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Ports commercialization strategy october 2015

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This is a summary copy of the findings from a regional study on South Pacific Vessels and Cruise Analysis, Port Landscape and Competitiveness. Further inquiries for in-depths understanding of the report can be forwarded to Harorimana.deo@gmail.com or info@aipfgroup.com . Free for personal use only.

Published in: Government & Nonprofit
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Ports commercialization strategy october 2015

  1. 1. COMMERCIALIZATION STRATEGY REPORT 2013 1
  2. 2. Commercialization Strategy Report was developed under a paid contract between iPacific Frontiers Ltd and Solomon Islands Ports Authority (The Client) For any further information contact: iPacific Frontiers Ltd (The Consultant) Outback Bld, P.o.Box 2081 Honiara, Solomon Islands email: ceo@aipfgroup.com harorimana.deo@gmail.com 2
  3. 3. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization – Recommendations 3
  4. 4. Commercialization Strategy Report 2013 – Current state of the port landscape • Major container ports in the region • Main shipping routes that ply through the region • Shipping network of Honiara and Noro – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization – Recommendations 4
  5. 5. Major container ports in the region Current port landscape 5 Source: Consultants. 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 Lae Noumea Port Moresby Suva Lautoka Honiara Rabaul Container Throughput Slot Capacity 70.9% 25.3% 24.4% 15.2% 11.8% 10.6% 12.7% TEUs
  6. 6. Commercialization Strategy Report 2013 – Current state of the port landscape • Major container ports in the region • Main shipping routes that ply through the region • Shipping network of Honiara and Noro – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization – Recommendations 6
  7. 7. Main shipping routes that ply through the region Current port landscape 7 Source: Consultants.Source: Consultants. East Asia-ANZ: 2.2 million TEUs Honiara Solomon Islands New Zealand Australia East Asia South East Asia- ANZ: 1.7 million TEUs South East Asia Americas-ANZ: 0.8 million TEUs North America South America South West Pacific • South West Pacific region sits astride major shipping routes that connect between Asia, ANZ and Americas • Tremendous opportunity for transhipment activity
  8. 8. Main shipping routes that ply through the region Current port landscape 8 Source: Consultants.Source: Consultants. Australia-NZ: 213,000 TEUs ANZ-East Pac: 221,000 TEUs ANZ-West Pacific: 58,100 TEUs Intra PNG: 15,000 TEUs Honiara Solomon Islands New Zealand Australia FijiNew Caledonia Vanuatu Papua New Guinea
  9. 9. Commercialization Strategy Report 2013 – Current state of the port landscape • Major container ports in the region • Main shipping routes that ply through the region • Shipping network of Honiara and Noro – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization – Recommendations 9
  10. 10. Shipping network of Honiara Current port landscape 10 Source: Consultants. Townsville Lautoka Suva Noumea Lae Madang Port Moresby Rabaul Lihir Honiara Noro Santo Port Villa Baie de Prony Wewak Oro Bay Fiji New Caledonia Vanuatu Solomon Islands Papua New Guinea Shipping service Capacity Carpenters Shipping Pac 1 32,300 Carpenters Shipping Pac 2 32,300 Greater Bali Hai 1 10,900 Greater Bali Hai 2 11,600 New Pacific Line 41,800 Sofrana 1 10,300 Sofrana 2 12,500 Swire Shipping – North Asia 31,800 Swire Shipping – PNG 21,100 Container throughput: 21,600 TEUs Slot capacity: 200,000 TEUs Slot capacity utilization rate: 10.6% Transhipment: 4%, about 900 TEUs Australia
  11. 11. Shipping network of Noro Current port landscape 11 Source: Consultants. Lautoka Suva Noumea Lae Madang Port Moresby Rabaul Honiara Noro Santo Baie de Prony Oro Bay Fiji New Caledonia Vanuatu Solomon Islands Papua New Guinea Australia Shipping service Capacity Carpenters Shipping Pac 1 32,300 Greater Bali Hai 1 10,900 Maersk PNG Express 29,100 Container throughput: 2,000 TEUs Slot capacity: 72,300 TEUs Slot capacity utilization rate: 2.8%
  12. 12. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies • Determinants of container port traffic in the South Pacific • Port tiers in the South Pacific • Shipping line behaviour in container shipping operations • Key players and their network strategy – Competition, competitiveness and successful commercialization – Recommendations 12
  13. 13. Determinants of container port traffic in the South Pacific Shipping routes and network strategies 13 Source: Various.
  14. 14. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies • Determinants of container port traffic in the South Pacific • Port tiers in the South Pacific • Shipping line behaviour in container shipping operations • Key players and their network strategy – Competition, competitiveness and successful commercialization – Recommendations 14
  15. 15. Port tiers in the South Pacific Shipping routes and network strategies 15 Source: Consultants. 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 Population Container Throughput (TEUs) Size of the bubble denotes estimated GDP of the port city NoumeaSuva Lautoka Honiara Lae Port Moresby Tier 1 ports Tier 2 ports Tier 3 ports RabaulMadang Santo Port Villa
  16. 16. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies • Determinants of container port traffic in the South Pacific • Port tiers in the South Pacific • Shipping line behaviour in container shipping operations • Key players and their network strategy – Competition, competitiveness and successful commercialization – Recommendations 16
  17. 17. Shipping line behaviour in container shipping operations Shipping routes and network strategies 17 Source: Yap. Factors influencing shipping service configuration
  18. 18. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies • Determinants of container port traffic in the South Pacific • Port tiers in the South Pacific • Shipping line behaviour in container shipping operations • Key players and their network strategy – Competition, competitiveness and successful commercialization – Recommendations 18
  19. 19. Key players and their network strategy Shipping routes and network strategies 19 Source: Consultants. Lae Rabaul Honiara Fiji New Caledonia Vanuatu Solomon Islands Papua New Guinea Australia Lautoka Suva Noumea Port Moresby Santo Madang Port Villa Noro Lae serves as primary hub for ANZ-Asia and intra-regional trades Noumea serves as primary hub for ANZ-East Pacific and Americas trades • Biggest opportunity is to attract mainline services currently bypassing the region • Deploy vessels up to 5,900 TEUs • Mainline services will boost cargo by three to four times from current levels • Need to provide adequate handling facilities and sufficient cargo base
  20. 20. Key players and their network strategy Shipping routes and network strategies 20 Source: Consultants. Honiara: 120 metres
  21. 21. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization • Market share analysis • Competitive advantage analysis • SWOT analysis • Competitive analysis • Focus areas 1 to 4 – Recommendations 21
  22. 22. Market share analysis Competition, competitiveness, commercialization 22 Source: Consultants. Much scope to build up capacity connected to these trade routes which could translate into higher container throughput and better slot capacity utilization
  23. 23. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization • Market share analysis • Competitive advantage analysis • SWOT analysis • Competitive analysis • Focus areas 1 to 4 – Recommendations 23
  24. 24. Competitive advantage analysis Competition, competitiveness, commercialization 24 Source: Consultants. Port TEUs Competitive (dis)advantages Key customers Lae 430 metres berth 11 metres draft 184,500  Busiest container port  Largest feeder network  Highest slot utilization (70.9%)  Strong local cargo base  Transhipment hub for PNG  Can handle 3G ships (3,500 TEUs) Carpenters Shpg Swire Shipping New Pacific Line Noumea 750 metres berth 10.3 metres draft 110,000  Highest shipping capacity  Largest container ships (2,560 TEUs)  Second busiest container port  Central location for Asia, ANZ, America  High slot utilization (25%)  Longest berth (750 metres) CMA CGM MSC Swire Shipping Port Moresby 125 metres berth 10.6 metres draft 89,500  More shipping but less container traffic than Lae  Difficult to receive big container ships  Portek started 5-year operations Swire Shipping Carpenters Shpg New Pacific Line Sofrana
  25. 25. Competitive advantage analysis Competition, competitiveness, commercialization 25 Port TEUs Competitive (dis)advantages Key customers Suva 492 metres berth 12.5 metres draft 50,000  Busiest container port in Fiji  Second longest berth (492 metres)  Deepest draft (12.5 metres)  Low slot utilization (15%)  Serves Asian market CMA CGM Swire Shipping Pacific Direct Sofrana Lautoka 290 metres berth 10.5 metres draft 30,000  Largest port for bulk cargo in Fiji  Sister port to Suva  Low slot utilization (12%)  Mainly local cargo  Serves ANZ-East Pacific, Americas Swire Shipping CMA CGM Honiara 120 metres berth 9.1 metres draft 21,600  Low slot utilization (11%)  Mainly local cargo  Limited vessel-handling capacity  Limited cargo base Carpenters Shpg Swire Shipping New Pacific Line Rabaul 152 metres berth 10.2 metres draft 18,000  Low slot utilization (13%)  Mainly local cargo  Many parallel calls at Honiara Carpenters Shpg New Pacific Line Aitken Spence began 15-yr operations Source: Consultants.
  26. 26. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization • Market share analysis • Competitive advantage analysis • SWOT analysis • Competitive analysis • Focus areas 1 to 4 – Recommendations 26
  27. 27. SWOT analysis Competition, competitiveness, commercialization 27 Source: Consultants.
  28. 28. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization • Market share analysis • Competitive advantage analysis • SWOT analysis • Competitive analysis • Focus areas 1 to 4 – Recommendations 28
  29. 29. Competitive analysis Competition, competitiveness, commercialization 29 Source: Consultants. Supply restrictions: Require berth length of 350 metres and depth alongside of at least 13.0 metres
  30. 30. Competitive analysis Competition, competitiveness, commercialization 30 Source: Consultants. Demand restrictions: • Two largest container ports in the region, Lae and Noumea, are situated roughly at opposite ends of the Solomon Islands chain • Large cargo base at these two ports will pose considerable challenges to Honiara’s ambition to become a hub port in the region • Large cargo base at a port will assure shipping lines to call and this brings transhipment opportunities on top of local cargo • Evidence of Lae which has feeder services • If matters are left at the current state, Honiara could become a feeder port to Lae or Noumea as well
  31. 31. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization • Market share analysis • Competitive advantage analysis • SWOT analysis • Competitive analysis • Focus areas 1 to 4 – Recommendations 31
  32. 32. Focus areas to boost the competitiveness of Honiara Port Competition, competitiveness, commercialization 32 Source: Consultants.
  33. 33. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization • Focus areas – Market segmentation analysis to attract additional traffic – Development of an independent feeder network – Development of a Honiara port cluster – Growing the local cargo base – Recommendations 33
  34. 34. Market segmentation analysis to attract additional traffic Competition, competitiveness, commercialization 34 Market segment Priority Other potential targets Time frame 1 Shipping lines that call at the Solomon Islands Maersk Line New Pacific Line Carpenters Shipping Swire Shipping Greater Bali Hai Sofrana Short term 2 Shipping lines that charter slots in segment 1 Hub Line COSCO Mitsui OSK Lines NYK Pacific Forum Short term 3 Lines operating feeder svcs from Lae Hub Line PNG CEX Bismarck Maritime Curtain Bros PNG Short term 4 Services calling in PNG region on East/SE Asia-ANZ trade Mariana Express ANA ANL-CL APR ANL-CL NAPX Swire Shipg East/SE Asia Swire Shipping SE Asia Kyowa Paradise Short term 5 Smaller svcs passing thru SI & PNG on East/SE Asia-ANZ trade Expand berth length to 350m with depth alongside of 13m Vessel sizes up to 2,500 TEUs Medium term Source: Consultants.
  35. 35. Market segmentation analysis to attract additional traffic Competition, competitiveness, commercialization 35 Source: Consultants. Lae Honiara Noro Port Moresby From Tanjung Pelepas, Malaysia Back to Tanjung Pelepas, Malaysia Papua New Guinea Solomon islands About 200 nautical miles in each direction to/from Honiara Market segment 1: Additional sailing distance Maersk Line will incur to turn around at Honiara instead of Noro
  36. 36. Market segmentation analysis to attract additional traffic Competition, competitiveness, commercialization 36 Lae Honiara East/SE Asia 1 (from/to Singapore) East/SE Asia 2 (from Singapore, to Subic, Philippines) From Yokohama, Japan To Keelung, Taiwan North Asia service Brisbane Lihir PNG service Noro Santo To Kaohsiung, Taiwan From Nukualofa, Tonga Port Villa To Apia, Samoa Pacific Island service Greater Bali Hai 1 Greater Bali Hai 2 Lautoka Suva Noumea Port Moresby New Zealand ports Australian ports Source: Consultants. Market segment 1: Swire Shipping and Greater Bali Hai
  37. 37. Market segmentation analysis to attract additional traffic Competition, competitiveness, commercialization 37 Source: Consultants. Honiara Solomon islands Rabaul Oro Bay Madang Hub Line PNG Express 1 Hub Line PNG Coastal Express New Pacific Line (slot charter) From Jakarta, Indonesia To Singapore From Hong Kong To Busan, South Korea Lae Port Moresby Papua New Guinea Market segment 2: Hub Line
  38. 38. Market segmentation analysis to attract additional traffic Competition, competitiveness, commercialization 38 Source: Consultants. Lae Honiara Port Moresby Papua New Guinea Solomon islands Rabaul Madang ANL APR Mariana Express Lines ANA Swire Shipping East/South East Asia 1 Swire Shipping East/South East Asia 2 Kyowa Paradise From Jakarta, Indonesia To Port Klang, Malaysia From Singapore To Port Klang, Malaysia From Busan, South Korea To Townsville, Australia To Townsville, Australia From Singapore To Noumea From Singapore To Noumea 801 nautical miles 800 nautical miles 562 nautical miles ANL NAPX Market segment 4: Shipping services calling in PNG on the East/SE Asia-ANZ trade
  39. 39. Market segmentation analysis to attract additional traffic Competition, competitiveness, commercialization 39 Source: Consultants. Market segment 5: Smaller services passing through Solomon Islands and PNG on the East/SE Asia-ANZ trade Market segment would be better served by provision of berth length of 350 metres with depth alongside at 13.0 metres
  40. 40. Market segmentation analysis to attract additional traffic Competition, competitiveness, commercialization 40 Source: Consultants. Market segment Priority Other potential targets Time frame 6 Larger vessels passing thru SI & PNG on East/ SE Asia-ANZ trade Expand berth length to 450m with depth alongside of 14m Third generation container ships Longer term 7 Mainline svcs passing thru SI & PNG on East/SE Asia-ANZ trade Expand berth length to 750m with depth alongside of 15m Fourth and fifth generation container ships Longer term 8 Lines that ply on Americas-ANZ trade Matson CLX 1 Hamburg Süd/Maersk Pacific VSA PSW Pacific VSA PNW PIL CTP CMA CGM/Marfret PAD Longer term 9 Shipping services that ply on the ANZ-East Pacific trade Maersk Line Sofrana Swire Shipping MSC Pacific Direct Line Neptune Pacific Reef Shipping Express Cook Is Line Mataroa Int’l Shipping Longer term
  41. 41. Market segmentation analysis to attract additional traffic Competition, competitiveness, commercialization 41 Source: Consultants. Require expanding port infrastructure to berth of 450 metres and depth alongside of 14.0 metres Market segment 6: Larger vessels passing through Solomon Islands and PNG on the East/SE Asia-ANZ trade
  42. 42. Market segmentation analysis to attract additional traffic Competition, competitiveness, commercialization 42 Source: Consultants. Market segment 7: Mainline services passing through Solomon Islands and PNG on the East/SE Asia-ANZ trade Require 750 metres of berth and at least 15 metres draft
  43. 43. Market segmentation analysis to attract additional traffic Competition, competitiveness, commercialization 43 Source: Consultants. Honiara Solomon Islands North America South America New Zealand Australia Objective is to swing traffic to Honiara Matson’s South Pacific services Market segment 8: Shipping lines plying on the Americas-ANZ trade
  44. 44. Market segmentation analysis to attract additional traffic Competition, competitiveness, commercialization 44 Source: Consultants. Market segment 9: Shipping services plying on ANZ-East Pacific trade
  45. 45. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization • Focus areas – Market segmentation analysis to attract additional traffic – Development of an independent feeder network – Development of a Honiara port cluster – Growing the local cargo base – Recommendations 45
  46. 46. Development of an independent feeder network Competition, competitiveness, commercialization 46 Source: Consultants. An independent feeder network which serves smaller ports may help to circumvent the hub statuses of Lae and Noumea Townsville Lautoka Suva Noumea Lae Madang Lihir Noro Wewak Oro Bay Fiji New Caledonia Vanuatu Solomon Islands Australia Port Moresby Honiara Rabaul Transhipment hub Feeder port candidates Lae as the regional transhipment hub:
  47. 47. Development of an independent feeder network Competition, competitiveness, commercialization 47 Source: Consultants. Lautoka Suva Noumea Lae Madang Lihir Noro Wewak Oro Bay Fiji New Caledonia Vanuatu Solomon Islands Australia Port Moresby Honiara Rabaul Potential transhipment hub Feeder port candidates Santo Port Villa 1a. Honiara as a hub for hub-and- spoke transhipment
  48. 48. Development of an independent feeder network Competition, competitiveness, commercialization 48 Source: Consultants. Potential transhipment hub Feeder port candidates Need to assess cargo growth potential of feeder ports. Honiara Auki BualaGizo Kamaosi Kirakira Lata Munda Noro Taro Island Tigoa Tulagi Tabarato Kandova Surairo Wairokoi Ruaniu Nguvia 1b. Honiara as a national hub for hub- and-spoke transhipment
  49. 49. Development of an independent feeder network Competition, competitiveness, commercialization 49 Source: Consultants. Honiara Solomon Islands North America South America New Zealand Australia East Asia South East Asia East Asia-New Zealand service South East Asia- Australia service 2. Honiara as a hub for inter-lining transhipment
  50. 50. Development of an independent feeder network Competition, competitiveness, commercialization 50 Source: Consultants. Honiara Solomon Islands North America South America New Zealand Australia East Asia South East Asia 3. Honiara as a hub for relay transhipment
  51. 51. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization • Focus areas – Market segmentation analysis to attract additional traffic – Development of an independent feeder network – Development of a Honiara port cluster – Growing the local cargo base – Recommendations 51
  52. 52. Development of a Honiara port cluster Competition, competitiveness, commercialization 52 Source: Consultants. Vessel entry and departure formalities (customs and immigration) Berth arrangement Pilotage Bunkering Fresh water supply Food provisions Store supply Stevedoring Warehousing Dry-docking and repair Underwater repairs, cleaning, photography, rudder, propeller polishing Hull, deck and engine survey Safety inspection Crew change Crew training and certification Medical assistance Discharge of slops and tank cleaning Waste disposal Cargo stowage planning Charts and publications Legal advisory
  53. 53. Development of a Honiara port cluster Competition, competitiveness, commercialization 53 Source: Consultants. Honiara Port Cluster Navy Bunker Engineering Domestic Ferry Shipping Seaport Maritime Services Ship Repair Marine Equipmnt Cruise Fishing Defence Transport and Logistics Energy Construction Port-related Industry Service Industry Steel Industry Metal Working Machinery Recreation and Tourism Fish Production and Processing Industry
  54. 54. Development of a Honiara port cluster Competition, competitiveness, commercialization 54 Source: Consultants.
  55. 55. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization • Focus areas – Market segmentation analysis to attract additional traffic – Development of an independent feeder network – Development of a Honiara port cluster – Growing the local cargo base – Recommendations 55
  56. 56. Growing the local cargo base Competition, competitiveness, commercialization 56 Source: Consultants. Sizeable local cargo More shipping traffic Carriers perform transhipment Economies of scale and network economies Honiara becomes a load centre Virtuous cycle of cargo growth for the Port of Honiara:
  57. 57. Growing the local cargo base Competition, competitiveness, commercialization 57 Source: Consultants. • Limited population size with small consumption volumes • Limited hinterland that is captive to the port • Limited port drafts which restricts calls by larger mainline vessels • Limited terminal handling capacity which caps cargo throughput growth • Inefficient work processes which lowers port productivity resulting in excessive berth time and waiting time for the vessel • Lack of space for future port capacity expansion • Lack of support by policy makers Challenges:
  58. 58. Growing the local cargo base Competition, competitiveness, commercialization 58 Source: Consultants.
  59. 59. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization • Forecast of potential demand • Port marketing considerations • Key accounts management • Critical issues for port commercialization • Public relations management – Recommendations 59
  60. 60. Forecast of potential demand Competition, competitiveness, commercialization 60 Source: SIPA. 0 5,000 10,000 15,000 20,000 25,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Transhipment Local 99.8% 97.6% 87.7% 94.6% 95.8% 90.2% 98.1% 98.8% 98.4% 95.9%+22.9% +22.1% +0.6% +29.9% +0.6% -11.4% +0.3% +26.3% +13.5% TEUs Container throughput handled at Honiara Port (2003-2012):
  61. 61. 0 2,000 4,000 6,000 8,000 10,000 12,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Export Full Export Empty Import Full Import Empty Forecast of potential demand Competition, competitiveness, commercialization 61 Source: SIPA. Constitution of import and export containers at Honiara Port (2003-2012):
  62. 62. Forecast of potential demand Competition, competitiveness, commercialization 62 Source: Consultants. Modus Operandi Scenario: 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 Transhipment Local cargo 21,564 46,327 CAGR 2012-2035: 3.5% TEUs 23,182 25,273 27,399 29,566 31,749 33,948 36,163 38,393 40,640 42,903 45,182 Assumptions:  Local containers grow at 1,000 TEUs p.a.  Reliance on local cargo  Transhipment share at less than 6%  Basic port and shipping-related services  No plans for industrialization  No plans for tourism hub development
  63. 63. Forecast of potential demand Competition, competitiveness, commercialization 63 Source: Consultants. Hub Port Scenario: 0 50,000 100,000 150,000 200,000 250,000 300,000 Industrial zone Transhipment Local cargo 21,564 260,461 TEUs 25,743 35,025 69,406 91,371 113,432 135,647 157,942 180,423 203,056 225,854 248,893CAGR 2012-2035: 12.0% Estimated capacity limit for 150m berth Assumptions:  Local containers grow at 2,000 TEUs p.a.  Feeder networks feed cargo to Honiara  Industrialization undertaken  Basic port and shipping-related services  No plans for tourism hub development
  64. 64. Forecast of potential demand Competition, competitiveness, commercialization 64 Source: Consultants. Hub Port Scenario: 0 50,000 100,000 150,000 200,000 250,000 300,000 Industrial zone Transhipment Local cargo TEUs Estimated capacity limit for 150m berth Strong industrial zone performance, 20% above baseline projection Weak industrial zone performance, 30% below baseline projection Industrial zone: 1,000 hectares or 10 km2 Single plot size of 2 hectares or 20,000 m2 350 low-rise factories Each factory generates 500 TEUs per annum Projected to contribute 175,000 TEUs in total
  65. 65. Forecast of potential demand Competition, competitiveness, commercialization 65 Source: Consultants. Port Cluster Scenario: 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 Industrial zone Transhipment Local cargo 21,564 728,912 TEUs 29,939 43,724 90,103 122,082 158,424 200,569 250,339 310,989 386,413 485,677 629,166 CAGR 2012-2035: 17.4% Assumptions:  Local containers grow at 4,000 TEUs p.a.  Transhipment strategy anchors hub status  Industrialization undertaken  Tourism hub development  Suite of port and shipping-related services
  66. 66. Forecast of potential demand Competition, competitiveness, commercialization 66 Source: Consultants. Port Cluster Scenario: 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 21,564 728,912 TEUs 29,939 43,724 90,103 122,082 158,424 200,569 250,339 310,989 386,413 485,677 629,166 Estimated capacity limit for 150m berth Estimated capacity limit for 350m berth Estimated capacity limit for 450m berth Estimated capacity limit for 750m berth Providing sufficient capacity to accommodate vessel and cargo traffic is key!
  67. 67. Forecast of potential demand Competition, competitiveness, commercialization 67 Source: Consultants. Summary of demand forecasts: 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 TEUs Port Cluster Scenario CAGR 2012-2035: 17.4% Hub Port Scenario CAGR 2012-2035: 12.0% Modus Operandi Scenario CAGR 2012-2035: 3.5%21,564 728,912 260,461 46,327
  68. 68. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization • Forecast of potential demand • Port marketing considerations • Key accounts management • Critical issues for port commercialization • Public relations management – Recommendations 68
  69. 69. Port marketing considerations Competition, competitiveness, commercialization 69 Source: Consultants. Two important groups of customers Honiara Port must take into account: 1. Shipping lines
  70. 70. Port marketing considerations Competition, competitiveness, commercialization 70 Source: Consultants. Two important groups of customers Honiara Port must take into account: 1. Shipping lines
  71. 71. Port marketing considerations Competition, competitiveness, commercialization 71 Source: Consultants. Two important groups of customers Honiara Port must take into account: 2. Shippers
  72. 72. Port marketing considerations Competition, competitiveness, commercialization 72 Source: Consultants. • When targeting new customers, Honiara should be extremely careful not to enter into a rate war and negative price spiral for all customers • Transhipment market is much more volatile than the import/export market • Gaining market share by increasing import/export volumes is likely to be more time consuming but this strategy is more sustainable • Cost is usually the primary focus of shipping lines. As such, Honiara must develop new ways of improving efficiency and effectiveness
  73. 73. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization • Forecast of potential demand • Port marketing considerations • Key accounts management • Critical issues for port commercialization • Public relations management – Recommendations 73
  74. 74. Key accounts management Competition, competitiveness, commercialization 74 Source: Consultants. Cycle of Customers Prospects Existing customers New customers Ex- customers Customer relationship management:
  75. 75. Key accounts management Competition, competitiveness, commercialization 75 Source: Consultants. Key accounts for Honiara Port:
  76. 76. Key accounts management Competition, competitiveness, commercialization 76 Source: Consultants. • Managing well the relationship between the port of Honiara and key customers is an important task • Key account management involves coordinating interfaces between various functions of the port and key account’s organization • Key account management aims to deliver customer satisfaction, high level of service and customer profitability • Aim is to cultivate deep relationships with shipping lines and shippers so as to convince them to handle more cargo and vessels through Honiara • Authorities should understand the network strategy and primary motivation of these lines to better cater to their needs
  77. 77. Key accounts management Competition, competitiveness, commercialization 77 Source: Consultants. Key account matrix:
  78. 78. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization • Forecast of potential demand • Port marketing considerations • Key accounts management • Critical issues for port commercialization • Public relations management – Recommendations 78
  79. 79. Critical issues for port commercialization Competition, competitiveness, commercialization 79 Source: Consultants. • The port is an important gateway through which Honiara interacts with other communities • As the capital city, the port carries the additional important dimensions of social and economic development for the country • Policies made with respect to the port will have irrevocable and wide-ranging impact on the country’s long-term propensity for competitiveness, growth and development • Any policies regarding commercialization of port operations or assets must consider potential implications for: • Commercial viability for operators • Steady flow of financial revenue for government authorities • Sustainable competitive setting where monopolistic tendencies will not set in
  80. 80. Critical issues for port commercialization Competition, competitiveness, commercialization 80 Source: Consultants. Demand conditions Supply conditions Market structure Demand size Demand growth Demand composition Cargo handling capacity Vessel handling capacity Contestability Small Weak Unbalanced Inadequate Monopolistic Oligopolistic
  81. 81. Critical issues for port commercialization Competition, competitiveness, commercialization 81 Source: Consultants. Shipping line/service Shipping agent Carpenters Shipping Sullivans Greater Bali Hai Tradeco New Pacific Line Tradeco/Sullivans Sofrana Tradeco Swire Shipping Tradeco Shipping line Cargo owner Ship agent SIPA Shipping services Monopolization of the port value chain?
  82. 82. Critical issues for port commercialization Competition, competitiveness, commercialization 82 Source: Consultants. Contestability in terms of port connectivity:
  83. 83. Critical issues for port commercialization Competition, competitiveness, commercialization 83 Source: Consultants. 100,000 TEUs Steady Import/Export/Transhipment Expand port facilities Develop new port Addressing demand conditions is key
  84. 84. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization • Forecast of potential demand • Port marketing considerations • Key accounts management • Critical issues for port commercialization • Public relations management – Recommendations 84
  85. 85. Public relations management Competition, competitiveness, commercialization 85 Source: Consultants. • Honiara Port will also have to manage its relations with the public • This is important when the public are important customers of the port as well • Communications management • Crisis management • Corporate image and branding • Risk management
  86. 86. Public relations management Competition, competitiveness, commercialization 86 Source: Consultants. 1. Communications management
  87. 87. Public relations management Competition, competitiveness, commercialization 87 Source: Consultants. 2. Crisis management • Minimize disruption to Honiara’s critical port and shipping-related business processes, facilities and operations in order to facilitate a rapid recovery from a crisis or negative event • Provide Honiara’s BCM Team with a procedure for recovering critical business operations, business functions or suppliers that support company core business • Identify and prioritize resources needed during business recovery and restoration efforts
  88. 88. Public relations management Competition, competitiveness, commercialization 88 Source: Consultants. 3. Corporate image and branding Corporate Branding Advertising Logos Websites Vision Brochures Service quality Marketing Credibility Physical infrastructure • Image of the port directly affects port usage and user take-up: • Poor image could result in shipping lines hesitating to initiate direct calls • Good image will result in greater ease of reception and appeal especially to shipping lines who are deciding to initiate direct calls for the first time • An image of a pro-active, pro-business and pro-excellence SIPA will likely result in shipping lines and other members of the port community that will want to do business with the port • Communications and marketing efforts are likely to be more effective as well
  89. 89. Public relations management Competition, competitiveness, commercialization 89 Source: Consultants. 4. Risk management Risk Identification (Source of risk) Risk Analysis (Prioritization) Risk Monitoring (Results/impact) Risk Control (Mitigation)
  90. 90. Public relations management Competition, competitiveness, commercialization 90 Source: Consultants. Risk assessment matrix:
  91. 91. Public relations management Competition, competitiveness, commercialization Source: Consultants. Enterprise risks faced by Honiara Port: Pricing pressure Competitive pressures on prices as cargo volume growth slows in South West Pacific Cost cutting and profit pressure Narrower margins shipping lines can absorb Market risk Price volatility, interest rate hikes by U.S. Federal Reserve, volatility of SBD Macroeconomic risk Another major economic crisis setting back world trade 91
  92. 92. Public relations management Competition, competitiveness, commercialization Source: Consultants. Enterprise risks faced by Honiara Port: Management talent and skill shortage SIPA must have right people to implement and maintain changes Regulation and compliance Companies have to spend more on compliance costs 92 Sovereign debt Japan going bankrupt? Emerging technologies Organizations with requisite technologies are increasing their competitive lead
  93. 93. Public relations management Competition, competitiveness, commercialization 93 Source: Consultants. Enterprise risks faced by Honiara Port: Political shock Emerging markets brings higher exposure to political shocks Fraud Typical organization loses about 5% of revenues to fraud Industry concentration Leads to cluster degeneration and loss of competitiveness Reputation risk Loss of goodwill by shipping lines and shippers
  94. 94. Public relations management Competition, competitiveness, commercialization Major risk areas for Honiara Port Implication 1 Failed commercialization Results in cluster degeneration 2 Failure to capitalize on transhipment opportunities accorded by strategic geographical position Results in low cargo throughput 3 Failure to significantly boost cargo and vessel traffic Relegation to feeder port 4 Failure to provide sufficient capacity Missed opportunity to boost demand growth 5 Overcapacity as a result of weaker than expected demand growth High opportunity cost for port development 94 Source: Consultants.
  95. 95. Public relations management Competition, competitiveness, commercialization Major risk areas for Honiara Port Implication 6 Failure to develop BCM and ERM plan to respond to potential human and/or nature-induced disasters Port operations come to standstill, adversely affecting Honiara’s reputation and image 7 Failure to enlist commitment and support of the port community to enhance overall competitiveness and competitive advantage offering of the Honiara Port Cluster Low cargo throughput and lack of cluster dynamism 8 Failure to step up in terms of port efficiency and productivity Loose potential market share to competitor ports 9 Failure to have capable people in key positions Challenges in bringing the port of Honiara onto a new stage of growth and development 95 Source: Consultants.
  96. 96. Public relations management Competition, competitiveness, commercialization 96 Source: Consultants. Risk control model for the port of Honiara:
  97. 97. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization – Recommendations • Quick wins • Short term • Medium term • Longer term 97
  98. 98. Quick wins (over the next 12 months) Recommendations 98 Source: Consultants. Set up Commercial department • Market research unit • Marketing unit • BCM and ERM unit Enhance competitiveness, marketing effectiveness, contingency response and image development
  99. 99. Quick wins (over the next 12 months) Recommendations 99 Source: Consultants. Market Research Unit Good sensing of market developments in the port and shipping scene and broad competitive environment in the port landscape Key deliverables: • Competitive benchmarking • Port and shipping trends • Database • State of port development and competitiveness building • Half yearly reports and presentations to management
  100. 100. Quick wins (over the next 12 months) Recommendations 100 Source: Consultants. Marketing Unit Develop, strategize, communicate and evaluate feedback from key stakeholders in the Honiara port cluster Key deliverables: • Marketing plan for the short term time frame • Database of key accounts and other customers • Develop and maintain key accounts management system • Develop and maintain strong relationships with key accounts • Conduct annual customer surveys and focus group meetings • Develop and maintain positive image, branding of Honiara Port
  101. 101. Quick wins (over the next 12 months) Recommendations 101 Source: Consultants. BCM and ERM Unit Foster and reinforce culture of preparedness and mindset to enable quick response to any contingencies that may arise Key deliverables: • BCM and ERM plan identifying events that can result in significant losses to the port • Contingency plans to mitigate risks and provide continuation of Honiara’s core business • Perform regular user testing against multiple scenarios to reinforce familiarity and foster BCP/ERM culture
  102. 102. Quick wins (over the next 12 months) Recommendations 102 Source: Consultants. Set up consultation processes with shipping lines, shippers and shipping agents separately • Provide an avenue where collaborative win-win strategies can be forged through better understanding of each party’s challenges and concerns • Can also serve to forge a stronger bond within the Honiara port community
  103. 103. Quick wins (over the next 12 months) Recommendations 103 Source: Consultants. Set up key account management process • Company information, contact details of direct point of contact, key decision makers • Contract information, details of historical meetings and list of activities and notes • Opportunities pipeline report • Lost deal analysis – where improvements can be made to secure future customers • Track record of marketing campaigns • Customer feedback – outstanding issues, action items, customer satisfaction
  104. 104. Quick wins (over the next 12 months) Recommendations 104 Source: Consultants. Key account matrix:
  105. 105. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization – Recommendations • Quick wins • Short term • Medium term • Longer term 105
  106. 106. Short term (1-3 years) Recommendations 106 Source: Consultants. Target market segments in the short term:
  107. 107. Short term (1-3 years) Recommendations 107 Source: Consultants. Survey action plan • Market research unit to conduct annual surveys of the port and shipping community • Solicit feedback on customer satisfaction with current levels of services offered, major concerns, as well as services which the port should offer
  108. 108. Short term (1-3 years) Recommendations 108 Source: Consultants. Development of an inter-island feeder network • Entrench hub status of Honiara in the Solomon Islands by consolidating cargo at the port • Step 1: Identify major load centres and key traffic flows in the Solomon Islands • Step 2: Determine the market structures along these routes, e.g. number of service providers, vessel types, frequency, source of cargo demand and seasonal variations • Step 3: Analyze possible constraints to higher traffic volume • Step 4: Work out possible solutions to increase traffic flows • Step 5: Implementation • Step 6: Evaluation of results
  109. 109. Short term (1-3 years) Recommendations 109 Source: Consultants. Development of the tourism industry • Strong and thriving tourism industry will provide a good source of transient demand • Labour-intensive in nature, source of income and employment generator for the country • Inter-government agency effort and will require coordination between various ministries
  110. 110. Short term (1-3 years) Recommendations 110 Source: Consultants. Honiara port cluster development plan: • Port-centric model is the most attractive option • Anchored on activities that are centred on the port and shipping lines • Honiara already offers some of these activities • Widen the range of services offered as well as deepen the level of competition to elicit competitive services and pricing
  111. 111. Short term (1-3 years) Recommendations 111 Source: Consultants. Set up communications, corporate image and branding unit: • Where the level of customer profile, sophistication and complexities in managing stakeholders has matured in relation to the cargo and vessel traffic handled • Unit to develop a corporate image that is consistent with the port and create an appropriate brand for the Honiara port cluster
  112. 112. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization – Recommendations • Quick wins • Short term • Medium term • Longer term 112
  113. 113. Medium term (3-5 years) Recommendations 113 Source: Consultants. Target market segments in the medium term: Requires expansion of container berth to 350 metres in length with depth alongside of 13.0 metres
  114. 114. Medium term (3-5 years) Recommendations 114 Source: Consultants. Development of an export oriented industrial zone • Presence of a strong manufacturing sector is vital in providing a sound local cargo base for Honiara Port to draw upon • Local cargo base will attract more shipping lines to call at the port • Some of these shipping lines are likely to build on their existing service networks to hub transhipment operations in Honiara • Important to develop an industrial zone with strong export competitiveness • Additional benefits of boosting the country’s current account position
  115. 115. Medium term (3-5 years) Recommendations 115 Source: Consultants. Competition Act for the Honiara port cluster • Enact Competition Act to protect consumers and businesses from anti-competitive practices of undertakings in the port cluster • Three main types of anti-competitive behaviour: • Agreements, decisions and practices that prevent, restrict or distort competition • Abuse of a dominant position • Mergers that substantially lessen competition
  116. 116. Commercialization Strategy Report 2013 – Current state of the port landscape – Key shipping routes and shipping lines’ network strategies – Competition, competitiveness and successful commercialization – Recommendations • Quick wins • Short term • Medium term • Longer term 116
  117. 117. Longer term (5-10 years) Recommendations 117 Source: Consultants. Target market segments in the longer term: Requires expansion of container berth to 450- 750 metres in length and depth alongside of 14-15 metres
  118. 118. Longer term (5-10 years) Recommendations 118 Source: Consultants. Target market segments in the longer term: Requires expansion of container berth to 450- 750 metres in length and depth alongside of 14-15 metres

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