Port Strategy April 2019

APRIL 2019 ❘ VOL. 1019

ISSUE 3

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INSIGHT FOR PORT EXECUTIVES Emission strategy confusion | Evolution of smart clusters | Southeast Asia’s reinvention | Developing finance links

COST-EFFECTIVE CARGO DATA STREAMS Small connectivity gains add up

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The international magazine for senior port & terminal executives EDITORIAL & CONTENT Editor: Carly Fields editor@portstrategy.com News Reporter: Rebecca Jeffrey rjeffrey@mercatormedia.com

VIEWPOINT CARLY FIELDS ❘ Editor

Regular Correspondents: Dave MacIntyre; Iain MacIntyre; Felicity Landon; Alex Hughes; Martin Rushmere; Stevie Knight; John Bensalhia; Kate Jones; Ben Hackett; Peter de Langen; Barry Parker; Charles Haine; Johan-Paul Vershuure; Dr Eva Savelsberg; Ulrich Dorndorf; Matthew Wittemeier Production Ian Swain, David Blake, Gary Betteridge production@mercatormedia.com

Hidden sound waves

Forget air pollution, it’s what’s happening under the water that global ports need to be thinking about

As an industry, we are so narrow-mindedly focused on the nasties that are being pumped into the air in and around our ports that we have become blind to another, less obvious form of pollutant.

We may have become accustomed to the now common-parlance air pollution acronyms and initialisms of Sox, NOx, PM, VOC and GHG, but another ‘contaminant’ needs to be added to the list, one that a group of like-minded ports dearly want to monitor and mitigate for the good of the planet.

Two years ago, a handful of environmentally-conscious ports came together to find a way to better understand the sinister and largely invisible problem of underwater noise. They were disappointed to find that there were no universal measurement standards or protocols for the quantification of noise performance of ships in port. They also discovered that there was no recorded information or standardised datasets regarding noise or nuisance in and around ports. Consequently, data on noise pollution varies greatly and, so, little has been done to date to mitigate it.

Why should we care? Underwater inhabitants rely on their acoustic world to find habitats, navigate, find mates and communicate with each other when hunting, or avoiding being hunted. Sound underwater can travel for many kilometres – and that applies to man-made sounds too, which mask more natural and necessary sounds. And while there’s a great hubbub about how to sort the air and plastic pollution problems, noise pollution is much easier to tackle; once the noise stops, it’s gone.

Ports should care about noise pollution because the sea is the one environment that we cannot do without for global trade. We have a duty of care to protect that environment, just as much as we do for cleaning up the air that our workers and residents inhale.

To that end, Project NEPTUNES, that aforementioned group of ports that want to reset our respect for the underwater environment, have created a best practice guide for ports on measuring, labelling and mitigating noise emissions of vessels at ports.

The measurement protocol is based on international standards and the experience of acoustic specialists in similar projects in other industries.

Guidelines for consistent labelling have been created and this has been tested in seven ports, with a 1-100 scale to label vessel noise performance.

The goal now is to integrate the labelling system into the IAPH Environmental Shipping Index and encourage ports to reward ships that exceed the standards. I wish them all the best in their endeavours. Even if we win the battle on the air pollution front in ports, ships, whether at berth, at anchor or manoeuvring to arrive or depart from a berth, are still polluting. This is something that we cannot and should not ignore.

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CONTENTS

APRIL 2019

15 16 FEATURES

6

NEWS

18 Forget big, think small for data gains Small data could shine a light into places left dark by the bigger stuff

COLUMNS

17 Global port growth to slacken off Fitch Ratings expects a more modest pace of port growth over the next 10 years

18 Stop shirking port responsibility, government told Port of Newcastle boss criticises Australia’s policy makers for ceding responsibility to the private sector

10 Free ports won’t help Brexit Britain’s economy Research reveals that the creation of free ports with relaxed customs rules and duties would have little impact on economic growth in a post-Brexit UK

14 Countdown to IMO 2020 Port directors need to concentrate on making bunker operations run as smoothly as possible come January 1

22 Port emission strategies up in the air What, how, who and when? English ports need clarity on the government’s requirements for air quality strategies

24 Stepping up a smart gear with clusters Innovation clusters are popping up across the sector, as ports recognise the value of exploring new technologies together

15 Threats to Eurozone 26 Locked horns and bad blood growth remain in Djibouti

12 Collaborative emissions initiative launched New scheme aims to reduce emissions from shipping through education, incentive programmes and improved environmental infrastructure

Online portstrategy.com 5 Latest news 5 Comment & analysis 5 Industry database 5 Events

18

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Only an optimist could fail to recognise weak growth figures as a skin-of-the-teeth miss of recession in parts of Europe

16 Glimpse of a hydrogen future The transition away from fossil fuels in the ports and maritime sector poses conundrums, opportunities and – at the moment – many challenges

DP World’s unceremonious eviction from Djibouti sends a chilling message to other foreign investors

29 Taking reinvention seriously Southeast Asia is attempting to ditch its old labels and loosen the grip of some established institutions

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APRIL 2019 | 5

THE STRATEGY

BRIEFS

PORT GROWTH TO SLACKEN OFF

Damietta Port Authority (DPA) and PSA International have met to discuss collaborating on future container handling projects at Egypt’s Damietta Port. DPA chairman Capt Tarek Shaheen received a delegation from PSA International to “discuss mutual cooperation between the two sides over future projects in Damietta Port,” according to a statement on DPA’s website, which could refer to DPA’s plan to build a new container terminal.

Agreement reached todevelop Yangshan Zhejiang Seaport Group has signed a strategic agreement with Shanghai International Port Group (SIPG) to jointly develop the Yangshan Port area. The agreement will see Zhejiang Seaport Group invest $740m to acquire 20% equity shares in SIPG’s subsidiary Shanghai Shengdong International Container Terminal Company, the operator of Yangshan Port, according to Splash 24/7.

The two groups will work together to develop a new feeder container terminal in the north of Yangshan.

Middle East ports ease restrictions DP World has eased Qatar shipping restrictions in a move that follows Abu Dhabi Ports and allows third party shippers to move cargo to and from Qatar after an extensive ban. In a circular, DP World, which operates the Port of Jebel Ali — through which much of Qatar’s trade used to flow – said that while Qatari-flagged ships and vessels with Qatari owners are still prohibited, other vessels coming to and from Qatar and ships carrying cargo between Qatar and the United Arab Emirates are not barred, reported Bloomberg.

6 | APRIL 2019

Credit: Budak, Flickr, CC BY-NC-ND 2.0

Potential Damietta and PSA partnership

Volume growth will continue for ports throughout the world but at a more modest pace over the next 10 years, according to a new Fitch Ratings report.

Global port throughput growth has outpaced economic growth rates over the last 10 years, with containerisation of cargo and increasing vessel sizes coupled with supporting infrastructure at ports all contributing to growth.

However, growth rates are slowing relative to historical averages as these trends mature, and volume growth, while expected to continue, will likely more closely mirror that of global GDP. An increase in protectionist trade policies, shifts in centres of production, and the advent of disruptive technologies add

further complexity in considering future throughput levels.

On the subject of US-China trade relations, Fitch Ratings’ senior director Emma Griffith, said: “Primary ports of call will be able to weather the storm despite elevated concentration in Chinese trade exposure in some cases.

“Conversely, smaller and more specialised ports will have less leeway to offset major losses in imports and exports if commodities handled are targeted by tariffs.”

However, US-China trade uncertainties could mar the rate of growth for ports in the Asia Pacific, which have been the pace-car for volume growth. Bilateral trade in particular will suffer if the dispute continues to escalate.

Shifts in trade policy are not

8 Larger ports, such as Singapore (pictured), will better weather a slowdown in global port growth

likely to curb growth meaningfully for ports located in North America, found the report. “Port investment will continue to focus on capacity enhancements to accommodate larger vessels while investor interest in North American port assets appears to be increasing,” said Ms Griffith.

The outlook for ports in Latin America is somewhat more unpredictable. Recent changes in trade policy between Asia and the United States are clouding future performance of the Panama Canal’s container business while Brazilian ports are still facing overcapacity challenges.

SWEDEN STRIKES AVERTED, CBA DEAL STRUCK A mass strike involving workers across multiple ports in Sweden was called off in March following the resolution of a long running collective bargaining agreement (CBA) battle that will see port operations resume as normal.

The Ports of Sweden and the Swedish Dockworkers Union/ Swedish Harbor Workers’ Union entered into a secondary CBA agreement on March 5. The deal follows strike action in January after mediation talks to secure a CBA fell apart, although the dispute has been ongoing since 2016.

Joakim Ärlund, director of negotiations at the Ports of Sweden, said that the secondary agreement “means that the terms and conditions for employment of

all port workers in the ports will continue to be regulated by our collective bargaining agreement with the Swedish Transport Workers’ Union,

which is the agreement first made in the industry.”

Henrik Kristensen, managing director of APM Terminals Gothenburg, which has seen significant disruption as a result of past strike action, said: “We are very pleased with this agreement and with the fact that the industrial action has been called off.”

Erik Helgeson, spokesperson for the Swedish Harbor Workers’ Union, stated: “The strike and the lockout was called off … as we reached a solution and signed a national CBA for the first time in 47 years.”

8 APM Terminal’s Henrik Kristensen is ready to resume normal operations in Gothenburg

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

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THE STRATEGY

BRIEFS

STOP SHIRKING PORT RESPONSIBILITY

End of dispute in Singapore waters Malaysia and Singapore aim to end a territorial dispute over the extension of the Johor Bahru Port limits with an agreement to mutually suspend overlapping port limits and for vessels of both countries to operate in accordance with international law.

OECD critical of management style A study undertaken on the Portuguese economy by the Organisation for Economic Cooperation and Development (OECD) has found that the current management format is not the best in terms of boosting the country’s overall competitiveness. The OECD is especially critical of the seemingly-automatic renewal of private operator concessions. The study advised the state to issue a new public tender at a contract’s end and also fix minimum investment levels in new contracts.

8 | APRIL 2019

Australia’s national and state policy makers have ceded the responsibility for ports and shipping policy to the private sector, creating a policy misalignment in the process, according to Port of Newcastle chief executive Craig Carmody.

In a speech at Macquarie University, Mr Carmody said this vacuum leaves Australia unable to handle ultra-large container vessels.

While ports policy is supposed to be the responsibility of state governments, it “bears little to no relationship to what is happening globally in shipping”,

and “port operators have been left to determine the infrastructure and asset needs of Australian importers and exporters into the future”.

While ports around the world have been upsizing their infrastructure to service ultra-large container vessels, Australia’s major east coast ports are typically handling container ships of only about 5,000 teu.

Mr Carmody said some shipping channels are not big enough for larger vessels, the available land area in existing ports is constrained by urban

8 Australian ports are being held back by policy misalignment

encroachment, and the existing container ports are not able to handle long trains.

“I suggest the strategy for solving the wicked problem of ports and shipping policy in Australia is for governments to do their job of understanding the global developments in shipping and ports and to ensure that private operators of maritime infrastructure are preparing for these future developments,” he concluded.

SPAIN COMMITS TO STEVEDORING REFORM The Spanish government has committed to complete the reform of its stevedoring sector

by April 28 at the latest.

However, it is not yet clear how it will resolve the problem identified by the competition watchdog of guaranteeing terms and conditions of existing workers moving from Sociedades Anónimas de Gestión de Estibadores Portuarios (SAGEP) stevedoring companies to the new Centros Portuarios de Empleo (CPE), which appears to be illegal under existing EU legislation.

Authorities in Madrid are speaking to those in Brussels to try and find an acceptable resolution.

Asociación Nacional de Empresas Estibadoras (ANESCO),

Credit: Hans Permana, Flickr, CC BY-NC 2.0

The UK government’s assessment of ports to decide how much Brexit funding local authorities should receive was disjointed and created a financial shortfall, the director of Portsmouth International Port (PIP) has said. Speaking exclusively to Port Strategy about the government's decision to distribute £3.14m among 19 UK local authorities with a major port to help them prepare for Brexit, Mike Sellers stated that the method by which Portsmouth City Councilowned PIP was assessed for funding failed to effectively consider the potential impact of Brexit on its operations, while neighbouring Port of Southampton was given double the cash.

Credit: Ian Sanderson, Flickr, CC BY-NC-ND 2.0

Portsmouth feels Brexit funding sting

8 Challenges still remain in reforming dockworkers in Spain

the employers’ association, while applauding the government’s commitment, is still requesting legal certainty for stevedoring, albeit in exchange for increased competitiveness and a change in its management set-up.

In a statement, the association said that the government’s decision to complete stevedoring reform represents an important step forward in creating the legal framework required and welcomes the unanimous support of all political groupings in parliament to get the job done.

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

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THE STRATEGY

FREE PORTS WON’T HELP BREXIT BRITAIN’S ECONOMY New research shows that the creation of free ports with relaxed customs rules and duties would have little impact on economic growth in a post-Brexit UK. Free ports have been suggested as a way of boosting trade after the UK leaves the European Union (EU), but research by the University of Sussex-based UK Trade Policy Observatory into the potential of free ports in post-Brexit Britain found that relief on customs duties and tariff inversion are likely to be limited in the UK and any economic benefits brought to free zones could simply be diverting economic activity from elsewhere.

The Briefing Paper entitled ‘What is the extra mileage in the reintroduction of ‘free zones’ in the UK?’ concluded that “when tariffs are low the direct benefits of free zones are small. They do not allow suppliers to obtain duty-free access to final markets (except where inverted tariffs are avoided), and they merely defer any duty payments, a small gain to cash-flow.

“Although there are potential benefits and savings that businesses can accrue from simplified customs procedures, and relief on customs duties and tariff inversion, we believe that such benefits will be very limited in the UK context.”

Authors Ilona Serwicka and Peter Holmes stated that Brexit would not widen the scope of enterprise zones significantly as the UK would still be “subject to World Trade

BRIEFS TecPlata ready for regular business Bruno Porchietto, chief executive of TecPlata, the container terminal at the Port of La Plata in Argentina, has stated that the facility is to commence regular operations on April 2. TecPlata officially opened for business in July 2015 but has been unable to attract regular calls from shipping lines. Now the Brazilian shipping line LogIn has signed a three-year deal and will make bi-weekly calls.

10 | APRIL 2019

Organization subsidies agreement rules and to any commitments to EU state aid rules under ‘level playing field provisions’, (such as

have been included in recent EU free-trade agreements) and would certainly be included in any post-Brexit trade deal”.

How to ‘turbo charge’ UK ports A new 10-point plan to ‘turbo charge’ UK ports and give them greater ability to invest and grow seeks reform of local planning law, with an overall goal of boosting UK trading capability regardless of how Brexit develops.

The plan, developed by the UK Major Ports Group (UKMPG) in collaboration with the British Ports Association (BPA), includes proposals to increase the scope of Permitted Development Rights within ports to make investment faster and easier and cover more value adding and job creating activities; develop pro-trade, pro investment ‘port zones’ around specific ports and their hinterland

‘‘

As far as the US, there’s nothing to stop us from going there, but we haven’t found an opportunity that is profitable

Sultan Ahmed bin Sulayem explains why DP World has yet to make inroads into the US

areas; give masterplans for ports the same weighting as other local masterplans; and include the needs of ports and opportunities in local strategic spatial plans.

Tim Morris, CEO of the UKMPG, said: “Our plan focusses on ten common-sense, pragmatic and practical ways the Government could create a better environment for ports, for trade and for investment, helping not just the ports themselves but coastal communities all over Britain.”

The plan also includes a proposal for a revised definition of ‘operational land’ so it better reflects the modern major ports business, and covers the full area used by

8 Direct benefits of UK free zones could be smaller than anticipated

multimodal ports so that regulation recognises that the activities of modern ports are important centres for distribution chains and manufacturing activities and provide a wide array of services.

8 UKMPG’s Tim Morris outlines common-sense and practical ways that government can aid ports

Nicaragua unveils port investment strategy

Yilport announces upgrades to Leixões

Nicaragua’s national port company has confirmed that a brand new port is to be built at Bluefields, on the Caribbean coast, while the Port of Corinto will be rebuilt and create a dedicated terminal for cruise ships. Corinto will also have a working gantry crane for containers and the dry bulk terminal will be modernised and upgraded, as will existing infrastructure to allow six vessels to dock simultaneously.

Yilport is to invest €43.4m in upgrading the South Container Terminal at the Port of Leixões in Portugal, with work scheduled for completion by March 2021. The work will involve an increase in stacking area and the acquisition of further handling equipment with the aim of increasing capacity and alleviating congestion as well as improving productivity and cutting operational costs.

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

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THE STRATEGY

BRIEFS

JOINT EMISSIONS INITIATIVE LAUNCHED

Shipping lines are reporting congestion-related issues throughout New Zealand’s port network, with little capacity existing to accommodate the realities of vessels frequently arriving outside of their scheduled berthing windows. Swire Shipping New Zealand country manager Brodie Stevens said: “The current Auckland terminal issue – which is a combination of the reduced terminal footprint due to the planned automation process, a straddle accident late last year, labour shortages at times, high import volumes preChristmas, inability to move out empties, etc. – has had a flow-on effect through other New Zealand ports.”

Tanzania ‘dumb’ ports crackdown The Tanzania Ports Authority (TPA) is in the process of formalising nearly 150 of the country’s ‘dumb’ ports to administer controls including taxation and putting a stop to smuggling. Work to tighten regulations is expected to better manage the flow of goods into and out of the country, TPA director general Deusdedit Kakoko told The Guardian.

JAXPORT agrees SSA development Jacksonville Port Authority’s (JAXPORT) board of directors has approved a 25-year agreement with terminal operator SSA Marine for the development and operation of a $238.7m international container terminal at JAXPORT’s Blount Island Marine Terminal. The facility, SSA Jacksonville International Gateway Terminal, is an expansion of SSA Marine’s current leasehold at Blount Island.

12 | APRIL 2019

Credit: Edna Winti, Flickr, CC BY 2.0

Berthing window issues in NZ

A new Vancouver Fraser Port Authority-led initiative aims to help reduce emissions from international shipping more efficiently and effectively through education about incentive programmes and environmental infrastructure.

The International Collaboration on Ship Emission Reductions (ICSER), which also involves the Port of Los Angeles, Port of Long Beach and Port of Gothenburg, is seeking stakeholder engagement on its proposal for more collaboration among ports and industry to make it easier to learn about, use and administer ship incentive programmes and to obtain input on the concept of creating a web resource to support ship incentive programmes.

“We want to make it easier, more efficient and more effective for incentive programs (existing and future) to promote voluntary environmental performance in international shipping,” said Christine Rigby, environmental specialist – air emissions, with the Vancouver Fraser Port Authority.

ICSER is also currently researching the potential for this web-based portal to support increased use of environmental infrastructure such as shore power, “by making it easier for marine carriers to find out where it’s available and compatibility with their vessels and increase confidence in systems,” explained Ms Rigby.

The reasoning behind the collaboration is the growing

8 Vancouver port authority is driving a collaborative project on emissions incentives

number of priorities and opportunities for different maritime stakeholders which is creating complexity. As incentive programmes and environmental infrastructure at each port are promoted independently, it can be challenging for customers to navigate and take advantage of opportunities, potentially hindering participation in schemes and limiting the effectiveness of these opportunities. As initiatives are created separately, there is also a lack of clarity on cumulative economic and environmental benefits.

The ICSER’s final report will be published in July.

U-TURN POSSIBLE ON SUDAN CONCESSION Sudanese president Omar al-Bashir has said that a deal to transfer Port Sudan’s container terminal to International Container Terminal Services Inc (ICTSI) is being reviewed following a protest strike by workers.

Last month, nearly 2,000 workers went on strike against the ‘privatisation’ of the port, managed by the governmentcontrolled Sea Ports Corporation (SPC), who signed a 20-year concession deal with ICTSI subsidiary ICTSI Middle East DMCC on January 3, according to a disclosure from the company.

“We have already ordered a review of the contract with the Philippines company to ensure that it is a fair contract for

Sudanese people,” Mr Bashir said, reported AFP. The president’s media office also confirmed that Bashir had ordered a review of the contract.

Speaking at the time of the strike, Othman Taher, head of an opposition trade union, said 1,800 workers took part: “Our message and our demand to the government is to refuse the privatisation and cancel the

contract with the Philippine company to protect the country’s resources,” reported Reuters.

In July 2018, ICTSI informed the Philippines Securities and Exchange Commission that it had been named the preferred bidder to operate, manage and develop the terminal under a 20-year concession. Port Sudan South Quays handle containers, petroleum, and bulk grains.

The Southern port covers about 400,000 square meters and has capacity to handle 3m tons of cargo per year.

Port Strategy has contacted ICTSI for comment.

8 Sudanese president Omar al-Bashir has ordered a review of an ICTSI concession in the country

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

THENEWYORKER

COLUMNIST

BARRY PARKER

PORTS COUNTDOWN TO IMO 2020 As this is being written, there are roughly 300 days until ‘IMO 2020’ – the day that tighter restrictions on sulphur content in marine fuels come into effect The frenzied build-up to the big day is evidenced by multiple conferences, presentations, webinars, email briefings and social media posts on the subject.

Notwithstanding all the expertspeak, the exact costs of fuels, and their availabilities on January 1, 2020 are big unknowns. Instead of relying on the punditry, I would point readers towards settle prices of newly-launched futures contracts on the differentials between low sulphur fuel and higher sulphur bottom-of-thebarrel type grades.

Ports will be playing an important role in what might be a big complicated mess. In past columns, I’ve suggested that ports get involved in efforts aimed at enhancing the fuelling infrastructures, where possible.

But now it’s increasingly clear that the regulatory lens will actually zoom in on such things.

An aspect of IMO 2020 receiving a great deal of scrutiny concerns the actual availability of fuel in

specific ports given uncertainties regarding refinery production and things like compatibility of various “blends” with vessel engines. The IMO has recently weighed in on the subject of ominous sounding FONARs (Fuel Oil Non-Availability Reports), saying that a lack of compliant fuel availability could exempt owners from burning the low sulphur grades, albeit briefly, for example for the next leg of a particular voyage.

THEANALYST

8 Ports have an important role to play in the upcoming entry into force of the IMO’s marine fuel sulphur limit

Local port state control (typically Coast Guard or similar) will be under pressure from above – think of the folks with stars on their shoulders, at district offices, or at headquarters – to make sure that rules are being properly enforced. Think of it as scrutiny on steroids.

On a practical basis, local

administrations ought to be sounding out their local stakeholders, including bunkering terminals with pipeline hook-ups, barge providers, and storage facilities, on whether all the supply and communications pieces are in place. Organising informal gatherings of all concerned may also be appropriate.

To be clear, getting familiar with the close-in details of fuelling or facilitating the communications of industry players are certainly not legal obligations for ports. But, in a world where the rumour mill now plays out on social media with minimal time lags, being proactive on everything fuel-related will help burnish port reputations and smooth vessel calls.

With possible fuel supply uncertainties, reputational damage is a real possibility.

Port directors should strive to divert all those FONARs and whatever other horrible acronyms come along in the next 300 days, to other ports, up and down the coast, and concentrate on making bunker operations run as smoothly as possible on their own waterfronts.

COLUMNIST

PETER DE LANGEN

CIRCULAR SPACE OPPORTUNITIES There is a clear transition towards a circular economy, where materials and components are reused or recycled at the end of their lifecycle, and this transition has important consequences for supply chains, ranging from the way products are designed to the business models of companies.

Ports as transport nodes and as locations for logistics and manufacturing activities will be affected by the transition towards the circular economy. On the downside, ports handle huge volumes of non-renewable primary resources; the trend towards circular economy will likely lead to a decline of these volumes. In addition, the majority

14 | APRIL 2019

of non-fossil imports and exports consist of products in linear supply chains and these flows will be impacted as well, especially when supply chains move from current globalised and linear structures to more localised and circular ones.

On the upside, the transition towards the circular economy increases the number of companies focused on creating value through advancing the circularity of supply chains. An overview of new investments in circular manufacturing activities in ports in Europe shows the (slow) development of circular economy activities in ports.

In about one out of three ports at least one activity can be

classified as circular. Most circular economy activities in ports relate to sustainable energy generation, which is in line with the role of ports as important centres of energy generation.

Investments in the circular economy are concentrated in specific ports; for instance, Amsterdam and Helsinki stand out.

This is probably partially due to the fact that both ports are located in large metropolitan areas. However, in other metropolitan areas, circular economy activities are far less developed.

Are ‘early mover advantages’

relevant in attracting circular economy activities, in the same way they were relevant in earlier days in developing hinterlands and industrial clusters in ports? Solid analysis is lacking, but my intuition is that such early movers’ advantages will turn out to be very relevant, and give ports that had an early start an advantage in developing manufacturing clusters based on re-use and recycling.

For ports without a single circular project in the business development funnel, it may be time to get going.

In about one out of three ports at least one activity can be classified as circular

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

THEECONOMIST COLUMNIST BEN HACKETT

THREATS TO EUROZONE GROWTH REMAIN Only an optimist will fail to recognise weak growth figures as a skin-of-the-teeth miss of recession in parts of Europe.

Eurozone quarterly economic growth in the third quarter of 2018 was a measly 0.1%, followed by 0.2% in the fourth quarter, the lowest level of expansion since 2013. German GDP declined in the third quarter of 2018 by 0.8% followed by growth of just 0.02% in the fourth quarter. Italy went into recession during this period and France, with its yellow vests, can only hope that it somehow avoids a recession.

Industrial output, which is impacted by consumer demand and exports, dropped in the same two quarters in both Germany and France. Business confidence has halved since late 2017 and the ECB has forsworn any further interest rate increases. The business outlook and trade growth expectations are not looking good.

The North Europe Global Port Tracker newsletter last month projected imports to increase by 2.2% and exports by 1.7% and this may be optimistic if the first quarter of 2019 continues with weaker economic fundamentals.

8 The EC may well revoke container carriers’ alliance exemption from anti-trust regulations

Meanwhile the supply side for containerships continues to expand despite cancellation of voyages from Asia and a surge in

THESTRATEGIST

lay-ups. We can therefore expect financial pressures on terminal operators and carriers and things are unlikely to improve going into

2020 as the European Commission looks like it is seriously considering revoking the carrier alliance exemption from anti-trust regulation from April 2020.

The carrier alliances argue that the bloc exemption is part of liner network logistics, but shippers counter argue that the alliances are leading to less choice, potentially higher prices – although I’m not sure how that can be argued – and that few benefits for the carriers are apparent as reliability has not improved.

Carriers are caught between a rock and a hard place. Economies of scale are difficult to achieve with the ultra large ships and there is no end in sight for further orders above the 22,000 teu level which exacerbates the supply/demand imbalance. Maersk’s recent announcement that they are not ordering larger ships has falled on deaf ears in an industry that is still maintaining the mantra that bigger is better.

COLUMNIST

MIKE MUNDY

A CHARGED RACE YOU HAVE TO JOIN There are good grounds to believe that the application of infrastructure charges to loaded containers in Australia represents a questionable practice. But once one terminal operator goes down this road – DP World in the case of Australia – competing terminals have little choice but to follow.

This is the conclusion logically arrived at if you subscribe to the widely-accepted view that the application of infrastructure charges – usually only applied in the case of major infrastructure works such as a port extension or to upgrade interfacing road or rail connections – is effectively a device through which established interests attempt to retain the

loyalty of liner clients in an environment where new competition has been introduced.

In essence, it is easier to target the fragmented importer/ exporter base, and to apply infrastructure charges, than to approach powerful liner clients for an uplift in charges.

And particularly now that there are relatively new terminal operators active in Brisbane, Sydney and Melbourne.

Hutchison opened its new Brisbane terminal in 2013, Sydney terminal in 2014 and in Melbourne ICTSI brought on-stream its Victoria International Container Terminal (VICT) at the beginning of 2017. And, as might be expected, these terminals entered service

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with a smaller workforce and typically a stronger emphasis on automation than their established competitors. However, it has to be acknowledged that both DP World and Patricks have also undertaken select investments in automation for example at DP World’s Brisbane terminal which it now describes as “semi-automated”.

The new terminals have broken the duopoly that existed previously, a stated aim of port management and other agencies.

But while the number of terminal operators has expanded, large scale consolidation has taken

place in the liner sector providing an added incentive to established terminal operators to do all in their power to retain liner clients.

Invariably, to lose a liner client today is a much bigger ‘hit’ than even two or three years ago.

Hence there are many reasons for established interests to apply infrastructure charges to the diverse importer/exporter community rather than powerful liner companies. Equally, with this trend in train it is self-evident that newcomers to the sector also have to look here to achieve increased charges.

To lose a liner client today is a much bigger ‘hit’ than even two or three years ago

APRIL 2019 | 15

THEENVIRONMENTALIST COLUMNIST CHARLES HAINE

The transition away from fossil fuels in the ports and maritime sector poses conundrums, opportunities and – at the moment – many challenges, and the huge costs involved are causing headaches.

A year ago, no-one was talking about the carbon footprint of liquefied natural gas. That alternative – with its fugitive emissions of methane, some 30 times more warming than CO2 – is now at best only a stepping stone to a low carbon future.

It’s possibly a candidate for the stranded asset catalogue.

While not naturally occurring as a fuel, hydrogen is a worthy energy storage medium. That is because electric power can easily convert water into its hydrogen and oxygen components via electrolysis. Converting it back to electrical power in a fuel cell only results in water and heat as byproducts. That’s an upgrade on the nasties – CO2, CO – you get from burning diesel. The use of hydrogen and fuel cells to reduce greenhouse gas (GHG) emissions and improve air quality in ports and neighbourhoods is a real option if it can be scaled-up.

And that’s already happening.

When launched for testing this summer in San Francisco Bay, the Water-Go-Round will be the first fuel cell vessel in the US and the first commercial fuel cell ferry in the world. In the Western Isles of Scotland, the SwiftH2Project, including CMAL, is looking at hydrogen-powered craft produced from wind turbines. The Scripps Oceanographic Institute – in California again – is developing a silent and diesel fume-free ZERO-V vessel, perfect for marine research.

In Europe, ABB plans to use fuel cells for hotel loading on cruise ships. Viking Cruises will use this in the fjords of Norway, which need to become zero-emission zones.

Out of the saltwater, the Ports of Los Angeles and Long Beach – keen pursuers of testing innovations – are committed to zero-emissions by 2035. They’re looking at tech in on-dock vehicles and mobile equipment to reduce NOx, SOx and particulate matter from traditional fuels in cargo handling. The 5m teu Port of

16 | APRIL 2019

Credit: TruckPR, Flickr, CC BY-NC-ND 2.0

GLIMPSE OF A HYDROGEN FUTURE

8 Some ports are already investigating hydrogen-powered equipment

Valencia is testing a reachstacker and terminal tractor powered by hydrogen batteries. This H2Ports Project includes a mobile hydrogen supply station at Grimaldi (Valencia Terminal Europa) and MSC terminals.

Interestingly, 88 regions and cities of 22 European countries are joining forces to promote the use of hydrogen in an EU-funded programme. The Ports of Honolulu and Auckland are also testing hydrogen power solutions.

GOVERNMENT SILENCE As is always the case, many ports look to Governments for clarity on the policy framework around alternative fuel types because the financial outlay for connecting infrastructure can run into millions.

But they are being left wanting, and it’s surely the job of ports to better communicate what they need from government. There is

only one chance to get it right yet hydrogen is up against other alternatives. Which fuel horse are you going to put your money on?

Further testing, fair funding, and other incentives are needed to slash emissions from shipping, port and freight operations.

Shipping’s rising position in the top ten of global polluters – albeit if it was viewed as a country – has caught the attention of hydrogen innovators. H2 could play a vital role in the future of shipping as a final fuel or as an input source to e-fuels like e-ammonia and e-methanol. Advocates declare that hydrogen – in combination with sector coupling – can achieve 96% decarbonisation of shipping by 2050. But without financial support, the cost of changing an entire system, and the need for huge storage facilities, are worrying barriers.

Multi-megawatt fuel cell ships are on the horizon. This works because many container vessels

It’s surely the job of ports to better communicate what they need from government. There is only one chance to get it right yet hydrogen is up against other alternatives. Which fuel horse are you going to put your money on?

already use electric motors powered by gensets. Fuel cells in vessels will require thousands of kilograms of H2 per day, in volumes that will require infrastructure able to contend with gigawatt scale.

However, the IMO does not have a standard on this most abundant of chemicals. That means no one is going to swap over to hydrogen on an existing vessel. At a minimum, the IMO needs to bring hydrogen into the policy equation when they recalibrate their 2050 target (for 50% GHG reduction) in 2023. And safety concerns will need to be addressed.

Hydrogen and fuel cells can play a key role in meeting sector targets. Hydrogen will likely be produced in the Middle East, where renewable electricity will be cheaper, and where renewables abound – for instance, Australia, Chile, Scotland. It will have to be transported in bunker ships.

Mobile refuelling strategies will also play out. Terminals and port authorities have yet more considerations for new services, the use of their space and yards, and transformation of their energy strategies, as they prepare to become future ready.

8 Charles Haine is technical director, maritime, at WSP.

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Valenciaport

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With its unrivalled strategic location, Valenciaport connects everything in the new digital age. It connects the largest hinterland in the Iberian Peninsula and is connected to over 1,000 ports around the world. It connects the industry's leading operators, the most advanced infrastructure and equipment, innovation, quality, technology, sustainability and, above all, it connects people.

CARGO HANDLING: IoT

FORGET BIG, THINK SMALL FOR DATA GAINS With an average intercontinental shipment involving over 200 interactions and more than 20 different players, end-to-end supply-chain visibility can be “a real challenge”, according to Laetitia Jay of network operator Sigfox.

Although electrical assets, such as reefers, have been regularly monitored by 2G/3G networks for some time, there’s an issue: these systems are power-hungry, tearing through battery life. So, ordinary boxes and other unpowered kit have generally remained isolated.

That’s all beginning to change with the emergence of lowpower wide-area networks (LPWANs), which make use of very small packets of data.

These can collate five-minute location and environmental condition-monitoring data to be transmitted every hour from the equipment, “giving near real-time updates, while the energy from a coin cell type battery will still last for years”, says Adarsh Krishnan of ABI Research.

People are fast catching on to the advantages, triggering an explosive growth in LPWAN-connected containers: ABI’s figures indicate that their number will increase from 40,000 in 2017 to over 250,000 by the end of this year – and by 2023 he predicts there will be 6.2m in circulation.

The LPWAN infrastructure is likewise growing: US giant Semtech, which provides LoRa technologies, claims 50m-plus nodes are currently in operation.

Moreover, this time ports aren’t just catching the tails of other industries but are on the cutting edge. Innovators, such as Sigfox – which already has 65 logistics partners onboard – is “first looking at connecting dry containers inside the port and spreading out from there”, explains Mr Krishnan.

Michelin has been an early adopter/Sigfox partner with a project that helped to iron out the kinks in its containerised freight flows: in fact, Michelin’s Pascal Zammit says that the pilot and follow up work (with collaborator Argon Consult) “has convinced us that achievable gains could reach up to 10% reduction of the on-sea inventory [and a] 40% increase in ETA accuracy”.

Most interestingly, he believes this real-time visibility of the inventory will reduce the impact of even unforeseen freight disruption from, say, bad weather, by as much as three-quarters.

IoT LINK So, what about the ports themselves? Firstly, to be clear, it’s still the shippers that own the data explains Traxens’ Thomas Nouvian, but by working with MSC and CMA CGM to make an IoT solution available to the lines’ top 300 clients, the information will penetrate the entire logistics chain. And the ports are potentially very interested customers.

Therefore the company has been collaborating with Valencia port, which wanted “to see further into its hinterland” says Mr Nouvian’s colleague, Thierry Alcacer. It can also allow tracking and congestion monitoring along the roads outside the gate, “providing information that allows a fluid response” to changing circumstances and improves the port operations.

But there’s a divergence in the underpinning technology used by Sigfox and Traxens. While at sea, all require satellite

18 | APRIL 2019

Credit: Traxens

Small data could shine a light into places left dark by the bigger stuff, writes Stevie Knight

connection, but on land differences emerge. While both are low(ish)-power networks, LPWAN signals are directly picked up by gateway or base stations in one leap – in open environments this can be up to 40 kilometres. But the payload is very limited: LoRa’s is 243 bytes while Sigfox’s is a mere 12 bytes although “it’s enough for a straightforward index report on things like location, environmental condition-monitoring and so on”, says Mr Krishnan.

By contrast, technologies such as Traxens carry far more detailed information which ‘multi-hop’ between sensors: these are linked in what is aptly described as a mesh network with devices just a few hundred metres apart.

So, what happens when the mesh thins out? The gaps are filled by jumping over to either satellite or cellular networks for the backhaul element, potentially resulting in lower latency and closer to real-time data delivery, says Mr Krishnan.

He underlines that the advantage can be measured in just tens

8 Visibility resulting from IoT exposes industry-wide process inefficiencies, says Traxens

8 There has been an explosive growth in LPWAN-connected containers

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CARGO HANDLING: IoT

OVERCOMING SHYNESS Certainly, Traxens is in favour of more, rather than less, intense tracking because that “multiplies the use cases for the customers”, says Mr Nouvian.

Voluntary data sharing (a sticking point for many innovations) is addressed by Traxens through a business model where a legitimate party buys the data but is free to share it with the rest of the ecosystem. While Mr Nouvian admits this level of visibility exposes industry-wide process inefficiencies, “such as overbooking and rolling-over”, in his view, the first movers will gain an enormous advantage by improving operations and deepening relationships with their customers. He’s not alone in his belief: Professor Reza Sahandi of Bournemouth University agrees that when it comes to the supply chain, its various elements will probably overcome their hesitancy once critical mass is reached “and access to market information becomes less of an issue than not taking part”.

However, efficiency isn’t the only attraction: one of the big IoT drivers for Valencia “has been to increase market share”, says Mr Nouvian. “It’s allowed the port to see where it can grab business,” he explains: “Valencia has some big competitors... so it has been very enlightening for them to understand exactly where goods are coming from.”

But, he adds, Traxens’ mission is to give customers complete visibility into their assets anywhere in the world, not only maritime containers. The company already takes its IoT devices onto railway wagons via the Digital Freight Train and in future it wants to get down to ‘pallet level’ says Mr Nouvian, bringing the first and last mile into focus.

SIM CARD These aren’t the only systems utilising packeted data for cargo tracking. For example, one of the biggest box manufacturers, China International Marine Containers (CIMC), decided to use the near ubiquitous mobile phone technology to help its clients gain insight on the long Asia-Europe trades.

Therefore, Telenor and Chinese partner AuEase took a modem and a global SIM card and installed it in a range of CIMC’s containers.

There are advantages to the approach, says Mats Lundquist, chief executive of Telenor Connexion: partnering agreements allow the onboard SIM to roam more than 400 networks around the globe giving the tech reach and building penetration, “ensuring high-quality, uninterrupted coverage”.

Credit: Traxens

of minutes – and you pay a higher rate for it – but it’s worthwhile if immediate visibility gives clients a competitive edge.

Admittedly it isn’t the lowest-power option but as Mr Lundquist explains, it’s more accurate to count reports: a 7000mAh battery, in the Telenor/AuEase solution, will provide around 2,800 connections – that is, it keeps going for between twoand-a-half and five years at a rate of between one and three reports a day.

There is flexibility too: “In some cases, such as short-term usage on a China-EU cargo train, the container is rented by the transportation company or the cargo owner,” he explains.

So, while the request is for one report per hour, there’s only a three-month lifecycle “and when the container arrives in EU, the device will be thrown away”.

“Overall, the choice – LPWAN, cellular or other wireless network – very much depends on the business case,” says Mr Krishnan. While the LPWAN latency is higher than Industrial Internet of Things networks, with longer periods between picking up the packets of information and smaller payloads “it’s far more cost effective, so it opens up a lot more potential uses”.

However, it’s hard to make a straightforward price comparison as it rests on factors like battery life, maintenance and integration says Ms Jay. She adds that their network uses “very little energy which in turn lowers hardware costs”.

Still, according to Mr Krishnan, LPWAN devices are cheap enough to allow their spread to other assets “such as trolleys, forklifts, power tools and pallets”, in other words, the kind of things that aren’t missed until they’re needed.

8 IoT is of great use to ports looking to shine a light on their hinterland

Connecting over 500 million assets “LPWAN based track-and-trace solutions will connect over 500m assets by 2023,” predicts Adarsh Krishnan of ABI Research.

This is obviously interesting to a broad swathe of logistics and insurance companies: for example, stolen vehicles will “continue to transmit GPS co-ordinates without interruption”, points out Sigfox’s Laetitia Jay. Tracking can help ports fix warehousing security flaws; Sigfox’s underpinning radio technology is resistant to GSM jamming “one of the most fundamental weaknesses of alarm systems and anti-theft

20 | APRIL 2019

devices”, she explains. Also, the low energy consumption means you can “run detectors and alarm systems for months or even years without needing to replace batteries”.

And for some applications, that’s being bypassed by the rise of autonomous and self-powered data transmission.

Importantly, tracking “even extends to people” says Mr Krishnan. Adding sensors to watches, passes or jackets, “may benefit workers’ health and safety... and also makes sure you have the right personnel with the right credentials in the area”.

8 Low-power wide-area network-based trackand-trace solutions will connect over 500m assets by 2023, predicts Adarsh Krishnan of ABI Research

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PLANNING & DESIGN: AIR STRATEGIES

PORT EMISSION STRATEGIES UP IN THE AIR English ports know they must submit air quality strategies soon, but which ports are affected, what they must do and even the deadlines for compliance are unclear.

An original deadline of December for submitting strategies was based on a promise of guidelines to be available in the spring. In January, the Department for Transport (DfT) confirmed the guidelines would be published in May. After hosting a recent workshop with the DfT and Department for Food, Environment and Rural Affairs (Defra) to discuss the government’s progress, the British Ports Association (BPA) asked shipping minister Nusrat Ghani to consider putting back the deadline and placing more focus on improving air quality rather than just tackling emissions at source, and it also asked for more clarity on which ports are required to produce a plan.

Since then, the minister’s office has acknowledged the “challenging timetable” and that the deadline could be “detrimental to producing high-quality plans”. Instead, it is apparently looking at a two-step approach, with interim plans due in by December and final plans one year after the guidelines are issued.

DEADLINE WORRIES But even with this extension the timeline is extremely tight, says Mark Simmonds, head of policy and external affairs at the BPA. “My main concern is that we don’t know which ports are covered. The DfT is not clear whether it is talking about harbour authorities or terminals – it hasn’t defined what a port is.”

There was an initial list of 23 ports being looked at but then the DfT said it had “narrowed down” that list – to 25. The policy, which only covers England, is said to apply to ports handling 1m tonnes or more since 2016, but clearly that is open to interpretation, given one port could include several separately run terminals, for example.

“There are cases where smaller terminals are handling under 1m but have been taken together, and others where that hasn’t happened,” says Mr Simmonds.

Then there is responsibility – for what? The air quality strategies are to cover the port estate, including the landside and ships alongside, but not ships manoeuvring or at anchor. If there happens to be a power station or manufacturing operation

Credit: joiseyshowaa, Flickr, CC BY-SA 2.0

What, how, who and when? English ports need clarity on the government’s requirements for air quality strategies. Felicity Landon reports

8 UK ports need guidance on what is and isn’t included in their emission reporting

within a port’s boundaries, the port cannot control emissions generated there. How this works has yet to be explained.

The ports will be required to prepare inventories calculated back to 2016 and work out the associated emissions. “There are some concerns that the DfT will bring together inventories and publish them in January and it won’t give a realistic picture, will be devoid of context and could involve commercial sensitivities,” says Mr Simmonds.

Preparing the inventory and developing an air quality strategy is not an easy exercise and many ports won’t have budgeted for this, he says. “Ports will need to engage consultants and undertake research. They haven’t planned for this level of work. For an exercise like this, you need to plan it well and set budgets.”

ACTION TO-DATE Both the BPA and the UK Major Ports Group have emphasised that many ports are already taking action on air quality, monitoring the sources or producing action plans.

“Air quality has been a topic of interest and action for major ports for years,” says UKMPG chief executive Tim Morris. “There are real, practical examples of what has been achieved.”

Credit: Daniel Greene, Flickr, CC BY-NC-ND 2.0

8 Los Angeles says that incentives can be used to persuade companies to switch to cleaner equipment

22 | APRIL 2019

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The Port of Felixstowe is one example. In 2009, the local council imposed an Air Quality Management Area (AQMA) on areas near the port after levels of NOx breached statutory limits.

This was revoked by the council in 2016 after both parties worked together to reduce emissions from activities at the port and from vehicles coming to and from the port. When the AQMA was lifted, the port highlighted “smarter working, smarter kit and smarter technology”, including electrification of kit and the introduction of stop-start vehicles.

Ports have been stepping up their activity on air quality since the government announced its policy, says Mr Morris. In September, the UKMPG hired Arup to analyse and report on emissions and mitigation measures at three illustrative ports.

Arup concluded that port machinery made up only 0.2-0.3% of total NOx in a city with a very large port, while port-related factors (including shipping) together make up 6% at worst.

“The issue affects different ports differently,” says Mr Morris.

“For example, urban port or relatively rural; containers or general cargo. As with many things, there is a tendency to rush to the fashionable rather than what is necessarily effective. A lot of the more immediate gains probably come from good operational practices extended slightly. Are you installing startstop motors on your port machinery? Are you working with local hauliers with a VBS and local traffic management systems? Are you maximising the opportunity for non-road transport, effectively rail or water?”

He questions the value of setting “relatively arbitrary thresholds” as opposed to targeting areas where there is a problem.

“You may be a port with more than 1m tonnes, in a rural area, not co-located with other sources of emissions. Or you may be a small port near a motorway junction with a number of other operations all adding up to air quality issues. It isn’t all about the port but the port quite rightly has to play its part to drive forward better air quality for local people.”

The final guidelines from the DfT are expected to largely mirror what has been done by the Port of London Authority (PLA), which published the first ever draft air quality strategy for a UK port, in 2017. The PLA’s environment manager, Tanya Ferry, has been seconded to the DfT on a part-time basis to support the DfT in drawing up the guidelines. The PLA was also the first port in the UK to offer a discount for vessels with lower emissions. This was increased from 5% to 10% discount at the start of 2019.

CAAP SUCCESS The San Pedro Bay Ports Clean Air Action Plan (CAAP), introduced by the Ports of Los Angeles and Long Beach in 2006, was not without opposition. While there was tremendous pressure on the ports to tackle the issue of air quality, there were also pushbacks such as a court battle over its Clean Trucks programme.

“Container throughput – at what were predominantly fishing ports until the 1980s – had gone up from 1m teu to 17m teu.

And we are surrounded by mountains and by very large communities,” says Tim DeMoss, air quality supervisor at the Port of Los Angeles. “The primary goal of the CAAP was to reduce the health risk to surrounding communities.”

8 The BPA’s Mark Simmonds is concerned that the sector still does not know which UK ports are included in the clean air reporting requirement

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

Credit: Amanda Slater, Flickr, CC BY-SA 2.0

PLANNING & DESIGN: AIR STRATEGIES

The focus was, therefore, on diesel particulate matter. A fiveyear goal to reduce emissions by 50% was achieved in year four.

“We had some really successful measures,” says Mr DeMoss.

These included ships approaching the ports slowing to 12 nautical miles (nm) per hour from a distance 40 nm out, ships switching to low-sulphur fuel from 200 nm out and ships being required to plug into shore power.

The Clean Truck programme implemented a $35 per teu levy on non-EPI 2007 compliant trucks and the success of this seems to demonstrate that ports can indeed influence matters beyond their control.

“In 2008 we had 16-20,000 dirty trucks serving our ports. By 2012 we had seen the entire fleet turned over as trucking companies decided to buy new trucks – and emissions from trucks were reduced by 95%.”

The CAAP has been updated twice and the latest version envisages further truck fleet transition, first to ‘near zero’ and then to no-emission trucks. Also, there is a new focus on NOx and greenhouse gases, on top of diesel particulate matter.

EMPLOYING INCENTIVES The Port of Los Angeles is a landlord, and doesn’t own any of the trucks, equipment or harbour craft used by terminal operators and others. However, Mr DeMoss says incentives can be used to persuade companies to switch to cleaner equipment. Another way is through leases. “When leases are due for renewal, we insist on cleaner operations. Also, whenever a new project is being planned, the terminal operators are required to have mitigation measures – for example, if you extend, you must electrify your equipment or plug in more ships.”

He adds: “You can also achieve change through port tariffs.

However, you do walk a fine line when you do this type of thing.

We get pressure from all our stakeholders, whether the business community, trucking companies, environmental groups, regulatory agencies or the community at large. They all want something and often they conflict.

“We are very transparent and have regular meetings so that everyone knows what we are trying to do. I wouldn’t say the business community is always happy with what we are doing but they are now more willing to work with us because they can see the first action plan was successful – and they can’t deny that.”

Finally, he points out, the effort never stops – the ports are looking to grow their volumes but must at the same time remain within their air quality goals.

8 Felixstowe has already improved emissions after the local council’s imposition of an Air Quality Management Area on the port

8 The UKMPG’s Tim Morris questions the value of setting "relatively arbitrary thresholds" as opposed to targeting areas where there is a problem

APRIL 2019 | 23

OPERATIONS: CLUSTERING

STEPPING UP A SMART GEAR WITH CLUSTERS

Credit: COVE

Innovation clusters are popping up across the sector, as ports recognise the value of exploring new technologies together. Felicity Landon reports

FOUR PILLARS PierNext is based on an innovation model which has four pillars.

First, governance: all stakeholders are included on a strategy and innovation committee. Second: development of an innovation ecosystem, with programmes to stimulate innovation. That has included running a hackathon in the port and setting up training innovation programmes for students.

Third is partnership with other actors, such as universities, research centres and other ports, in particular through Barcelona’s membership of the international Chainport project.

Finally comes dissemination. You can’t innovate and then put the innovation in a box so that no one knows about it, says Mr Rúa. “You have to explain what you are doing and also what

24 | APRIL 2019

others are doing – that is the idea of PierNext, to identify some innovations and explain them to the audience.”

Inviting other ports to participate can, of course, bring competitors together, he says. “You may be competing for the same market but in fact in most cases what you need is cooperation to reach the market,” he says. “There are a lot of elements common to all ports and you do need to know what other ports are doing – otherwise you risk making the same mistakes as others. If you can avoid mistakes and benefit from others’ experience, all the ports will act better. In the end, all ports have the same mission – to facilitate international commerce and help companies to import and export.”

PierNext has not been set up as a new accelerator for startups but rather as a hub to bring together the two sides, says Mr Rúa. “We want to integrate more than create. If a start-up company comes here with an idea and I know the industry wants this idea, we can join the two. It's about adapting technology to the reality of the port.”

WIDESPREAD PROJECTS Maurice Jansen, senior researcher and business developer at Erasmus UPT, says: “There are various innovation clustering projects going on at the moment and the value is recognised across a number of cities, including Rotterdam (Rotterdam Maritime Capital, in which he is involved), Singapore, Oslo (Green Capital of Europe), Halifax (COVE) and Le Havre (SmartPort).

“In each of these port cities, there are designated areas.

Rotterdam has the RDM Campus, which celebrates its tenth anniversary this year. More recent is the M4H (Merwe-Vierhaven), which is a port area in transition – from old port users to new.”

Halifax, meanwhile, has the Centre of Ocean Ventures and 8 Blyth is one of five ports involved in a smart port project in the North of England

Credit: Port of Blyth

When the Port of Barcelona unveiled PierNext, a new digital knowledge hub, it declared its intention to “enrich Barcelona’s innovation cluster” with its specialised view of the port and logistics sector. The sector is full of opportunities and potentialities, mainly for start-ups and SMEs, said the port.

PierNext, launched last year, is one of many such ventures in which ports are turning to ‘non-port’ partners for new-tech solutions – and in which they are also prepared to work with their competitors to move ideas forward.

Cars Rúa, head of strategic projects and innovation at the Port of Barcelona, says: “The main concept of PierNext is that we have realised we need to create a structure around innovation – to organise a strategic way to develop innovations.

This is an initiative of the Port of Barcelona. It is open not only to the port authority, all port agents and other stakeholders, but also to other ports.

“It is necessary not only to work with research centres and universities but also with those in the port industry, terminals, ship agents, forwarding agents and government – all these, and consultancy companies too, are represented on the PierNext committee.”

A port can’t develop a lot of innovations by itself, says Mr Rúa.

“You also need the help of other ports, you need to join with the smartest ports in the world, you need to benchmark what others are doing and tell them what you are doing well. That way, everyone can advance. If you keep innovation and activity to yourself and try to hide what you are doing from others, it isn’t a good idea and it makes it more difficult to advance.”

8 Halifax’s Centre of Ocean Ventures and Entrepreneurship is just one of several innovation clustering projects

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

OPERATIONS: CLUSTERING

ENGLISH PILOT In the UK, another cluster has been developed to push smart objectives. Five ports in north-east England are collaborating in a new programme piloting smart digital initiatives to boost trade and foster economic growth.

The Smart Port North East Testbed, part of the Situational Awareness Information National Technology Service (SAINTS) which is being led by consultant Urban Foresight, will test satellite-based solutions to enable ports to become more intelligent.

AI, data analytics, unmanned marine vessels and drones will be examined as ways of speeding up trade, increasing efficiency and reliability, reducing costs, tracking cargo, improving security and protecting the environment.

“The idea is around exploring new technologies, specifically satellite-related applications, working out ways that ports can manage logistics better,” says Port of Blyth communications manager Tom Chaplin. “That might involve tracking the use of plant, finding more efficient ways to deliver services or more modern ways to track requirements around dredging, for example. The idea of the organisers was to work with five ports of varying sizes, output and requirements.”

The Northumberland port of Blyth is used to the innovation cluster concept – it was home to the UK’s first offshore wind farm and the National Renewable Energy Centre, now called the Offshore Renewable Energy Catapult, is next door. Blyth has become a hub of international renewable energy, offshore and subsea companies and within the Testbed project the focus will be on technology advances for servicing the renewable and green energy sectors.

“We are in the fact-finding stage of the project with the

Credit: EvgeniT, CC0

Entrepreneurship, and Le Havre is looking to scale up its SmartPort efforts significantly.

Rotterdam’s project has worked out well, with a rich innovation landscape including Yes! Delft, PortXL, RDM Campus and others, says Mr Jansen. He is also involved in Human Capital Ports, a new coalition of ports from around the world which is considering digitisation, automation and sustainability, and the way in which these will transform ports and the way people work in them. The members met in January and will meet again in Vancouver in October.

The aim is to share knowledge on social innovation and HR issues, and establish a Human Capital Ports Action Programme in which port authorities, educational institutions, and city and port authorities will work together. Port Strategy will look deeper into this initiative in the May 2019 issue. consultants working across departments with the port to explore challenges, needs, opportunities and how technology could help us,” says Mr Chaplin. “The idea is that the public money is available to bring smart technology companies and ‘old technology’ ports together.”

8 Barcelona has spearheaded the collaborative PierNext platform

COMPETITION QUESTION As for commercial sensitivities, Mr Chaplin says: “Yes, there is always competition. But this isn’t like a round table for ‘here are our problems and secrets’. Having the consultancy as the hub means we can all plug in without giving anything away to anyone else. The consultancy is also talking to the digital businesses and is there to put us together.”

The other ports signed up to the Testbed are Berwick, Sunderland, Tees and Tyne.

Ian Blake, head of information technology at the Port of Tyne, says: “The Testbed project is about introducing high-level innovation into the North East ports – for example, using drones for deliveries or introducing fully automated vehicles. There are a lot of good ideas – we need to find the right fit. Urban Foresight has been appointed to put innovators and ports together, finding the right project for the right port.

“Although we are competitors, there is generally in the North East port sector a desire to work together a bit better, understanding that if we work together and share ideas it will be beneficial.”

The Port of Berwick will be trialling smart solutions for boosting tourism, specifically cruise, while Sunderland is expected to pilot solutions to improve operations, processes and transparency. Teesport, the largest in the region, will test solutions for boosting operational efficiency in logistics and warehousing processes.

Getting the creative mix right Erasmus’ Maurice Jansen has previously commented on the value of clustering: “Collaborative innovation does not just happen, it needs to be orchestrated through partnerships.”

He quotes a recent study by Richard Florida which suggests that generating creativity requires finding the right mix between technology, talent and tolerance – ‘creatives’ being not only artists and designers but also engineers, architects, artisans and software engineers/programmers.

“The main concern I see is when the right

mix is not there. For creative capital to be unlocked, it requires a positive flow of financial, social, human and cultural capital entrepreneurial or ‘can-do’ mentality based on inherited maritime values,” says Mr Jansen.

“In some ports, the social capital is negative, meaning that there may be a cohesion between members of the community but it leads to inertia rather than innovation. With inertia, I mean there is a kind of distrust between stakeholders, such as between unions and employers. In these cases, I can imagine it takes quite a lot more effort to ignite the ‘spark of creativity and innovation’.”

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

8 Erasmus’ Maurice Jansen believes that collaborative innovation needs to be orchestrated through partnerships

APRIL 2019 | 25

AREA SURVEY: EAST AFRICA

LOCKED HORNS AND BAD BLOOD IN DJIBOUTI DP World’s unceremonious eviction from Djibouti sends a chilling message to other foreign investors. Alex Hughes reports

8 Doraleh Container Terminal has become a battleground for DP World

DP World’s decision, announced in February, that it is to sue China Merchants in Hong Kong’s High Court over the Djibouti debacle caused major shock waves in the global terminal operator sector. The Dubai-based operator is accusing the Hong Kong-headquartered company of causing the Djibouti government to unilaterally revoke its concession to handle containers at the Doraleh Container Terminal (DCT) in the Port of Djibouti.

Olivier Milland, senior analyst for sub-Saharan Africa at A2 Global Risk, tells Port Strategy that the move by the authorities in Djibouti to effectively re-nationalise the commercial port is highly unusual. But he acknowledges that the relationship between the company and the state had been “shaky for several years prior to last year’s decision to expropriate the port concession”.

Indeed, bad blood first emerged in 2014 when the government accused DP World of having paid bribes to a prominent Djiboutian businessman, Abdourahman Boreh, in order to win contracts. However, there was much speculation at the time of a political motivation behind those proceedings, following a very public falling-out between the president and the businessman.

To make matters worse, China Merchants has held a onethird stake in Port of Djibouti throughout this whole process meaning that it clearly has had some behind-the-scenes influence in the ousting of DP World, although Mr Milland concedes that it is difficult to gauge exactly what that influence has been.

“Given Djibouti’s strategic location and its modern port facilities compared to other countries in the region, it is a possibility that it did play a role, albeit indirectly through a position of influence rather than interference. But that is merely analytical speculation at this point,” he says.

Nevertheless, Mr Milland says that the latest move by the government could also have been prompted by its fears that DP World was under-investing in the port in favour of other ports the Dubai-based company operates on the Red Sea, which was its official explanation.

“It is ultimately up to the decision-makers to explain why they moved to seize control of the port and ultimately DP World’s shares; only they really know exactly what motivated them,” he says.

PYRRHIC VICTORIES The row with businessman Abdourahman Boreh, who was then in charge of the country’s free trade zone, eventually went to international arbitration, with a London high court making a very high profile ruling against the government’s claim in 2016.

The seizure of DCT also ended up at the London Court of International Arbitration (LCIA), which again found in favour of DP World, although Mr Milland believes these may have been pyrrhic victories at best.

“I don’t think there is a possibility that DP World will now return to Djibouti, unless the company meets both the government's and the state-owned company’s demands for further investment in the DCT port terminal to meet growing demand. And that” – given the recent decision by DP World to take legal action against China Merchants in Hong Kong – “now seems very unlikely,” he says.

Significantly, DP World has invested in other ports in the region. These include the ports of Berbera, Somaliland, and Bosaso in Somalia’s autonomous Puntland region. The latter is being operated by the company’s subsidiary P&O Ports, which is looking to modernise it. In this, it very much has the backing of Ethiopia, since Ethiopian businesses currently have to ship 95% of their goods through Djibouti’s ports.

“It would therefore be understandable if DP World looked for business opportunities elsewhere,” says Mr Milland.

The Djiboutian authorities have moved quickly to replace DP World, inviting in new investment partners from Asia. Asked what message this sends to potential investors in Djibouti, Mr Milland points out that “the decision to nationalise a key port and allow

8 PwC’s Andrew Shaw says that Djibouti's interest for investors cannot be overstated

Credit: PwC

26 | APRIL 2019

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

AREA SURVEY: EAST AFRICA

in a major Chinese investor is likely to spook some Western investors. This is particularly so during a period when competition is growing between Australia, New Zealand, the EU and US on one side, and China, Russia and their allies on the other.”

PwC Africa ports expert Andrew Shaw adds that Djibouti is one of the fastest growing countries in the Horn of Africa, therefore its interest for investors cannot be overstated.

GOVERNMENT CONCERNS Mr Milland notes that competition is epitomised through infrastructure developments in Africa in particular, but even more so along Beijing’s Belt and Road Initiative where Djibouti is a key point connecting the Horn of Africa to the rest of the world.

“The government’s actions to nationalise the port despite two LCIA rulings against it, and its intention to continue to expand DCT with Chinese operators, set a worrisome precedent in the country. It suggests that long-term contracts are at risk, even under the same administration, and might even mean that those with long-running relationships with the government could be quickly side-lined without any clear reason,” says Mr Milland.

Chinese investors have already begun construction of a free trade zone within the Port of Djibouti, partially on land that formed part of the DP World concession. Chinese investors are present across Sub-Saharan Africa, and especially so in the Horn of Africa. “Since a lot of their investment is in critical infrastructure, their presence in Djibouti does not strike me as surprising; in fact, it makes sense,” says Mr Milland.

He adds that it also makes sense from a historical perspective, in that the Chinese have been present in Djibouti for many years, and the relationship between both governments is close; for instance, Djibouti hosts China’s only overseas military base. China also pursues close ties with Ethiopia, where Chinese construction companies have built the African Union headquarters and a standard gauge railway between Addis Ababa and Djibouti City.

“The problem is that other investors from other parts of the world are facing increasingly tough competition from investors from China and that is likely to damage Djibouti’s relations with investors from other countries that have a long-running presence in Djibouti, such as France or the US, with which it also pursues close ties.”

8 Djibouti is strategic in that it lies midway between the Middle East and Sub-Saharan Africa

of global trade passes, and a lot of Chinese goods are shipped to ports on the Red Sea,” says Mr Milland.

He also notes that, for security purposes, Djibouti is also strategic in that it lies mid-way between the Middle East and Sub-Saharan Africa. This location could help air-based missions in the Levant or Yemen but also act as a launch for vessels to fight maritime threats from pirates in the Gulf of Aden or in the Indian Ocean. These launchpads could additionally be used to protect commercial shipments, for instance for oil coming from the Gulf.

Both DP World and China Merchants were asked to contribute to this article, but neither responded.

8 Chinese investment in Djibouti has transformed the country’s logistics sector

STRATEGIC MOVE The move to invest in Djibouti also reflects a much broader trend in Chinese investment, which initially concentrated on countries that had much needed raw materials.

“Djibouti may not hold a lot of natural resources, but it is situated in a highly strategic location, through which 12%-20%

Chinese investors spread tendrils in Africa Djibouti is not the only country in Africa to have received interest from Chinese investors. On the east coast, two brand new potentially Chinese-backed projects have emerged in Mozambique.

Several Chinese investors, for example, have indicated an interest in financing projects in the Port of Inhambane, which is located in a province in the south of the country. The information was made public by local governor Daniel Chapo,

who said that the Chinese entrepreneurs had made contact with national entities linked to the sector.

Reactivation of the Port of Inhambane project first emerged in 2017, when an investor conference was held in Inhambane.

One of the biggest headaches faced by engineers is that the site is prone to major silting.

Chinese investors are also working with Mozambique on the design of a new cabotage port located in the town of Chongoene. This will

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

require investment of $300m in port infrastructure, as well as additional funding for a connecting rail link to the Limpopo Corridor, in Macarretane. There will also be branches to sand deposits at Chibuto in Gaza, and Jangamo in Inhambane.

Agriculture, forestry and livestock are all being targeted.

A contract has already been signed with the China Railways International Group to take the project forward.

APRIL 2019 | 27

REGIONAL SURVEY: EAST ASIA

SOUTHEAST ASIA TAKES REINVENTION SERIOUSLY

Credit: Hernawan Widhi/KARURU ZABUR ANTARA NEWS 4 TTL. CC2.0

Southeast Asia, once considered a pool of low-cost labour, is attempting to ditch its old labels and loosen the grip of some established institutions, writes Stevie Knight

A significant proportion of Southeast Asia, including Thailand and Vietnam, is engaged in “reinventing itself as a high-end manufacturing partner” says Jason Chiang of OSC. It’s backed by an overall 5%-plus growth that may, in some cases, have been enhanced rather than damaged by the US-China trade spat.

Certainly, Mark Yong of BMT Asia notes the ports are demonstrating a new appetite for technology. “A number are now seriously evaluating automation – it’s becoming a trend,” says Dr Yong. In fact, Malaysia has one very large candidate: recent media reports suggest that Westport, after being hit by stinging losses to Singapore, could be looking in this direction.

But it is a tricky path and the destination doesn’t always result in a clear advantage. Take Indonesia’s Lamong Bay at Surabaya.

Mr Chiang says that “while the automation itself was implemented successfully, there are operational issues because the berth is located further away from the yard, adding to the cost structure”.

Combine that with configuration issues at the pier head and the result is “less than efficient”, adds Mr Wignall.

Moreover, according to Dr Yong, a recent survey shows that automation can be a mixed blessing. While around two thirds of the region’s ports recognise its safety, control and potential for reducing operating costs, only a third see it as actually improving customer relationships.

AUTOMATION ALTERNATIVE There are others making a go of a high-tech approach, but not necessarily through automation. Tanjung Pelepas (PTP) handled 8.4m teu in 2017 and it’s aiming to retain its competitiveness despite Singapore’s huge Tuas construction just a couple of kilometres across the water. PTP plans to add

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

8 While automation at Teluk Lamong was implemented successfully there have been operational issues

another 3m teu capacity by deepening its draught to 18 metres, installing larger quay cranes, upgrading kit and combining all this with a digital strategy that embraces ERP systems alongside other smart technologies.

Likewise, Hutchison’s recently opened $600m terminal D at Laem Chabang, Thailand, raises the port’s capacity by 40% to 3.5m teu, supported by mobile apps, e-tracking and remotecontrolled cranes. In the last year or so it has boosted its top container vessel size from 10,000 to 14,000 teu. Mr Chiang says the terminal “is capable of handling the big 22,000 teu ships, if they choose to call”.

But despite Leam Chabang’s relevance to the $54.2bn Eastern Economic Corridor (EEC) and Thailand’s 4.0 effort which is intent on raising the value of its production base, there are simple shipping realities to account for: “You have to deviate from the current Europe-Far East sailing route, so it still might not make sense for the largest vessels,” he points out.

Also, the EEC is heavily reliant on Chinese backing and right now the government’s critics are weighing the likely costs of debt.

Certainly, a number are looking to Malaysia which has now cancelled its own East Coast Railway Link contract with China Communications Construction Company (CCCC). “The link aimed to bring cargo from the east coast to Port Klang, and yes, it would have cut sailing time, but at a significant cost,” says Dr Yong, adding that at time of writing, the authorities are renegotiating – possibly for half the price.

Further, the tender for Laem Chabang’s $3.65bn third phase has been subject to an embarrassing hitch. Dr Yong explains that while as many as 32 parties picked up the Terms of Reference for the third phase, at the January close “it ended up with just a

APRIL 2019 | 29

REGIONAL SURVEY: EAST ASIA

8 Tanjung Pelepas plans to add another 3m teu capacity through operational improvements

be that the Ministry of Transport is engaged in discussions about the development of another private, 1m teu terminal.

Stories about discussions between major operators and substantial local partners have put PSA, DP World and even Hutchison in the frame with detailed assessments. “We seem to be seeing private operators being allowed by the Ministry to step in to make investments on a purely commercial basis,” Mr Wignall concludes.

In the less developed areas, however, there’s a rather more co-operative picture emerging as the Transport Ministry is working with local governors to develop small hubs “with some container capacity, even able to attract a few international calls”, explains Mr Wignall. These would be supported by a network of smaller jetties dealing largely with container barges and ro-ro traffic.

The money is partially being sourced from provincial authorities, some from private investors, plus some from the World Bank or ADB money, he explains. The first two regions off the mark are likely to be the Maluku Islands of Indonesia, with Ambon as its centre, and East Nusa Tenggara (ENT) with the capital port of Kupang as its centre.

“Lessons,” says Mr Wignall, “are being learned.”

8 Hutchison’s recently opened $600m terminal D at Laem Chabang raises the port’s capacity by 40% to 3.5m teu

Credit: bvi4092 CC2.0, Flickr

PELINDO PROBLEMS Indonesia needs to put its weight behind lowering its logistics costs, but behind the headlines that Pelindo 3 is looking at port facility investment worth IDR6.44tr ($455.37m) lies another reality.

Mr Chiang explains that three out of the four state-owned Pelindo port companies “have borrowed whatever they can”.

David Wignall of Seaport puts it more bluntly: “While Pelindo II has money, it’s sitting tight on it and the other state-owned Pelindo companies, I, III and IV, have maxed out their credit and will need to sell assets to fund more investment.”

There have been a number of projects that reflect a certain lack of planning in the country. Take the multipurpose Kuala Tanjung in North Sumatra. Pelindo I claimed to have invested $350m to have the capacity to handle the big ships, but Mr Wignall highlights that based on its own forecasts “the revenue will be about $25m in 2025 – barely enough to cover the annual interest”.

Even Patimban stands to have mixed results. It’s being built with Japanese money, says BMT Asia’s Mr Yong, and is very convenient for the concentration of Japanese auto and manufacturing plants nearby, “but it will definitely impact this cargo stream at Tanjung Priok”, he says. Mr Wignall adds: “Assuming New Priok Container Terminals 2 and 3 are delivered on time, there will be no lack of capacity in the Jakarta-West Java region. Overall, it’s hard to see much benefit to the economy.”

Moreover, DP World’s exit from the 1.4m teu-capacity PT Terminal Petikemas Surabaya (TPS) joint venture is significant.

“They still couldn’t come to an agreement with Pelindo 3, despite running the operation efficiently for a number of years,” says Mr Chiang. In fact, DP World publicly stated that “significant positive contributions made by global terminal operators in Indonesia have not been fully recognised, despite our successful track record”.

Although this leaves a hole in Indonesia’s cargo strategy, there’s possibly a chink of daylight in the form of a promising 2m teu facility not six kilometres from TPS. Direct discussions about a competing terminal are underway with the operator, entirely bypassing the state-owned company. “It’s pretty clear the Indonesian Ministry of Transport is saying to the Pelindos, if you can’t do better, then we’ll let in the competition,” observes Mr Wignall.

Credit: PTP

single – disqualified – bid”. He adds that the problem may well not be financial, but rather “additional compliance conditions” forcing the authorities to go back to the drawing board.

INDONESIA MOVES Further developments in Java could also challenge the Pelindo monopoly. Tanjung Emas is pushing its limits with a throughput of around 700,000 teu, but rather than call on Pelindo III it may

Vietnam dials up the volume After a long, dry spell, Vietnam is seeing another round of intense activity on its port front.

In the north, state-owned Vinalines is looking to develop Lach Huyen port with Japanese backing. The first of nine, Haiphong International Container Terminal started work last May, catering for Hannoi and the city’s hinterland. The

30 | APRIL 2019

story around the South’s Cai Mep cluster, once painfully overburdened by too much competition, is now looking up “and three of the terminals are now full”, says Jason Chiang.

However, things look like heating up again: “The Gemalink port project in Cai Mep – Thi Vai has been brought off the back burner,” he says, and the 1.5m teu phase one is underway. He

points out that as CMA-CGM has a quarter share of the total, 20,600-box ship, 2.4m teu capacity project, “it’s likely that it will move over its cargo”.

“I’d say that the patterns are changing... the terminals moving closer to serving the individual lines,” concludes Mr Chiang.

8 Celebrating a region of port powerhouses – Page 48

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

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FINANCE: EMERGING MARKETS

TIME FOR A RE-THINK ON DEVELOPING PROSPECTS

Credit: National Renewable Energy Lab, Flickr, CC BY-NC-ND 2.0

WSP’s Johan-Paul Vershuure explains why the gap needs to be bridged between financial institutions and port opportunities in developing markets

Obtaining funding for port developments in developing markets remains challenging, even in the current investment climate. While the appetite of large private financial institutions for finding new infrastructure investments is large and the need for additional and upgraded port facilities is pressing in quite a few developing markets, there remains a funding gap. What is preventing financial institutions from looking a bit further outside their conventional markets?

Keen financial interest was proven by the 52 parties that showed interest in the first bidding round for Long Beach Container Terminal. For DCT Gdansk there was also significant interest from industry players, financial institutions and shipping lines. In the developed world, great interest for such assets is pushing up the price and reducing the return.

However, when looking at the interest in port developments in, for example, Africa, it remains subdued. With the exception of international financial institutions – such as the African Development Bank – and some entrepreneurial investors, there are few western parties actively looking for opportunities in these markets. Noteworthy is that one group of players active in western markets is generally absent from emerging markets: private financial institutions.

GOVERNMENT INVOLVEMENT RISKS Logically, the major hurdle in many countries is political risk.

Recent developments around the concession of the Doraleh container terminal in Djibouti are an example of an event that international financial institutions fear most. Political involvement around the operations of ports should be limited as much as possible. And although the political climate and governance will be difficult to change for a port entity, the level of political influence in the port organisation should be minimised. Typical required returns are set higher in these

32 | APRIL 2019

8 Over 50 parties showed an interest in the first bidding round for Long Beach Container Terminal

regions to offset these risks, which in turn leads to reduced investment. As a consequence, export financing has become increasingly popular over the last decade. In this type of financing, western countries are willing to take on the political risk in developing markets from the private sector in exchange for securing work (and hence jobs) or sharing in the profits.

With political involvement there is also the risk of the asset falling into foreign hands. In the last few years this ‘debt trap’ has been particularly evident in Africa. Extremely favourable financial terms were offered to projects, particularly by politically-backed financiers, and when the projects defaulted the assets fell into foreign hands.

Commercially offered political insurances can provide a solution here. Although the terms may be less favourable than the ‘political’ alternatives, there is less political consequence in the case of a default. Commercial insurances for projects in developing countries are used more often in other sectors and is still a new concept in the port industry although companies like Willis and Lloyd's are picking up some initial business in the sector.

INCREASE OF POLITICAL INFLUENCE Also, after years of increasing privatisation of ports, the trend now seems to be reversing and political involvement in port infrastructure is picking up again. This may see export financing increase in popularity. The strategic labelling of ports through the Belt and Road Initiative has been widely discussed, but this is not the only example of this trend.

Governments are increasingly influencing transactions either via lobbying or via funds tied to governments bidding on assets.

Recently, for example, Belgium-based Euroports was acquired

by Monaco Resources backed by two state funds, FPIM and PMV. Be warned that the introduction of this political

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

LACK OF ACCESSIBLE DATA Part of the challenge in achieving transparent business cases is that financial institutions face difficulties in carrying out due diligence in these markets. As they are not historically core markets, available internal data is generally limited.

Macroeconomic and market data from local statistical offices is often difficult to obtain and/or of poor quality. The maritime industry in western countries has developed to become much more data driven and the financial industry has become used to this level of data availability. With a wide range of digital applications and the introduction of new initiatives, such as blockchain, this focus on data is only set to increase. Developing markets must find a way to at least keep up with this development to provide the right statistics to attract investment.

Another problem with port financing in developing countries can be finding the right match. The world of financial investors is a blended one consisting of many different types of investors, each with different expertise and project requirements.

Understanding these requirements and expectations and knowing when to approach investors is key.

Venture capital providers will be more interested in developing greenfield port projects but also want to be involved from day one of the project and likely on an equal basis. Clear and sound political governance is required in a country for venture capitalists to step in. Local entities must be willing to co-operate with these parties to make it a success.

DEBT OFFERINGS At the other extreme are debt providers. These parties prefer to step into projects in developing countries when the port has been developed and is up and running. They will set very high standards for the documentation in place to prevent any issues arising on the environmental, social and operational aspects.

Debt financing comes in different forms with unilateral/ multilateral financing institutions currently picking up most of the deals in developing markets. Parties like the African or Asian Development Bank can offer very favourable terms, but will go through an extensive and detailed due diligence process, for which the port developer has to ensure the right resources and documentation is made available.

Commercial banks are another option, but typically only follow global port operators or players into developing markets.

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

Terms are typically somewhat less favourable but can be setup more flexibly. With more developing markets accessing international financial markets the option of issuing bonds has arisen. However, this can only be done when the ports are developed and operational.

In between these two extremes is the domain of private equity and infrastructure funds. Each has their interest in when they would like to step in, the level of control they want to get back for that, what their risk preference is, and geographical focus. It is in this area where most opportunities lie for new players. These parties are used to taking on more risk and are willing to do more extensive due diligence locally.

8 Significant investment interest in DCT Gdansk proves there is great demand for port assets in the developed world

ADDRESSING THE MISMATCH The mismatch between financial investors and port opportunities in developing markets does not only lie on the side of the port developers. Most financial investors have regional boundaries set through fundraising conditions, credit committees and extensive compliance processes. Most of these procedures are determined by whether the investor has experience in particular markets. Increased regulation in the financial industry has not helped in this respect.

Over the last decade the risk of investing in developing markets has been reduced due to increased transparency, more political stability, and a better understanding of how to develop port infrastructure. But few institutions have changed their procedures to reflect this and the size of their investments has lagged behind.

With global port operators and shipping lines increasing their activities in these markets, this is a real opportunity for more infrastructure fund activity in these markets. With very crowded deals on western port assets, the risk-reward balance can hardly be worse in developing markets.

8 Johan-Paul Vershuure is technical director for WSP, based in the UK. 8 Governments are increasingly influencing transactions, for example in the recent sale of Euroports

Credit: Euroports

component may end up impacting the general investment or financing capability of the sector.

Another key reason why financial institutions have shown limited interest in these markets is that business cases for ports in developing markets can vary greatly in quality. To attract the attention of the financial industry the business case has to be crystal clear. In almost all cases offtake contracts (or at the minimum, letters of intent) for the facility are required to secure external financing. Financial institutions typically step in when the business case is detailed, risks are identified and managed.

However, port developers in developing markets often struggle with this. If developers struggle to develop a detailed and credible business case, teaming up with a joint venture partner or having consultants to assist in the process can help. That said, just doing the homework required for a good business plan is not enough. Transparency of the port developer is key â&#x20AC;&#x201C; surprises kill a deal.

Shipping lines and global port operators appear more determined to look for opportunities in developing markets.

These groups are often already involved in some form or another in these markets and can step in more easily to take over control if needed. However, these two groups also require more than a feasibility study alone.

Credit: DCT Gdansk

FINANCE: EMERGING MARKETS

APRIL 2019 | 33

THEOPINION COLUMNIST DR EVA SAVELSBERG, ULRICH DORNDORF and MATTHEW WITTEMEIER INFORM’s Dr Eva Savelsberg, Ulrich Dorndorf and Matthew Wittemeier discuss how hybrid AI is transforming port operations Terminal operations are a complicated mixture of manned physical machinery, unmanned robotics systems, human operated software platforms, and increasingly, artificial intelligence (AI) based software systems. In a broader production sense, these complex systems where connected robotics systems (hardware) and AI (software) converge are referred to as Cyber-Physical Systems (CPS).

And it is at this convergence that one will find the future of AI in container terminal operations.

Ports around the world are set to evolve into digital ecosystems comprised of various ‘intelligent agents’, or modular decisionmaking processes, that are highly specialised AI processes existing as a specialised component within

EQUIPMENT BRIEFS ❙ Navis acquisition to help

small terminals Cargotec’s Navis has acquired privately-owned US company Cetus Labs, Inc. which provides cloud-based terminal operating system (TOS) Octopi for small container and mixed cargo terminals. With the addition of Octopi to its software portfolio, Navis is better positioned to support thousands of smaller terminals around the world that want to modernise terminal operations, but lack the technology infrastructure and technical expertise required to support a full-scale Navis N4 TOS deployment. “Our customers told us they need a lighter weight TOS solution to improve the planning and execution of operations for their smaller terminals, and to easily connect to the supply chain ecosystem,” said Benoit de la Tour, president of Navis. “By joining forces with Octopi, Navis is answering the need to have more

34 | APRIL 2019

BRIDGING THE CYBER-PHYSICAL GAP the broader digital ecosystem.

Paired with human experts, these CPS will be empowered to resolve the automation challenges that plague the industry today.

To start, we need to understand how combining AI and traditional physical systems works. At the core of a Cyber-Physical System is an AI algorithm making decisions for the connected robotics systems. This has become increasing possible over the past decade due to advancements in both hardware and software.

In the past 28 years, improvements in computer hardware have resulted in an increase in computing power by a factor of 2,000. This seems impressive until one compares it with the advances in optimisation algorithms over the same period.

For instance, linear programming

algorithms, considered the most important class of optimisation techniques by many experts, have improved by a factor of 1.5m.

When combined, the effects of both advances generate a tremendous 3bn times improvement in processing capability. To better understand this, a planning model, using linear programming, that takes us a second to solve today, would have taken almost 100 years to solve in the 1990s – we’d still be waiting for the result for some time to come!

This approach uses both knowledge-driven algorithms based on mathematical optimisation, operations research, and human know-how as well as data-driven algorithms based on advanced analytics, machine learning (ML), deep learning, and so on. Hybrid AI enables terminals

A combination of AI and human experts working in conjunction will lead to an overall improvement in terminal operations TOS options for both standalone small terminals, and those smaller or remote terminals that are part of a larger global terminal operator network. Offering a cloud-based TOS that is intuitive and quick to implement will enable us to serve an entirely new segment of the terminal market. Launched in 2015, Octopi is a modern and lightweight, cloud-based TOS developed exclusively for small container and mixed cargo terminals. ❙ Kalmar’s ambitious

performance guarantees Kalmar is gearing up towards a performance-based business model, the company’s president has stated. Antti Kaunonen explained that this model means that Kalmar would get paid on the basis of performance, such as completed container moves per hour, rather than the number of container handling machines it sells or leases. “This is something that won’t be achieved overnight, but it is a long-term goal to which we are committed,” he said.

Availability and performance guarantees will boost the efficiency of cargo handling, believes Kalmar, and this concept works by optimising customer service. For example, instead of selling machines, Kalmar could lease them to customers, while ensuring they are available and maintained according to a defined schedule, plus delivering the required spare parts, said Mr Kaunonen.

Following this, the company could commit to providing spare parts within a defined number of hours or days.However, to deliver availability guarantees, Kalmar would need to calculate the fleet size needed to ensure availability of the required number of operational machines, at all times, said Mr Kaunonen.

“The key point for both parties is to realise that once we have responsibility for not only the machines, but also their connectivity, optimisation and maintenance, we can offer (and guarantee) higher levels of

to get the best out of both worlds, as leveraging computer algorithms with human expertise yields results significantly superior to both. Humans will have a significant role to play in terminal operations for years to come. One can choose to fight this reality, or build a digital ecosystem that includes humans at the core of its decision-making process.

DRIVING CONTINUOUS IMPROVEMENT Key to the advancement, and improvement, of CPS is the implementation of Machine Learning. As such, in 2018, INFORM undertook a machine learning assessment project, looking at maritime container terminals and how ML could be used to improve operational and optimisation outcomes. Several implementation areas were identified in the assessment including connected robotics systems, container dwell time, and outbound mode of transport, to name a few. While

performance and availability than with traditional maintenance models,” he said. ❙ Chinese port reveals

5G ambitions Ericsson and mobile service provider China Unicom are developing a 5G smart port at the Port of Qingdao in China with the aim of exploring commercial 5G networks and solutions and saving labour costs. The partners undertook a six-month field trial which confirmed the feasibility and potential of 5G applications for the development of smart ports and found up to 70% of labour costs can be saved when a port uses a 5G automation upgrade, comparing traditional ports with fully automated ports. These savings are estimated based on Port of Qingdao, which has been operating Asia’s first fullyautomated port since 2017. Zhang Yong, general manager of the China Unicom Research Institute, said: “We would like to co-operate with major 5G equipment

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

THE OPINION

suppliers and leading industrial equipment suppliers to create differentiated value to enterprise customers.” Chris Houghton, senior vice president and head of market area North East Asia at Ericsson, stated: “In the Qingdao 5G smart harbour project, we successfully showcased various 5G network capabilities, such as millisecond level end-to-end latency at Gbps level speed.” He added the 5G smart port can be replicated with many other ports and industries. ❙ Konecranes ARTG

fleet first Nine Konecranes automated rubber-tyred gantry (ARTG) cranes have been supplied to Terminal Peti Kemas Semarang (TPKS) in Indonesia to boost its operational safety and efficiency and expand what is the world’s first commercially operated fleet of Konecranes ARTG cranes. The new cranes complement an existing fleet of 11 Konecranes ARTGs, making the expanded fleet the first in the world to be operated on

8 Figure 1: Selected view of loaded travel durations of connected robotics system without outliers

Duration

additional research is required, the assessment quantifiably showed that machine learning will have a significant role to play in improving terminal operations today and into the future.

Connected robotics systems are typified in the terminal industry by semi- or fully-autonomous terminal equipment, such as cranes, straddle carriers, AGVs, and so on. We analysed data from such systems and gained decisive knowledge on how reality differs from expectations and found that the behaviour of connected robotics systems can be better understood, leading to improved decision-making.

Figure 1 is an example of the findings from the application of ML to analyse past data sets. The figure shows a snapshot of loaded crane travel durations within a terminal block. Each grey dot indicates the actual duration of a move for a given distance.

The orange line indicates the human expert’s calculated task completion time prediction based on the robotic system’s physical hardware capabilities (i.e., using the

Distance manufacturer’s predicted acceleration and speed of travel) and predictions for fine positioning.

Looking at Figure 1, it’s clear that using the hardware's physical capabilities to build the prediction model has consistently produced an overly optimistic parameter for expected task performance. In contrast, the ML algorithm’s regression model output is represented in white. It provides a

considerably more realistic prediction of expected task completion. That said, when an expert reviews the model they can quickly see that it isn’t necessarily a tidy fit either. It is overly cautious of job completion time for shorter runs and still, too optimistic on longer runs.

While the above is a basic example of machine learning in terminal operations, it does

This is something that won’t be achieved overnight, but it is a long-term goal to which we are committed Kalmar president Antti Kaunonen explains the move towards a guaranteed performance model such a wide commercial scale. The ARTG cranes utilise a nextgeneration automation platform, including fully automated stacking in the yard, remote operating stations for truck handling and the related container yard infrastructure. “Konecranes is constantly innovating its products to meet container terminal needs, and by choosing them to provide new ARTG cranes, we have taken our operations to the next level of safety and efficiency,” said Recky Julius Uruilal, general manager at TPKS, which is the second-largest container terminal in the Pelindo III Group, an Indonesian state-owned enterprise that manages 43 ports throughout seven provinces in Indonesia. Jukka Tukia, Konecranes’ port service APAC regional director, said: “The latest Konecranes technology installed

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

at Pelindo III provides efficiency improvements in many areas, including operational efficiency, efficiency in utilising manpower, and efficiency in maintenance and support functions through modern tools such as TRUCONNECT remote monitoring.” Konecranes’ TRUCONNECT real-time monitoring service provides an accurate report on equipment condition, so that predictive maintenance can be optimised to suit each piece of equipment and how it is used. ❙ Navis emissions

compliance approval The dedicated emission compliance modules of Navis’ Bluetracker One software have been awarded certification by Verifavia. Verifavia’s certification process proves that Navis has

demonstrate that a combination of AI and human experts working in conjunction will lead to an overall improvement in terminal operations. Like all Cyber-Physical Systems, we still need big picture thinking and while AI is steadily advancing towards the ability to deliver this – an agent of agents model so to speak – keeping humans in the loop and freeing them up from the monotonous tasks of daily decision-making enables them to question assumptions about, and derive clever solutions to, the underperformance challenges that plague robotics systems and full automation in terminals around the world. It's a win-win.8.

8 Germany-headquartered INFORM offers technologies for digital decision making in a number of verticals, including logistics and the supply chain.

For more information go to www.inform-software.com.

designed a software solution that assists ship operators in aggregating operational vessel performance data to generate annual emission reports in accordance with EU MRV and IMO Data Collection System regulations. “With Verifavia certification, the Bluetracker system has once again demonstrated its compliance which has also been confirmed by our customers who have successfully started the verifying process of the ship-specific annual emission reports in accordance with the EU MRV regulations,” said Martin Bardi, vice president global sales at XVELA and Head of Navis’ maritime unit, Navis Carrier and Vessel Solutions. Bluetracker’s emission compliance modules consider the fuel consumption methodologies for different vessels and generate compliant emissions reports whereby all incoming operational ship data is continuously validated in real-time, in terms of data plausibility, consistency and completeness.

APRIL 2019 | 35

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RISK MANAGEMENT: UNDERWATER

CRITICAL ISSUES BUBBLE UP IN UNDERSEA SECTOR Diver availability, cost undercutting and uncertainty over the role of quasi-regulators are critical issues facing the underwater services industry catering to global ports and terminals.

Engaged over the past 20-plus years as both a professional diver, contractor and trainer of commercial divers, Commercial Diver Training Limited’s director George Gradon tells Port Strategy of the pay and recruitment concerns relating to divers working in port waters.

“The biggest challenge to the industry is that the majority of divers start off in docks and harbours on the inshore route, but their long-term aspiration is to work offshore,” he says. “It pays more money and it's also playing with ‘bigger toys’ on bigger projects.”

With the inshore underwater services sector typically populated by “lots of small companies” and therefore creating “lots of competition for the work”, he also raises concerns that rates are being significantly undercut.

“That drives down the price. Most clients tender for their work competitively and contractors do a very good job of putting each other out of business by bidding with prices that are too low. It limits the contractor’s future capital reinvestment in new equipment, such as video recording, editing suites, plant and welfare facilities, all of which would ultimately result in a better end-product for the client.

“Carpenters and other tradesmen get around £250 per day onshore, while inshore divers get maybe £150-£170. This makes it difficult to attract new high calibre personnel into diving.

Personally, I think that when you look at the management, the health and safety, the equipment and so on for inshore diving, companies and divers and companies should be paid more.”

REGULATORY IMPROVEMENTS Mr Gradon does credit the Diving at Work Regulations (DWR 97) introduced in the UK in 1997 for having clarified that legislation covers any paid work involving diving in the country’s waters.

DWR 97 and the subsequent revisions to the inshore/inland Approved Codes of Practices (ACOPs) in 2014 for commercial diving projects are “generally considered to be best-practice globally”, he says.

Nonetheless, Mr Gradon is troubled by uncertainty over the role of quasi-regulators and highlights the UK’s Marine Management Organisation (MMO) in this regard. Established in 2010 to license, regulate and plan marine activities in the seas around England so that they are carried out in a sustainable way, he says the MMO has simply introduced a “new and complicated level of bureaucracy with additional costs for contractor and client”.

“If you want to build or maintain any subsea assets, if you want to install any new infrastructure, undertake any construction or dredging – effectively anything that involves using tools under the water – then you need a licence and approvals which take a long time to get and cost money. We’re not talking about wishing to extend a port where you are legally required to get planning permission and undertake public consultation and an environmental impact study.

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

Credit: U.S. Pacific Fleet, Flickr, CC BY-NC 2.0

Iain MacIntyre and Carly Fields investigate the issues hanging over the progression of the commercial diving industry serving ports

“The MMO’s involvement doesn’t appear to bring any enhanced control, safety or environmental protection that wasn’t already there. They simply appear to have increased red tape.”

8 Concerns are building on pay and career prospects for commercial divers

PORT ADVICE Offering advice for ports and harbour executives seeking to engage potential underwater services providers, Mr Gradon urges that diving contractors be given a “seat at the table” at the earliest opportunity.

“My approach to contracting is largely based on competence, transparency and trust. Be open and honest and involve the client in the job – after all, they have a legal responsibility in the job as well as an interest in seeing it completed efficiently and safety. The client, local port authorities and contractor should work together, pooling information to promote a mutually beneficial outcome.

“If somebody gets hurt, as one of the directors, I might be in court. But the client will be stood right next to me as they have a shared liability under the Diving at Work legislation. In the past, clients have said ‘we don’t know anything about diving, that’s why we have you’; that doesn’t work anymore. If you do not understand commercial diving, you should have employed a diving consultant to act as your agent to oversee the actions of the contractor and to ensure your expectations are met.”

Picking up on the engagement advice from a US perspective, Coda Octopus Products chief executive and president of technology Blair Cunningham urges that priority is also given to security considerations.

“It is important to find contractors who are committed to providing effective solutions designed to address the increased and new types of security threats which ports and port infrastructures are exposed to, and also who are prepared to work with customers to adapt core technology for their purposes, backed by solid customer support and training,” he says.

APRIL 2019 | 37

RISK MANAGEMENT: UNDERWATER

FACING OPERATIONAL CHALLENGES He sees the primary focus for undersea services providers as being to help overcome the operational challenges faced on a daily basis: operating in zero-visibility waters where there is need for continuous monitoring, reduced acoustic shadowing and rapid deployment.

“Zero-visibility water conditions in both offshore and nearshore operations prevent our customers from using common tools like subsea cameras or single-beam sonars. Laying assets precisely on the seabed or monitoring a diver’s safety below the surface requires continuous real-time monitoring – a task not previously possible if visibility was poor.

Credit: Coda Octopus

Mr Cunningham, whose firm developed real-time 3D Echoscope sonar, sees such technology as an established and conventional method of providing critical information for port and harbour security.

“Advances in technology now mean that up-to-date sonar technology, which has real-time 3D volumetric sonar capability, can play an even more significant role in port and harbour security – as this removes the requirement to process data before information can be obtained and it allows ports to take real-time critical decisions about their assets as the survey is taking place.

“By way of example, the increased accessibility of drone technology has given rise to a new type of threats in ports – the arrival of unknown sea drones heading into our ports and harbours. It is important therefore to have technology that can track such sea drones in real-time and remove the threats before they arrive at our ports.”

“Our customers who are familiar with industry-common systems like multi-beam echosounders, also have difficulties when visualising a complex asset. The narrow swath of the multi-beam’s pulse makes the image more susceptible to acoustic shadowing – possibly hiding important structural faults or hazardous objects from the sonar operator’s view. “[Additionally], our customers working in the defence and maritime security space require real-time 3D visualisation solutions, that operate in all-water visibility conditions and that can be deployed rapidly in order to investigate an urgent threat or locate a piece of critical evidence.”

8 Real-time 3D Echoscope sonar provides a better picture of the underwater environment

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RISK MANAGEMENT: UNDERWATER

An operator in the field over the past 25 years, the Coda Octopus’ Echoscope sonars are enabling non-trained port personnel to gain a first-person's perspective of underwater environments, explains CodaOctopus Products chief executive and president of technology Blair Cunningham.

“While standard multi-beam sonars take a narrow swath of data with every pulse of the sonar, the Echoscope creates a volumetric pulse that sends 16,000 points of data out 20 times per second,” he says.

“This large amount of data redundancy reduces acoustic shadowing, allowing the operator to see more around targets, as well as visualising moving objects instantly – without any post-processing and even in zero visibility conditions.

“For port inspections specifically, the Echoscope can support divers in the water during live operations. Where subsea cameras and multi-beam sonars struggle to visualise underwater targets in highly-turbid port areas, the Echoscope can see through this noise to continue the operation and

Credit: CodaOctopus

Technological innovations advancing undersea port ops

8 CodaOctopus Underwater Inspection System can assist with inspections for security and recovery purposes

provide real-time 3D information which is critical for port management and safety.”

Utilised alongside Coda Octopus’ Construction Monitoring Software, the Echoscope has proven a “critical piece of equipment” in the construction of ports and breakwaters around the world, claims Mr Cunningham.

“This allows the user not only to visualise the moving blocks, but also to track and place blocks more accurately in the breakwater. It gives crane operators a target positioning,

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

allowing even less-experienced crane operators to place blocks more accurately.”

Furthermore, Mr Cunningham says the Coda Octopus Underwater Inspection System (UIS), which embeds the Echoscope, is positively changing the way many ports are now managing their underwater environments.

Mr Cunningham claims this “revolutionary technology” is enabling ports to conduct prompt and accurate inspections for security and recovery purposes.

“The rapid-deployment UIS system allows port operators to take advantage of this technology quickly, responding to urgent requirements for critical asset inspections and surveys. This system is a real enabler of real-time critical decision making.”

He adds that security operations can be further enhanced at ports with the deployment of his firm’s proprietary software package, Coda Octopus Underwater Survey Explorer (USE), which includes the Baseline Comparison module. “Port security services can identify any new and potentially-hazardous features different from previously-recorded inspections.”

APRIL 2019 | 39

TECHNOLOGY: TRUCK MANAGEMENT

INJECTING CASH INTO PORT TECHNOLOGY GATEWAYS Virtual logistics and venture capital are coming together to power the expanding frontier of dockside-to-warehouse distribution or drayage – seen as the area of port operations in the US receiving the lowest level of investment.

A flurry of start-ups is popping up amid intensive capital crunching, driven partly by repeated cycles of congestion at bottlenecks, particularly in Southern California.

And it is there that venture capitalists are taking the greatest interest. Virtual fleet owner NEXT Trucking has secured $97m from Brookfield Asset Management and others for its app which informs cargo vehicle drivers of loads awaiting transportation between manufacturers/distributors and Los Angeles/Long Beach. That brings total financing for the company to $125m.

Describing itself as a hybrid of owned and contracted drivers, NEXT says it has added more than 15,000 drivers to its network recently. Some of the new funding will be used to launch NEXT's Relay app, designed to further streamline the process of matching available vehicles with available loads. Focused on the US at the moment, the company says it plans to expand to other countries, including the UK. “The logistics space is under more pressure than ever before – with more shipments coming into our ports than drivers and warehouses have the capacity to manage,” said Lidia Yan, chief executive at NEXT. According to NEXT, drayage drivers increase their earnings by up to 20%, while local drivers increase earnings by up to 50%.

On the supplier side, NEXT customers have seen 167% more containers pulled per truck.

OUTSIDE INVESTORS Brookfield Ventures was established in 2017 to partner with technology-enabled businesses that are disruptive within the sectors in which Brookfield owns and operates businesses (real estate, infrastructure, renewable power and private equity).

Josh Raffaelli, a managing director with Brookfield Ventures, says: “Brookfield, through its ownership of the TraPac terminal in the Port of Los Angeles, is creating a partnership with NEXT to offer its services for our own shipping partners. This includes technology integration that can be replicated in the future for other port assets and their customers. Brookfield is also an owner of logistics real estate, which is a natural extension for us to expand the relationship with NEXT. “NEXT stands out as it is focused on enabling truck drivers who directly benefit from using the company’s platform and services. The company is solving challenges around port congestion and its approach towards starting with drayage is unique in the technology and enabled freight brokerage space.”

But, like the congestion at Los Angeles, the marketplace for digital- and application-orientated ventures in the dockside/warehouse chain is 8 Josh Raffaelli sees Brookfield Ventures’ investment in NEXT as a “natural extension” of its ownership of LA’s TraPac terminal

40 | APRIL 2019

Credit: Port of Oakland

Last mile ventures are a current favourite of venture capitalists in the US, but might their attention be short lived? Martin Rushmere reports

becoming crowded, and all the recent entrants say they aim to cut the same things: delivery costs and times.

DIFFERENT OPTIONS Dray Alliance has secured $3.5m from venture capitalists, led by Craft Ventures, for its mobile technology, connecting carriers and shippers with cargo vehicle drivers in an Uber-like model.

“The drayage industry still depends on emails and spreadsheets for its daily operations – leading to massive inefficiencies that result in lower earnings for truckers, less predictability in delivery times and 20%-50% increases in the drayage trucking cost of freight deliveries for shippers,” it says.

Startup BookYourCargo says volume grew 48% in 2018, while growth has been 45%-55% year-on-year since its launch in 2014, centred on its web-based platform. Its system extends to administration functions such as billing and scheduling.

Oakland-based Terminal 49 has a somewhat different digital approach. It focuses on the drivers, paying them every two weeks instead of for each load. Offering predictive insights, it also aims to avoid detention and demurrage charges.

E*Dray’s focus starts on the vessel, aiming to group containers at known points and doing the same for the stacks in the container yard for specific customers. Delivery vehicles save time by knowing exactly where to go for a container and where to deliver. Productivity is said to increase by 40%.

Says E*Dray: “A driver takes the first container available and delivers to one geographic region – a ‘taxi cab’ model.”

Cargomatic is also back in the mix after a lean period and says business has improved immensely, partly due to a $35m finance injection in 2018.

Indeed, hundreds of millions of dollars have been injected into port-related start-ups over the last two years. But there remain unanswered questions as to how and whether these tech ventures will fit in with ports’ own digital systems.

8 Oakland is implementing Advent’s eModal information and dashboard system

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

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TECHNOLOGY: TRUCK MANAGEMENT

42 | APRIL 2019

8 Virtual fleet owner NEXT has attracted $125m in financing to date

Credit: NEXT Trucking

PORT EFFORTS Oakland continues to implement its eModal information and dashboard system in conjunction with the supplier, Advent. The latest development uses RFID tags to keep precise track of cargo vehicles from the moment they cross the threshold of a terminal entrance to the moment they go through the out gate, measuring waiting and turn times and associated metrics. Data is updated every 30 minutes.

Four digital dashboards are being set up for beneficial cargo owners to log into a terminal information system to check on the exact status of containers – arrival, customs and ocean clearing and associated paperwork. A trial roll-out is set for August.

“The next step for eModal is to extend the system to the street outside the terminals,” says maritime director John Driscoll. “Drivers will be able to see whether there are problems in the streets leading to the terminals and so plan their schedules accordingly.”

Mr Driscoll says the port and Advent are “open to working with other applications, provided certain criteria are agreed to.

The system is not a huge bells and whistles approach and takes a basic approach.” Total cost of implementation has been just north of $100,000.

Meanwhile, Los Angeles is spending more than $10m on its Port Optimizer, in conjunction with General Electric.

Says LA spokesperson Phillip Sanfield: “The project is going very well. We are currently in the registration phase for stakeholders. Currently LA has about 60% of our cargo in the data feeds from ocean carriers. Over the next 30 days we expect that number to increase with additional carriers and we

expect to have 90%-95% of our containerised cargo in the Optimizer data feed.

“At this moment, the NEXT Trucking app is not integrated into the Port Optimizer platform,” says Mr Sanfield. “By design (with its APIs and microservices architecture), the Port Optimizer platform is flexible to connect to third party vendors, with the ultimate purpose of optimising the broader port community.”

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

TECHNOLOGY: TRUCK MANAGEMENT

BEWARE THE GIANTS Small digital start-ups specialising in a niche market such as ports and terminals should probably be aware of giants taking an interest. Maersk is again getting back into logistics and trucking, while the commerce behemoth Amazon has officially declared itself a maritime and aviation company in its most recent filings with the US securities and exchange commission.

Both have said they want to be involved in the “last mile” of cargo delivery.

The drayage sector is also becoming less easily defined with the entry of digital-related logistics/warehouse businesses. In March Olimp of Chicago launched a service to match warehouse space and available cargo vehicles with demand – be it for just a few miles or across the country.

But venture capitalists, notorious for their short attention spans and fixation on profit above all else, could soon divert their focus to start-ups that make the “last mile” part of a broader business model, so perhaps ports are right to make hay while the sun shines.

8 NEXT’s Lidia Yan notes that the logistics sector is under more pressure than ever before

Optimising the supply chain GE’s Port Optimizer is a platform that “digitises disparate supply chain data”, says LA spokesperson Phillip Sanfield, “and brings it together into a single source.

To alleviate the need to access multiple systems and data sources, Port Optimizer was purposely built to be data and system agnostic, meaning that it has been built with the capabilities to integrate with any application and ingest data in any fashion – it’s a ‘system of systems’ that fits into the existing supply chain ecosystem for interoperable visibility.”

Adds Mr Sanfield: “This capability directly addresses a top request from our users for a single portal to collaborate with supply chain partners, and we continue to add new data providers to the platform on an ongoing basis.”

Mr Sanfield says the port has worked with GE in developing the system and was not a passive customer.

“We did much, much more than ‘install’ the optimiser.

We co-developed it for the benefit of the broader supply chain. The port’s investment has been an approximate $12m contract with GE. For other ports, the contracts will be different. Depending on size, complexity, and requirements, GE has a number of different pricing models.”

Cargo / Passenger and Recreation / Military Facilities Core Services Advisory Services Port Planning and Analysis Environmental Services Engineering Services Coastal Engineering Program Management Construction Services Asset Management

wsp.com/maritime Simon Harries Tel: +44 777 322 8338 simon.harries@wsp.com

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

APRIL 2019 | 43

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BOATINGBUSINESS BOATING BUSINESS & MARINE TRADE NEWS

SUPPLY CHAIN: TRUCKS

TIME TO BE OPEN ABOUT GATE TURNAROUND TIMES Can ports gain extra traffic from reporting truck turnaround times? US West Coast ports seem to think so.

The Harbor Trucking Association (HTA) of Los Angeles and Long Beach first started publishing data on truck turnaround times in October 2013. According to chief executive Weston LaBar, up to that point such information had been purely anecdotal.

“Part of the problem was that a truck driver would say it would take four to five hours to complete a visit at any given facility, while the marine terminal would claim it was just 40 minutes,” says Mr LaBar, adding that it’s only with accurate data that you can take measurable action.

Prior to 2013, some marine terminals had published their pedestal-to-pedestal turn time information. But accurate information about turnaround times was being distorted by the random-access nature of operations in those days. Trucks, for example, could be forced to queue for several hours outside terminal gates, only to then complete their business within the terminal in fewer than 40 minutes – and it would be this latter information that the marine terminal would publish.

“In our view, it isn’t good enough to say you can get a truck in and out of the facility very quickly, if there is a queue outside first,” says Mr LaBar. To gain more accurate information, the HTA therefore used telematics already in use in many of its members’ trucks. “It was that data that we then used to improve conditions,” he says.

Support was immediately forthcoming from the port authorities who had held off publishing data of their own, because they hadn’t wanted it to be construed as them adopting a combative position towards their tenants.

FINANCING AND FENCES The data collection programme is nowadays financed by the HTA, which recoups its investment through subscriptions.

Some of the largest subscribers are port authorities, marine terminals and BCOs. As for the data, geo-fences have been agreed with all maritime terminals to ensure that like-for-like data can be captured. Furthermore, Mr LaBar stresses that the data is statistically accurate, pointing out that in Southern California alone, HTA monitors over 5,000 trucks, which is half the number of frequent callers at the port, so the sample size is big.

Average monthly figures compiled by the HTA are also compared with similar figures gathered by the terminals themselves.

“Our two sets of figures are usually quite close. If there is a discrepancy of more than five minutes, we sit down and discuss why, but that rarely if ever happens,” he says.

The published figures have had an overall positive impact, with HTA having seen many efficiencies implemented with specific marine terminal partners as a result. However, Mr LaBar concedes that with just one port gateway publishing figures on the West Coast, it has been difficult to compare performance across different port operations.

“We therefore didn’t know whether the turn times of Los

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

Credit: Port of Oakland

US ports are embracing public appetite for port information and making truck-wait data available to all. Alex Hughes reports

Angeles or Long Beach were good, bad or indifferent. As a result, even some of the more efficient terminals were receiving some negative pushback if the gateway as a whole was perceived as not being efficient,” he says. However, while he acknowledges that the two ports have some of the best terminals in North America, he candidly concedes they have some of the worst, too. But it’s only with the emergence of more data from other port complexes that valid comparisons can now be made.

THE RIGHT PATH Nevertheless, even with a lack of comparative data from other ports, data gathered by the HTA can be used to indicate whether Los Angeles and Long Beach ports are moving in the right overall direction.

“In fact, as a result of the figures, we have worked with individual marine terminals to put specific programmes together that have greatly reduced congestion,” he says.

As an example, he cites the YTI box terminal at Los Angeles, which initially had the worst turn times in the harbour, these being routinely over 100-120 minutes. Over the past few years, HTA has worked with YTI, using the data to look for improvements, and the terminal now has some of the best turnaround times in the harbour.

Mr LaBar stresses that, with good figures, terminals will attract both truckers and BCOs as their primary customers, which will in turn prompt shipping lines to switch alliances, too.

“Truckers and shipping lines tend to gravitate to terminals with the best gate productivity and when a terminal struggles to be efficient, it is hard to get truckers to call there,” he says.

So, while a cargo owner may look at ways to save money on ocean freight rates, they might find that this is negatively offset by the refusal of truckers to work with certain terminals because of their turn times.

8 Oakland is to make truck turnaround times available through its online portal

8 The Harbor Trucking Association’s Weston LaBar says truckers and shipping lines tend to gravitate to terminals with the best gate productivity

APRIL 2019 | 45

Credit: National Renewable Energy Lab, Flickr, CC BY-NC-ND 2.0

SUPPLY CHAIN: TRUCKS

“Long gone are the days when you just tendered a load and got a price for it. Now, prices incorporate waiting time surcharges and congestion fees to ensure that, even if a terminal is not productive, a truck driver still makes money.”

VESSEL GROWTH Mr LaBar says that, with space within ports nowadays at a premium, terminals are in a difficult position as vessel sizes continue to grow.

“If a terminal doesn’t have a fluid gate operation, it’s going to have a hard time accepting larger vessels. But terminals make money from volume so need to organise to accept larger vessels, which means more productive yards,” he says.

Indeed, the data published by HTA clearly shows that some terminals are having a hard time adapting to increased volume, while others routinely hit their target irrespective of the number of boxes being handled.

8 Long Beach Container Terminal is recognised in the local trucking community for its quick turn times

“If I’m a shipper with excess capacity that I need to send in a particular month, I can see that some terminals will be able to handle it better than others.”

Ports and terminals can therefore gain business if their turnaround times are good, with Mr LaBar singling out Long Beach Container Terminal as being recognised in the local trucking community for its ability to offer turn time of around 30-40 minutes, however much traffic it is having to cope with.

“In terms of productivity, shippers can see which terminals they should be sending their cargo to simply by studying published figures over time. These are the facilities that are investing in themselves and getting better, while others continue to have systemic issues.”

The Port of Oakland has heard the message and recently announced that it is to make truck turnaround times available through its online portal.

According to Mike Zampa, the port authority’s communications

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SUPPLY CHAIN: TRUCKS

SUPPLY CHAIN GAINS As to the impact that the availability of these figures will have, he points to an expected improvement of efficiency throughout the supply chain.

“Shippers can better plan for cargo deliveries, motor carriers can make more informed decisions about deploying drivers, and freight haulers can spend more time on the road by avoiding peak periods of terminal activity,” he says.

In some ports, either road hauliers or the actual terminals themselves publish truck turnaround information, but Oakland has opted to use its established internet portal to distribute this information.

“The goal of the portal is to provide everyone who touches the supply chain with a one-stop, unified view of the port online.

By aggregating turn time metrics on the portal, we make it easier to track port-wide performance and provide an objective

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

Credit: PierPass

director: “Customer service is the driving force behind operational improvements at the port, including our latest improvement – turn time reporting. Shippers, freight haulers, dispatchers... so many parts of the supply chain benefit from a timely look at how marine terminals are performing.”

In terms of how accurate these figures will be, he says that Oakland is reporting average turn time information based on RFID reads transmitted from the marine terminals.

“Oakland marine terminal operators have been exceptional partners in all our improvement efforts, from extended gate hours to appointment systems. They're supporting publication of turn times as well,” says Mr Zampa.

turn time metric,” explains Mr Zampa. Interestingly, the reported turn times haven’t surprised port authority managers, since these have long been tracked offline through constant contact with the marine terminals. According to Mr Zampa, the figures now being seen online pretty well matched expectations.

“It’s too soon to say that turn times are shrinking as a result of the port's new online metric, but the potential is there.

Publishing the data could also point to areas of opportunity for future operational improvement,” he says.

Asked whether the availability of turn times will bring more business to Oakland, he reiterates that anything that improves port performance and efficiency has the potential to attract business.

“Our motivation is simply to improve efficiency and supply chain velocity for our customers and business partners,” he says.

8 The US Harbor Trucking Association points out that it isn’t good enough to say you can get a truck in and out of the facility quickly if there is a queue outside first

APRIL 2019 | 47

REGIONAL SURVEY: EAST ASIA

CELEBRATING A REGION OF PORT POWERHOUSES

Credit: Saigon Newport

China may dominate the port top ten, but it’s not the only country making sure its voice is heard in East Asia, finds Kate Jones

East Asia has much to offer today’s world: according to The World Bank, the subregion, along with the Pacific, is responsible for almost 40% of world economic growth.

Unsurprising then that the region is home to eight of the 10 biggest ports in the world, according to the World Economic Forum. China’s Shanghai is the largest, with the superpower’s Shenzhen and Ningbo-Zhoushan coming third and fourth respectively and South Korea’s Busan coming fifth. Furthermore, a third of all global containers move through Chinese ports.

The Port of Shanghai is driving continued capacity expansion, in line with other established ports in China. Last year, annual growth at the port was 4.4% – modest by past standards, although it did add 1.8m teu to the facility's total. Digitalisation is also being given a push with the port one party to the blockchain consortium the Global Shipping Business Network – an open digital platform based on distributed ledger technology. Other participants included terminal operator stalwarts DP World and PSA International. Shanghai is also part of another blockchain and artificial intelligence venture, facilitated by APMEN Trade Tech and Ideanomics, to improve shipping operations by integrating port and supply chain data.

It plans to renew its Vessel Traffic Management Information System with security firm Saab in a project that is set to run to June 2020, replacing the majority of the existing radar and communications systems and delivering a new supervisory centre.

48 | APRIL 2019

8 HICT is the largest deep-water container terminal in Northern Vietnam

The latest development in Shanghai’s growth journey has seen its operator Shanghai International Port Group enter a cooperation agreement with Port of Ningbo operator Zhejiang Provincial Seaport Investment & Operation Group – the Chinese port located opposite Shanghai – on a development scheme for the northern part of the Xiao Yangshan port area. The move is expected to increase the efficiency of cargo transit on the Yangtze River and reduce costs. The Yangtze River Delta region is responsible for up to 70% of the Port of Shanghai’s throughput, and almost 50% of the goods in Yangshan need extra waterborne transport.

UPS AND DOWNS Over in Vietnam, development of an ambitious deep-sea project at Lach Huyen Port in Hai Phong city in the north of the country is moving on apace. May last year marked the opening of its Haiphong International Container Terminal (HICT), a joint venture between Vietnam’s Saigon Newport Corporation, Japan’s Mitsui O.S.K. Lines (MOL) and ITOCHU and Taiwan’s Wan Hai Lines. It marks the first public-private partnership between Japan and Vietnam.

“Backed by a yen loan from Japan, the Vietnamese government has been constructing various infrastructure projects such as reclamation, levee protection, a groin and breakwater, causeway and access road between the port and Cat Hai Island,” MOL said at the time HICT was opened.

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

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REGIONAL SURVEY: EAST ASIA

8 Shanghai is driving continued capacity expansion

HICT is the largest deep-water container terminal in Northern Vietnam, with 750 metres total berth length, a 14-metre access channel, 660 metres of turning basin, and 16 metres of berth.

HICT can accommodate container ships up to 14,000 teu and offers an annual cargo throughput of 1.1m teu.

However, the outlook is not so rosy for one terminal south of HICT. DP World’s Saigon Premier Container Terminal (SPCT) in Ho Chi Minh City opened in 2010 to target container volumes, but the terminal was forced to change tack after heavy sedimentation in the Soài Rap River stopped large container ships from reaching it. It is the State’s responsibility to dredge passages and a lack of funding and red tape has stymied dredging operations.

CAR ALTERNATIVES While it waits for dredging to take place, SPCT has turned to the car sector to stem losses – which has proven to be a savvy move. Towards the end of 2018 it reported record high throughput for completely built-up (CBU) motor vehicles. SPCT offers storage capacity of about 5,000 cars on its 23-hectare site.

“I don’t see that type of capacity open to CBUs in other parts of Ho Chi Minh City, so we should focus on that,” Andrew Hoad, chief executive and managing director for DP World Asia Pacific, was quoted as saying in local press. “DP World is here to stay and this is a real contribution we can make to the economy as a trade-enabler.”

The next round of dredging of the Soài Rp River channel was scheduled to take place in February, but there has been no confirmation that this has taken place.

In South Korea, expansion of capacity is continuing at both the Port of Busan and the Port of Incheon. Busan Port Authority is going ahead with building a 50,000-square metre logistics zone, including 34,000 square metres of warehousing and supporting facilities, in Maasvlakte Industrial Park in the Dutch city of Rotterdam, with commercial operations forecast to start in the summer of 2021. Meanwhile, operator Busan New Container Terminal has signed a deal with maritime IT solutions provider CyberLogitec for implementation of a terminal operating system.

The Port of Incheon is working on hinterland developments with Incheon Port Authority signing an agreement with Incheon Free Economic Zone Authority to create a co-operative relationship.

The shift towards domestic or cross-border co-operative agreements in South Korea is not accidental. With the domestic construction industry struggling, there are deliberate moves to boost partnerships to drive trade through the country’s ports.

South Korea has offered its support for the development of a dry port in landlocked Laos through a Memorandum of Understanding that agrees to jointly implement port development co-operation projects and exchange human resources, such as port experts.

Another MoU from late last year agreed to the establishment of a basic plan for 34 ports nationwide in Vietnam, with cooperation of port development between the two countries.

That MOU saw South Korea pledge to help Vietnam to study the function of ports by region, direction, and timing of development as well as the design of the port infrastructure.

While mainland China’s terminals have enjoyed riding the long wave over the past few years, Hong Kong has been left in their wake.

Consultant Drewry reported this year that the Port of Hong Kong had dropped out of its ranking of the top five busiest shipping container terminals in the world for the first time since Drewry started compiling global port data 30 years ago. In 2006, the port handled 23.54m teu, but last year that had slipped to 19.64m teu, according to Drewry data.

Neil Davidson, the organisation’s senior analyst for ports and terminals, notes that since the 1990s, mainland Chinese ports such as Guangzhou and Shenzhen have seen massive expansion and modern facility investment and have turned into much more effective competitors to Hong Kong.

50 | APRIL 2019

Credit: Mary Crandall, Flickr, CC BY-NC-ND 2.0

Hong Kong’s grip slackens

8 Hong Kong’s higher handling costs put it at a disadvantage

“At the same time, these mainland ports are closer to China’s factories, which have seen huge growth since the opening up of China’s economy,” Mr Davidson told Port Strategy. “Much of Hong Kong’s traffic is barge volumes, carrying cargo to and from the mainland before being shipped

internationally, and these barge moves have been replaced in part by direct mainline vessel calls in mainland Chinese ports.

In addition, in Hong Kong dock labour costs are higher than on the mainland as the cost of living in Hong Kong is higher, and labour is more easily available in mainland ports. Plus, land is more expensive and scarcer in Hong Kong and there is pressure to use land for other purposes.

“These factors mean that terminal handling charges are higher in Hong Kong than in mainland ports,” says Mr Davidson.

Additionally, he notes that previously, the dock had the unique advantage of not being classed as a Chinese port and was thus “the only ‘Chinese’ port not subject to cabotage restrictions”. However, since 2016, several other key Chinese ports have been granted exemptions from these limitations.

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

BULK HANDLING: TRAINING

TAKING HANDLING TRAINING TO THE NEXT LEVEL

Credit: Liebherr

Modern training techniques go head-to-head with traditional teaching methods to improve bulk cargo handling. John Bensalhia reports

Cargo handling training is no longer the province of sitting down at a desk, reading a brick-sized textbook and scribbling reams of notes. Today’s training is varied, adaptable and modern. And there are choices: whether it’s original equipment manufacturer or third-party training, there are options for ports looking to give their employees a little more education.

In terms of OEM training, crane and machinery manufacturers provide a broad range of learning alternatives. Because the OEM obviously knows its own products, it can impart detailed knowledge on whichever product the port has bought. Liebherr is a case in point, providing different training methods for dry bulk cargo handling.

Key aspects covered by Liebherr for dry bulk handling include safety and general crane operation, both theoretical and practical. Another aspect is enhanced performance and efficiency, which has three main elements. “Users are informed about the optimised location of the crane – reducing move distances and slewing range,” says Philipp Helberg, marketing manager, maritime cranes. “Next, information and training are given for optimised/correct seating position based on ergonomics and giving the best view of an event.” Finally, there is information and training about the optimised use of the crane.

This covers areas such as reduction of impacts including overload, side lead or fishing, the correct filling of the grab, and the correct use of options such as SmartGrip.

EMPLOYING SIMS The Liebherr maritime crane simulator complements basic theoretical training, with special attention given to aspects such

52 | APRIL 2019

8 Liebherr provides different training methods for dry bulk cargo handling, including simulator training

as general crane and travel operation. “A selection of scenarios, coupled with the ability to vary the difficulty of the simulation, allows the participants to train in highly diverse operating situations, for example, the correct operating procedures and protocols during diverse weather conditions,” says Mr Helberg.

Simulators provide a very high-quality method of training, he adds, and as such are able to offer numerous advantages to operators. Simulator-based performance training is also available, providing advanced knowledge. Mr Helberg explains that this aims to improve operators’ capabilities regarding the safe and efficient use of a Liebherr mobile harbour crane. “The participants will learn about the operating limits of the crane, which naturally boosts productivity in real operation,” he says.

Using a simulator for crane handling of bulk cargo gives trainees the chance to develop and hone their skills and is far more practical and less time-consuming than training in a real crane. Time and money are saved, leaving operators more enlightened about using cranes to handle dry bulk cargo.

Other OEM companies are also making the most of what the modern world can offer in terms of simulator training. Konecranes’ simulator training encompasses a broad spectrum of scenarios such as extreme weather and potentially hazardous situations.

MacGregor’s offshore crane simulator training is one of a suite of training opportunities that OEM offers, which complements its Training Academy with hands-on training and theory sessions, available at both beginner and more experienced levels. A specially created 3D-simulated environment is created for users, who can experience different kinds of weather, wave directions and heights, and times of day or night.

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

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SAFETY FIRST Meanwhile, the Australian Maritime College Search’s Safe Bulk Loading Practice course is a tool that helps ports with the safe loading of bulk vessels. It's an important programme that helps to reduce the risk of accidents both in the port and on the vessel. All of the relevant skills and information required to ensure safe cargo transference between port and vessel (and vice versa) are covered in a selection of learning materials including online documents, videos, interactive images and 3D scenarios. A course can be undertaken from any location around the world and each participant works at their own pace; there are no specific start or finish dates. A final assessment involves a series of questions and if successful, the participant

Value of courses and seminars The Association of Bulk Terminal Operators co-organises bulk cargo courses, with the last one held in March at the University of Greenwich’s Wolfson Centre For Bulk Solids Handling Technology.

The two-day course explored important issues regarding the safe handling and storage of bulk materials, both in ports and out at sea. Setting the course in such an environment allows attendees to get the best of both learning worlds, gaining theoretical and practical knowledge. Because of the interactive nature of the course, the core issues of real-world bulk handling can be discussed, allowing a sharing of ideas and resources.

Organised seminars are also a useful way to gain a greater insight into dry bulk cargo through specialised subjects such as the Liquefaction of Bulk Cargoes, due to be held at Lloyd’s Maritime Academy in November 2019.

This event will look at the implications of liquefied bulk cargoes, coming at it from technical, financial and legal angles, and examine the pros and cons of current and future testing procedures.

54 | APRIL 2019

8 Using virtual reality techniques for crane operators handling bulk cargo gives trainees the chance to develop and hone their skills in a safe environment

gains an Australian Maritime College Certificate in Safe Bulk Loading Practice.

The same e-learning principle applies to Seagull Maritime’s two bulk cargo courses. A more general picture is provided in the Common Bulk Cargoes course, which covers the properties of three popular cargoes (coal, iron ores and grains) and the potential hazards and required safety precautions. The Loading Bulk Cargoes course provides tuition in safe, efficient handling, covering aspects such as correct documentation, cargo loading calculations, safety checklists, and loading and distribution. The course is suitable for both new employees and those requiring a refresher course.

OLD SCHOOL METHODS But while online tools and courses are available, traditional face-to-face teaching methods are still effective. Experienced and professional crane operators and trainers are provided, for example, by Liebherr, for performance training. “The trainers work for well-known and noted training centres with which Liebherr has a co-operation agreement,” says Mr Helberg.

The trainer supervises a maximum of three operators.

“During this period, he evaluates different operator skills and defines the individual training program for each operator to maximise efficiency. The Liebherr crane operator training is customer-specific and focuses on the most important issues, like safety and performance.”

Another alternative for ports is to ‘go back to school’. Specially prepared courses are an excellent method, not just in terms of gaining more knowledge, but in terms of pooling of resources.

Both OEM and third-party training provide solid support for those seeking expertise in handling dry bulk cargo. The training is designed to ensure that those who take part come away feeling more enlightened – whether it’s to do with equipment handling, safety or potential risks to the cargo.

“Our training offers a number of benefits for ports,” concludes Mr Helberg. “It’s customised, provides less downtime and higher efficiency.”

8 Specially prepared courses can build knowledge and pool resources

Credit: Pixabay Fudowakira, CC0

ONLINE SOLUTIONS Third-party companies can also give ports what they need when it comes to simulation solutions. Buenos Aires-based Terminal Zárate has called on the services of training solution provider GlobalSim to introduce two new crane simulators. The Essential Plus system is a simulation platform that provides a number of configuration choices, such as rubber-tyred gantry crane, mobile harbour crane and ship pedestal cranes. Meanwhile, a portable virtual reality system provides training for operators using a hydraulic telescopic crane. The two new simulators are due for installation in the second quarter of this year.

There are also third-party companies which specialise in creating training initiatives for ports, including courses which can be studied online. Eschewing the traditional classroom approach, training can be accessed at the press of a button – whenever and wherever.

Vistrato’s online products help boost efficient port management of dry bulk cargoes such as biomass, grain, iron ore and bauxite. A wide number of techniques are used, such as scenario-based simulations, multilingual voiceovers, information graphics and 3D animations that all help to build up knowledge of the field, while educating and evaluating participants. Participants are provided with feedback along the way, and ports can inform Vistrato about the type of training and set-ups that they would like.

Credit: Pixabay/Fill, CC0

BULK HANDLING: TRAINING

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

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Dellner Dampers is an innovative Swedish company that supplies solutions to mitigate vibrations and absorb kinetic energy. Standard and customised buffers and dampers for port side applications such as cranes, spreaders and more. All designed and produced in Sweden.

Tel: : +46-(0)157-45 43 40 Fax: +39 049 8848006 Email: info@dellnerdampers.se Web: dellnerdampers.se

Gantrex Founded in 1971, Gantrex is the global market leader in production, distribution, installation and maintenance of high quality crane rail solutions. Gantrex offers its products and services across the world and operates four production sites in Belgium, Spain, Canada and China. Gantrex products are used in many different applications including ports, shipyards and heavy industries.

DEME NV DEME has almost 175 years of experience in dredging and land reclamation activities, hydraulic engineering and executed major works of marine engineering infrastructure.

Scheldedijk 30 / Haven 1025 2070 Zwijndrecht â&#x20AC;&#x201C; Belgium T: +32 (0)3 250 52 11 Info.deme@deme-group.com www.deme-group.com

E LECTRIFICATION SOLUTIONS

Together we are Stronger and Better.

Together, Jacobs and CH2M bring unequaled ports and maritime technical excellence to solve your greatest challenges and capitalize on your greatest opportunities.

Together, we are now the worldâ&#x20AC;&#x2122;s largest port consultancy 22 Cortlandt Street New York, NY 10007 USA Tel: +212-608-3990 Patrick.King@ch2m.com www.ch2m.com/ports

Rohde Nielsen A/S Specialising in capital and maintenance dredging, land reclamation, coast protection, Port Development, Filling of Caissons, Sand and Gravel, Offshore trenching and backfilling Nyhavn 20 Copenhagen K. DK-1051 Denmark +45 33 91 25 07 mail@rohde-nielsen.dk www.rohde-nielsen.dk

D REDGING EQUIPMENT

C ONSULTING ENGINEERS

Gemini House Cambridgeshire Business Park, 1 Bartholomewâ&#x20AC;&#x2122;s Walk, Ely Cambridgeshire CB7 4EA England, United Kingdom (UK) Tel: +44 1353 665001 Fax: +44 1353 666734 sales@samson-mh.com www.samson-mh.com

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FĂĽrtoftvej 22 7700 Thisted, Denmark Tel: 0045 72 42 24 00 holding@cimbria.com www.cimbria.com

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

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

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

C RANE RAIL SOLUTIONS

Cimbria design, develop, manufacture and install custom-built solutions, from processing lines to large turnkey projects. We possess in-depth specialist knowledge in every field of crops and products with project engineering and process control as particularly demanding fields of competence.

C OMPONENTS

A/S Cimbria

DREDGING

Email: info@buttimer.ie Tel: +353 52 744 1377 Website: www.buttimer.com

LASE Industrielle Lasertechnik GmbH

C RANE COMPONENTS

Buttimer Engineering are a diversified mechanical engineering company with 40 yearsâ&#x20AC;&#x2122; experience, specialising in bulk materials handling systems and high-quality steel fabrication.

In 2014 Buttimer launched their DOCKSOLID brand, a range of market leading Standard and Environmental ship unloading hoppers.

â&#x20AC;˘ Portable pneumatic conveyors or grain pumps; â&#x20AC;˘ Pneumatic continuous barge and ship unloaders; â&#x20AC;˘ Mechanical continuous ship unloaders; â&#x20AC;˘ Mechanical loaders; Complete turnkey projects for port terminals

VIGAN Engineering s.a.

Rue de lâ&#x20AC;&#x2122;Industrie, 16 1400 Nivelles (Belgium) TĂŠl.: +32 67 89 50 41 www.vigan.com info@vigan.com

C ARGO HANDLING SYSTEMS

Buttimer Engineering

VIGAN manufactures dry agribulk materials handling systems:

C ONTAINER TERMINALS

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

Via Praimbole 38, 35010 Limena (PD) â&#x20AC;&#x201C; Italy Tel: : +39 049 7663100 Fax: +39 049 8848006 Email: sales@bedeschi.com Web: www.bedeschi.com

B ULK HANDLING

B ULK HANDLING

Bedeschi S.p.A

Stäubli Electrical Connectors AG As one of the leading manufacturers of quick connector systems, Stäubli covers connection needs for all types of fluids, gases and electrical power. +41 61 306 55 55 ec-ch@staubli.com www.staubli.com/en-ch/ connectors/

Email: info@gantrex.com Tel: +32 67 88 80 30 www.gantrex.com

VAHLE PORT TECHNOLOGY

To advertise in the

Port Strategy Directory contact Tim Hills on

+44 1329 825335 www.portstrategy.com

YOUR VISION â&#x20AC;&#x201C; OUR SOLUTION As a specialist for energy and data transmission VAHLE is active in the fields of ports, intralogistics, automotive, people mover and cranes. VAHLE offers innovative customized solutions based on wide experience.

Email: info(at)vahle.de Web: www.vahle.com

APRIL 2019 | 55

PRODUCTS & SERVICES: DIRECTORY

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

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

Technologielaan 13 Leuven, Belgium +32-16-38-9272 +32-16-38 9274 info@camco.be www.camco.be

Liebherr provides advanced maritime cargo handling solutions with a focus on quality, innovation and performance. With more than 50 years’ experience in vessel handling and container stacking, Liebherr supplies premium port equipment for highly efficient port operations across the globe.

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

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

Talweg 15-17, Helmstadt-Bargen 74921, Germany Tel: +49 (0)7263 - 91 29 0 Fax: +49 (0)7263 - 91 29 12 info@mrs-greifer.de www.mrs-greifer.de

Liebherrstraße 1, 18147 Rostock Rostock, Germany +49 381 6006 5020 maritime.cranes@liebherr.com www.liebherr.com

CERTUS provides Automatic Container Recognition systems in ports and terminals all across the globe. Our systems have consistently demonstrated high reliability and overall high OCR accuracy, streamlining customer operations.

Check out our Mobile OCR! www.certus port automation.com +31 78 6815196 The Netherlands

Sany Europe GmbH

Over 40 years experience constructing and manufacturing a wide range of grabs, including electro-hydraulic grabs (with the necessary crane equipment) radio controlled diesel hydraulic grabs, 4, 2 and single rope grabs all suitable for bulk cargo.

SANY offers reliable quality container handling trucks.

Benefit from the experience of over 4,000 reach stackers build over the last 12 years, with up to five year full machine warranty.

Schwartauer Str. 99 D-23611 Sereetz • Germany Tel:+49 451 398 850 Fax: +49 451 392 374 soj@orts-gmbh.de www.orts-grabs.de

Marconibaan 20 Nieuwegein Netherlands 3439 MS Tel: +31-30-6062222 Fax: +31-30-6060657 info@verstegen.net www.verstegen.net

56 | APRIL 2019

1-Stop is a globally recognised leader in innovating and delivering integrated solutions to increase productivity for the Port Community. We are committed to working collaboratively with all members of the community to deliver efficiency gains for everyone.

PO Box 204, Rockdale, NSW, 2216 Australia Tel : +61 2 9588 8900 (Intl) Email: info@1-stop.biz Web: www.1-stop.biz

To advertise in the The TT Club is the international transport and logistics industry’s leading provider of insurance and related risk management services.

TT Club specialises in the insurance of liabilities and equipment for multi-modal operators.

90 Fenchurch St London • EC3M 4ST Tel: +44 207 204 2635 london@ttclub.com www.ttclub.com

Port Strategy Directory contact Tim Hills on

+44 1329 825335 www.portstrategy.com

S IDELIFTER/SIDE LOADERS

Verstegen is worlds leading manufacturer of rope operated mechanical grabs for the dry bulk industry. Stevedoring companies and ports are using our grabs for handling all kinds of bulk materials.

I NSURANCE

Verstegen Grijpers BV

Sany Allee1 D-50181 Bedburg Tel: +49 2272 90531 100 Email: info@sanyeurope.com www.sanyeurope.com

1-Stop Connections Pty Ltd

ShibataFenderTeam Group ShibataFenderTeam is one of the leading fender manufacturers with 50+ years of group experience and an extensive global network.

As a specialist for customized fender solutions, they focus on vertical integration with in-house manufacturing and full scale testing, offering high quality products at competitive prices.

SFT offers the full range of marine fender products. info@shibata-fender.team www.shibata-fender.team

P OWER TRANSMISSION

Orts GMBH Maschinenfabrik

VISY Oy VISY takes pride in solving operational problems, specialising in gate automation and access control solutions in ports and terminals. Their solutions streamline processes resulting in saving money and increasing productivity.

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

M ARINE FENDERS

G RABS

Liebherr-MCCtec Rostock GmbH

MRS Greifer GmbH

I T PORT AUTOMATION

Box 720, 931 27 Skellefteå, Sweden Tel: +46 910 870 00 info@alimakhek.com www.alimakhek.com

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

I T PORT AUTOMATION

H ANDLING EQUIPMENT

E LEVATORS

Alimak Hek AB Alimak Hek, the leading manufacturer of rack and pinion elevators, have been successfully servicing ports since the early 1970’s with close to 3,000 elevators installed, providing easy access for crane drivers, which enhances productivity and profit. Today, the company’s crane elevators are installed in almost 100 countries around the world.

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

We Keep Your Vital Business Moving!

Rheinstrasse 27 + 33 Weil am Rhein 79576 Germany Tel: +49 (0) 7621 662 0 Fax: +49 (0) 7621 662 144 info.de@conductix.com www.conductix.com

Hammar Maskin AB Hammar Maskin AB is developing, manufacturing and marketing Sideloaders, also known as Sidelifters, Swinglifters or Self loading trailers, under the brand name HAMMAR™.

Buagärde 36, Olsfors 517 95 Sweden Tel: +46-33 29 00 00 Fax: +46-33 29 00 01 info@hammar.eu www.hammar.eu

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

PRODUCTS & SERVICES: DIRECTORY

Bromma is the industry’s most experienced spreader manufacturer, known worldwide for crane spreaders of exceptional reliability.

Today you find Bromma spreaders operating in 97 out of the top 100 ports worldwide.

Malaxgatan 7 , P.O. Box 1133 SE-164 22 Kista, Sweden Tel: +46 8 620 09 00 Fax: +46 8 739 37 86 sales@bromma.com spareparts@bromma.com

Coda Octopus is a global leader and specialist in underwater technologies.

Our patented flagship product, the Echoscope®, is the world’s only real-time 3D volumetric imaging sonar, giving operators the ability to visualize and map the subsea scene in real-time 3D.

Port Strategy Directory contact Tim Hills on

+44 1329 825335 www.portstrategy.com

The Brain of Logistics With more than 30 years experience in IT Solutions and Business Operation Consultancy DSP offers a large portfolio of professional services and products to support terminal operations processes and system.

DSP Data and System Planning SA Via Cantonale 38 6928 Manno, Switzerland Tel: +41 91 230 27 20 Fax: +41 91 230 27 31 info@dspservices.ch www.dspservices.ch

Master Terminal TOS from Jade Logistics solves the complex problem of managing a variety of mixed cargo within one system, providing the agility you need to manage your port. Designed to cater for all cargo types, it is the TOS of choice for mixed cargo terminals.

5 Sir Gil Simpson Drive Christchurch 8053 New Zealand PO Box 20152 E: info@jadelogistics.com W: www.jadelogistics.com

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

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

TGI Maritime Software is a Terminal Operating System editor and integrator specialized in the support of Small to Medium Terminals. Its expertise is built on 34 years of experience within the maritime sector. TGI provides comprehensive services to its customers all along their projects. OSCAR TOS and CARROL TOS have already been successfully handled by 40 container and RoRo terminals worldwide.

Tel : +33 (0)3 28 65 81 91 contact@tgims.com www.tgims.com

Providing complete solutions for your container cranes Refurbishments & Upgrades – Maintenance – Training – Inspections & Audits – Safety Lashing Cages – Spares & Service Support www.wcs-grp.com/ info@wcs-grp.com T: +971-4-8838980

T RACTORS

To advertise in the

T ERMINAL OPERATING SYSTEMS

ELME Spreader AB ELME Spreader, world’s leading independent spreader manufacturer supports companies worldwide with container handling solutions that makes work easier and more profitable. Over 18,000 spreaders have been attached to lift trucks, reach stackers, straddle carriers and cranes.

Stalgatan 6 , PO Box 174 SE 343 22, Almhult, Sweden Tel: +46 47655800 Fax: +46 476 55899 sales@elme.com www.elme.com

Worldwide: +44 131 553 1380 sales@codaoctopus.com US +1 863 937 8985 Salesamericas@codaoctopus.com www.codaoctopus.com

Navis understands that as ships get larger and operational processes become more complex - efficiency, collaboration and productivity are essential. As a trusted technology partner, Navis offers the tools and personnel necessary to meet the requirements of a new, and ever-evolving, global supply chain.

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

T ERMINAL OPERATING SUPPORT

Coda Octopus

T ERMINAL OPERATING SYSTEMS

S UBSEA

S PREADERS

Bromma Conquip

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

Hochhäuser Str 18 97941 Tauberbischofsheim, Germany Tel: +49 9341 8990 sales@mafi.de www.mafi.de

Terberg Special Vehicles develops and manufactures customised tractors. Our terminal, RoRo, industrial and road/rail tractors operate in ports, distribution centres, shunting yards, industry and construction sites worldwide.

We believe efficient operations depend on high quality, easy maintenance and operator comfort.

Benschop – The Netherlands Tel. +31 348 45 92 11 terbergspecialvehicles.com

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

APRIL 2019 | 57

Credit: DP World

POSTSCRIPT

POSORJA PROJECT UNDER FIRE

DP World is facing allegations of irregularities associated with the award of its multipurpose port project at Posorja, Ecuador.

A greenfield development, these latest allegations follow on from objections raised to the project on environmental grounds

58 | APRIL 2019

Following a Complaint filed by Dr Carlos Figueroa, a well-known political activist and medical doctor in Ecuador, the country’s Attorney General has initiated an investigation into the award of the 50-year concession for the Port of Posorja to DP World, the international terminal operator.

One of the main points in the Complaint filed by Dr Figueroa is the fact that the concession was awarded to DP World without any international tender, so a direct award without other parties being invited to bid. Such an award was said at the time to be permitted as it was a direct negotiation between one sovereign state and another. The point is made by objectors to the project, however, that DP World is not a wholly-owned state company as it has private sector investors in it and as such it should not have qualified for such an award. Thus the award contravenes the qualifying legislation.

It is also well known that other major players in Ecuador’s port sector are unhappy with the terms of the Posorja concession with these said to be very favourable and ‘out of sync’ with those of other terminal operators including those given to Yilport, the Turkish international operator, for its new multi-phase Puerto Bolivar project, which includes the construction of a new container terminal. Like the Port of Posorja project Puerto Bolivar is now under development and is based on a 50-year concession. Allegations are additionally made that clauses within the DP World proposal for Posorja sought to effectively constrain competition through a package of measures that in key respects limited the ability of competing terminals to compete on an even footing with the port of Posorja.

Another major issue raised widely in local media is the subject of returns to Ecuador. The DPW concession, it is said, provides for Ecuador receiving 1% of gross income from port operations for the first 10 years, 2% for the next 10 years, 3% for the following 10 years and 5% of gross income from

8 Investigations have been initiated by Ecuador’s Attorney General into the award of the concession for the port of Posorja now under development

year 31. It is alleged, these returns are much lower than those achieved from other port concessions in Ecuador and particularly those related to container handling activity.

In opening the investigation into the Posorja concession award, local media report that the Prosecutor’s office has requested the Secretariat of the Presidency (the concession was awarded under the previous Presidency of Rafael Correra), the Port Authority of Guayaquil and the Ministry of Transportation to make available relevant copies of minutes of meetings, decrees, memoranda of understanding, the technical and economic proposals of DP World and other documents.

VIOLATION OF LAW AND DUE PROCESS The central contention of Dr Figueroa is that several state institutions and their officials violated the law and due process with DP World being the beneficiary of this. The question is also raised of the motivation behind the transfer of sums amounting to around $500,000 to a partner of Alexis Mera in the law firm Romero Menendez. Mera was the former legal secretary of the Presidency under Rafael Correa.

The preliminary investigation now underway of the Port of Posorja concession also has an environmental dimension to it. The Attorney General has asked the Office of the Comptroller of the State to assess if irregularities can be identified. It should be noted, however, that an initial legal action taken in this respect was not upheld.

All the allegations identified above, and others remain to be proven. It is nevertheless true to say that they have caused quite a stir in Ecuador and generally it promises to be an investigation followed with great interest.

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

Worldwide performance With a highly professional team Rohde Nielsen A/S operates worldwide, r;u=oulbm] 0;-1_ mo ubv_l;m|ķ Ѵ-m7 u;1Ѵ-l-ঞomķ rou| 7; ;Ѵorl;m|ķ o@v_ou; |u;m1_bm] -m7 0-1hCѴѴbm]ķ -m7 1-rb|-ѴŊ -m7 l-bm|;m-m1; 7u;7]bm]ĺ

Rohde Nielsen A/S

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Nyhavn 20

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Phone: +45 33 91 25 07

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E-mail: mail@rohde-nielsen.dk

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