and the military, which came into effect after the overthrow of Omar al-Bashir and was meant to steer the country towards democratic elections in 2023.

The military coup received massive international condemnation and sparked country wide protests resulting, in late November, in the release of Abdalla Hamdok, the detained civilian prime minister and other political prisoners.

The release is based on a 14-point deal, and the set-up of a new largely technocratic cabinet, agreed between Hamdok and the coup leader General Abdel Fattah al-Burhan. This agreement, however, is not liked by all civilian interest groups including The Forces for Freedom and Change, the group that effectively led the overthrow of Bashir. At the time of writing, there is no certainty that this latest agreement will lead to stability and a viable route out of the political turmoil.

For Port Sudan this scenario offers little comfort which, in turn, means a continuing limited contribution to economic recovery.

PORT ISSUES Port Sudan has major potential. Its strategic location makes it well placed to serve not just as the major gateway port for Sudan’s maritime trade but also as a regional hub serving the landlocked countries which surround it. These include South Sudan, Ethiopia, Chad, Niger, the Central African Republic and Uganda. Further, the potential extends to serving areas of neighbouring countries distant from their own ports plus its Red Sea location offers the ability to engage in container transshipment activity.

A simple starting point is to go back and complete the privatisation process…

‘‘

As recent events have demonstrated, however, the port remains hamstrung by the tide of political events. Essentially, the port has become politicised; negatively impacted by the shifts in power and underpinning this being used as a pawn in regional haggling. The port is seen as a revenue source by both special interest groups in the eastern region and in Khartoum where it is looked upon as an important generator of foreign exchange.

This negative culture has to be dropped by all parties in order for Port Sudan to progress and realise its huge potential. There has to be a widespread recognition that a unified approach to its development will facilitate efficient trade processes, generate major employment opportunities and provide it with a real chance of gaining regional hub status. Fundamentally, however, this boils down to the

strength of central government to enforce its policies nationwide and to exert clear, unbiased leadership in pursuit of economic strategies of benefit to the country as a whole.

AT A CROSSROADS In the years leading up to regime change in Sudan, the South Port Container Terminal (SPCT) in Port Sudan underwent what was widely recognised as an efficient and transparent concession process, overseen by Hamburg Port Consulting.

This resulted in the award of the concession to International Container Terminal Services Inc. (ICTSI) of the Philippines. This was a much-needed step to bring Sudan’s main international container terminal up to modern and professional standards after decades of what is widely acknowledged to be mismanagement by the Sea Ports Corporation of Sudan.

However, after the revolution, vested interests opposing the privatisation process succeeded in using the revolution as an excuse to have the new regime terminate the contract awarded to ICTSI. As a result, the Sea Ports Corporation of Sudan remains in control and service levels remain sub-standard.

ICTSI, approached by PS for its view of the chain of events, responded with a simple statement: “ICTSI is proud to have won a very competitive tender process and remains ready to implement the concession under the terms agreed.”

Today, Port Sudan stands at an interesting crossroads symbolic of the situation of the country as a whole. Effectively, it can continue to rub along under public ownership, in a functional way without a sound development strategy behind it, or the new government leadership can validate Hamdok’s emphasis on technocratic and expert management of the economy and implement much needed reforms at Port Sudan, in the process demonstrating that real progress can be achieved. A simple starting point is to go back and complete the privatisation process rather than letting various interest groups hold the whole country hostage to either a closed or backward port.

Within such a framework port Sudan has a realistic chance of enjoying the multiple benefits enjoyed by its regional peers who have already followed this rewarding path.

For the latest news and analysis go to www.portstrategy.com/news101

8 South Port Container Terminal handles an annual volume of around 0.5 million TEU but with properly directed reforms can do much better

DECEMBER 2021 | 21

TERMINAL OPERATIONS

TERMINAL TRANSITION Johan-Paul Verschuure of the Rebel consultancy group looks at the new-found wealth of shipping lines and the implications for the terminal operating sector

8 Increased shipping line investment in strategic terminal capacity is underway – recently CMA CGM has bought back the Fenix Marine C.T. in LA, MSC has been buying back TIL shares and Hapag Lloyd has declared its interest in the sector

It’s hard to grasp that an industry offering very cheap transport across the globe for years – even below the actual costs to the liner – is now making billions in profit.

The favourable position the shipping lines find themselves in seems set to continue in 2022, with more supply chain disruptions. The lines are certainly ‘making hay while the sun shines. Due to very thin margins the industry stretched itself in all direction to make ends meet. All of a sudden – within a time span of 12 months – the world has changed completely. But what to do with the mega profits?

WHERE TO INVEST THE PROFITS? So, what are the options for the shipping lines? So far, the emphasis has been on paying back their large debt burdens and alongside this investment in new vessels is now at an unprecedented level. The first wave of the new ‘Corona Vessels’ is likely setting sail in the course of 2023 and onwards. There are however more investment options available to the shipping lines, not least further vertical integration in the supply chain. This has become an increasingly popular approach with shipping lines such as CMA CGM and Maersk buying into 3PL providers and even air freight operators. Another strong option is to secure strategic

22 | DECEMBER 2021

container terminal capacity. And this will likely have a significant impact on the industry.

Terminal operators are only now starting to see revenues increase following supply chain problems. Global demand at container terminals has seen a healthy but manageable growth with volumes on average returning to the levels witnessed in 2019. Longer dwell times at the container yards and in warehouses are boosting storage revenues. Terminal operators are seeing their buffers grow, but not to the same extent as shipping lines are experiencing.

What will this mean for the independent terminal operator not linked to shipping lines?

SHIPPING LINE DIRECTIONS Ordering new vessels in the current situation won’t make much difference. Current supply chain problems stem from short term labour problems as a result of infections – especially with regard to securing terminal capacity and trucks as well as empty containers in the correct locations.

Secondly, vessels being ordered now will only set sail after these problems have been alleviated (it is hoped!).

With the problems easing in a couple of years, container turnover rates should return to typical pre-pandemic levels.

For the latest news and analysis go to www.portstrategy.com/news101

TERMINAL OPERATIONS With new dedicated container capacity, container volumes will be moved away from multi-user facilities

‘‘

This will surely lead to less favourable supply/demand balances for the shipping industry, with more typical margins for shipping lines once again occurring. The lines are aware of this, so fleet expansion is probably focused on market share considerations that were typical drivers in the last decade or so.

Investments in other parts of the supply chain make much more sense.

Shipping lines flooded with cash can now realise their preCovid ambitions of controlling the entire supply chain doorto-door. The big challenge for the logistics industry has always been managing the numerous interfaces between operators in the supply chain. Consolidation of steps in the supply chain, as well as increased digitisation, will result in more efficient supply chains and hence lower costs. This will make the life of the small logistic player much harder.

But also, the ambition to secure strategic port capacity in various places and reduce the effective handling costs for the lines will be easier to realise. Or at a minimum, shipping lines will not be obliged to sell terminal investments based on weak financial positions as has been undertaken from time to time in the past.

With new dedicated container capacity, container volumes will be moved away from multi-user facilities and consolidated at dedicated facilities for each alliance.

Interestingly enough, terminal operators linked to shipping lines have been very quiet over the last two years. Headlines on new port developments and acquisitions were especially focused on independent terminal operators. With CMA CGM buying back their terminal in LA/LB the trend of shipping lines once again directing newfound cash in this direction seems to have started.

REDUNDANCY IN THE SUPPLY CHAINS In particular the situations in the ports of LA/LB and Savannah are making headlines. Although the situation in many other ports is challenging and delays are frequent, the congestion here is of a different order. When adding port capacity to the system this will be particularly focused on flexibility and capabilities to rapidly respond to uncertain demand development. The call for flexible masterplans has been emphasised repeatedly and the current situation in ports shows why this is a good idea. With vessels and call sizes ever increasing and more pressure to achieve very smooth supply chains, this requirement for flexibility will be here to stay.

The current situation also shows that building in more redundancy into supply chains is a good move. Typically, container terminals aim to operate between 70-80 per cent of capacity to strike a balance between profitability and offering good service levels. With the increasing size and complexity of supply chains, the optimal utilisation levels are likely to drop in the future. Reliability has proven to be a weak point of supply chains, and this may become more of a differentiator in the years to come.

Securing strategic port capacity will increasingly be the focus. In turn this means that to maintain the same profitability, tariffs will need to increase and, as we have seen in the shipping industry for years, the need for large CAPEX (and relatively low OPEX) has seen fierce competition.

Acceptable margins will be especially difficult to sustain. So, it remains to be seen who will pay for all this – will transportation costs go up or will margins in the industry decline once again?

8 Will the future see common-user terminal operations squeezed in favour of shipping line operated terminals?

OPTIONS FOR COMMON-USER TERMINALS Operators of multi-user terminals have in principle the same potential as the shipping lines to further invest in vertical integration of the supply chain. Parties like Hutchison, PSA and DP World have been doing so. In order to balance the new financial strength of the shipping lines, these parties can still partner with financial investors who continue to demonstrate high levels of interest in the sector. In addition, strategic partnering with shipping lines in particular markets may actually be the best offensive move.

For smaller parties, realisation is sinking in that the hinterland logistics will be the next area of strong consolidation, and – indeed – this trend is already underway.

In order to survive, efficiency will need to be stepped up quite dramatically. Sharing data, working together with other logistic players and digital solutions/interface management in order to improve efficiency are the only options for the smaller players. This has proved to be hard for the industry.

However, as large port operators are also looking in the direction of the hinterland, they may be the first candidates for increased cooperation.

As long as independent terminal operators are dealing with the shipping lines only, their negotiating power will reduce further. However, increased transparency and ways for direct engagement with cargo owners (and forwarders) have reduced the costs of dealing with a dispersed client base and is now a real possibility for deep sea terminal operators. In the short sea shipping markets and inland water transport market, more direct interaction between terminal and cargo owner has been a common feature for longer. For the deepsea terminal operators this may be a useful route to diversify their client base away from the few and large shipping lines. This new offering would however need to be tailored in more detail to the needs of each client and more flexible in nature to attract them. This is a clear strategy for terminal operators.

Shipping lines will increasingly focus on controlling more of the supply chain. Multi-user terminals and smaller players in the supply chain will need to focus their attention on the exposure they have in their respective markets in order to counter this. But if they do plan for it, there is a real possibility for a strong position when things return to normal – or to provide a strong position in the ‘new normal’. A real shake-up is beginning.

For the latest news and analysis go to www.portstrategy.com/news101

DECEMBER 2021 | 23

CHINESE COAL DEMAND IMPACT

‘COAL CRISIS’: PORT PRESSURES An energy crunch in China is prompting a surge in thermal coal imports and in turn triggering widespread pressures. Andrew Penfold analyses this complex situation

8 Increased domestic production of coal in China will not meet demand and imports are on the rise triggering widespread pressures

Following hot on the heels of the crisis in the container supply chain, dry bulk demand and freight rates have accelerated sharply in the past few weeks.

As discussed on many occasions previously in Port Strategy the conflict between politics and bulk trade is nothing new. This time, however, deeper issues are emerging with the focus on steam coal. The surge in energy demand has led directly to a crisis in the steam coal trades. How this plays out promises to have massive implications for ports.

WHAT HAS HAPPENDED? The Chinese economy is suffering.

Over-indebted construction (especially for speculative housing projects) has placed great strain on several of the major development companies that have been driving GDP development in recent years. Centrally planned efforts to defuse the property bubble have resulted in a slowdown of economic growth in the third quarter and the outlook is for a further weakening as property curbs are maintained. The depth of the problem is clear as the real estate and related sectors account for around 25 per cent of GDP. At the same time, a crackdown on local government debt is also underway.

On its own, this adjustment would simply reduce raw material demand but there has also been an energy crunch for the economy as a whole and this has forced a partial curtailment of industrial production. There is a nationwide shortage of coal, and this has led to falls in electricity output with at least 20 provinces curbing output. This alone could see fourth quarter GDP slow to around three per cent according to Bank of America analysis.

24 | DECEMBER 2021

The strategic response has been to attempt to increase domestic production, but quality is low and much of this is in the wrong place – the overall result is a surge in demand for imports. There is now a scramble for coal on the world market and this has driven up both steam coal prices and dry bulk freight rates.

This is not just a China problem. The global gas supply crunch – generated by both geopolitical and green issues – has triggered an extreme increase in both gas and electricity prices.

In Europe, electricity prices have risen from around €10 per megawatt hour in autumn 2020 to a current level of at least €50. This has shifted the balance in favour of coal, with a much higher coal burn driving import demand for the electricity sector (as well as increasing reliance on environmentally damaging lignite and setting-back plans to reduce CO2 emissions). It is clear that coal must remain a significant factor in the European energy mix for the foreseeable future.

In the USA, it is estimated that power plants will burn at least 23 per cent more coal this year than in 2020.

THE CURRENT POSITION Essentially three aspects are dominant: 5 Freight rates are at (almost) unprecedented levels.

5 Dry bulk port congestion is a major issue.

5 Coal prices are very high, but the outlook is volatile.

The resulting stress on supply chains has seen spot rates for Capesize dry bulkers increase from around US$18,000 per day to peak at around US$70,000 per day in early October.

This is as high as during the peak markets noted in 2008 when the initial China-effect on freight rates was first noted. The

For the latest news and analysis go to www.portstrategy.com/news101

likelihood is that rates will ease slightly but remain very high into the first quarter of 2022 and – probably – beyond.

The volatility of the market for these vessels is well illustrated by the loss of faith that was initially noted after the weaker Chinese economic outlook was reported in mid-2021.

This saw forward freight rates weaken but the new ‘coal crisis’ has pushed this firmly into reverse. More coal to keep the power on in the winter will surely equal higher bulker rates.

More coal demand is also generating severe port congestion which, in turn, is cutting effective shipping capacity and impacting the supply side of the market equation (just as is the case with containers). As recently as end-September, the broker Braemar ACM was estimating that at least six per cent of the global dry bulk fleet capacity was waiting to discharge at major Chinese bulk import terminals. This is further pushing up freight rates. The congestion issue is impacting all ship sizes, with smaller vessels focusing on the grain trades also seeing congestion with Chinese grain silos at high usage levels – see Figure 1.

Coal prices have surged. The weakening of the Chinese economy has not been manifested in lower prices. Steam coal market indicators in Australia peaked at around US$180/ tonne in October. This represents an increase of around 120 per cent since the beginning of the year.

Why has this happened with a weakening Chinese economy?

The answer is that the Chinese energy sector has been squeezed by higher oil and gas prices and that it remains dependent upon imports. With similar pressures noted in Europe and the USA this has seen a surge in demand for coal imports – all of this despite political moves to reduce coal burn.

More coal demand is generating severe port congestion which, in turn, is cutting effective shipping capacity…

‘‘

The focus of the situation is China. The Chinese government has ordered its top coal regions to boost output and will allow power utilities to charge customers higher prices in order to combat shortfalls. According to Reuters, Inner Mongolia and Shanxi have ordered miners to lift combined annual production capacity by more than 160m tonnes. Despite this, power rationing is underway. This will not be sufficient to provide the required burn, and this has driven import demand. The position has been made more complex by anti-corruption cases brought against the coal sector which has forced some mine closures.

Coal inventories at major Chinese ports were at 52m tonnes in early October which is around 30 per cent down on the year before. The government is now calling for further imports to offset this shortfall following a tonnage drop in the first half of 2021. Reality has forced the release of Australian coal which had been the subject of a de facto politicallydriven embargo since mid-2020 and the USA is also stepping up tonnages. Major power plants are holding average stockpiles of around 10 days supply, with this being half of the capability last year.

This all means increased demand with discharge facilities simply unable to keep up with these volumes.

Source Braemar ACM

CHINESE COAL DEMAND IMPACT

8 Figure 1: Chinese Dry Bulk Port Congestion

8 Figure 2: Australian Coal Prices US$/tonne

although recording higher volumes – have not seen any real difficulties in the past few months. The position is complicated because – on the one hand – very strong demand would indicate the need for greater discharge capacity (especially for the largest vessels) but, on the other, coal remains an unfashionable commodity and its long-term prognosis is not favourable.

Demand and pricing will remain high as long as Chinese shortfalls drive the market. The need for large scale investment in new capacity – be it in production, ports, or shipping capacity – must remain uncertain, however. Great caution should be taken in forward investment in these sectors simply on the basis of current market specifics.

8 Leading Chinese producers located across diverse provinces are reporting stoppages and slowdowns in output due to power supply problems

WHAT PORT AND SHIPPING IMPLICATIONS? It is important to note that the port congestion issues are focused on Chinese ports. The major coal load terminals –

For the latest news and analysis go to www.portstrategy.com/news101

DECEMBER 2021 | 25

AUSTRALIA: CONTAINER STEVEDORING REPORT

ACCC MIXED BAG Australia’s ACCC has released its latest container stevedoring monitoring report which highlights a mixed bag of impacts and recommendations The Australian Competition and Consumer Commission (ACCC) Container Stevedoring Monitoring Report 2020-21 features an interesting mix of both unsurprising and surprising conclusions.

It is actually remarkable after over 18 months of living with the pandemic what can be categorised as “unsurprising.” The following all fall into this category: Unsurprising 5 The negative impact of surging demand for containerised cargo and congestion throughout global supply chains generating severe disruptions and delays.

5 A major increase in vessels arriving outside their designated berthing windows. The ACCC reports one stevedore suggesting that only 10 per cent of vessels arrived in their designated berthing window during the 2020-21 period.

5 Freight rates today – late November 2021 – being around seven times higher than they were a year ago and ironically accompanied by a significant drop in service levels when measured against on-time delivery performance.

5 A resulting squeeze on the margins of Australian importers and exporters, “as they are all round the world,” says ACCC. It is indeed a sign of the times that such exceptional events have come to be viewed as unsurprising. They are not just Australia’s problem but everyone’s problem – global disarray!

Of course, it is probably also fair to say in this respect that Australia is one of the world’s countries most dependent on extended supply chains and as such the disruption factors have the potential to be commensurately bigger. Additionally, the ACCC points out, that the supply chain disruption Australia has suffered from has been made worse by industrial relations issues and restrictive work practices.

“Industrial action on top of pre-existing congestion has unfortunately put enormous strain on our international container ports at a time when they can least cope with it…,” underlines Rod Sims, ACCC Chair. Indeed, the ACCC goes further voicing the belief, shared by many, that the Maritime Union of Australia (MUA) has recently used industrial action to push for restrictive work practices, including enterprise agreements, that limit the ability of stevedores to automate and make sensible recruitment decisions. As evidence of this it points to Hutchison Ports Australia’s enterprise agreement which requires 70 per cent of new recruits to be ‘family and friends’ of existing employees or people chosen by the MUA. Is this surprising? Sadly, it falls into the unsurprising category…the MUA Has a long history of fielding an ‘us and them,’ as opposed to collaborative, approach to labour relations characterised by rigid inflexibility and demands that are entirely inappropriate to modern port working.

THE SURPRISES So what in the ACCC Container Stevedoring Monitoring Report 2020-21 is surprising?

Giving credence to the findings of the recent study by the World Bank and IHS Markit definitely falls into this category.

Many industry analysts and observers have looked at this ‘study’ and promptly concluded it is flawed. It cites Australia’s container ports as being relatively inefficient and as operating well below international best practice. It places Australia’s

26 | DECEMBER 2021

largest container ports, Melbourne and Sydney, in the bottom 15 and 10 per cent respectively of the 351 ports that featured in the study.

Australia’s container ports may not be in the top tier of the world’s most efficient ports but based on experience and global perspective alone they do not deserve to be categorised in this way.

The second surprising point made by the ACCC relates to the landside charges, better known as terminal access charges, applied by stevedores. These fees have been the cause of considerable controversy and have been slated by landside logistic interests, cargo shippers and notably the industry body Freight and Trade Alliance (FTA). The basic accusation is that the country’s stevedores are stepping up and widening the landside charges as an alternative to passing costs on to a consolidated shipping sector where competition for business is very strong.

Refreshingly, however, the ACCC does not go along with the contention that the charges are excessive. As Sims puts it: “At the current level of landside charges, stevedores do not appear to be earning excessive returns…”

A third surprising point – although doubtless not to some – is a call for more regulation of the container port sector and specifically as it relates to the country’s four major wholly privatised ports – Adelaide, Brisbane, Botany and Melbourne.

It states there is a need to limit the privatised ports’ ability to impose “excessive rents and charges.” Certainly there is a need to establish a more level playing field in this respect but is it appropriate to do so post privatisation? This is an approach that swims against the tide in a privatisation context and the examination of other options appears at least worthy of some consideration.

8 DP World has publicly voiced its surprise at the weight attributed to the inaugural IHS Markit report on global port performance – it is not alone!

8 The full ACCC Container Stevedoring Monitoring Report 2020-21 is available at: https://www.accc.gov.au/ publications/container-stevedoring-monitoring-report

For the latest news and analysis go to www.portstrategy.com/news101

SUPPLY CHAIN PERFORMANCE

FINGER POINTING FUTILE Felicity Landon reviews the highlights of Drewry’s Container Market Outlook for the third quarter of 2021 Human nature demands that there must be a scapegoat for the current global supply chain disruptions and delays – but the problems are not down to just one sector, Simon Heaney, Senior Manager Container Research, Drewry, told his audience in a recent webinar.

Presenting the highlights from Drewry’s Container Market Outlook for the third quarter 2021, Heaney said the current supply chain chaos was not caused by one single sector, “nor can one group fix this on their own”. With the ongoing “eyepopping” freight rates, a lot of the ire is thrown at container operators, he said, and lines are very much on the defensive.

“In our view, they are not to blame for this crisis – they are just the lucky winners in this situation. It is not their fault that ports keep them waiting, throwing schedules into disarray.

But neither is it the fault of terminals, because COVID-19 stripped away a lot of their capacity to turn containers around quickly. And there is no warehouse space because e-commerce has boomed throughout this period.”

Lack of joined-up thinking is one of the reasons why Drewry is less optimistic about a solution being found over the next few months, said Heaney.

Drewry has said that today’s huge freight rates and container profits can all be traced back to COVID-19 and the devastating impact on supply chains, and its previous position was that supply chain disruption would be cleared by the second quarter 2022. However, its predicted date for container recovery has now been extended to the end of 2022.

Chaos was not caused by one single sector, nor can one group fix this on its own

‘‘

“We had expected more progress by now, but supply chain efficiency has been getting worse, not better,” said Heaney.

The problems have been compounded by China’s zero COVID-19 policy leading to large terminals closing after only a handful of cases and very extreme weather events around the world: “China, with its incredible volume-weighted influence on the market, is a key part of this equation.”

RECOVERY TIMELINE Part of the problem when predicting the recovery timeline is that while there is good data on the ocean side, the data quality for landside is ‘less abundant’, said Heaney.

“The more we learn, the more we think the problem goes deeper than we originally feared and in some cases the pandemic seemed to accelerate latent crises that were already going to happen in certain cases – for example, the UK trucking shortage, a problem that hadn’t been addressed for a number of years and Brexit made that situation more complicated.”

Normally it would be hoped that a localised issue in the supply chain could be worked around, “but because this problem is so widespread – it affects every aspect of the supply chain – there are no quick fixes. It is a major problem for a complex supply chain.”

World port handling is expected to increase by 8.2 per cent this year. As he noted, this is a sizeable increase, but it is a downgrade on Drewry’s previous prediction of 10.1 per cent

three months earlier, “since when, the turmoil in the supply chain has worsened”.

For 2022, Drewry has retained its previous guidance for a 5.2 per cent uplift in port handling. An interesting challenge is not knowing for certain whether the supply chain chaos and consequent high rates curbed some growth by denying exporters/importers access to the market, or if the problems increased volumes because shippers moved to step up orders and build inventories.

There are, of course, many uncertainties, such as the looming energy crisis; how long the surge in consumer demand will continue (Drewry thinks it may have already peaked, but demand will be maintained as the world moves to a more hybrid working model); and whether the extreme shipping cost will make it unviable to ship lower cost products, leading to lower volumes.

Further ahead, there is the container ship orderbook. “The recent frenzy of container ship orders will start to hit the water from 2023 and we expect a mismatch between supply and demand from then. This presents a risk to carriers of overcapacity returning to the market. The big question is whether they will care – they will have made three years of previously unheard-of profits.”

The revised profit forecast for container carriers in 2021 is now US$150 billion, said Nilesh Tiwary, manager of Drewry’s maritime financial research division. He predicted a similar result in 2022, despite rising costs and persistent supply chain bottlenecks.

“Where has all the excess cash from profits been going?

We learned that a substantial portion of cash has been used for debt repayments, M&A, vessels and equipment.”

Carriers are also investing in logistics companies and even cargo planes, he added, as they have identified logistics as a driver for value-added services. He predicted more investment in inland logistics support, and also noted that carriers are ramping up investments in terminal assets.

For the latest news and analysis go to www.portstrategy.com/news101

8 Drewry’s revised profit forecast for container carriers in 2021 is now US$150 billion

DECEMBER 2021 | 27

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SOUTH KOREA: BUSAN PORT DEVELOPMENT

BUSAN HAS A PLAN Transshipment is on the rise at South Korea’s Port of Busan. AJ Keyes looks at the investments programmed to facilitate growth in this sector and other priorities

NO. 6 GLOBALLY The Port of Busan is currently the sixth largest container port, globally, in volume terms. The total container port market in South Korea currently amounts to 29.1 million TEU based on 2020 data. Of this volume, Busan handled over 21.8 million TEU, the equivalent of 75 per cent. To put this into perspective, the second largest volume port in the country is Incheon, but its volumes were less than 3.3 million TEU in 2020.

Figure 1 shows the development of container traffic at Busan, rising from 19.5 million TEU in 2015 to reach more than 21.8 million TEU by the end of 2020.

Since 2018 container transshipment traffic has maintained a clear lead over local cargo.

As Figure 2 highlights, in 2017 there was a more or less 5050 split between local cargo and transshipment, but within just three years the position has changed, with transshipment in 2020 accounting for 55 per cent of total demand and local activity dropping to 45 per cent.

TRANSSHIPMENT: EXPANSION AND REFINEMENT So, what is the Busan Port Authority (BPA) doing to facilitate ongoing growth in the transshipment sector?

Construction of more feeder capacity is a good start, but also required is a rationalisation of internal logistics’ arrangements. Currently, many feeder vessels call at Busan North Port, which means that additional trucking costs are incurred to get the containers back to Busan New Port, where the larger mainline ships berth.

Transshipment is a highly competitive and lower revenue business (than import-export activity), so reducing internal logistics costs represents an important step in promoting overall competitiveness.

Hence a new feeder terminal, to be developed at Busan New Port, aims to improve cost efficiencies and save time by reducing the need for extended trucking movements.

Busan Port Authority (BPA) has chosen DL E&C to construct the “lower” section of the feeder terminal, with works scheduled to be finished in 2024. There is also an “upper” section and this is slated for completion in 2025. So far, BPA has not selected its preferred construction partner but at the time of writing (early November 2021) it had invited several companies to participate in tenders.

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8 Figure 1: Development of Container Traffic at Port of Busan, 20152020 in ‘000 TEU

Hyundai Merchant Marine (HMM) was selected as the preferred bidder for the West Pier. Yet in June 2020 the shipping line, which already operates Hyundai Pusan Newport Terminal in the Busan New Port area, withdrew, citing concerns about possible cargo volume cannibalisation if it had to split its traffic between more than one terminal.

The development of Busan New Port continues to be the focus of container port capacity development in Busan.

Currently, there are 23 container berths with a total of 40 planned (and five general cargo areas) taking the redeveloped Busan New Port to an annual container capacity of over 15.8 million TEU per annum.

DISTRIPARK PLUS A new Distripark project at Busan New Port is also under development. The 8.46 million m2 facility is targeting assembly, classification, packaging and processing to go beyond the simple task of cargo handling. It is also a free trade zone which further aims to attract cargo via the services offered and tax breaks available.

There are four key components to the project, North Container Terminal Distripark (2.23 million m2 by 2030), South Container Terminal Distripark (1.14 million m2 by 2025), Ungdong Complex (3.60 million m2 by 2025) and West Container Terminal Distripark (1.18 million m2 by 2030).

Clearly, the port of Busan has an ambitious development agenda with broad-based investment underway. # )

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For the latest news and analysis go to www.portstrategy.com/news101

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DEEP-SEA CAPACITY AS WELL Expansion is also underway to support deepsea shipping activity.

In August 2021, Dongwon New Port Terminal consortium was selected as the preferred bidder to operate new terminals under Phase 2.5 and Phase 2.6 of the West Container Pier in the Busan New Port area. Completion is due in 2023 and 2026, respectively, as part of the West Pier offering 3.55 million TEU per annum, according to BPA. This latter project has, however, not been without issues.

Originally in December 2019 a consortium headed by

8 Figure 2: Recent Growth of Transshipment at Port of Busan since 2017

DECEMBER 2021 | 29

Source: Busan Port Authority, dataand.com

Busan is upping container transshipment capacity and rationalising logistics arrangements in order to maximise its competitiveness in the sector. At the same time, it continues to roll out new deep-water container terminal capacity and progress major distripark plans.

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CHINA: YELLOW SEA PORT DEVELOPMENT

YELLOW SEA POWERHOUSE The Yellow Sea area is a sub-regional powerhouse in China and home to some of the country’s biggest container ports. AJ Keyes looks at the current strategy in play for the region The Yellow Sea is an area of the Western Pacific Ocean located between mainland China and the Korean Peninsula.

These coastal regions of China are very densely populated, consisting of more than 600 million people and some of China’s major ports.

CONCERTED ECONOMIC GROWTH, CONDENSED REGION Also located within the Yellow Sea Economic Basin (YSEB), defined as an area of around 300 miles of the Yellow Sea rim, are some of Asia’s biggest and most important political and financial centres. For example, Beijing and Shanghai in China and Seoul in South Korea, while Tokyo in Japan is also only a short flight away. To the Chinese authorities it can be defined as an area of concerted economic growth in a condensed region.

According to official statistics from the People’s Republic of China, there are more than 60 “mega-cities” within the immediate vicinity of the Yellow Sea, each with a population of more than one million people.

Unsurprisingly in such a key region of economic development and population, there are a number of ports, including Dalian, Tianjin and Qingdao. As Table 1 confirms, container traffic for these ports for the January to September 2021 period, along with other major facilities in China, has generally been strong.

Other ports in this region, such as Rizao, Qinhuangdao and Dandong, complete the Yellow Sea port picture.

On the other side of the coin, there are two ports in the Yellow Sea region which have recently had negative experiences; namely, the failure of Dandong, one of China’s few privately-owned/developed ports and the continued volume declines for Dalian.

STATE-LED PORT CONSOLIDATION In Q3 2020, following bankruptcy, Dandong Port was restructured into the Dandong Port Group. The original port operator was forced into a court-led restructuring process in Q2 2019, with reported liabilities of RMB66.7bn ($9.67bn).

Consequently, the Liaoning Port Group, part of China Merchants, has now taken control of this facility following a government recommendation (via the appointed administrators). The impact of this move has already been seen with plans to leverage its geographic location on the border between China and North Korea.

International press reports confirmed at the start of November 2021 that Dandong Port is utilising its geographic capability to serve cross-border rail traffic, which fuels speculation about the border between the two countries re-opening after being shut down in January 2020 due to COVID-19 concerns.

LINKS WITH NORTH KOREA RAMPING UP A new procurement tender from the Dandong government from November 1, 2021 requested bids to manage construction of a new dual carriage road that will connect Dandong with Sinuiju in North Korea.

At the same time, international press reports sourced to the USA, state that rail freight shipments have also now commenced across the Yalu River border linking the two countries – representing potential cargo for Dandong, but also bringing aid and goods for North Korea as it continues to struggle with sanctions and economic difficulties.

Traditionally, China has supplied up to 90 per cent of North Korea’s trade, with oil, fertilisers and machinery all key cargoes.

There is clearly a defined consolidation strategy in the Yellow Sea port region for China. China Merchants Group took control of Liaoning Port Group in 2019 and has continued the process, with Dalian Port and Yingkou Port both now part of a state-led strategy of placing more facilities under the same controlling organisation.

This initiative will make it more difficult to understand the exact competitive position in Dalian. As shown in Figure 1, to the end of September 2021 the port’s year-on-year activity was down by -37.2 per cent and this followed a similar trend in 2020 when a decline in container throughput of -41.7 per cent saw 5.11 million TEU handled – much less than the 8.81 million TEU recorded in 2019.

Localised reports previously referenced container traffic shifting to nearby Yingkou as a factor in the decline in Dalian, so with Dalian and Yingkou ports now falling under centralised control, any joint cargo volume releases will make it difficult to ascertain exact trends in Dalian port in the future.

For China, stability within the YSEB is going to remain a key factor in continuing to target its aims of remaining a major political and economic force. The strategy seems to be firmly in place.

Port

Jan-Sept ‘21

Y-o-Y %

Dalian

269

-37.2%

Tianjin

1580

14.8%

Qingdao

1783

11.1%

Rizao

383

8.9%

Lianyungang

375

3.8%

Shanghai

3480

9.9%

Ningbo & Zhoushan

2397

12.2%

Xiamen

900

7.6%

Shenzhen

2141

13.2%

Guangzhou

1786

5.2%

Beibuwan

419

19.1%

For the latest news and analysis go to www.portstrategy.com/news101

8 Trade and physical links are expected to be improved between China’s Yellow Sea region and North Korea

8 Table 1: Volumes in 2021 for Major Ports in China

Notes: Figures in ‘0000 TEU

DECEMBER 2021 | 31

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TERMINAL DEVELOPMENT

ADANI ROLLERCOASTER Adani Ports and Special Economic Zone Ltd (APSEZ) has been riding a roller coaster internationally and to a more limited extent at home as it pushes to expand. AJ Keyes reports The November 2021 edition of Port Strategy reported how Adani Ports of India has signed a US$700 million Build Operate Transfer (BOT) deal to develop, manage and operate the Colombo West International Container Terminal in Sri Lanka. Adani holds a 51 per cent stake in the project, local partner John Keels 34 per cent and the Sri Lanka Ports Authority 15 per cent.

This latest deal joins other international port projects in Mynamar and Australia as well as a strong portfolio of 13 terminals across seven states in its home country of India. The two international projects have proved problematic while at home Adani has made progress but not without challenges.

MYANMAR WITHDRAWAL The bottom line with the project in Mynamar is that the company is set to abandon the concession for the Yangon International Terminal which it won in 2020. It has made this decision against a background of Mynamar suffering a military coup in February and an ensuing crackdown on mass protests which have seen protestors against the coup killed which, in turn, has drawn international condemnation and sanctions.

There was a possibility that Adani could have ended up in violation of US sanctions which clearly it does not want to do.

Adani’s formal withdrawal statement says: “The company’s risk management committee, after a review of the situation, has decided to work on a plan on exiting the company’s investment in Myanmar, including exploring any divestment opportunities.”

As a result, Adani Ports is expected to fully exit the project by the end of H1 2022. This is after already investing US$127 million in the project, including US$90 million as an upfront payment. The company has suggested that the write-down of the money spent does not have a material impact overall because the project only accounted for “about 1.3 per cent of the company’s total assets.”

In Australia, Adani owns and operates the 50-million tonnes per annum capacity Abbot Point coal export terminal.

Here too Adani has faced financial penalties.

In 2020, a Queensland court ordered the company to pay damages of A$106.8 million to four terminal users for “unconscionable conduct” as it targeted to “advantage its own financial interests over other coal companies.”

As a result, Adani has undertaken a rebranding exercise to re-name the facility North Queensland Export Terminal (NQXT) and has had to inject A$100 million to meet repayments.

Also part of Adani Australia is Adani Mining Pty, the company’s flagship project at Carmichael in the Galilee Basin, Central Queensland. This is planned to realise thermal coal exports from a new mine with Asia and India as primary target export markets.

Unsurprisingly perhaps, in this age of environmental consciousness, there have been diverse criticisms of the project which include: that the mine will violate the land rights of the Wangan and Jagalingou people; drain tens of billions of litres of water every year, threaten the survival of the ancient Doongmabulla Springs, drive the extinction of endangered species such as the Black-Throated Finch and result in hundreds more coal ships travelling through the

Great Barrier Reef every year. There have also been disputes over the project’s financial viability and the foreseeable economic benefits.

The project has been dubbed one of the most controversial in the world and since work on its development, which began in 2019, commenced it has been scaled back to a projected output of 10 million tonnes per annum.

8 Challenging developments in Myanmar and Australia contrast with a more positive position at home for APSEZ

HOME DEVELOPMENTS Within its home country, there is more positivity, with recent acquisitions including Sarguja Rail, Dighi Port, and Gangavaram Port. Another port project, Vizhinjam port, targeting container transshipment is located on the Arabian Sea coast at Vizhinjam in Thiruvananthapuram, Kerala in close proximity to Sri Lanka. Adani is building the facility on a 40-year Design, Build, Finance, Operate and Transfer basis (DBFOT).

The concession agreement was originally signed in August 2015, for operations to commence by the end of 2019, which subsequently became 2021. An acute shortage of granite for the 3.1km breakwater means only 850m has so far been completed, while several cyclones and COVID-19 have also contributed to the delay.

The revised date for operational start-up is December 2023. This is according to a statement made in October this year by Ahamed Devarkovil, Kerala Minister for Ports who additionally noted that the phase 1 development will deliver a million TEU capacity and the final build out a capacity of 6.2 million TEU per annum.

An obvious question mark hanging over this project, however, is how will it co-exist with the nearby Colombo project which is also focused on transshipment traffic?

In a more positive vein, November this year saw Adani declare that it is building a war chest to acquire the major equity stake in government-owned logistics service provider Container Corporation of India (CONCOR). The deal, should it go through, is expected to be the largest undertaken by APSEZ.

For the latest news and analysis go to www.portstrategy.com/news101

DECEMBER 2021 | 33

SIMULATION FOR OPERATOR TRAINING

IS THIS FOR REAL? Felicity Landon discusses the use of simulation for operator training and the perceived benefits it offers

8 A raft of efficiency and cost-saving benefits are claimed for operator training via simulation

Increasing efficiency, reducing costs, improving safety – many of today’s port terminal challenges (or aspirations) can be addressed by using simulation, according to speakers at a recent webinar.

“There is one issue at the forefront of today’s port terminal operations and that is the global supply chain congestion,” said David Clark, Senior Product Marketing Manager at CM Labs Simulations.

The supply chain problems are expected to go on for some time and number of analysts are projecting it to last for years, and there are even suggestions that this is a new reality which will lead to fundamental changes in the world’s shipping infrastructure, he noted.

“Nearly 13 per cent of the world’s cargo-carrying capacity is tied up in delays of one kind or another. Some terminals are looking at 24/7 operations. Some are looking at expanding in terms of berthing and storage. Others are looking at stacking higher.”

Clearly a simulator alone will not solve all of the issues, said Clark. “But a simulator quickly delivers safe, efficient well-trained operators.”

The webinar was run by CM Labs Simulations, whose training product manager Julien Richer-Lanciault was joined by fellow panellist Mark Desmons, Owner of MarCrane Port Equipment Consultancy and former director of equipment engineering at Terminal Investment Limited (TIL), the terminal division of MSC. The session was based on quickfire questions around congestion, efficiency, cost savings, safety, recruitment, training and upskilling.

The ability to simulate all kinds of conditions in a safe environment delivers improved safety, said Desmons.

“We can simulate different weather conditions, working at night, wind, snow, rain. We have done extensive research over the past few weeks but nobody really measures the impact of the improved safety. Everybody is aware and realises there is improved safety – fewer incidents or accidents with equipment where the operators have been

34 | DECEMBER 2021

trained on simulators. But this is also coupled with new work technology, improved technology, so to pinpoint exactly the impact has not been done yet.”

AS CLOSE AS POSSIBLE TO REAL It is important that a simulator is designed to be as close as possible to the real kit, said Richer-Lanciault, so that the skills and competency gained during training are readily transferable to the actual piece of equipment.

“You also want to have a solid training curriculum with specific segments covering every part of the operation.”

Fortunately, today there are more options available that are more accessible and specific to the application, he said: “Flexibility is increasing a lot.”

There are clear measurements of the efficiency of operators trained through simulation, said Desmons. “First of all, the training time is much faster to reach the same level, compared to before where they were trained on real equipment but also the ramping-up time for a new, inexperienced operator to achieve an acceptable productivity level is much faster. Also, with an experienced operator we can go back to correct bad habits, to improve certain skills and to grow the productivity level.”

The alternative, of course, is training on the actual equipment – but Desmons said he had never come across a situation where a terminal booked out equipment to fine tune or retain the skills of operators. “There would not be equipment for separate training, so you would have to work between operations and also maintenance – training on equipment is always the last on the list. With a simulator, it is a lot easier to book a session for operators not only to correct bad habits but also to try new ways of operating the equipment.”

Terminals are getting busier all the time and only have the amount of equipment required for operation, he said. “There is no spare equipment designed for training - the use of cranes is maximised, so there is barely enough time to do maintenance, let alone to perform training.”

He suggested that the average cost of a ship-to-shore

For the latest news and analysis go to www.portstrategy.com/news101

SIMULATION FOR OPERATOR TRAINING

8 The flexibility offered by simulation in a training curriculum has increased a lot

crane not being available for operation is approximately US$10,000 for an eight-hour shift. “These costs add up and can be huge.”

CM Labs works with OEMs to do reverse engineering of a machine in order to match the simulator as closely as possible – for example, on the cycle, speed and braking distance, said Richer-Lanciault. “It is not only about the basic controls. It is experience – what they can feel, hear, see, vibrations, etc.”

In two to four hours, the simulator can be used to assess who should go through for further training

‘‘

Desmons described the role simulators can play in the hiring process. “In areas where terminals are being developed and there is no large port – for example, in West Africa – there is not a pool of experienced operators we can select from. So we have to train people who have no experience in crane operations.

“Since training is a high cost to a terminal, we can do a first assessment based on who has potential and who does not have potential to become a crane operator.”

In two to four hours, the simulator can be used to assess

who should go through for further training and who doesn’t have the skill required, he said. “It reduces the number of people who will eventually fail.”

Of non-experienced operators, only 30 per cent would be expected to get through this first level of assessment and move on to further training: “Within a few hours we can eliminate about 70 per cent of potential operators, so there is a huge cost impact of not training people for weeks, to realise in the end they will never reach a level that is acceptable.”

Simulator training can also help ports adjust to demand volatility, said Desmons. “In a lot of ports, all the vessels arrive at once so all the berths are occupied, then there is no ship alongside for another two days. It is very difficult to have a steady pool of operators. You can much more quickly and efficiently find new operators to fill in peak demand – a simulator is a very good tool to increase the pool of operators which will achieve an acceptable level of productivity in a very short period of time.”

A QUICK ROI Richer-Lanciault said just a couple of days training on a simulator delivered a quick ROI, removed the stress factor and gained a massive reduction in damage and accidents.

“Operators are more confident and focused, more careful and respectful of the equipment. You can work on and improve new techniques and build confidence.”

PLA simulation for pilot training The Port of London Authority (PLA) uses a highly advanced ship’s bridge simulator for training its pilots and also for planning, testing and preparing for handling vessels in all kinds of conditions. This ranges from bringing mega container vessels into DP World’s London Gateway terminal to bringing cruise ships through the Thames Barrier and up river to moorings alongside HMS Belfast.

Most ports will use a pilotage simulator at a third-party premises, usually the nautical colleges, says Bob Baker, Chief Harbour Master, PLA: “We find, primarily due to the large number of pilots we have, that it is more efficient to have our own simulator. It

avoids travel, hotels and pilots being away from piloting ships for longer periods. We can set up and cancel training at very short notice depending on requirements and we can tailor the use to our own specific needs.”

There are many benefits to using simulators, says Baker. “First, training both new pilots and pilots progressing through promotion, the real benefits being that scenarios can be completed more quickly and then played back to the pilot to explain what went well and what could have gone better. It is a very efficient way of training and building confidence. Also, if it all goes wrong there are not unwanted consequences!”

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The PLA uses its simulator for refresher training for fully qualified pilots and for pilots returning from long-term absence, he says. “We also use it for emergency scenario training – for example, a vessel losing its engines or a tug line parting. And new projects can be tested, such as new berth developments or larger ships going to certain berths for the first time.”

The PLA also runs a sophisticated VTS (vessel traffic services) simulator which is used for VTS training and also for planning and preparing for unusual, new or challenging ship calls.

DECEMBER 2021 | 35

PARAGUAY: INLAND LOGISTICS

NEW PATHS FOR PARAGUAY Low water in the River Parana waterway is prompting fundamental changes in inland container logistics and new port gateway selections

8 River Parana waterway is suffering its worst drought since the 1940s

Suffering its worst drought since the 1940s, the River Parana waterway system, that feeds into the River Plate and is the main transport artery for Paraguayan export and import cargoes, has seen barges and vessels grounded over the past year with trucking companies taking up some of the slack; and charging heavily for the privilege!

Among the main beneficiaries of a “newly developed, substitute Paraguay transport network” are the ports of Montevideo, in Uruguay, and Paranagua, in southern Brazil, and even Valparaiso, over the high Andes in Chile, which is a 1370 mile journey by road.

Those vessels and barges that are able to negotiate the tricky and unstable water levels are having to operate sporadically and at only 50 per cent of capacity due to draft restrictions, and as a result have to charge a premium to make a profit.

During “normal” years this traffic – from Paraguay to Uruguay/Argentina - totals around 220,000TEU per annum, including empties.

Figures from the Directorate of Meteorology and Hydrology in Paraguay (DINAC) show that this year water levels at Asuncion, Paraguay’s capital and key river port, rose from 0.9 meters (2.9 feet) on January 1, up to 3.3m by February 1 and peaked at 4.63m on February 14, near the height of the rainy season in Brazil’s interior, the source of the water. They then fell rapidly down to 1.77m by March 8 and to below 1m

by May 19 when the Low Water Level (LWL) season kicked in.

This has led to stringent draught restrictions and long delays with boxes waiting for up to six weeks (instead of the usual average of seven days) for transshipment windows,

36 | DECEMBER 2021

In addition, deep-sea carriers – with MSC leading the way with a 45 per cent share (48,343TEU) of the Paraguayan transshipment market for the first nine months of this year who relay transshipment cargoes from Montevideo and Buenos Aires to/from worldwide destinations are regularly frustrated by the “unpredictability” of the feeder services as this plays havoc with their timetables and berthing windows.

One terminal operator in Montevideo reports that around 15 per cent of all deep-sea calls have been cancelled as carriers “cut and run” rather than get embroiled in long delays and “lose the use of empties for several weeks if they get involved in the River Plate basin messy delays”.

Paul Gunther, Managing Director of Maritime Service Line Paraguay (part of MSL Corporate), an NVOCC, told Port Strategy that during the first nine months of this year Paraguay, taking into account both exports and imports, generated 124,692TEU of full containers and suggested that distribution had shifted in several ways, “with far more boxes being moved by truck than usual”. The latter figure represents a 10.3 per cent increase over the 113,056TEU handled in the same period in 2020.

For the whole of 2020 transshipment to Montevideo and Buenos Aires (BA) totalled 153,094TEU of full containers, down from 160,547TEU in 2019, and 181,398TEU in 2018, the last “normal year” before the extremely LWLs kicked in (figures from the Association of Paraguayan Shipagents). The latter’s members are the main owners of the Paraguayan fleet of barges and self-propelled vessels, which is the thirdlargest fleet of inland vessels in the world after those operated by the USA and China. The fleet comprises around 1000 units for bulk as well as container transport.

For the latest news and analysis go to www.portstrategy.com/news101

PARAGUAY: INLAND LOGISTICS Out of the 2020 container volume 93,751TEU comprised import boxes and 59,900TEU exports.

LWL PROMPTS BOX REDIRECTION “The draught along the waterways in and from Paraguay has been reducing for more than two years now and we are having very many problems to move cargo on this route, where there are many delays and also, now, surcharges,” explains Gunther.

He adds that trucking is now a viable option for many shippers as carriers have been, since June, asking for LWL surcharges, of up to $300 per TEU, to compensate for draught reduced loading from terminals in the Asuncion area – such as the private terminals of Puerto Caacupemi Asuncion, Fenix and San Jose (all around 7km from downtown Asuncion), - for movement to Montevideo and BA. So poor are the facilities in the public port of Asuncion that hardly any containers pass through there these days.

Further, in order to find slightly better draft, many boxes and grain shipments are trucked a greater distance from the capital, to Puerto Seguro and Terport (both 52km from the capital near Villetta). Even more cargo is moved to Puerto Caacupemi Pilar (some 300km away), in the direction of the River Plate and on the confluence of the Parana and Paraguay Rivers.

Rather than the inconvenience of using multi-modal options, some shippers are preferring, as an alternative, an all-trucking option to Paranagua (650 miles and 17 hours) or Valparaiso (1370 miles and more than 30 hours), although the deep-sea journey would save at least five days compared to loading in Paranagua and seven or eight if loaded in BA or Montevideo).

The draught along the waterways in and from Paraguay has been reducing for more than two years…

‘‘

“Excluding air cargo, we usually see 90 per cent of Paraguayan cargo moved by river and 10 per cent by land, but last year this changed to 15 per cent by truck and this year it has jumped to 25 per cent,” elaborates Gunther. “So yes, it really has been a very, very good year for trucking and I can see this continuing for some time to come, until the water levels return.”

The MSL executive warns though that with the Christmas rush in process for November and December there “are not enough trucks available to meet the huge demand so the truckers are preparing to put their prices up significantly.”

With BA suffering from a “lack of direction” – since its Puerto Nuevo expansion plan was cancelled last year – Montevideo has increased its market share of the Paraguay market, by 10 per cent, up from 60 per cent last year to 70-75 per cent and BA has fallen from 35 per cent down to just 5-10 per cent, according to Gunther. At the same time, he estimates that Paranagua has risen from five per cent (mostly electronic and white goods to Ciudad del Este, on the border with Parana state, Brazil), up to 15 per cent and that this route could remain a gateway for Paraguay even after good water levels return to the Parana Basin.

Most interesting, however, a new outlet for Paraguayan containers is Valparaiso, one of two ports which serves the Chilean capital Santiago [the other being San Antonio]. This year some 10,000TEU, about five per cent of all international boxes out of Paraguay, have made that arduous and expensive journey, mostly from Asuncion and mostly bound to/from China and the Far East. Freight rates from the River

Plate ports have jumped from US$4000 per TEU up to US$18000 over the past 18 months, so significant savings on the ocean freight can be made utilising Valparaiso.

Alejandro Gonzalez, Country Manager for both Paraguay and Uruguay for Multimar, the Buenos Aires headquartered shipping agency, agrees that extreme LWLs “have created a dire situation for Paraguay” confirming also that Montevideo had gained some extra cargoes from Argentina during the past year, but it isn’t just due to the extreme LWLs. Congestion, chaos and lack of draught in BA, has also played a part in many shippers and services switching back to Montevideo.

8 Paranagua in Southern Brazil is one of several ports benefitting as a substitute Paraguay transport option

MONTEVIDEO PROFITS “Paraguay is a landlocked country and so it is very important to have good water levels for assured inland navigation for inbound and outbound cargoes, not just for containers but also for breakbulk and bulk cargoes,” underlines Gonzalez.

“Paraguay is also very important for Uruguay’s Business Plan, along with Bolivia.” He notes that as a small buffer state wedged between the giant nations of Brazil and Argentina, Uruguay depends heavily on third countries to gain cargo mass in order to make its larger ports viable for regular deepsea calls.

“At the port of Montevideo, for example. more than 60 per cent of the total cargo movement is not from Uruguay, but comes from Paraguay, Argentina (both the south and north) and Bolivia which like Paraguay is land-locked,” explains Gonzalez, adding that the terminals in Uruguay have to keep transshipment tariffs down otherwise traffic may gravitate back to BA. Usually, the Uruguayan share of the 220,000TEU Paraguayan transshipment market fluctuates between 40 and 60 per cent, but with so much uncertainty in BA, plus the upheaval caused by the LWLs this has now risen to more than 70 per cent.

As several commentators noted while researching this article: It will be very interesting to see how the new Paraguayan containerised transport matrix works out once the water levels are back to normal.

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DECEMBER 2021 | 37

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PORTSTRATEGY INSIGHT FOR PORT EXECUTIVES

PARAGUAY: CARGO LOGISTICS

TCP SETTING UP IN ASUNCION TCP, the Paranagua (Brazil) container terminal operator, is to establish a permanent presence in Asuncion as part of efforts to consolidate and expand Paraguayan container traffic Owners of the Brazilian Paranagua container terminal (TCP) are so convinced they are in for the long haul when it comes to handling boxes to/from Paraguay that the company is setting up an office in Asuncion in 2022.

TCP, which is fully owned by China Merchants Port Holdings (CM Port), has picked up an extra 30,000TEU per annum since the Parana River basin drought kicked in two years ago and its management believes that – via an efficient trucking and railroad operation – a good percentage of those boxes will keep flowing down to Paranagua, in the southern Brazilian state of Parana.

Historically, Paranagua has been an “alternative route” for Paraguayan cargoes, especially soya. The world famous Foz do Iguacu waterfalls and Itaipu Dam are on the borders of the two countries, transport links between them are good and it was natural step for Paranagua to become a gateway for soya cargo. However, 15 years ago the “famous” Requiao brothers (Eduardo as President of Paranagua Port Authority APPA and Roberto as Governor of Parana State), decided to end the arrangement as they did not want “transgenic” soya from Paraguay mixing with “non-transgenic” soya from Brazil.

With the Requiao brothers - who held power in Parana for the best part of 10 years – now long gone, the interests of TCP’s Chinese owners are pointing towards total infrastructure investments and, eventually a Belt and Road initiative that will end up connecting the East Coast of South America (ECSA) with the West Coast South America (WCSA), thereby making exports/imports to China far cheaper. With Asuncion encouraging links with the port of Valparaiso, in Chile, this project comes closer to fruition. Even before Chinese investment exploded in South America, local shippers were dreaming of the time a Bi-Oceanic Corridor would connect the two coasts.

Thomas Lima, Commercial Director, TCP, notes that the local Novo Ferroeste railroad that currently connects

Paranagua to Cambe in Brazil some 500km away, will soon be extended to Foz do Iguacu and Guaira on the Paraguayan border, and close to that country’s second largest city of Ciudad del Este (310,000 inhabitants) which is an electronics boom town. TCP also acts as the gateway port for much cargo emanating from/destined for Asuncion, the capital (three million inhabitants including conurbation). For beef exports Paranagua is identified as a good match as it has close to 4000 reefer plugs. Electronics and white goods from the Far East are the main imports into the landlocked country, with Ciudad del Este one of the main destinations and its proximity to TCP seen as a bonus.

“We have been rapidly increasing our business with Paraguay over the past year and opening a new office in Asuncion will help cement that,” emphasises Lima. “Extra railroad connections will also help.”

8 The spectacular Foz do IGuacu waterfalls close to the border between Argentina, Brazil and Paraguay impact water flows along the River Parana

Climate and big neighbours call the shots Paraguay does not have the muscle to influence water levels and so climate change will continue to make its impact felt.

Landlocked Paraguay depends hugely on the Parana and Paraguay river systems, plus the River Plate estuary, for transport, social and commercial services with 96 per cent of its foreign trade plied via these routes.

With the historic drought currently bringing water levels down to new lows it is important to point out that climate change is one of the main drivers of the damaging game-changing drought, especially given the COP26 gathering in November 2021.

Deforestation in both Paraguay and Brazil – for both soya and cattle ranching are also key causes, as is the La Niña weather phenomenon.

It is rainwater that falls in the Mato Grosso region of Brazil that initially feeds the Parana River and billions of gallons of water is stored in the dams of Itaipu (owned and managed by Brazil and Paraguay) and Yacyreta (Paraguay and Argentina) so this allows for some degree of control and storage of water flows.

However, according to one port terminal manager, who did not wish to be identified, the Paraguayan presence in relation to the two hydro-electric facilities is “way too weak and too easily swayed by its bigger neighbours” to be able to exert any meaningful influence over water flows versus electricity needs. “Brazil, in particular, rules the roost over Itaipu and prioritises hydro electricity generation,” he told Port

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Strategy. “The joint management could have held back more water from the dam during the last rainy season [December to March] and afterwards to maintain a decent water level for barges on the Parana River, instead of catering for Brazilian cheap electricity needs, which could have been replaced, temporarily, with more expensive diesel.”

Now meteorologists in both countries are forecasting less than average rainfall in the Mato Grosso and River Plate Basin (the second largest river basin in South America and fifth-largest in the world), for the latest “rainy season”. Plus significantly, that acceptable water levels on the Parana between the port of Asuncion and Montevideo and Buenos Aires will not return until March of 2023.

DECEMBER 2021 | 39

PORT POWER SOLUTIONS

POWER SUPPLY PRACTICALITIES Across-the-board, power supply to cranes and vessels is responding to environmental challenges and leveraging hard earned experience to optimise implementation. John Bensalhia reports The requirements for extra strength and environmental awareness were two powerful themes that emerged at Transport Events’ recent webinar on Advanced Cable Solutions for Electrification and Sustainability.

Jana Blechschmidt, Head of Technical Sales Cranes Export, Prysmian Group, the manufacturer of cables and systems for power transmission and distribution, kicked off the talks by illustrating the capabilities of the company’s Protolon cable range. In the case of both the Protolon SMK, the medium voltage reeling cable, and the Protolon SMK 200, a flexible medium voltage reeling cable with integrated fibre-optics for the combined transmission of energy and data, she highlighted their inherent flexibility and the ease via which they can be managed by port operators as well as the robust resistance they offer when working in adverse conditions.

Blechschmidt further pointed out that the company’s Protolon SMK HS system is specially designed to accommodate the top travel speeds and high levels of tensile force. “This cable offers outstanding mechanical protection due to further optimisation of insulation giving more room to the extreme robust sheaf system like a buffer keeping mechanical stresses away from the core assembly,” she underlined.

Extra strong cables are a must for ports working in freezing conditions.

Using Arctic crane cables as an example, Blechschmidt illustrated how Prysmian’s specially developed products used inner and outer sheath material to allow for work in temperatures as low as -50 degrees Celsius. As well as providing strong flexibility in challenging weather conditions, Arctic crane cables have superior resistance to impact, abrasion, water, moisture and UV. Moderator Anthonie Versluis, Senior Adviser, Maritime Sector, Roland Berger (Malaysia), asked Blechschmidt whether Prysmian allows cable fibre sensors to be added to different cable designs. She responded: “At the moment, we have this technology on the main power supply cables, because they are like the umbilical cords to power up a crane. But over time, there are possibilities that they can be added to other types of cable.”

Also discussed was the offering of the total cable system software package. For example, did the software advise the port operator in specific cases to stop or even replace the crane?

Blechschmidt explained that the software covers and measures a number of metrics. “These include the element of deformation of the cable – on all cable lengths and at each position of the cable. This is an indicator of stresses building up on the inside of the cable. Another metric is the time that the cable spends in an elongated state, which, for example, indicates poor quality performance of the cable.”

Interestingly, she noted: “What we do with our IQ system is an estimation of fatigue, which is dependent on a number of cycles of the cable – whether operation is 24/7 or five shifts a week.

“Our system software is automatically programmed to calculate all the qualities of the mentioned metrics and puts it in a sort of bookmark in the virtual calendar, explaining what happened, when it happened. This kind of information can be integrated in the crane management system,” she said.

40 | DECEMBER 2021

ENVIRONMENTAL CONSCIOUSNESS Both Blechschmidt and Andrea Benedetti, Product Manager – Specialities & OEM (Cranes and Mining), Prysmian Group, gave insights into how Protolon Shore-Connection cables can help the environment.

Benedetti outlined the concept of Shore-Connection as a cable connection as an option that is used to plug-in ships to the main grid during the berthing process. As a result, the ship’s engines do not need to run, thus reducing carbon emissions, fuel consumption and noise.

The Protolon (SC) cable was described by Benedetti as an ideal choice for both high and low voltage systems to supply ships with electrical power. While the cable feeds vessels with electricity and digital data, diesel engines can be turned off.

A question put to Benedetti by Versluis concerned the difference in ship classes and power levels. “Different ship classes require different amounts of power,” explained Benedetti. “The typical configuration is up to four cables laid in parallel to provide high energy for each ship.”

“We can play with different cross sections we have. If power supply needs are lower (i.e. smaller ships), we provide cables with smaller cross sections, or with less copper, so with less amount of current that can be transmitted.

“If the amount of energy is higher, the standard size is ` 185 mm2. But we can go up to 240 or even 300mm2. The design concept of the cable is the same, but they will have bigger copper conductors inside. What matters is that we keep the same flexibility of the cable itself,” he said.

The focus on environmental matters continued with the presentation given by Georg Franz Matzku, Head of Shore Power/Head of Marketing, Power Collection Business Unit, Stemmann Technik.

Matzku reinforced the concept of providing shoreside electrical power to berthed ships allowing the main and auxiliary engines to be shut down. Examples of cable reel

8 Prysmian offers cable solutions that can operate in temperatures as low as -50degC

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PORT POWER SOLUTIONS customers given by Matzku include the German Port of Kiel (high voltage); Niedersachsen Ports and Acciona, Spain (low voltage). The cable reels make port operations that much easier, with only one person needed to handle the shore power connection.

The arrangement of cables shore-side was discussed between Matzku and Versluis. Matzku pointed out: “Usually, what we see is that cables are brought from the sub-station underground to a junction box which is either placed on top of, inside, or next to the quay. So, the main problem is the connection between the junction box and any kind of cable management system. This can lay on top of the ground but sometimes this is not possible because you need to run over from left to right of the ground with a forklift or a crane. In this case, there is the chance to use cover plates and lay the cable in a trench if necessary.”

An alternative put to Matzku by Versluis in cargo berths was the option of placing the cables at height so, for example, they won’t interfere with mobile harbour crane operations.

“We could possibly do this,” replied Matzku. “But sometimes we are limited in height as there are cranes and vehicles going back and forth.”

It was generally seen as most beneficial for a cable manufacturer to visit a port installing a system to spend time on site to assess the situation and determine the best option.

It helps when you go to a site as it makes you realise the situation, i.e., what the infrastructure looks like, the different versions of ships, and different norms.

“For example,” Matzku pointed out, “for container ships looking how best to get a cable from a ship down to the ground. Whereas, for offshore support vessels, usually, you bring a double or triple spiral cable reel on top of the ground on shore and hand over the cable, maybe with a crane or lifting device, to the ship.”

Georg Matzku summed up the green ethos of cable manufacturers: “With the world facing “massive ecological problems”, what manufacturers must remember is that each port is created differently. “You cannot copy and paste solutions from one port to another. You need to create customised solutions for each berth.”

“It’s not easy being green, but it’s worth it.”

VERSATILITY IMPORTANT The concluding presentation was made by Martin Tiling, Industry Manager, Shore Power, igus.

Tiling followed on from Matzku by discussing the overall context of shore power for specific terminals. In the case of

the container terminal, it’s about profit and therefore, port operators will be looking to implement highly efficient loading and unloading vessel processes. Furthermore, automation is progressively being looked at as a means of achieving this, reducing costs and increasing margins.

Similarly, he noted that, “electrification is happening already – all port equipment is going to be electrified.”

Shore power, Tiling emphasised, has to fit into this environment and needs to address these and other big picture factors. There are also key local factors such as site location, wharf, and tidal range. Additionally, he concurred with his fellow presenters noting: “We always have to look at the power consumption of vessels - for example, general cargo vessels consume less power, compared to container vessels. This means less cables or less cross-section. Which means smaller systems.”

You cannot copy and paste solutions from one port to another. You need to create customised solutions

‘‘

Tiling also spoke about the limitations and the best solutions for cable management systems. Prominent among the limitations were connection issues – for instance, the changing positions of cable management systems and limited cable deployment length. Some of the current options to handle this dilemma also present problems.

Extension systems can, argued Tiling, add extra work for ports, and in some cases where lack of space is an issue this won’t be a viable solution.

Tiling highlighted two key factors that contribute to the best cable management solutions: 5 Securing good value through a one-time investment delivering a service life of up to 20 years, and 5 Ensuring full compliance with the relevant standards (for example, the EU Machinery Directive 2006/42/EC) and that the product has a corrosion protection system according to C5-M).

In conclusion, Tiling noted that overall the ideal ship cable management system should offer a high degree of flexibility, be matched to achieve economies of operation, simplicity of connection and uncoupling as well as be specified with new market trends in mind. This, he said, will deliver significant benefits over and above the main environmental benefits secured.

8 Two differing configurations of shore-side power supply arrangements from Stemman Technik – versatility is essential

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DECEMBER 2021 | 41

INTERNATIONAL NORTH-SOUTH TRANSPORT CORRIDOR (INSTC)

INSTC GEARING UP Recent and planned investments look to achieve the more effective operation of the fledgling International North-South Transport Corridor (INSTC). Oleksandr Gavrylyuk charts the progress On 26 October 2021, Astrakhan Seaport, Russia’s key harbour operator on the Caspian Sea, and the Iranian Caspian port of Astara signed a Memorandum of Understanding, aiming to expand the cargo traffic volume within the International North-South Transport Corridor (INSTC).

The INSTC concept was first set out back in the 1990s, as an alternative to the traditional transoceanic routes from Europe to Asia via the Suez Canal.

The new multimodal corridor extends for about 7,200 km from the Gulf of Finland to the Russian Caspian shore and then through Iran to India.

It was believed at the time of its conception that using the combination of maritime, rail and motor transports, INSTC would be able to first halve the duration of the transoceanic routes, from 40 to 20 days, and then to reduce the journey time to 14 days.

In 2002, Moscow, Tehran and New Delhi became the founding members of the project, having officially committed to jointly develop the corridor. Subsequently, nearly all of the South Caucasian and Central Asian countries have, on separate occasions, joined the INSTC. As a result, there are now three main schemes to either overpass or bypass the Caspian Sea. One of them runs across the sea from its northern to southern coast, while the two others stretch along its western and eastern shores, transiting through either Azerbaijan or Kazakhstan and Turkmenistan respectively.

RECENT DEVELOPMENTS In June this year, Russian Railways and Finnish logistics operator Nurminen Services tested the western direction, having railed containerised paper from Finland’s Vuosaari to Iran’s Astara. From here it was delivered to the Persian Gulf port of Bandar Abbas and then shipped to Mumbai, India.

While the Western and Eastern initiatives have already seen construction of missing rail links and launch of pilot train services, the progress under the Trans-Caspian (sea) route has long remained far from the mark principally due to the lack of up-to-date container handling infrastructure on the Russian Caspian littoral. This situation, however, is now changing. In late August this year, Kaspiy Dock and Logistics Company, set up in 2019, became the anchor tenant of the 644 ha-large portcategory special economic zone (PSEZ) established at Astrakhan’s outer harbour of Olya in November 2020.

Kaspiy and its German partner, Martrade Group, reportedly intend to invest up to US$350 million to develop Olay’s handling facilities, which will eventually be integrated into the INSTC. Russia’s central authorities are reportedly going to earmark some $140 million for the project from the federal budget.

The investors are going to start with the rearrangement of existing berths Nos. 8 and 9, in order to expand their aggregate annual handling capacity to three million tonnes per annum by 2023, according to Oleg Savchenko, Director General, Kaspiy.

The project’s next stage will involve construction of a state-of-the-art container hub on a 250 ha-large land plot some seven kilometres south of Olya by 2026. The harbour’s overall handling capacity, according to Hamburg Port Consulting (HPC), is targeted to reach eight and 19 million tonnes by 2031 and 2050, respectively. This is clearly ambitious – overall the Astrakhan region’s port operators

42 | DECEMBER 2021

handled no more than just three million tonnes last year.

The development of the Trans-Caspian route additionally foresees the design and construction of new multipurpose container and bulk carriers at a locally based shipyard.

With this in mind, it is proposed to merge the Olya PSEZ with Lotus, the special industrial economic zone established in the Astrakhan region in November 2014. Since Lotus features shipbuilding and other production plants, such a synergy is designed to evolve into a powerful intersectoral cluster, which will boost infrastructure development throughout the entire northern Caspian coast, according to Sergey Milushkin, Director General, Lotus.

Meanwhile, Iran’s Khazar Sea Shipping Lines (KSSL) has already connected the nation’s Caspian harbours with those of Russia and Kazakhstan via six freight-shipping services.

Launched on 23 October 2021, KSSL is planning to increase the service programme to eight services by the end of the current Iranian year (21 March 2022). Additionally, Tehran is known to be considering the integration of its new port of Chabahar into the INSTC. Iran’s closest point to the Indian Ocean, this would open up the shortest sea-lane to Mumbai.

Being easily accessible from India’s western coast, Chabahar will also be able to provide India with strategic links to both Europe and Central Asia. This reality underpins the reason why New Delhi is the principal developer of Chabahar, phase one which was inaugurated in December 2017.

Chabahar has already joined the nation’s Caspian ports in signing cooperation agreements with Lotus and is accordingly interested in handling containers, metals, timber, fertilisers, sulphur, grain, vegetable oil and other cargoes though the Trans-Caspian route, according to Milushkin.

Increasingly, the system components to achieve the effective operation of the INSTC are being assembled.

Milushkin, however, proffers the view that the effective realisation of the project will only happen when Moscow, Tehran and New Delhi combine their efforts to form a single route operator, create attractive tariff conditions, simplify customs procedures, introduce electronic information exchange and eliminate other trade barriers. This though, can only happen, when the political climate allows.

8 Tehran is known to be considering the integration of the port of Chabahar into the INSTC

For the latest news and analysis go to www.portstrategy.com/news101

PRODUCTS & SERVICES DIRECTORY

Gemini House Cambridgeshire Business Park, 1 Bartholomew’s Walk, Ely Cambridgeshire CB7 4EA England, United Kingdom (UK) Tel: +44 1353 665001 Fax: +44 1353 666734 sales@samson-mh.com www.samson-mh.com

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NEUERO Industrietechnik GmbH Specialist for pneumatic ship unloaders and mechanical ship loader. NEUERO follows the MADE IN GERMANY quality tradition.

Now with more than100 years of tradition in the manufacture of reliable and high-quality conveyor systems worldwide.

Email: neuero@neuero.de Tel: +49 5422 9 50 30 neuero.de/en/

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As one of the leading manufacturers of quick connector systems,Stäubli covers connection needs for all types of fluids, gases and electrical power.

Tel: +33 4 50 65 61 97 connectors.sales@staubli.com www.staubli.com/en-de/ connectors/

Staubli_Directory Mar 2021.indd 1

Taylor Machine Works, Inc. Taylor Machine Works designs, engineers, and manufactures more than 100 models of industrial lift equipment with lift capacities from ,000-lbs. to 125,000-lbs.

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E LECTRIFICATION SOLUTIONS

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Tel.: +49 2521 240 E-mail: info@beumer.com Web: www.beumer.com

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LASE offers innovative and productive solutions for ports by combining state-of-the-art laser scanner devices and sophisticated software applications. We are specialised in the fully automated handling of containers, cranes or trucks.

Rudolf-Diesel-Str 111 D-46485 Wesel, Germany Tel: +49 (0) 281 - 9 59 90 - 0 info@lase.de www.lase.de

C OMPONENTS

The BEUMER Group is an international leader in the manufacture of bulk material handling systems:

LASE Industrielle Lasertechnik GmbH

D REDGING

SAMSON Materials Handling Ltd specialises in the design and manufacture of mobile bulk materials handling equipment for surface installation across multiple industrial segments. Designed for rapid onsite set-up and continuous high performance SAMSON equipment provides an excellent return on investment.

C ARGO HANDLING SYSTEMS

For more than a century, Bedeschi is providing effective and reliable solutions in a wide variety of industries (bulk handling, marine logistics and mining), capitalizing on synergies and cross competences.

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B ULK HANDLING

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VAHLE PORT TECHNOLOGY VAHLE is the leading specialist for mobile power and data transmission VAHLE provides the solutions to reduce the carbon footprint while increasing the productivity.

RTGC electrification including positioning and data transmission making RTGC ready for Automation.

Westicker Str. 52, 59174 Kamen, Germany

Email: port-technology@vahle.de Web: www.vahle.com

DECEMBER 2021 | 43

PRODUCTS & SERVICES DIRECTORY

Contact Tim Hills or Hannah Bolland

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Port Strategy Directory

H ANDLING EQUIPMENT

G RABS

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Grabs of MRS Greifer are in use all over the world. They are working reliably and extremely solid. All our grabs will be made customized.

Besides the production of rope operated mechanical grabs, motor grabs and hydraulic grabs we supply an excellent after sales service.

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Camco ID June 2021.indd 1

Künz GmbH Founded in 1932, Künz is now the market leader in intermodal rail-mounted gantry cranes in Europe and North America, offering innovative and efficient solutions for container handling in intermodal operation and automated stacking cranes for port and railyard operations.

Gerbestr. 15, 6971 Hard, Austria T: +43 5574 6883 0 sales@kuenz.com www.kuenz.com

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Visy systems reduce VISY Oy expenses, optimize safety & security, and VISY takes pride solving via increase throughputin capacity operational problems,Our specialising process automation. singlein gate automation and system access platform gate operating control solutions in ports and and OCR solutions manage all terminals.

Their solutions cargo, assets & personnel streamline processes resulting movements via quay, rail or road in saving money and to keep operations moving. increasing productivity.

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Tel: +358 3 211 0403 Email: sales@visy.fi Web: www.visy.fi/

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S IDELIFTER/SIDELOADER

I NSURANCE

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P OWER TRANSMISSION

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44 | DECEMBER 2021

Phone : +919727738429 E-mail : Info@irmome.com Website : www.irmome.com

RuggON is here to offer high quality and future-proof one-stop rugged computing solutions, ranging from rugged vehicle-mount computers, mobile tablets and data terminals, to similarly durable data-capture accessories, for a safer and more efficient automated port and terminal operations from quay, yard, gate, and all the way to warehouses.

RuggON_Directory_40x58.indd 1

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CAMCO Technologies NV Visual- and Micro Location- assisted process automation solutions for container, ro-ro and rail terminals worldwide. Accurate crane, gate & rail OCR systems and Gate Operating System software helping terminals accelerate terminal and gate activity.

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MARINE FENDERS

I T PORT AUTOMATION

F IRE SUPPRESSION SYSTEMS

Fogmaker develops, manufactures, and markets fire suppression systems for engine compartments with high pressure water mist. Fogmaker is a market leader for automated fire suppression systems with 200,000 installations in more than 50 countries since 1995.

Conductix-Wampfler The world specialist in Power and Data Transfer Systems, Mobile Electrification, and Crane Electrification Solutions.

We Keep Your Vital Business Moving!

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latest news and analysis go to www.portstrategy.com/news101

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Solvo’s software solutions such as TOS or WMS help container and general cargo terminals take full care of their cargo handling processes and make sure the clients expectations are exceeded.

Prinses Margrietplantsoen 33, 2595AM, The Hague, The Netherlands Tel: +31 (0) 702-051-709 Email: sales@solvosys.com www.sovosys.com

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T RACTORS

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World Headquarters 55 Harrison Street Suite 600 Oakland CA 94607 United States Tel: +1 510 267 5000 Fax:+1 510 267 5100 Web: www.navis.com

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S PREADERS

ELME Spreader AB ELME Spreader, world’s leading independent spreader manufacturer supports companies worldwide with container handling solutions that makes work easier and more profitable. Over 21,000 spreaders have been attached to lift trucks, reach stackers, straddle carriers and cranes.

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MAFI Transport-Systeme GmbH Specialised in the development and production of heavy-duty equipment for transporting containers, semi-trailers, cargo/roll trailers and special container chassis in ports and industry.

Tideworks Technology provides comprehensive terminal operating system solutions for marine and intermodal terminal operations worldwide. Tideworks works at every step of terminal operations to maximize productivity and customer service. info@tideworks.com +1 206 382 4470 www.tideworks.com

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POSTSCRIPT US WEST COAST: MORE NEEDED

“…for the US West Coast, the short-term measures could be interpreted as five out of ten in terms of score…

‘‘

46 | DECEMBER 2021

Comprehensive measures continue to be introduced across the US West Coast (USWC) to alleviate the prevailing port congestion, but will they have the desired effect or are they hampered by fundamental flaws?

There are a number of ongoing issues on the western seaboard. The number of ships waiting to access both Los Angeles and Long Beach remains as high, if not higher, than ever, with reports of more than 75 container ships at anchor for much of this year.

A recent solution to the problem, approved by the Biden Administration, is to start charging an “emergency fee” on all containers that remain at the terminal for nine days or more, and rail containers for three days or more. The cost is US$100 per container on the first day past the set dwelling limit for terminal or rail, then increasing by US$100 increments for each day that follows (i.e., US$200 for day two, US$300 for day three etc.)

The plan for the extra levy followed the White House stating that the two San Pedro ports will operate on a 24-hours-per-day basis and increase operating hours at night to help relieve the build-up of boxes at the berths.

Strong words from government but little by way of explanation of how things will work, operationally.

There are also other problems – a shortage of truckers and many warehouses due to receive containerised goods are lacking both space and employees.

Obviously the current issues will not be resolved until all major shippers and beneficial cargo owners are able to get their freight to where it needs to be, immaterial of what extra charges are applied.

That is even before the issue of who will pay the fees is considered. Simply adding such charges will only see them ultimately passed on to the end consumers.

So if the aim of applying extra fees is to put pressure on beneficial cargo owners and shipping lines to move the cargo away from the ports, it does not explain where these boxes will actually be moved to.

In general, the short-term measures could be interpreted as five out of ten in terms of an efficiency

8 USWC port operations are generally high cost and offer lower levels of performance than achieved in other key port ranges

score. But this is perhaps not surprising with more fundamental challenges present in the USWC port working environment.

The unionised workforce and terminal operator employers are rapidly approaching time for another contract to be negotiated.

The prickly subject of terminal automation will be on the agenda, with the employers pushing for greater concessions from the unions and the workforce representatives still largely resistant to the concept becoming widespread.

The resulting discussions will eventually see a new agreement on wages and pensions (among other benefits) and this will see an increase in costs – in port locations that are already more expensive than competing ports in other key North American gateways, most notably the Pacific Gateway of Canada of Prince Rupert and Vancouver (BC) and the US South Atlantic, where Savannah and Charleston continue to invest in infrastructure and grow their volumes.

The potential threat of the US Gulf is also increasing, as amplified by the decision of APM Terminals to develop a new terminal in conjunction with Plaquemines Port, Harbour & Terminal District (PPHTD). The new facility is located on the lower Mississippi River, 50 nautical miles from the Gulf of Mexico, and will offer deep water access.

With current US port congestion in Southern California, this new project may offer some ships and beneficial cargo owners an alternate routing, especially for serving such key locations as Memphis and St. Louis. Sailing time to the US Gulf is longer than across the Transpacific to Southern California, but factor in the vessel delays and higher costs, and the Plaquemines project may be viewed as an attractive option.

It is clear that 2021 has been a year of strong port volume demand for the US ports on the West Coast, especially in San Pedro, and there is no end in sight for queuing ships and congestion in the two Southern California ports. These may be new challenges, but the old flaws still remain.

For the latest news and analysis go to www.portstrategy.com/news101

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