Vessels, especially container vessels, become bigger and bigger. Together with environmental restrictions this leads to some major challenges the ports have to face and it has also significant effectson the supply chains
Nowadays, shipping companies make the decisions to increase the amount of cargo on their vessels, so ships become bigger than[ds_preview] ever before. »Bigger vessels are more efficient«, is the shipping companies’ rationale for their decisions. More than 900 shipping experts discussed the main issues at the IAPH conference in Hamburg.
Right now shipping companies make rules by just ordering bigger ships. Ports and terminal operators have the choice to either go with the development and enlarge their systems and capacities as well or leave the bigger ships to their competitors. The pressure is high because nobody wants to lose cargo volumes. The question is, who will pay for all of these necessary investments? The shipping companies often do not think about the other parties and which consequences their decisions have for the whole supply chain, critics say.
»Larger vessels need enhanced infrastructure«, said Patrick Bol, Director Global Operations at terminal operator DP World. As an operator, it is important to deal with the container service. Therefore it is necessary to adapt the ports to the development of bigger vessels. One factor is to improve the suprastructure. For example the outreach of the container cranes has to be improved. »We need more bollards and the quays have to be reinforced«, added Bol. But it is not only the suprastructure that has to be improved, of course it is also the infrastructure. »We need deeper water-side accesses«, said Bol.
»The average in northern European ports will be 17,000 TEUs in 2020. The Triple E will become the new normal. How can we make this work?«, asked Olaf Merk, Administrator Ports and Shipping at the International Transport Forum (ITF) of the OECD. Bol spoke of an average of 6,000 containers per ship that have to be moved within 24 hours. This means 250 moves per hour, 38 moves per crane, 95 seconds per container. »Therefore operators and ports have to look for creative solutions.« At London Gateway for example, a DP World operated terminal that went into service at the end of 2012, 40 crane moves can be reached per hour because of twin lift spreaders.
»We looked at different scenarios and the results are pretty scary. You will maybe see 24,000TEU ships in Far East, 19,000TEU ships in North America, 14,000TEU ships in South America and Africa in the future. Something is coming up that will cause problems in ports«, Merk illustrated the development expected by the OECD.
»Then there are the peaks«, he said. Truck and train movements and optimization of infrastructure – everything is related to the ship size. But a lot of the additional equipment is not utilized for most of the time. Besides a waste of money this also demands flexibility of labour. Merk advocated balanced decision making. Ports should take all the public interest into account and see whether it makes sense to accommodate these mega ships in the long term. In many cases ports and countries are even subsidizing the mega ships which cause a lot of the costs. So in the end it often is the tax payers’ money that finances the development.
Merk presented a study of the OECD on ship size and cost savings. On the ship side, the increasing vessel size leads to costs going down, while on the land side the ever bigger vessels lead to increasing costs. »Does this all still make sense?«, he asked. While vessel costs per TEU decrease, port handling costs per TEU increase. As Merk said, there is a point where this still leads to overall reduced costs in the transport chain, but at some point these total costs go up again. »Going from 14,000 to 19,000 TEU, land transportation costs increase by around 50$, which is substantial.
Focus on efficiency and environment
»It is not necessary to invest millions of dollars, it is much more important to coordinate the existing systems in an effective way«, said Michael Pal, Principal Transport Analyst of Fremantle Ports, Australia. All actors in port should be informed timely when vessels are coming. Then they can align their supply chain with the arrival. People call it »Smart Port« today. Jens Meier, Chairman of the Management Board of the Hamburg Port Authority (HPA), explained what Hamburg has done to coordinate the supply chain in the port. An intermodal Port Traffic Center for the marine, rail and road traffic is the foundation to link the different traffic streams to each other and to make it more efficient. All this is based on an IT system but »it is much cheaper to develop an IT system than to build a new bridge«, Meier said. »Smart Ports and Smart Apps are not enough«, added Bol. »We have to be more creative.« One possibility could be a floating terminal concept, where cranes are able to work on the vessels from both sides of a quay, the expert suggests.
As an add-up to all the challenges arising from bigger vessels sizes, environmental regulations are also getting stricter. That means even more financial pressure for port operators. »We need to be zero emission«, said Bol, presenting the new RWG-terminal at Maasvlakte 2 in Rotterdam that will enter service very soon. DP World holds a 30% stake of this terminal. At the new facility, battery powered Lift Automated Guided Vehicles (AGV) will transport the containers between ship and stack. When the AGV arrives at the stack with a container from the ship, the vehicle, fitted with two electric lift platforms, is able to lift the container by itself and place it in a rack. Vice versa – from stack to ship – the AGV can also collect a container on its own from the rack again. As a result, the new AGV can perform 50% more actions than the conventional model, promises the manufacturer, Terex Port Solutions.
Port of Los Angeles Executive Director Gene Seroka presented the efforts to reduce NOx, SOx and diesel particulate matter emissions in his port. Faced with growing opposition to port development in 2006 due to air quality concerns, the port of Los Angeles and neighbouring Port of Long Beach jointly created the St. Pedro Bay Clean Air Action Plan. The ports have exceeded their initial five-year-goals and today have achieved an 80% reduction in diesel particulate matter, nearly 60% less NOx and little more than 90% reduction in SOx, Seroka said. The NOx reduction had come from replacing all of the old drayage trucks at the port with a new fleet of EPA admisson compliant trucks. Shore powered ships contribute to the SOx reduction. »We know that even small amounts of emissions from port sources can add up to a tremendous amount of overall emissions. We must look for ways to reduce our reliance on combustion-based engines«, he stated.
The port has been exploring how zero emission equipment can be integrated into the supply chain. The focus is mainly on trucks and cargo handling equipment and also funded the world’s first hybrid-electric tug boat. Many of the other innovations, that the port is testing – electric yard tractors, or drayage trucks for example – are done through a technology advancement programme that was created and co-funded with the Port of Long Beach. Port Tech Los Angeles, a technology development incubator, that the Port of Los Angeles also co-founded a few years ago, is designed to attract technology start-ups and accelerate the development of research and development into practical application.
Seroka presented one of the technology advancement program projects, a rubber tire gantry crane, that uses heavy duty capacitors to store regenerated energy as the crane operates. It allows to have a much smaller diesel engine and produces more than 80% reduction in emissions, compared to conventional rubber tire gantry cranes.
The latest executive order from US president Barack Obama, to cut greenhouse gas emissions by 40% of the 2008-levels by the year 2025 as well as a stricter ozone regulation will put the port under additional pressure, to further reduce emissions, since Southern California has the highest ozone levels throughout the United States. »But it’s a call we must answer.«
Right now the Port of L.A. is developing a 12 MW solar power plant. Seroka expects to expand the renewable energy efforts in the coming years while also assisting his customers in their pursuit of renewable projects.
Cargo efficiency reduces emission
»As we contend with a new era of larger vessels and carrier alliance dynamics, becoming more efficient involves new levels of coordination at the terminals and throughout the supply chain«, Seroka looked at the big picture. To this end the port has implemented several initiatives in recent months, including an inter-operable chassis pool and staking areas for peel-off cargo programs. Other test projects include a new Uber-like mobile phone application from a company called Cargomatic, which connects truckers, cargo owners and terminals, to transport goods more efficiently. Closing his speech, Seroka presented another approach to reduce the emissions in the port: Two companies are finalizing government certification for mobile emissions capturing systems, whereby barge mounted cranes lower bonnets over smokestacks of ships while at berth. The emissions are captured and treated. So the ship would not have to run its auxiliary engines on low sulphur fuel while at berth. »These devices have potential to reduce upwards of a ton of emissions per ship call. And these vessels can also be managed, if they do not have alternative marine capability«, the port director explained.
Learning continuously
From China Christine Loh, Secretary of Environment of Hong Kong, brought news of developments concerning cleaner air in ports. »Ground Zero for us was the 2006 LA Clean Air plan«, she said. Looking at the contribution of ships to air pollution in Hong Kong, everybody had been shocked, because everybody‘s focus had been on power plants. But 50% of the areas sulphur actually do come from ships.
After years of discussion the first Fair Winds Charta was set up. 17 large shipping companies agreed to fund a fuel switch while at berth in Hong Kong. The companies also asked the government for regulation and legislation to ensure fair competition and also the neighbour ports to follow for that reason.
Now the government passed two pieces of legislation for cleaner bunker in Hong Kong and for a fuel switch at berth from July this year. This would not have been possible for Hong Kong without the shipping companies, Loh explained. Port Authorities are in a special position, because they can command such things. But not every port has the right government structure like a port authority to do it. »This area with the ports of Hong Kong, Guangzhou and Shenzhen carries about 12% of world tonnage in containers and has 60mill. people, so it is critical for us to get on the path, the ports of Los Angeles/Long Beach and Europe areon«, Loh stated.
»Also you have the ECAs and the SECAs, we want to do that, too. We want the waters of this whole area in China to become an ECA. We are continuing to learn from you.«
»The centre of gravity is moving«
Merk already gave an impression of possible future scenarios in the maritime industry. Peter Hinchcliffe, Secretary General of the International Chamber of Shipping (ICS) looked at an even bigger picture. While ports and shipping companies look mostly on technological feasibility and base their decisions on the current situation, Hinchcliffe emphasized, that the world of today will not be the same in ten or 20 years from now. As he explained, the ranking of GDP by 2035 is likely to see China at the top, followed by the USA, India, Japan, Indonesia and Mexico. But much of the GDP growth in emerging economies will be in the service sector, as they become similar in character to the current OECD economies. So not all of this growth will necessarily drive increased demand for maritime transport. »Estimates of future growth in maritime trade, which are based on past experiences may result with significant inexactness.«
With a change of economic balance, also supply chains are expected to become more complicated, but they will also shorten, as export economies such as China source their components much more locally, Hinchcliffe said.
Also the trade paths are changing, the ICS Secretary General says. By 2030 the top ten exporters for goods and services will be China, USA, India, Germany, Japan, Hong Kong, the Netherlands, France, South Korea and the UK. Significant wage increases in China will serve to increase the attractiveness of labour from India, the Philippines, Peru, Mexico, Eastern Europe and Vietnam, amongst others.
Felix Selzer, Thomas Wägener
