2009 05 Apac Container Ports Frost & Sullivan


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There are many challenges ahead for container port operators. The biggest challenge of all is the economic downturn that took a dramatic turn for the worst in the last quarter of 2008. The declining throughput has dramatically reduced the revenues of port operators. This scenario, coupled with increasing costs from the security and green initiatives, make 2009 a very challenging environment for port operators. To meet this challenge, port operators are exploring new revenue opportunities through new services and expanding their hinterland reach.

Frost & Sullivan\'s Consultant, Michael Lee, will share his findings on:
- Insights on container ports industry structure across major Asia Pacific countries
- Container ports’ growth opportunities & future prospects
- Insights on container ports driver, restraints and challenges
- Implication of security and emission trading have on container ports across the region.

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2009 05 Apac Container Ports Frost & Sullivan

  1. 1. Growth Opportunities in Container Ports: Are the Boxes Flowing or Just Floating? Mike Lee, Consultant Transportation & Logistics Practice Research by Transportation & Logistics Practice Frost & Sullivan Asia Pacific May 19, 2009
  2. 2. Focus Points 1 Definition of Container Ports and its Microenvironment 2 Review of 2008 Asia Pacific Container Ports 3 Market Restraint and 2009 Container Ports Outlook 4 Challenges and Issues for the Container Ports 5 Long Term Drivers and Container Ports Outlook 6 Container Ports Opportunities in Asia Pacific 7 Questions and Answers 2
  3. 3. 1 Frost & Sullivan: Transportation & Logistics Consulting Competencies Forwarding, Forwarding, Contract Contract Supply Chain Supply Chain Supply Chain Supply Chain Express and Express and Logistics Logistics Transportation Transportation Services Services Technologies Technologies Support Support Services Services Services Services Ports Ports Infrastructure Infrastructure Equipment Equipment Services Services Strategy Development Freight Markets Freight Markets Air Air Ocean Ocean Land Land Business Planning M&A Analysis Market Opportunity Analysis Rail Rail Systems Systems Aftermarket Aftermarket B2B Branding Transportation Transportation Addressing Trends & Issues Competitive Benchmarking Urban Urban Support Support Systems Systems Technology Benchmarking Transportation Transportation Services Services Product/ Service Concept Intelligent Intelligent Customer Assessment Transportation Transportation Systems Systems Customer Satisfaction Surveys Systems Systems Growth Coaching, Workshops & Training 3
  4. 4. Container ports industry structure across major Asia 1 Pacific countries Ports Classification Ports Operating Environment Gateway River Feeder Emission Trading Ports Ports Economy Security Needs Hinterlands Connection Equipments Ocean Shipping Transshipment Ports Competitors Repositioning Shipping Liners Containerization ICD Trade Gateway Container Road / Rail Ports Ports Feeder Ports 4
  5. 5. 1 Scope of the Study Container Ports: Container Ports Throughput, 2000 - 2008 140 Millions of TEU China is split from East Asia to illustrate its significant China contribution to Asia Pacific Container Throughput 120 100 80 Southeast Asia 60 East Asia 40 20 South Asia Oceania 0 2000 2002 2004 2006 2008 5
  6. 6. 2 Review of 2008 Asia Pacific Container Ports 2007 and 2008 Ports Throughput review (in ‘000 TEU) Top 40 Asia Pacific Ports has grown 6% on average between 2007 and 2008 6
  7. 7. 2 Key Ports Regions in China China’s Major Ports Regions Bohai Rim (23,326,000 TEU) 5. Ports of Qingdao (10,320,000 TEU) Beijing Ningxia Tianjin 6. Ports of Tianjin Jiangsu (8,503,000 TEU) Shanghai 8. Ports of Dalian (4,503,000 TEU) Guangdong Pearl River Delta (61,930,000 TEU) Yangtze River Delta (42,048,000 TEU) 2. Ports of Shenzen 1. Ports of Shanghai (21,400,000 TEU) (28,006,000 TEU) 4. Ports of 3. Ports of Ningbo Guangzhou (11,226,000 TEU) (11,001,000 TEU) 9. Ports of 7. Ports of Xiamen Lianyungang (5,035,000 TEU) (3,001,000 TEU) Include Hong Kong 7
  8. 8. The new 2008 Shipping Law will strip the regulatory power from the 2 current Ports corporations and create new opportunities Under the 1992 Shipping law currently under Pelindo I implementation in Indonesia, the Indonesian commercial and strategic ports are controlled by Pelindo IV the four state owned Indonesian Ports Corporations (IPCs) that have a monopoly over the region they control. The IPCs function and act as both sole operator and Ports authority controlling the supply of all major Ports services Pelindo II such as vessel traffic movement, anchoring and berthing, pilotage and towage and Ports facilities for stevedoring, warehouses and stacking container and bulk terminals Pelindo III Ports Authority Ports Operator The new Ports law draws a clear distinction between Ports operator and Ports The new Ports law transfers the role of Ports Operator to IPCs. The law regulator. The new Ports Authority will have the most regulatory authority at removes the IPC’s legislated monopoly and opens the Ports sector up for the Ports level. Their primary responsibility will be to regulate, price and participation by private operators and including foreign investors. The new law supervise access to basic Ports infrastructure and services including Ports offers a clear demarcation in the role and functions of the new Ports Authority land and waters, navigation tools, pilotage, breakwaters, Ports basins, Sea and Ports operator. channels (dredging) and Ports road networks. The IPCs (Ports Operators) would participate in providing cargo handling, The Ports authority will also be responsible for developing and implementing passenger facilities, mooring services, refuelling and water supply, towage as the Ports master-plan. The new master plan is to implement restricting the well as storage and other Superstructure. They would also be responsible for number of ports with direct international links to the 25 Strategic Ports determining Ports service tariffs based on tariff types, structure and categories (commercial ports) As per the new law these special terminals can apply to as determined by the government. become general cargo terminals if approved by the relevant Ports authority and ‘consistent’ with the local Ports master-plan, amongst other requirements. 8
  9. 9. Major investments are flowing into Vietnam to support its 2 trade growth Ho Chi Minh City Ports Group 1 New Ports Cat Lai Saigon Ports Ports Cai Mep – Thi Vai Ports Ben Nghe Ports Group 2 VICT Go Dau Ports (planned)) Group 3 Baria Serece (Phu My) Ports Hiep Phuoc Ports (existing) (under construction) Thi Vai Ports Complex (under construction) Group 4 Long An Ports Cai Mep Ports Complex (planned)) (under construction) Group 5 Existing Channel Vung Tau Ports Group 6 (planned) Group 7 Source: APL Vung Tau Group 8 Ports 9
  10. 10. 3 Market Restraints and 2009 Container Ports Outlook • Compared to land and air, trade by sea remained relatively stable. $87.094 Billion $180.11 Billion • Exports from EU-27 to U.S declined by 0.3% in 2008 compared to the previous year. $190.53 Billion $213.14 Billion • The imports from Asia to EU-27 grew by a modest 5.9%, while the exports $392.38 Billion showed a comparatively healthy growth of 9% compared to 2007. $614.26 Billion Year on Year growth by Month (2007 and 2008) Asia to EU-27 EU- Asia to U.S U.S to EU-27 EU- 14% 11.7% 10% 11.3% 10.4% 30.9% 7.3% 8.1% 9.1% 23% 6.8% 6.4% 6.2% 5.5% 6.6% 3.2% 5.1% 3% 3.5% 3.1% 18.5% 0.1% 16% 12.5%11.5%10.9% 11.2% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 6.5% 4.5% -2.3% -0.5% 1% -7.8% -7.0% -6.5% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -3.9% EU-27 to Asia EU- U.S to Asia 26.5% 23.6% 29.0% EU-27 to U.S EU- 27.2% 18.7% 20.5% 21.6% 16.2% 20.3% 21.0% 15.6% 16.1% 16.5% 16.7% 13.7% 8.9% 9.6% 8.8% 7.9% 7.4% 3.4% 0.1% 3.0% 3.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -6.0% -8.6% -0.3% -1.60% -7.3% -6.0% -0.7% -1.3% -2.7% -14.1% -9.6% -23.9% 10
  11. 11. 3 Short Term Outlook for Asia Pacific Container Ports Country 2008 2009 Japan 15,714 14,366 South Korea 16,939 15,169 140 China 115,946 107,079 Millions of TEU China Hong Kong 24,494 21,918 120 Taiwan 12,971 11,804 100 Singapore 29,918 27,225 Malaysia 15,448 14,371 80 Thailand 6,503 5,739 Southeast Asia 60 Indonesia 6,169 5,398 Philippines 3,043 3,043 East Asia 40 Vietnam 3,253 3,253 India 5,535 5,231 20 South Asia Oceania Australia 5,060 4,773 0 New Zealand 1,450 1,396 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 In ‘000 TEU 11
  12. 12. The government of APAC countries are implementing short-term as 4 well as long-term initiatives to counteract the effects of the current slowdown. Policies Initiatives taken by countries: • Delay or provide concession on emission - Industry-friendly policies restrictions Effects of Recession on Ports: - Rebates • Export incentives for specific goods - Lower trade volumes - Trade agreements with other countries - Lesser investment opportunities - Allocation of funds for infrastructure - Delayed infrastructure projects development P Trade Agreements • Free trade agreement between ASEAN and Australia and New APAC Rebates • Waiving of taxes and fees Zealand • Reduced Ports fees • Creation of free trade and free • Fuel price discounts investment region accelerated • Rental rebates for office • India-ASEAN free trade and warehouse spaces agreement • Ports dues cuts • Plans for a multi-lateral and T R • Incentives for Ports multi-national financial co- services operation to boost companies from liquidity, 12
  13. 13. 4 Challenges with the Hinterland Connections Container Ports and its Hinterland Country Gateway Ports and its Hinterland Japan Tokyo, Yokohama Greater Tokyo 24 South Korea Busan South Korea 13 33 4 16 China Shanghai Yangtze River Delta 9 9 17 22 6 Hong Kong Hong Kong Pearl River Delta 15 2 22 7 Expanding Hinterland Reach Taiwan Kaoshiong Taiwan 7 8 19 7 8 Rail to 6 2 Singapore Singapore Johor, Singapore, Riau address 4 Malaysia Ports Klang Selangor, Kuala Lumpur Hinterland 3 4 Thailand Laem Chabang Bangkok Moving Ports 15 3 3 Indonesia Tanjung Priok Jakarta, Banten, Java to address congestions Philippines Manila Manila Vietnam Saigon South Vietnam 2 India Jawaharlal Nehru West, Central, North India 4 1 Australia Melbourne Victoria 4 Ports Hinterland New Zealand Auckland New Zealand Congestion 13
  14. 14. 4 Implication of emission trading have on container ports • The Kyoto Protocol legally bind the countries classified under “Annex I” (industrialized) to 94% reduce Greenhouse Gases (GHG), hydrofluorocarbons and perfluorocarbons. • The GHG include carbon dioxide, methane, nitrous oxide and sulphur hexafluoride • The Annex I countries are obligated to reduce their GHG emission relative to their 1990 emission by 2012. For instance, Japan is required to reduce to 94% of their 1990 GHG 108% emission 100% The percentage is the quota of the country relative to the 1990 GHG emission level Power Generation Hinterland Transport Ports Operation & Shipping Development • Promote and enable generation of • Use efficient and innovative • Promote co-siting and shared • Support the development of clean renewable energy (e.g. wind, logistics to reduce the need for utilities to capture energy shipping solar, geo-thermal) in public and hinterland transport. efficiencies and use waste • Consider speed reductions were private domains. • Institute, facilitate and program energy. effective and possible with regard • Use renewable energy where the modal shift towards clean and • Develop sustainable nautical to nautical safety. possible for Ports authority energy efficient modes of services, such as those • Develop transparent incentives operations and advocate the use transport. represented by tugs and other based on a shared system of of renewable energy for • Stimulate the environmental harbor craft. environmental indexing of ships. Ports operations more broadly. performance of all transport • Encourage shore-side supply of • Urge the IMO to accelerate • Promote the transport and modes (e.g. by environmental (renewable) electricity for inland incorporating best practices in processing of certified biomass for zoning). navigation reducing CO2 in IMO treaties and the production of renewable • Improve the energy efficiency of to accelerate adoption of the energy. buildings, cargo handling and current proposals to amend transportation MARPOL Annex VI. 14
  15. 15. 4 Implication of security have on container ports Major Ports Security Regulatory Initiatives Secure Freight Initiative Authorized Economic Operator IMO’s ISPS Code • Combine threat intelligence • Part of the World Customs • Special measures to ensure • 100% security scan of containers Organization (WCO) Framework of security of ships and Ports facilities. Standards to Secure and Facilitate • The Ports is required to conduct an Container Security Initiative global trade (SAFE) security assessment identify the • Identify and target high risk containers • Certification program for supply critical asset, assess the threats to • Pre-screen the containers at Ports of departure chain industry participant including the assets and identify and address • Use of detection technology terminal operators weakness. • Use temper-evident containers • Similar to program such as C-TPAT • Functional requirement includes in U.S., Secure Trade Partnership in • Ports Facility Security Plan Mega-ports Singapore, Secure Export Scheme • Ports Facility Security Officer • Radiation detection technology in New Zealand • Security Equipment Share of U.S. Container Origin, 2007 Region Country CSI Ports in Asia Japan Yokohama, Tokyo, Nagoya, Kobe South Korea Busan North Asia China Shanghai, Shenzhen CSI Operational Ports Coverage Hong Kong Hong Kong 86% Taiwan Kaohsiung, Keelung 14% Singapore Laem Chabang Southeast Malaysia Singapore Asia Thailand Ports Klang, Tanjung Pelepas 15
  16. 16. 4 Understanding the Uncertainty and Impact is essential High Impact Fuel Price Increase Green Logistics Ongoing Infrastructure Financing On-Demand Supply Chain Hinterland Connection Improvements Security Initiatives Future Trade Movement Projected Impact on the Logistics Industry Containerization and inland transportation Inter-modal Transportation Cold Supply Chain in emerging markets Low Impact Low High Uncertainty 16
  17. 17. 5 Long Term Outlook for Asia Pacific Container Ports 0 50,000 100,000 150,000 200,000 250,000 Greater China 6% East Asia 2.6% 2008 2015 Southeast Asia 5.2% South Asia 9.8% Oceania 5% in ‘000 of TEU Regional Growth Outlook (in Millions of TEU) Greater China East Asia Southeast Asia South Asia Oceania 250 60 100 12 10 200 50 80 10 8 40 8 150 60 6 30 6 100 40 4 20 4 50 10 20 2 2 0 0 0 0 0 2006 2009 2012 2015 2006 2009 2012 2015 2006 2009 2012 2015 2006 2009 2012 2015 2006 2009 2012 2015 17
  18. 18. 5 Long Term Drivers of Container Ports Throughput Asia Pacific’s Container Ports Market Drivers, in ‘000 TEU 11,368 23,432 24,360 Containerization is growing at a 56,840 Trade imbalance rate of will continue to approximately be a problem for 1.4% a year the liners 378,442 262,443 2008 Vol Trade Growth Increasing Repositioning Trade Transshipment Transshipment Containerization Increasing share 2015 Vol 2015 Volume 2008 Volume Trade volume Imbalance of Containers of cargo are (Empty Container) containerized 18
  19. 19. Container Ports Opportunities in Asia Pacific: 6 Transshipment • Consolidation and privatization of Ports America ’05 Share of Major Container Region Ports Transshipment Lines Busan 43.7% Hanjin North Asia Kaoshiung 50.9% Evergreen, • Indonesia’s reform of Hong Kong 44.9% Hanjin Europe the ports and rail Klang 40.9% CMA CGM, CSCL market Tanjung Maersk, MISC, Southeast 96.0% Pelepas Evergreen Asia PIL, COSCO, APL, • Inland Rail Corridor Singapore 81.0% MSC, Swire, NYK, • Transshipment Ports investment in India South Asia Colombo 71.3% • New operator for major Australia ports 19
  20. 20. 7 Thank You THANK YOU We Accelerate Growth 20
  21. 21. 7 Next Steps Request a proposal for Growth Partnership Services to support you and your team to accelerate the growth of your company. Attend Frost & Sullivan Executive MindXchange best practice networking events (http://www.frost.com/cal) to share and address strategic challenges Consider Conducting a 360 Degree Growth Workshop to support your long-term growth strategy Join us at a Growth, Innovation and Leadership 2009: A Frost & Sullivan Global Congress on Corporate Growth (www.frost.com/gilglobal) Register for the next Chairman’s Series on Growth: (http://www.frost.com/growthapac) Schedule a Recession Strategy Session with a Frost & Sullivan Industry consultant (email us: alvin.chua@frost.com) Schedule a One-on-One Growth Strategy Dialogue with a Frost & Sullivan Growth Consultant (email us: alvin.chua@frost.com) Register for Frost & Sullivan’s Growth Opportunity Newsletter and Growth Team Membership e Bulletin to keep abreast of growth opportunities in your industry and best practices in your career track. (www.frost.com) 21
  22. 22. 7 Contact Us If you have questions or would like further information about anything we discussed, please send your query to the email provided below and we will get back to you shortly. Alvin Chua Account Manager Automotive, Transportation & Logistics DID: +65 6890 0997 Mob: +65 9199 4566 eMail: alvin.chua@frost.com 22