The document discusses how the increasing size of container ships, from 8,160 TEU in 2006 to 19,224 TEU currently, has impacted port operations. Larger ships have wider beams and taller stacking heights, requiring ports to invest in infrastructure upgrades like deeper berths and channels as well as larger cranes to accommodate the new vessel sizes. These investments come at a high capital cost for ports. Additionally, the upsizing of shipping networks has increased average berth moves per hour required at ports by 33% and peaks in activity levels, straining port capacity and productivity. Shipping lines and ports will need to collaborate more closely to support the large capital investments needed to handle increasingly large container ships.
Port Productivity in the Mega-Ship Era by Arcadis; TPM Asia 2017Dr Jonathan Beard
It is well and truly the era of the mega-ship - of the nearly 1.7 million TEU of capacity to be delivered by the end of 2017, 55 percent, or 920,000 TEU, will be distributed on 54 vessels of 14,000 to 21,000 TEU. These giant vessels will operate on the Asia-Europe trade within the new alliances, cascading capacity downstream while making fewer direct port calls and driving up transhipment volume that hub ports will struggle to handle.
For lines, the potential productivity and unit cost savings from mega-vessels are clear….provided cargo volumes are assured. But, the increased scale of vessels and increased concentration of alliance cargo volumes (i.e. larger hub operations), creates considerable challenges.
For ports and terminal operators the productivity upsides from the rush to “economies of scale” are less clear, especially when the gains are set against the capex costs. The continued subsidization and over-capacity of ship yards further clouds the picture – too many under-priced mega-vessels looking for owners; as does a transhipment model built around cross-subsidized lifts - if transhipment tariffs and gateway tariffs more accurately reflected the costs of provision, would the liner networks be organized in the same fashion?
Port Productivity in the Mega-Ship Era by Arcadis; TPM Asia 2017Dr Jonathan Beard
It is well and truly the era of the mega-ship - of the nearly 1.7 million TEU of capacity to be delivered by the end of 2017, 55 percent, or 920,000 TEU, will be distributed on 54 vessels of 14,000 to 21,000 TEU. These giant vessels will operate on the Asia-Europe trade within the new alliances, cascading capacity downstream while making fewer direct port calls and driving up transhipment volume that hub ports will struggle to handle.
For lines, the potential productivity and unit cost savings from mega-vessels are clear….provided cargo volumes are assured. But, the increased scale of vessels and increased concentration of alliance cargo volumes (i.e. larger hub operations), creates considerable challenges.
For ports and terminal operators the productivity upsides from the rush to “economies of scale” are less clear, especially when the gains are set against the capex costs. The continued subsidization and over-capacity of ship yards further clouds the picture – too many under-priced mega-vessels looking for owners; as does a transhipment model built around cross-subsidized lifts - if transhipment tariffs and gateway tariffs more accurately reflected the costs of provision, would the liner networks be organized in the same fashion?
Atul article on global connected commercial vehicleatulchandel2010
By the year 2030, the transportation system will have
reached a completely new level: intricately connected;
and above all, significantly more efficient and effective.
The future of commercial vehicles lies in digitized, electrified, safe, efficient, automated and well-connected
trucks and buses. The global CV industry is geared up to witness some major changes in the next ten years.
The industry is very interested to see the impact of these changes, mainly on transport system, OEMs strategy,
vehicle configuration, supplier’s technology, customers, productivity, profit, etc. This industry’s dynamic market
will change in correspondence with the new approaches it takes in order to realize this.
Port of Maputo Infrastructure and Operations updateTristan Wiggill
Presented by the Maputo Port Development Company (MPDC) at the MCLI Stakeholder Meeting in Nelspruit on 22 July 2015.
The presentation provides concession information, details the port's shareholder structure, gives information pertaining to the MPDC's main responsibilities, looks at the port's jurisdiction area for future developments, exposes the historical volumes handled, uncovers the main pillars of the Port of Maputo's Master plan, highlights projects in progress, gives an update on the expansion of the Chrome slab, provides an overview of the port expansion plan and construction of new access roads, showcases the dredging project and lists the critical success factors impacting the port.
Mega-Vessels, Mega-Alliances and Cascades: Impacts for port operations and th...ICF
Originally shared at the 7th Intermodal Asia 2016 in Melbourne on February 25, 2016, ICF’s Dr. Jonathan Beard focuses on Regional Economic outlook, container market movements, and emerging trends in a demanding economy; addressing topical issues and challenges facing Australasian transportation and logistics.
Learn more about this event here: http://www.transportevents.com/ForthcomingEventsdetails.aspx?EventID=EVE125
Atul article on global connected commercial vehicleatulchandel2010
By the year 2030, the transportation system will have
reached a completely new level: intricately connected;
and above all, significantly more efficient and effective.
The future of commercial vehicles lies in digitized, electrified, safe, efficient, automated and well-connected
trucks and buses. The global CV industry is geared up to witness some major changes in the next ten years.
The industry is very interested to see the impact of these changes, mainly on transport system, OEMs strategy,
vehicle configuration, supplier’s technology, customers, productivity, profit, etc. This industry’s dynamic market
will change in correspondence with the new approaches it takes in order to realize this.
Port of Maputo Infrastructure and Operations updateTristan Wiggill
Presented by the Maputo Port Development Company (MPDC) at the MCLI Stakeholder Meeting in Nelspruit on 22 July 2015.
The presentation provides concession information, details the port's shareholder structure, gives information pertaining to the MPDC's main responsibilities, looks at the port's jurisdiction area for future developments, exposes the historical volumes handled, uncovers the main pillars of the Port of Maputo's Master plan, highlights projects in progress, gives an update on the expansion of the Chrome slab, provides an overview of the port expansion plan and construction of new access roads, showcases the dredging project and lists the critical success factors impacting the port.
Mega-Vessels, Mega-Alliances and Cascades: Impacts for port operations and th...ICF
Originally shared at the 7th Intermodal Asia 2016 in Melbourne on February 25, 2016, ICF’s Dr. Jonathan Beard focuses on Regional Economic outlook, container market movements, and emerging trends in a demanding economy; addressing topical issues and challenges facing Australasian transportation and logistics.
Learn more about this event here: http://www.transportevents.com/ForthcomingEventsdetails.aspx?EventID=EVE125
Port Automation – Navigating the Underwriting RisksGen Re
With the global economy still unpredictable, industries across the world are striving to protect their profit margins. This is certainly the case for cargo carriers where fluctuating trade volumes and low freight rates continue to fuel the drive for efficiencies.
Societal implications of economies of scale in liner shipping by Maurice JansenMaurice Jansen
Year-on-year growth in TEU capacity has led to overcapacity and deterioration of freight rates.
Industry watchers wonder whether a container ship will ever reach a maximum size at all. Does this make sense for the owner or operator? Does it make sense from a society as a whole?
Driving port productivity and value proposition leveraging technologyTristan Wiggill
A presentation by Robert Jessing, maritime industry leader, Accenture, Singapore. Presented during African Ports Evolution 2015 in Durban, South Africa.
More like this on www.transportworldafrica.co.za
EAGES Proceedings - G. Gazuit & Y. GoupilStephan Aubin
In 2001 Euroavia Toulouse organized a symposium on ground effect. We invited most of the Russian and German actors, and some experts from Holland, UK or France for a week of science around the subject of ekranoplans / flying boats. This was dedicated to students. A book was issued... and now that all copies have been sold for a while I am sharing this on LinkedIn for everyone.
Enjoy.
Stéphan AUBIN
World Subsea Vessel Operations Market Forecast 2016-2020 LEAFLET + CONTENTSDouglas-Westwood
The World Subsea Vessel Operations Market Forecast 2016-2020 analyses the main factors driving demand for MSV, DSV, Flexlay, LWIV and Pipelay vessels, supported by analysis, insight and industry consultation.
Here is a prelim presentation I will make at the SMM Coatings Conference in Hamburg, Sept. 2010. Contact me for the .ppt after the conference. Sorry but many of the fonts converted automatically as a part of the upload process.
1. PROOF
The evolution of the containership over the
past two decades has allowed shipping lines
to pursue economies of scale that reduce the
cost per slot (at equivalent utilisation levels)
to all time lows.
The capacity of the largest container
ships, per decade, over the last 20 years has
increased by over 135%, this is manifested
in the current 19,224 TEU world’s biggest
ship, which was only 8,160 TEU in 2006.
However, the length of these vessels has
only increased by 14% from 347m to 400m
in the same period.
As seen in Figure 1, from only 2006 to
today we have witnessed an increase in width
from 17 rows wide to 23 and an overall
stacking height increase from 15 to 18. This
continued growth in capacity that is derived
more from width and stacking height on
board comes with some implications for the
port operators where these vessels are calling.
With the entry of the +18,000 TEU vessels
on many trade lanes, we have witnessed a
general upsizing of the other trade lanes as
the existing vessels cascade downward where
possible. The overall result of this for port
operators is that there is significant increased
pressure for performance, both for their
customers and for their shareholders.
Productivity
Deeper holds, higher stacking, and
wider hatches have noticeable negative
impacts on crane productivity. Sometimes,
however, good stowage planning from liner
operations departments can offset this
negative impact by reducing the wasted
movement of cranes as they service a
vessel. What this means is that at the same
time that lines are, rightly, insisting on
increased productivity, they are introducing
innovations targeted toward economies of
scale at the expense of productivity.
Taking a real example of network upsizing
at a major terminal along the Asia Europe
trade lane, the impact that these larger vessels
have on peak activity levels is clear to see.
The terminal in question has a balanced
gateway and transshipment ratio and can be
extrapolated to either business model easily.
In Figure 2, we can see the peaks and
valleys of both before the network upsizing
exercise and afterwards. While the actual
peak activity level, as measured in required
berth moves per hour, is higher in the
before scenario, the average activity level
and frequency of those peaks is statistically
significantly higher in the after scenario.
Figure 3 has the summary of the overall
shift in vessel activity from the old network
to the new network and while the average
required BMPH prior to the network
upsizing was 92, it is 33% higher after the
planned upsizing of 5 out of 11 vessels and
their related move counts.
However, with real differences comes
the percentage of time that the terminal
is required to perform above average and
even above 80% of max requirements.
The increase in these KPI’s is dramatic.
Furthermore, the median and standard
deviation of the requirements are higher
and greater, meaning that the performance
levels required by the customers are higher
in the upsized network AND the swings
between average performance requirements
and the peaks and valleys have gotten larger.
Peak problems
Peaks add a burden to the yard and the
requirements for servicing truckers. The
standard container yard capacity formula is
heavily dependent on dwell time and peak
occupancy. For example; a yard with 1,000
TEU slots can handle a maximum of
365,000 TEU per year (with one day ageing
and a 0% transshipment ratio), or the same
How terminals
can tackle mega-ships
Peter Ford, Independent Consultant,
Dubai, UAE
Illustration 1
17
Susan Maersk 8160 TEU 347x43x15
9
21 x 40' bays
6
20
New Panamax 12500 TEU 366x49x15.5
10
23 x 40
6
23
New Post Panamax 18‐19500 TEU 400x59x15.5
10
8
Figure 1
1 Edition 66: May 2015 www.porttechnology.org
MEGA-SHIP READY
2. PROOFyard can handle only 280,769 TEU per-year
under the same assumptions, but with a peak
factor of 30%. This is a reduction of 20%
capacity simply due to peaks. Any increase
in peak handling equals a reduction in yard
capacity and equals wasted assets in between
those peaks.This reduction in capacity is the
direct impact we see that network upsizing
has on port container yard investments.
Peaks have further significant
operational and financial implications on
ports and the supply chains that these
increasingly large vessels are being used
on. Because operational manning can be
either a fixed or variable cost depending on
the labour situation at a port, it is easier to
focus here on capital requirements when
examining the financial impacts from this
change in scenarios.
Cranes typically have a financial
lifespan of 25 years for depreciation and
ROIC calculations. If a port were to have
purchased state-of-the-art cranes only
10 years ago to ensure they could handle
the largest container vessels on the water,
they would have to have upgrade this
superstructure drastically only 40% into
the lifespan. An upgrade of this equipment
would require at least 4, but more likely,
6, new cranes. This requirement would
add anywhere between US$30m-45m
in CAPEX to the business and saddling
the annual Net Profit with an additional
$1.2m-2.2m in depreciation.
Lower cost alternatives like raising
and extending cranes are available, but
also require significant investment to be
capitalised, and furthermore, these solutions
add complexity to current operations and
equipment risk where these modifications
are made. Cranes are not the only additional
CAPEX requirements these larger vessels
have added to the ports they call at. Deeper
channels and berths require dredging,
additional yard space, additional yard
equipment, and, in some cases, additional
quay strengthening for the larger and heavier
cranes all require large CAPEX outlays that
can run into the hundreds of millions of
dollars. The impact these expenses have on
the ROI of a port investment is substantial,
and unfortunately for ports along the trade
lanes these large vessel ply the only guarantee
is that without these investments, the port or
terminal will find itself irrelevant.
Conclusion
As vessels continue to increase in size,
as can be seen with MOL’s recent order
of several 20,150 TEU vessels, port
investments will continue to be required.
In order to keep a balanced business
ecosystem, however, lines (or alliances) and
port stakeholders are going to have to begin
working together to find new methods of
supporting these investments.
Concepts like berth productivity
incentives, guaranteed capacity contracts,
long term guaranteed volumes, and other
win/win arrangements must become
more common. Ports cannot invest
massive amounts of capital resources only
to have their customer shift away before
the payback period has been reached. At
the same time, shipping lines and their
alliances cannot accept poor performance
from ports that fritter away the benefits
achieved by the economy of scale derived
by these large vessels.
BMPHCustomerRequirements
Day / Hr
Peak and Average Activity Levels
Before Upsizing Activity
Pre-Upsizing Average
After Upsizing Activity
Post-Upsizing AverageFigure 2
Before After Delta
Peak BMPH required 237 231 -3%
Average BMPH required 92 123 +33%
% of time required to perform above average 28% 51% +82%
% of time required to perform at 80% of max 5% 11% +120%
Performance requirement standard deviation 45 64 +42%
Performance requirement median 74 129 +74%
Figure 3
About the author
Peter Ford is a highly accomplished
executive with a successful record of
improving business results through
strategy development and successful
execution. Peter currently utilises his
specialties in strategy development,
strategy execution, executive leadership,
operations, union behavior, efficiency,
cost cutting, LEAN, and Six Sigma as
an independent consultant delivering
value to organisations worldwide. Until
recently, Peter was the Global Chief
Operating Officer for the Gulftainer
Group of companies where he led the
team toward its highest historical results
and was responsible for the negotiations
that allowed Gulftainer to expand its
footprint into Port Canaveral, FL. Peter
has also worked with the AP Moller-
Maersk group and has also completed a
number of management and leadership
courses at esteemed schools including:
Harvard University, the University of
Michigan, the University of Phoenix
(MBA) and the United States
Merchant Marine Academy (Bs).
Enquiries
pc.ford1@gmail.com
http://ae.linkedin.com/in/petercford/en
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