Port Strategy July/August 2022 by Mercator Media

JULY/AUGUST 2022 VOL 1022 ISSUE 6

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Russia Turns East | Coastlink Plots Priorities | IAPH: Expect the Unexpected

TRANSSHIPMENT – EVOLVES CHINA PORT SECTOR ANALYSIS KENYA ALLEGATIONS SUDAN UNCERTAINTIES

PORTSTRATEGY INSIGHT FOR PORT EXECUTIVES

The international magazine for senior port & terminal executives EDITORIAL & CONTENT Editorial Director: Mike Mundy mmundy@portstrategy.com Features Editor: A J Keyes keyesj186@gmail.com Consultant Editor: Andrew Penfold andypenfold@yahoo.com

VIEWPOINT MIKE MUNDY

Concessions: Proven Processes have the Best Potential to Deliver

Government to government led port concession deals are now surfacing but there is little evidence to suggest this is a proven approach

There are two stories in this issue, one relating to Kenya (p26) and the other Sudan (p27), which highlight government to government deals as a path to securing port concessions. Maybe these two examples and this sort of approach in general have a value to them but it is hard to see any tangible evidence of this. Indeed, this begs the question, are there any such deals that have worked other than in the military theatre of operations? The Kenya deal referred to in this issue appears to be running into what many might describe as a political minefield with opposition interests squaring up to the outgoing government over what it suggests is a secret and corrupt deal incorporating multiple port assets. Clearly, this story has a while to run yet and there will be more accusations followed by counter claims as well as other parties such as trade unions getting involved. Perhaps the thinking is the ‘prize is worth the pain’ by the proponents of this deal but given its political high profile, the fact that it was being shaped below the radar and Kenya’s past record of corruption in its port sector, it is surprising that endeavouring to secure port concessions by a government to government route under the mantle of a ’Economic Cooperation Agreement’ with the United Arab Emirates (UAE) is considered to be a viable option. The ingredients are there that make it an ‘accident waiting to happen,’ particularly if news of the deal broke in the last days of the current government, as has proved to be the case. The Sudan project, involving Abu Dhabi Ports, also has a lot of misfire potential about it, not least that for it to proceed it would have to ignore the exclusivity agreement in a legally binding concession secured earlier with the Government of Sudan. Equally, it will be interesting to see how the unions and other interested parties in Sudan’s existing main port, port Sudan, react to the idea of an entirely new competing entity. As the existing port workforce has proved previously, it has the power to significantly influence government thinking when it sets its mind to it. The fact that that what can be termed government to government deals take place not on a local but a national stage significantly ups the potential for such projects to become very complicated. As the two stories in this issue convey, there are also usually a raft of other factors that come into play, which are diﬃcult to manage and have the potential to reap significant damage. Properly managed international tender processes, open to properly qualified parties, conducted according to a tried and tested set of rules, are the cornerstone of successful concession processes on a global basis. The positive track record of this approach speaks for itself as does the limited success of alternative approaches.

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

Regular Correspondents: Felicity Landon; Stevie Knight; John Bensalhia; Ben Hackett; Peter de Langen; Barry Parker; Charles Haine; AJ Keyes; Andrew Penfold; Oleksandr Gavrylyuk Johan-Paul Verschuure; Phoebe Davison Production David Blake, Paul Dunnington production@mercatormedia.com SALES & MARKETING t +44 1329 825335 f +44 1329 550192 Media Sales Manager: Tim Hills thills@portstrategy.com Marketing marketing@mercatormedia.com Chief Executive: Andrew Webster awebster@mercatormedia.com PS magazine is published monthly by Mercator Media Limited, Spinnaker House, Waterside Gardens, Fareham, Hants PO16 8SD UK t +44 1329 825335 f +44 1329 550192 info@mercatormedia.com www.mercatormedia.com

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JULY/AUGUST 2022 | 3

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CONTENTS JULY/AUGUST 2022 VOL 1022 ISSUE 6

portstrategy.com

Russia Turns East | Coastlink Plots Priorities | IAPH: Expect the Unexpected

NEWS 17 Mombasa Phase 2… …but debt issues

17 Transnet Realities Not privatisation

19 Tallinn Terminal

Oshore wind focus

TRANSSHIPMENT – EVOLVES CHINA PORT SECTOR ANALYSIS

19 Roerdam Support For Quebec port

KENYA ALLEGATIONS SUDAN UNCERTAINTIES

On the cover The Port of Salalah, Oman is a leading transshipment hub which includes its comprehensive service package handling container traﬃc to/from Indian Ocean ports. The port’s facilities include seven container berths with draughts of up to 18m alongside. Our article on p18 discusses the evolution of transshipment with particular reference to its growing role in serving peripheral markets.

10 Mobile Launch

Liebherr’s latest MHC

10 Automated Straddle Under test at Aarhus

11 Auckland Pulls Plug Red light for automation

11 Saint John Upgrade Equipment package

14 Awake.Ai & Intel Building benefits

14 COSCO Joins GSBN Digital solutions

15 5G Competition

UK Government initiative

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Online portstrategy.com 5 Latest news 5 Comment & analysis 5 Industry database 5 Events Social Media links LinkedIn PortStrategy portstrategy YouTube Weekly E-News Sign up for FREE at: www.portstrategy.com/enews

15 Reefer Runner

Monitoring system

17 Tyne Taps 5G

Comprehensive enabler

17 Paperless Pearl River

Barge imports streamlined

REGULARS 12 The New Yorker

Data harmonization hopes

12 The Analyst

ESPO takeaways

13 The Economist

Congestion solution?

JULY/AUGUST 2022 FEATURE ARTICLES 18 Transshipment Evolves

Indian Ocean case study

21 China: Balance of Power

Movement detected

22 Northern Challenges

North China strategies

25 Rolling With The Punches

South Korea game plan

26 Kenya Allegations Port concession controversy

27 Sudan Uncertainties New port doubts

28 Russia Turns East Eastern ambitions

31 Coastlink Plots Priorities Development discussions

32 Digital Innovation Key initiatives

33 Green Goals

The Tyne agenda

35 Expect the Unexpected

IAPH market analysis

36 Clean Fuel Opportunities

Port business potential

38 Hydrogen Pioneer Roerdam hydrogen push

42 Postscript

Summer of Discontent

13 The Strategist

PR: Knowledge is power

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

JULY/AUGUST 2022 | 5

The new LHM The best LHM we ever made. For the future of maritime cargo handling. www.liebherr.com

Mobile harbour crane

PORT & TERMINAL NEWS

MOMBASA C.T. PHASE TWO COMPLETED… June saw the on-time completion of the phase 2 construction of the port of Mombasa’s Second Container Terminal. This phase, when operational, is designed to add new capacity equivalent to 450,000TEU/yr and incorporates one new 300m berth. Phase One, commissioned

in 2016, introduced 550,000TEU/ yr of new capacity and overall the Phase Two addition will bring Mombasa’s total annual container capacity up to 2.1mTEU/yr. As with the Phase One development at the time of its introduction, there has been considerable speculation

about whether Phase Two will be oﬀered for operation by the private sector. Traditionally, Mombasa port unions strongly oppose this idea, however, with a national election scheduled for August 9 the matter is unlikely to be settled in the short-term.

…BUT DELAYS IN CARGO DELIVERY DUE TO DEBT RECOVERY June also saw a dispute surface in Mombasa between the Kenya Ports Authority (KPA) and two groups: the Kenya Railways Corporation (KRC-SGR) and shipping lines resulting in delays in cargo delivery. KPA suspended the release of cargo as a path to securing debt payment from shipping lines using the standard gauge

railway to transport cargo to/ from Nairobi. The action taken applied to debts that were overdue by over 30 days and had the objective of clearing these up prior to the end of the government’s financial year which closed at the end of June. The Kenya Transport Association responded to the situation by suggesting that at

least in part it had come about as a result of government making use of the new standard gauge railway compulsory for container movements. It said: “The government has continued to…force railing of goods from Mombasa to Nairobi at higher rates than road transport rates and therefore making the SGR a monopoly.”

It was made clear earlier this year when Pravin Gordhan, South Africa’s Public Enterprises Minister said: “Transnet is not being privatised. Nothing within Transnet is being privatised. However, we are being faced with the reality that Transnet will not be able to fund every aspect of its plans for investment in development and maintenance,” In eﬀect, the government is looking for help to bail Transnet out of a bad situation and to rebuild for a bigger and brighter future. Easier said than done, it is well known that while at government level there is recognition of the need for private sector investment and expertise at a grass roots level – the workforce – there is massive resistance to the idea. It thus basically remains to be seen if the concept will gain traction. Presently, indications are the process for enlisting private sector involvement is not moving with any real alacrity. Switch to the rail sector, the other important arena of operations of Transnet, and there is also an indication here of the inherent reluctance of Transnet to engage with the private sector. The African Rail Industry Association (ARIA) has recently publicly stated that it has serious concerns regarding the restrictive terns and conditions Transnet has applied to use of the national rail

TRANSNET: PRIVATE SECTOR PARTICIPATION NOT PRIVATISATION

BRIEFS Renewable Power Japanese shipping and logistics companies, Kawasaki Kisen Kaisha (K Line) and Daito Corporation, have commenced operation of a dedicated finished vehicle terminal that is powered by renewable energies from electric and wind sources. The new K Line terminal, Yokohama Daikoku C-4 Terminal, located in Tsurumi-ku, Yokohama, has a 350m pier, 15m water depth and is supported by a yard able to accommodate up to 8000 units.

CDPQ’s DPW Stake

Canadian investment group, CDPQ, is taking a minority stake in DP World’s Jebel Ali Port, Jebel Ali Free Zone and National Industries Park for a reported figure of US$5 billion. Other long-term investors are also expected to take up the opportunity to acquire an additional stake valued at up to US$3 billion. This transaction reportedly implies a potential total enterprise value of around US$23 billion for the three businesses.

Beirut Auction

network by private third-party freight operators. The recently launched National Rail Policy incorporates as a key element acceptance of private sector investment and participation, and following on from this economic regulations that ensure fair regulated access to South Africa’s rail networks. In the view of ARIA, however, the conditions for fair access have not been achieved and it cites a raft of reasons to back up this view. These include the reality that only two-year contracts have been oﬀered (who would invest based on a two-year contract duration?), that operating slots are

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

8 ARIA suggests Transnet is eﬀectively limiting the potential for private sector investment in rail operations – shape of things to come in the port sector?

oﬀered on a voetstoots basis, that Transnet has reserved for itself special ‘grandfather rights’ and that only a limited sector of the network is being made available with no transparency in fee calculation etc.etc. In summary, ARIA says: “This approach oﬀers no long-term prospects for potential investors.” Certainly not encouraging signs for private sector investment in Transnet ports!

The Government of Lebanon has confirmed the launch of an auction to reconstruct the Port of Beirut following the largescale explosion in August 2020. It said that reconstruction will “start after the completion of a master plan prepared in cooperation with the World Bank” with estimated costs of up to US$100 million, in addition to a further US$25 million to address environmental damage caused. The blast killed more than 200 people and injured a further 4000.

JULY/AUGUST 2022 | 7

PORT & TERMINAL NEWS

Baie Comeau enlists Rotterdam support

TALLIN TO ESTABLISH SPECIALISED CAPACITY TO SERVICE OFFSHORE WIND FARMS 8 The Port of Tallinn is introducing specialist capacity to support oﬀshore wind farm development

The Port of Tallinn, Estonia is to construct a new 310m quay, with a 10ha supporting yard to service the oﬀshore wind industry. The €53 million project is located in Paldisiki South Harbour and is intended to meet future demand for this activity in the Baltic Sea region. The European Commission is co-funding the project by providing €20 million in financing. The new quay and back-up yard space is scheduled to be available in the Summer of 2025

and will be configured to support special purpose shipping vessels that operate in the oﬀshore wind industry, while ensuring that manufacturing and storage of wind generators and blades can be handled on site. Ro-ro vessels will also be able to be handled. The project complements the objective of establishing regional wind farms intended to be operational from 2028, although this date is subject to the Tallinn terminal commencing activities on time.

This latest announcement follows confirmation in 2021 that Enefit Green, a subsidiary of the Eesti Energia Group, owned by the Estonian state, was planning to assess the potential for oﬀshore wind development within the Estonian part of the Gulf of Riga, as part of creating the 1.1 GW Hiiu oﬀshore wind farm which will comprise 74 wind generators of 15 MW capacity.

New BPA Agenda

ADP Diversification

Green San Pedro Date

The British Ports Association has outlined its new agenda for UK ports with a vision incorporating an expansion of the recently launched freeports policy. In addition, it identifies business rates relief and enhanced capital allowances, with prioritised funding for port connectivity as desirable. A closer working relationship with the UK government for the exploitation of ports is also desirable.

AD Ports Group is further diversifying cargo activities. The company has signed a strategic agreement with Alexander Global Logistics of Germany to develop a pulp and paper products hub at its flagship facility, Khalifa. Stage 1 will be operational in Q3 2022 with 20,000m2 of quayside warehousing for forest products distribution. In 2021, ADP signed a 50-year land lease with Anchorage Investment for grain storage and processing.

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

The Long Beach City Council, USA has unanimously passed a “Ship It Zero Resolution 6-0” that is targeting 100 per cent zero emission shipping by maritime importers by 2030. Importantly, this announcement not only unites both Long Beach and Los Angeles ports, but also openly states a target date of 2030 for the ports, which coincides with Long Beach signing up to the Shanghai-Los Angeles Shipping Corridor project.

The Port of Baie Comeau, Canada has joined forces with the Port of Rotterdam, The Netherlands to explore the potential for its development and future cargo growth opportunities. The two ports have announced a plan to undertake a Master Plan Study, which will assess cargo flow activities and technical port infrastructure at the Quebec located port. There will be a specific focus on the production of, and potential use of, green energy, which includes wind and solar power, bioenergy and green hydrogen. The Société du Plan Nord is supporting the development plan through the investment of CAD$250,000, which has been provided under the Government of Quebec’s 2020-2023 Northern Action Plan. Located on the East Coast of Canada, the port of Baie-Comeau recently changed ownership from Transport Canada to the BaieComeau Port Management Corporation. It is located on the North Shore of the Saint Lawrence River, near the mouth of the Manicouagan River in the Baie des Anglais. Current key cargo activities include a Cargill cereals terminal (the largest storage capacity for cereals in Canada) and an Alcoa aluminium smelter.

BRIEFS Port Proposal

Peter DeFazio, a US Congressman, has openly sent a letter to US President Biden suggesting that a new, largescale container port for the US West Coast is developed at Coos Bay - with the cost met by US Federal funds. “Establishing a container port in Coos Bay, Oregon would immediately increase West Coast port capacity by up to 10 per cent, create an estimated 7000 jobs, and, dramatically lower greenhouse gas emissions.

JULY/AUGUST 2022 | 9

EQUIPMENT NEWS Liebherr has launched its new generation mobile harbour crane which it states represents a ground-breaking technical development and incorporates updates that make it truly “fit for the future.” The company says that the most decisive innovation is the implementation of the “Master V” crane control system which, together with an even more efficient software architecture, provides the basis for integrating future assistance and partial automation systems into the crane in the long term. Overall, Liebherr states that the new crane has become much more digital, networked, and smarter. Examples of improvements highlighted by Liebherr include how the position of the outrigger system is now monitored by sensors and is thus part of the internal data processing, while the use of a new outrigger base in the field only requires a software update by Liebherr and thus offers more flexibility. Another practical advantage is the variable use of digital IP cameras for better monitoring of the crane interior as well as the external crane environment. Plus, the new crane control is supplied by an independent power circuit, which means the whole crane can be continuously monitored by cameras and efficiently protected without the crane ignition being activated. The Liebherr Pactronic 2.0 hybrid system is the second generation of a hydraulic drive

BRIEFS Heading New Konecranes

xxx Konecranes has launched a range of new, large batterydriven container handling machines. The new units being released include the Battery RTG, the Battery Noell Straddle Carrier and the allelectric Gottwald Generation 6 Mobile Harbour Crane. This latest development represents the cornerstone of the company’s aims to develop and introduce sustainable solutions for port operations on a global basis.

10 | JULY/AUGUST 2022

LIEBHERR LAUNCHES SMART, NEW, FUTURE PROOF MHC 8 Liebherr’s new mobile crane is smarter, more eﬃcient and designed to meet the next generation of cargo handling requirements

system using hybrid technology and now an accumulator serves as an energy storage and provides support when needed by supplying additional,

temporarily stored power. There are also two operating modes, depending on the current work situation. In Boost Mode, the Pactronic 2.0 acts as a power

amplifier, lifting speeds are significantly increased - without the aid of a larger or even additional engine for more power. This improves eﬃciency and delivers reduced cargo-handling time. The second option is Green Mode, which is designed to save fuel or power consumption and to reduce CO2 emissions. During the lifting process, the Pactronic supports the main unit to such an extent that less power is required by the main drive, despite the lifting speeds remaining the same. As a result, absolute fuel or power consumption and emissions are reduced.

APMT AARHUS AUTOMATED STRADDLE PILOT PROJECT APM Terminals Aarhus and ZPMC are collaborating to develop new automated straddle carrier units. Chinese state owned manufacturer, ZPMC, and APM Terminals Aarhus are testing and developing a new straddle unit at the facility in Denmark, before similar straddles are then built for use at other APM Terminals around the world. Dennis Lenthe Olesen, Managing Director, APM Terminals Nordic, notes: “We are extending our collaboration around intelligent port technology, which is great.

Automation will bring a lot of value and great potential because it enables us to deliver consistent service to our customers and to be more eﬃcient and safe. There is a drive to utilise technology to futureproof our development and to enable us to provide world-class operational eﬃciency, today and for the future.” Dan Iversen, Operations Deployment Lead at APM Terminals Aarhus, further notes: “Right now, we are testing the straddle carrier in a small, enclosed area. Test results are

analysed and evaluated regularly to optimise the technology to fit our operation.” Despite the move towards automated operations, APM Terminals Aarhus is also sticking with traditional straddle units. The terminal has taken delivery of six new units, taking the total number of straddle carriers currently in operation to 36. The move follows the introduction, last year, of 180 new reefer plugs to keep pace with refrigerated demand. Reefer volumes were up by seven percent in 2021.

Heading New from SANY

Heading Electric CIT

Heading Kalmar Upgrade

xxx SANY Europe, part of SANY Heavy Industry from Changsha, has launched a new 25-tonne heavy duty forklift truck. The SCP250G5 is equipped with a 185 kW Volvo power unit complying with emission standard EU Stage V. A high lifting speed and powerful acceleration from a four-speed Powershift transmission with torque converter and automatic gear shift are key features. The new cab design is 40 mm wider than earlier units.

xxx Côte d’Ivoire Terminal (CIT) is going electric. The facility, located in the Port of Abidjan, has received six electric powered rubber-tyred gantries and 14 electric terminal tractors. The new terminal remains on target to be operational in November 2022 and represents the second container terminal at the port, developed and operated by a consortium of Bolloré Ports and APM Terminals. All equipment is being provided by ZPMC.

xxx Kalmar is upgrading and expanding its manufacturing plant in Ottawa, (KS), which is home to the company’s terminal tractor manufacturing operations in North America. The US$21.5 million investment will realise a doubling of the plant’s annual production capacity. Kalmar notes that this investment is being “driven by the growing demand from the logistics industry for eco-eﬃcient equipment solutions that do not rely on fossil fuels to operate.”

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

EQUIPMENT NEWS

AUCKLAND PULLS PLUG ON AUTOMATION The Ports of Auckland is scrapping plans to introduce automation at its Fergusson Container Terminal. The project was first aired in 2016 and originally had a date of late 2019/early 2020 for operations to commence. Now, with completion more than two years overdue, the port has decided to pull the plug on the initiative. The original aim of the project was to future-proof the port with this including automation of some aspects of the landside straddle operation to further boost capacity. Jan Dawson, Chair, Ports of Auckland Board, outlined the rationale for the decision. “We have made this decision after careful consideration of the current status of the project, advice from independent experts, and the work required to achieve full terminal automation. “Our review indicated that despite the best eﬀorts of our team and our supplier, the project is experiencing continuing delays to full terminal roll out, the system is not performing to expectations, and we do not have confidence in the projected timeline or cost to completion. “With these uncertainties and

the need to transform the Port’s performance, the Board has determined the best course of action is to cease automation of the container terminal.” To put the decision into perspective, Roger Gray, Chief Executive, Ports of Auckland, confirmed some of the cost implications. “We will, however, have to write-oﬀ approximately NZD$65 million (US$42 million) in investments which will no longer be used, mainly the automation software and guidance system,” he explained, but did add that the decision does not mean the end of investment at the port. “ Further, the end of automation does not mean the loss of all the investment and work that went

8 There will be no automated straddles in Auckland for the foreseeable future

into the project overall. The new infrastructure built as part of the project – for example the new wharf and cranes – provides extra capacity which is essential for future growth. The COVID-19 and Omicron variant have impacted the port’s container throughput. The last full-year figure (the end of June 2021) was 818,238TEU, down on the previous 12-month period figure of 880,781TEU. The second half of 2021 saw 364,140TEU handled, up slightly on the 358,899TEU for the same period 12 months earlier.

BRIEFS Saint John Boost

DP World is adding a range of new equipment to its Port of Saint John container terminal located in New Brunswick, Canada. The company is introducing two super-post-Panamax quay cranes (capable of servicing vessels with up to 21 rows of containers on deck), over 12 extra reach stackers and supporting internal transfer vehicles and container trailers. An upgrade to the terminal operating system, a new truck gate system and an enterprise-wide financial management system are also planned.

Ngqura Fenders

The South African Port of Ngqura has aligned diﬀerent fender systems at four diﬀerent berths. A new requirement from Transnet National Port Authority (TNPA) requires all fenders must be of the same type, requiring Ngqura to replace half of its fender systems. ShibataFenderTeam delivered 15 sets of Element Fender Systems (H 1000mm x L 1200mm) with steel panels measuring 2800mm x 4000mm, of which 10 sets are installed at the berths and five sets kept in stock as spare parts.

Marghera Mobile

8 Bruks Siwertell has completed the installation of a new high-capacity Siwertell ship unloader at Colonial Group’s Georgia Kaolin Terminals, in Savannah (GA) on the US East Coast. The fully enclosed screw-type system now delivers very efficient dust-free cement handling, while the flexibility of Siwertell unloader technology enables it to handle various designs and capacities of geared vessels, and supports the company’s switch from bagged cement deliveries to bulk. The Siwertell 490 F-type ship unloader offers high through-ship efficiencies and a rated cement handling capacity of 800t/hr, discharging vessels up to 55,000 dwt.

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

FHP Group has confirmed a new order for an ecoeﬃcient Generation 6 Konecranes Gottwald Mobile Harbour Crane for its Multi Service Terminal at Marghera Port, located near Venice in northern Italy. The order was booked in April 2022 and delivery of the new unit is scheduled for November 2022. The new crane has a working radius of 51m and a capacity of 125 tons and is being purchased to provide additional capacity to support bulk cargo operations.

JULY/AUGUST 2022 | 11

THENEWYORKER BARRY PARKER

As we move into the second half of 2022, economic and political storm clouds have been obscuring the horizons. If some (but not all) of the forecasters are to be believed, economic conditions may lead to a dropoﬀ in cargo flows. However, cargo planners are now thinking about “just in case” rather than “just in time,” a response to more and more frequent disruptions which might lead to more cargo flowing. Still, shipping goes on; all parts of the maritime markets are seeing discussions on decarbonisation and digitalisation. On the emissions front, new rules taking eﬀect at the beginning of 2023 will have dramatic impacts. On the data side, vendors of ship management software are hoping to infuse “machine learning” and “artificial intelligence” into their wares. Port planners need to keep scanning their horizons as these items will be impacting the movements of vessels.

DECARBONISATION, DIGITALISATION AND OPTIMISATION CROWD IN

Much of the discussions of new regulations on vessel emissions circle back to a simple fact- a tried and true method of reducing CO2, along with Nox and Sox, is to slow vessels down. But this is part of the bigger solution. These days, “optimisation”- a popular subset of vessel software that combines routing with fuel saving, will enable ships to score

8 Data harmonisation, one of the keys for smoothing out cargo flows

higher in various rating schemeswhich are now looked at closely by cargo owners. Some prescient (perhaps…we will only know a few years out!) analysts have suggested that freight bookings will be driven by the established metric- the price per box (or per

tonne), but also by a new component, which is the carbon pricing element. In this new and highly complicated world, the landside transport providers, and also the ports, will play a pivotal role. One much talked about aspect of the new paradigms for ship operations (and fuel saving) is that vessel arrival times would be more closely matched to availability of berths (and, in a well-tuned data eco-system, with landside storage and intermodal interfaces). In the wake of recent work by the Federal Maritime Commission, and other agencies looking into supply chain disruptions of the past two years, there will be a greater focus on harmonising data in order to smooth out cargo flows. All of this will get more muddled, before it gets sorted. Port planners, and their web/data folks, will need to be watching closely; hopefully digitalsation, decarbonisation and optimisation can all flow smoothly.

THEANALYST PETER DE LANGEN

FOUR TAKEAWAYS FROM THE ESPO ‘TRENDS IN EU PORTS’ GOVERNANCE 2022’ REPORT The European Seaports Organization (ESPO) periodically assesses developments in port governance, and recently published its findings for 2022. The following four takeaways are relevant. First, the ports have embraced the concept of a port business ecosystem. The ‘port managing bodies’ (PMBs - the term ESPO uses) see themselves as ‘active managers of an extensive port ecosystem’. With apologies for the focus on ‘semantics’: my only concern is their use of ‘managers’ instead of ‘developers’. In my view, they can rightly claim to be the developers of the port business ecosystem, but it is a bridge too far to claim to manage

12 | JULY/AUGUST 2022

it. After all, the third parties in the ecosystem often are large and independently operating multinationals (like APMT, Amazon, Cargill, and Shell) with major investments in the port. The PMBs certainly are not ‘managing’ their ecosystem in a similar way as Apple or Amazon manage their ecosystem. Beyond semantics, a focus on developing is, in my opinion, appropriate; the port business ecosystem really takes shape through the active development of land, port infrastructure and additional services. Second, the study demonstrates ports are actively aiming to broaden their ecosystems. Compared to 2016,

an increasing share (73 per cent compared to 66 per cent) of port managing bodies host industrial plants. Most ports have a strategy to develop circular economy activities in the port, with the vast majority of ports (86 per cent) willing to take up a role as facilitator. Third, there is a trend towards consolidation of port development. In 2022, half of European port managing bodies manage two or more ports, compared to 44 per cent in 2016. Important steps have been taken in North Sea Port (Ghent, Vlissingen, Terneuzen), HAROPA PORT (Le Havre, Rouen, Paris) and Port of Antwerp-Bruges (Antwerp, Zeebrugge).

Consolidation has been widely advocated, and there is a clear case for ongoing consolidation, for instance in Spain and Portugal. Finally, ports are actively shaping the energy transition, amongst others by developing sustainable energy projects in or around the port. Here the port managing bodies (PMBs) provide land, but also initiate such projects (51 per cent), act as (co-) investor (24 per cent) and in some cases even operate sustainable energy generation facilities (11 per cent). All of these developments take place without major institutional changes: the vast majority of PMBs continue to be public and aimed at ‘value for society’, not financial return.

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

THEECONOMIST BEN HACKETT

Congestion, excess shipping capacity and manpower shortages are blamed for inflation and shortages in shops. Ports in Asia, North America and Europe are suﬀering from congestion whilst the management of the supply chain inland continues to struggle as lack of labour and capacity cause us to wonder if things will ever improve? Added to this is the Covid Zero policy in China which is playing havoc with the production of goods and their transport to ports. There are threats posed by labour issues in Asia and Europe, but the U.S. discussions remain cordial between unions and management. Carriers report a lack of capacity but are being accused of manipulation to keep freight rates high and thereby impacting the inflation rate. We are in a strange situation where a significant amount of

PORT CONGESTION AND SUPPLY CHAIN DIFFICULTIES PERSIST

containership capacity is idle (not in service) for various reasons. This does not include the vessels delayed at ports waiting for a berth which are considered in service. At the same time, according to Container Trade Statistics (CTS), there was a 16 per cent drop in global volume between December 2021 and February 2022 which bounced back by March only to begin a

8 Congestion – solution in sight? Not so far, the problem has diverse dimensions

decline again in April. Much of this was due to consumer demand in Europe. The American consumer has continued to keep demand fairly high, using government grants and pent-up savings, nevertheless Asian exports dropped over 22 per cent

during the Lunar New Year, but much of this was recovered the following month. There appears to be no solution in sight as port congestion has been easing and labour issues are being addressed in all regions, which leaves the main source of problems related to manpower issues within the transportation supply chain. This was certainly one of the conclusions of a recent Federal Maritime Commission inquiry that took some of the pressure oﬀ the carriers (President Biden notwithstanding). The bulk sector is having issues with surplus capacity as oil demand is dropping as a result of the war in the Ukraine and declining growth in Europe and the U.S. All the signs are that we are headed for a recession by next year as interest rates rise to fight inflation.

THESTRATEGIST MIKE MUNDY

PUBLIC RELATIONS: UPWARDLY MOBILE ON THE BUSINESS AGENDA Public Relations (PR), in the world of instant news and online media, has risen up the list of day-to-day business priorities. PR ‘back in the day’ used to be mainly about getting a news story out – a major contract signed, an order fulfilled, an acquisition, a new service or product range. PR was the ‘machinery’ via which these sort of good news sound bites were delivered. To a limited extent, it was also the route via which setbacks were dealt with – a bad set of Annual Results – and explanations provided usually with signals of better times ahead. There are many shipping and port sector businesses that still utilise PR in this traditional way and have simply extended it to incorporate online media. PR in this way is eﬀectively a good news machine, regularly

pumping out digestible news to a mass audience. Is this effective? It can be, it can do the job for which it is intended, but its positive impact can be impaired by small things, for example, the fact that the same sort of News Release will be pumped out like clockwork every month. Ultimately, this sort of monotonous news offering is likely to find the Editor’s spike. Typically, it can also suffer from not enough thought going into logistics - the timing of a News Release for example. Is it good to catch the monthly publications, is it being released at a time when readership levels are likely to be lower – the summer holidays for example – or is it being released at a slow news time when it is likely to achieve more coverage? Even the basic PR approach can be finessed but that is influenced by how far up the list

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

of business priorities the importance of PR is placed. It takes investment to get it right. Modern PR, however, has much more about it, more weapons in its armoury. It also operates against a background of a general uplift in the importance of branding – generating a recognisable look, value set and message – that PR should complement and reinforce. Furthermore, with data processing and analytics it is possible to target individual market sectors in a highly concentrated way and to measure the eﬀectiveness of a given PR eﬀort. There are also new age disciplines to capitalise on – influencer linked PR, personalised pitches and banging the authenticity drum. An influencer is someone of good standing who directly or even indirectly can validate services or products

oﬀered – a classic example being a satisfied customer. Personalised pitches are exactly that, targeted at an individual or a set of individuals such as financial journalists. ‘Authenticity,’ this is the approach that basically builds credibility and shouts to the world, “this is real, honest and definitely not fake news.” But, bottom line, what does all eﬀective PR depend on – an organisation that has a business methodology that has good values, a good moral spirit and which, for example, is known to treat its workforce well and not to be at the centre of corruption allegations. If the fundamental approach is flawed, not thought through, then there is little fertile ground for positive PR to grow on and ultimately there will be a commensurate lack of belief in the marketplace.

JULY/AUGUST 2022 | 13

DIGITAL NEWS Awake.AI and Intel have teamed up to combine edge, Artificial Intelligence (AI) and 5G technologies, as a more efficient method of leading ports into what they describe as the computer vision era. With productivity, environmental, and economic pressures mounting, many port businesses around the world are turning to the Internet of Things (IoT), advanced analytics and machine learning to boost operational efficiencies. To help the process, the new solution offered uses machinelearning models to detect COSCO Shipping SPE has joined the blockchain-based Global Shipping Business Network (GSBN), effective June 1, 2022. The integration of the digital shipping platform from COSCO Shipping SPE with GSBN’s blockchain platform will provide data and resource exchanges amongst all the partners and build the infrastructure needed to facilitate modern and efficient global trade through data exchange solutions. The process works through control of data exchange by GSBN members, whereby information is encrypted before it is sent to the GSBN platform, and as a result GSBN cannot see the data without the members’ authorisation. As such, it will help generate better digital solutions that comprehensively simplify operations across the entire supply chain, with mutually

BRIEFS PTP Signs MarineM

The Malaysian Port of Tanjung Pelepas (PTP) has signed up for the MarineM port information and management system provided by Innovez One. The aim is to improve eﬃciency through provision of a user-friendly interface that allows shipping agents to register vessels and order support services, such as logistics, tug boats and pilots via algorithms powered by artificial intelligence (AI) and machine learning.

14 | JULY/AUGUST 2022

AWAKE.AI TEAMS WITH INTEL TO DELIVER ADDED SERVICE BENEFITS objects in the port yard using sensors installed in the port area and automatically provide real-time awareness of utilisation rates and cargo flows. As a result, numerous benefits are gained, such as better use of the existing capacity, reduced emissions, more accurate forecasting of ship arrivals and departures in real time, optimised port calls based on artificial intelligence and computer vision

information and opportunities for real-time information sharing. Karno Tenovuo, CEO, Awake.AI, notes: “Lidar sensor data, often combined with other sources of data, can be used to optimise the arrival and departure of landside traﬃc. Sensors can detect congestion, enabling re-routing port gate and inner area traﬃc.” He adds that by using powerful computer vision technologies from Intel, including intelligent edge

and cloud features, powered by Intel® Xeon® processors and optional vision accelerators that can benefit from the use of the Intel® Distribution of OpenVINO™ Toolkit, port operators can receive warnings of disruptions from expected normal operations along the cargo flow pipeline. Founded in October 2018, Awake.AI’s stated mission is to lead the transition to sustainable and intelligent maritime logistics.

COSCO SHIPPING SPE JOINS GSBN 8 The block-chain based GSBN grouping has been joined by COSCO Shipping SPE

beneficial results for all stakeholders and members. Indeed, GSBN has stated that by using blockchain technology it is “able to enable collaboration between disparate and often

competing market participants.” GSBN is a not-for-profit partnership established in September 2021 by a group of terminal operators and shipping lines (Hapag-Lloyd, Hutchison

Ports, OOCL, SPG Qingdao Port, PSA International and Shanghai International Port Group) that is working in conjunction with Oracle, Microsoft, AntChain and Alibaba Cloud.

Total Soft Bank Deal

CMA CGM & MPA JV

Autonomous MOU

Korean logistics solutions company, Total Soft Bank, has teamed up with Aidrivers to target autonomous solutions that meet sustainable objectives. The partnership will develop autonomous container handling and mobility solutions that meet operational needs for safety, productivity, eﬃ ciency, and resiliency. AI and autonomous solutions will eliminate downtime and deliver zero waste while contributing to decarbonisation.

CMA CGM and the Maritime and Port Authority of Singapore have signed a new memorandum of Understanding (MOU) to collaborate on the development of maritime decarbonisation, digitalisation and innovation services. A key objective of the MOU is to explore the use of zero and low-carbon marine fuels for commercial shipping that include e-methanol, e-methane and biofuels.

Terberg and Aidrivers have signed a MOU to deploy autonomous terminal tractor solutions for port terminals. The long-term collaboration aims to establish technical and functional safety specifications, through from development and testing to final acceptance. The requirement for autonomous terminal tractors is growing driven by terminals seeking to increase eﬃciency, maximise safety and overcome driver shortage problems.

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

DIGITAL NEWS

BRIEFS Skyports Jurong

UK GOVERNMENT LAUNCHES 5G COMPETITION The UK Government’s Department for Digital, Culture, Media and Sport (DCMS) has confirmed the launch of a new R&D competition that will see £30 million committed to help diversity the 5G supply chain in the country. The Future RAN Competition (FRANC) is a key part of the UK Government’s 5G Diversification Strategy, which has been published since the decision at the end of 2020 to remove Huawei equipment from the UK’s 5G infrastructure planning. This £250 million funded strategy has a specific aim to create a secure and innovative supply chain environment that is more accessible for companies wishing to enter the market and oﬀer an alternative to a limited number of multinational suppliers who retain monopoly control of service provision.

The newly announced competition is expected to contribute to the delivery of this Diversification Strategy because it will attract new international 5G RAN suppliers, while also encouraging research collaboration with UK companies already within the public telecoms sector. Matt Warman, Digital Infrastructure Minister for the UK Government notes. “The aim is to get some of our most creative minds helping the UK safely and securely deliver the amazing benefits of 5G for people and businesses. It is a major part of our plans to harness the country’s tech’ prowess, open up the telecoms market, and create new jobs and investment as we build back better from the pandemic.” The port industry is expected to be a major player in the

8 The UK government has launched a new R&D competition to enhance 5G and ports can be major beneficiaries

introduction of 5G in the UK. For example, in 2021 the largest volume container port in the UK, Felixstowe, announced the deployment of 5G technology to enhance productivity, eﬃciency and safety across its core operations. “We want to unlock 5G’s potential to revolutionise a wide range of UK industries and 5G Ports is just one project the government is backing to achieve this. Our ports will be more vital than ever as we forge an ambitious new global trading position for the UK post-Brexit, so I’m eager to see what 5G can do to maximise eﬃciency at Britain’s biggest and busiest container port in Felixstowe,” states Warman.

REEFER RUNNER LIVE IN PUERTO BOLIVAR IDENTEC SOLUTIONS and Yilport Holding have confirmed the successful launch of reefer monitoring operations at Puerto Bolivar, Ecuador, on the Pacific Coast. It is the first terminal in the Yilport portfolio to implement the Reefer Runner monitoring system. The Reefer Runner product digitalises monitoring of reefer containers and makes manual

inspections obsolete generating significant economies as result. It is specially designed for reefer management operations at terminals and for use in all climate zones and conditions. There is no need for a cable connection, with a consistent flow of data generated to a central system. Users can monitor temperature and power supply, adjust setpoints

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

according to the goods in the reefer container, perform automated pre-trip inspections and download data logs for documentation reasons. In addition, as each reefer tag is connected to the system independently, the entire system is expandable and not aﬀected by failure at one container. Yilport has ordered 1300 Reefer Runner transponders.

Jurong Port, Singapore is working with advanced air mobility (AAM) infrastructure developer and drone operating specialist, Skyports, to assess the potential to develop ship-to-shore infrastructure. The two companies will be working to assess the feasibility of integrating dronedelivery operations into the existing logistics and cargo operations at the port using Skyports experience in constructing drone take-oﬀ and landing infrastructure and drone delivery technology. As Singapore’s only multipurpose facility, Jurong Port handles bulk, break-bulk and containerised cargo.

eYARD Selection

Grupo Agunsa has chosen eYard to provide technological solutions to improve the productivity of operations at its Aretina container depot in Ecuador. eYARD, through its Container Tracking tool, will design ad-hoc artificial intelligence algorithms to optimise and automate its processes to help reduce costs through limiting non-productive terminal activities.

Zanzibar Digitalisation

Zanzibar Ports Corporation (ZPC) has introduced new terminal and vessel traﬃc digitalisation at Malindi Port. Wärtsilä Voyage, in conjunction with Fortris Company, has implemented the vessel traﬃc services (VTS) system and VTEK technology’s terminal operating system (TOS), which includes the company’s Advanced Intelligent Manoeuvring, Navi-Port, 3D, PilotPro Units and VTS Simulator modules, as well as a web version of Navi-Harbour.

JULY/AUGUST 2022 | 15

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DIGITAL NEWS

PORT OF TYNE TAPS 5G ENABLING POWERS

BRIEFS Amazon WS in LB

Amazon Web Services (AWS) has a new deal to help improve the visibility of cargo data at the port of Long Beach, USA. Under the new arrangement, AWS is to support the port’s digital infrastructure project, known as Supply Chain Information Highway, by aggregating data to enable real-time cargo tracking, from origin to destination, for all supply-chain stakeholders. All data is stored using the Amazon Simple Storage Service (Amazon S3).

TOS for Dongwon

The UK’s Port of Tyne is partnering with BT to install a new 5G Private Network to support and manage its remote operations while reducing consumption of associated fossil fuels. The port states that the arrival of 5G will support the delivery of more advanced technology, including autonomous vehicles, artificial intelligence and IoT applications, when the new Private Network Infrastructure goes live later in 2022 via an in-house group, the 2050 Maritime Innovation Hub.

By implementing this new hybrid fibre Private Network, fast and low latency connectivity will be oﬀered across the port’s entire real estate, with potential for implementation of established and emerging technology. BT has been chosen as preferred technology partner in the venture and is to use Ericsson equipment to complete the installation process. In addition, the aim is for 5G processes to help lower emissions and energy consumption in comparison to previous wireless technology equipment.

8 : The Port of Tyne is partnering with BT to implement 5G across it entire real estate before the end of 2022

“5G is an enabler and oﬀers us huge potential to implement world-class technology applications and drive real progress in the port and maritime sectors. We already have a range of use case scenarios developed through the Innovation Hub and are ready to collaborate with technology companies to validate these exciting new solutions,” explains Matt Beeton, CEO, Port of Tyne.

PAPERLESS PEARL RIVER BARGE OPERATIONS Cosco Shipping Line has launched a new paperless cargo service for barge transportation on the Pearl River. This process is for foreign trade import activities at Huangpu Xinsha Terminal and follows another recent solution undertaken by a terminal of Guangzhou Port which realised the extensive promotion of blockchain-based paperless

cargo release at Nansha Phase II Terminal. Cosco Shipping Lines has been working in partnership with Guangzhou Port Group to identify and implement additional business links with the blockchain platform through paperless bill exchange and on the basis of electronic container pick-up services at Huangpu Xinsha Terminal.

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

As a consequence of these processes, the barge-based foreign trade import business in the Pearl River region is moving from paper to blockchain, which for cargo shippers means online access for self-service for cargo release and container pick-up, with the entire operational process becoming more visible, eﬃcient, and more risk-controlled.

CyberLogitec’s terminal operating system (TOS) has been selected by Dongwon Global Terminal (DGT) for its fully automated Busan New Port (South Korea) terminal. The deal represents the first fully automated terminal operating system project that uses automatic transfer equipment in South Korea. DGT Consortium secured a new 30-year operation contract for the long-term expansion of the West Container harbour in Busan New Port, to complement its existing feeder facility operational since 2021.

Available SMATS

Specialist Canadian traﬃc management solutions company, SMATS, has confirmed that its Port Traﬃc Management Solutions product is available on general release globally. The technology helps alleviate cargo backlogs through use of next-generation IoT sensors to monitor truck movements and a data analytics and visualisation platform (iNodeTM) that uses algorithms for more accurate predictions of waiting times at the terminal gates in real-time. This data ensures better communication between port and truck drivers.

JULY/AUGUST 2022 | 17

INDIAN OCEAN: CASE STUDY

TRANSSHIPMENT – EVOLVES Transshipment is evolving as a tool via which to serve peripheral markets. Experience in the Indian Ocean confirms this and the ongoing requirement for port investment, as Andrew Penfold explains

8 ICTSI has transformed container handling operations in Toamasina, Madagascar and capacity here is on course for a major upgrade including providing for handling vessels of up to 14,000TEU

The focus of attention has been on the major east-west trades in the past eighteen months, with freight rates reaching unprecedented levels. What is the knock-on impact in the secondary, lower volume, trades? Let’s take a look at the Indian Ocean insular markets. HOW BIG ARE THESE MARKETS? The Indian Ocean markets of Reunion, Mauritius, the Seychelles, and Madagascar are individually quite limited but together represent a significant market. However, the interests of these markets rank fairly low on the global radar of the major liner companies. They are consequently vulnerable to changes outside their direct control that make the involved economies susceptible to adverse shifts. Considered together, these markets recorded a total of around 1.2m TEU in 2021. In common with all markets, these economies have been battered by COVID-19, with this especially impacting on demand generated by the tourism sector. There are only limited local industries, with Mauritius heavily dependent on clothing and tuna and the Seychelles also a major focus of the fisheries sector. Madagascar has seen volumes grow based directly on the broad prism of consumer demand. Reunion is an outlier as a département of France, with an economy dependent to a large degree on the needs of local retirees and the port dominated by French labour relations. Despite these diﬀerences, they form a cohesive market for shipping lines. As noted, overall volumes reached nearly 1.2m TEU in 2021 and the indications are that renewed growth is continuing with an estimated annualised increase of around 5-6 per cent in the first half of 2022. Within this total, transshipment demand has increased steadily from 20 per cent of port volumes in 2016 to some 27 per cent at present. Transshipment has long been the established strategy at Port Louis and Reunion has seen some success in this sector despite high stevedoring costs. Underlying import/export demand

18 | JULY/AUGUST 2022

increased sharply by 15 per cent between 2016 and 2019 but fell back as Covid hit the region. Recovery is now underway. HOW DOES TRANSSHIPMENT WORK? These relatively small-scale markets were in the past served by multiport container and semi container services linking them with European markets and some feedering from East African ports such as Mombasa. However, as part of the broader reorientation of the trades in favour of the Far East – especially China – there has been a far-reaching revision in service structures. Initially this was focused on developing transshipment hubs within the region, with Port Louis a pioneer in this approach. As vessel sizes increased and demand volumes ran ahead of port capacity in various east Africa markets, feeder services were established from the Mauritius hub. Regional intra-island services were superimposed on this to provide a strong and stable demand structure based on a regional hub role, local demand and feedering to/from the other insular markets.

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

‘‘

The changing structure of container shipping will see smaller regional markets further integrated into feeder networks linking to the largest east-west hubs More recently, the focus has shifted. The emphasis is now increasingly driven by serving these markets as feeder destinations linked to major hub ports serving the AsiaEurope trades. This has seen increased reliance on Colombo and Salalah, with other regional hubs also playing a role. From the lines’ perspective, this makes good economic sense as overall costs of serving the region are much reduced and it also serves to lift load factors on the ultra large vessels deployed on the primary hauls. However, for the regional economies the advantages are less clear. The loss of direct services has been accommodated well overall by the region and there has been some integration of regional calls – at Mauritius – into the rapidly expanding trades between East Asia and southern Africa. But, of course, this means much greater dependence on the major lines, with Maersk and CMA CGM eﬀectively controlling much of the regional business. MSC plays a similar role in Toamasina. These can be uncomfortable bedfellows for small local markets. The economics are sound, but the risks are high. SO, WHAT ARE THE RISKS? The real risks here are that the markets will become increasingly dependent upon the major lines which will have little incentive to significantly improve operations. For example, there has been no real development of the sub-3000TEU container fleet that is dominant on most of these trades. According to Clarksons, the fleet of these vessels has remained constant at around 3000 units since 2016 and a similar picture is noted for larger (old) Panamax tonnage. The orderbook for these two size ranges represents just 12 per cent and eight per cent of existing fleet capacity and scrapping of older units will more than oﬀset new deliveries. Relying on these sizes and types of vessels means an increasing dependency on an ageing fleet, with little prospect of expansion and renewal – this can only push up charter rates and, therefore, costs for these economies. This is not a problem for the lines as these costs can be readily passed-on. In some cases – notably, Port Victoria – the antiquated state of the existing quay prohibits the use of heavier shoreside equipment such as mobile cranes, with this leading to the continued use of ship’s gear for handling. This is an even more obsolete part of the container fleet with little or no investment directed to these units. Port Louis and Reunion have kept ahead of these risks by developing port capacity to handle larger vessels and similar developments are underway at Toamasina. The presence of international investment in the form of International Container Terminal Services Inc. (ICTSI) at the latter port has transformed operations within a fairly limited overall investment profile. Building on these developments the port is currently carrying out a US$639m expansion project. The Japan International Cooperation Agency (JICA) has provided US$411m to fund the project while US$227m has been provided by the Government of Madagascar. The expansion will comprise a 756m container berth with a draught of -16m and – importantly – the terminals will add ship-to-shore

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

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container gantries. The programme will enhance the port’s ability to handle ships with a capacity of up to 14,000TEU. This represents a recognition of both increasing demand and the evolving requirements of lines serving these markets. In Mauritius, to cater for container traffic beyond 2025, the Mauritius Port Authority has proposed the development of an island container terminal with a capacity of 1.5 million TEUs. The project would, in effect, require the building of a manmade island just off the current container terminal. The MPA also plans to construct a breakwater structure to create a tranquil basin at the container terminal. The aim is to work towards a public-private partnership deal for both projects, which combined are valued at $783 million. The current container terminal was upgraded to offer an extended quay length of 800m and dredged depth of 16.5m in 2017, with annual capacity raised from 550,000TEU to one million TEU. The situation in the Seychelles is still unresolved. The need to modernise Port Victoria is well known but the pace of realising required development has been very slow. It is agreed that a modern quay is needed to allow the use of larger mobile cranes and to berth the bigger vessels that will inevitably be introduced, but agreement on the inward investment strategy has not been prioritised. The real risk for the Seychelles is that the island’s economy could become dependent on secondary transshipment. That is to say, Asian goods could be transshipped at major hubs for distribution to, for example, Port Louis and then transshipped again for final delivery in small – perhaps semicontainer – vessels to the islands. A preliminary indication suggests that this could result in an increase in freight costs of between US$400-600 per container – a major penalty for the island economy.

8 Indian Ocean Container Markets ‘000TEUs

LESSONS TO BE LEARNT The changing structure of container shipping will see smaller regional markets further integrated into feeder networks linking to the largest east-west hubs. This does not obviate the need for modernisation, however. It will continue to be vital to provide facilities that are well suited to the needs of the shipping lines and to provide the flexibility to handle some direct calls at economic rates. Ports that do not rise to these challenges will be left behind and will remain fully in hock to the interests of the few major shipping lines dominating these markets. Accommodating these developments will be the major challenge for regional ports and these issues will also be noted in other lower volume and fractured regional markets.

JULY/AUGUST 2022 | 19

Source: MPL

INDIAN OCEAN: CASE STUDY

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CHINA: CONTAINERPORT PERFORMANCE

CHINA: BALANCE OF POWER Recent times have seen relatively small but distinct shifts in the balance of power among China’s containerports. A J Keyes charts these and puts northern China containerport development under the spotlight For China as a whole, the container outlook is now much more complex than for many years. A combination of COVID-19 disruption and changes at the political level indicate that the future may look quite diﬀerent from the situation over the past ten years. The degree to which the major ports can respond to these changes will be key to future growth rates. China has a number of largescale ports handling containers, which are geographically located in the north and central/southern areas of the country, as shown in Figure 1. Recent container volume activity is highlighted in Table 1, which outlines total container port volumes for China overall and individually for the largest 12 throughput ports between 2019 and 2021, plus for the January to end of April 2022 period (which is then compared to the first four months of 2021 in terms of percentage change). There are some key conclusions that can be drawn here, notably, that China overall saw a substantial increase in containers passing through its ports in 2021, likely due to a rebound after the COVID-19 pandemic suppressed 2020 activity.

‘‘

Dalian box volume down, Qingdao and Tianjin up – Dalian represents a brake on overall North China port performance The dominance of the 12 ports listed is easy to see and the volumes handled are clearly substantial. In 2019, this grouping collectively handled 195.8 million TEU, which rose to 198.1 million TEU for 2020 and almost reached 211.2 million for 2021 – a rise of 6.2 per cent in 2021 over 2020 and 7.2 per cent for 2021 over 2019. Yet possibly more striking is the decline in share retained by the largest 12 volume ports, down from 85 per cent in 2020 to 75 per cent for 2021. Shanghai was the biggest loser, seeing its 2019 share of total Chinese container port volumes of 19 per cent fall to 17 per cent by 2021. Likewise, other major ports of Ningbo-Zhoushan, Shenzen, Guangzhou-Nansha and Xiamen lost at least one per cent share. A reduction in volumes moving to North America and Europe during COVID-19 being oﬀset by greater Intra-Asia activity accounts for this shift with smaller ports in China serving regional routings benefitting. However, for the January to end of April 2022 period, the leading 12 volume ports recorded growth of 2.4 per cent over the comparable four months of 2021, which compares to 1.7 per cent for China overall across the same period. NORTHERN MOVES A strong geographic location for serving Beijing and the largescale industrial heartlands of China in the north of country means that major container ports, predominantly meeting export demand out of Asia, have developed at Dalian, Qingdao, Tianjin and Yingkou and represent a sizeable share of the total national port market.

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

While the following article assesses this area in more detail, including looking at development plans and challenges moving forward, it is still possible to summarise that for 2019 these noted northern ports accounted for 23 per cent of the total China container market, which dropped to 22 per cent for 2020 and 19 per cent by the end of 2021. This activity represents continuation of a recent trend in which Qingdao and Tianjin have been able to successfully increase volumes, but overall North China container port performance has been held back by container volume loss in Dalian. 2019

2020

2021

Jan-Apr ‘22

YOY ‘22 vs ‘21

7.1%

8 Figure 1: Overview of Port Locations in China. China’s 12 largest volume containerports are outperforming the national growth average in 2022 Note: Size of circles noting ports is representative of scale of container TEU traﬃc handled Source: Dataand.com

North: Qingdao

21,010

22,005

23,710

8,040

Tianjin

17,301

18,356

20,270

6,450

2.9%

Yingkou

5,480

5,673

5,210

1,320

-24.0%

Dalian

8,762

5,110

3,670

1,240

12.8%

Shanghai

43,303

43,501

47,030

15,350

1.9%

Ningbo-Zhoushan

27,535

28,734

31,080

10,940

5.2%

Shenzhen

25,772

26,553

28,770

9,100

-4.9%

Central/South:

Guangzhou-Nansha

23,236

23,192

24,180

7,530

-1.6%

Xiamen

11,122

11,405

12,050

3,860

1.7%

Rizhao

4,500

4,860

5,170

1,770

12.2%

Lianyungang

4,780

4,800

5,030

1,650

0.9%

Qinzhou

3,020

3,950

5,000

1,500

15.0%

Total China

230,920

234,290

282,700

91,000

1.7% 2.4%

Top 12 Total

195,821

198,139

211,170

68,750

Top 12 %

85%

75%

76%

Note: Ports located in North China identified in shaded lines Source: Ministry of Transport of the People’s Republic of China, Dataand.com

8 Table 1: Total Container Volumes at China’s Leading Ports, 2019 – end of April 2022 in ‘000 TEU

JULY/AUGUST 2022 | 21

NORTH CHINA: CONTAINERPORT DEVELOPMENT

NORTHERN CHALLENGES A J Keyes assesses the position of North China containerports against a background of economic uncertainty and reviews the performance and development strategies of the key players

8 Tianjin is now engaged in the phase II development of its new zero carbon terminal

Collectively, the ports in the North China region are seeing stability in container volumes handled, with 52.6 million TEU for 2019, 51.1 million TEU in 2020 and 52.9 million TEU for 2021. This nevertheless represents a declining share of the total China container port market, which was 22.8 per cent in 2019, but dropped to 21.8 per cent in 2020 and then a larger decline to 18.7 per cent for 2021, as Figure 1 shows. While this situation would be acceptable in most developed ports, this represents a real slowdown in the context of China and reflects growing economic uncertainty in the Chinese heavy industry sector. Heavy industry in China is primarily located in the north of the country with Central and Southern ports increasingly focusing on supporting consumer goods and manufacturing hubs. The 2021 northern container port volume is concerning because there was some volume growth (albeit much lower than compared to other ports in the country and China overall) and underlines the real issue in the north – the continued decline of Dalian. This is shown in Figure 2, which clearly highlights the continued improvements in total container throughput at Qingdao and Tianjin, but the decreases at Dalian. According to one local forwarder, who did not wish to be named, the reality is that the North China region has been losing “around one million TEU of cargo year-on-year up to 2021, but the south/central area has generated increases of up to four million TEU per annum.” LOCKDOWNS – LIMITED IMPACT Port lockdowns have been, and continue to be, commonplace throughout China during 2022 as Beijing maintains its Zero Tolerance policy in conjunction with COVID-19. Numerous examples exist, notably the recent two-month lockdown of Shanghai port (and city) and similar examples in Shenzhen (which stopped all cargo supplying Hong Kong) and Yantian. In the North China region Tianjin has seen recent

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lockdowns, including in the Heping district in late May 2022, while production challenges for both Toyota Motor Corp. and Volkswagen AG have continued, plus the Omicron variant reportedly became more prevalent in Beijing, resulting in further restrictions. Yet based on available data for 2022, there has been little negative impact on North China ports. For example, in the January to end of April 2022 period, Qingdao handled 8.04 million TEU which represents a 7.1 per cent increase over the same period in 2021, while Tianjin is up by 2.9 per cent (to 6.45 million TEU) and, surprisingly, Dalian also saw a strong improvement of 12.8 per cent to 1.24 million TEU. These volumes through Dalian are, of course, significantly lower than those that the port has handled in the past, but may be the first steps in stopping the decline. During 2021, Dalian Port (PDA) Company Limited successfully merged with Yingkou Port Liability Co., Ltd. via a joint agreement between China Merchants Group and the People’s Government of Liaoning Province. It was reported at the time of the merger that a key objective is: “to increase the resource allocation efficiency and market competitiveness…” DALIAN STRATEGY If container traffic increases continue during 2022, in line with the first four months, then the merger and its associated goals may indeed be having a positive effect. Moreover, with constant lockdowns occurring more frequently in the Central/South areas, such as Shanghai, and continuing to negatively impact production of industries there, then the north may gain market share because it has been subject to much less turmoil caused by COVID-19 policies. Indeed, the continued lockdowns enforced by Beijing on Shanghai continue to impact the supply chain networks supporting the port and, therefore, foreign trade activity. China’s insistence on its zero-COVID-19 policy continuing

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NORTH CHINA: CONTAINERPORT DEVELOPMENT

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China’s heavy industry is subject to economic uncertainty which may progressively pose challenges for its northern containerports must prompt some manufacturers to either relocate to areas in the country where the pandemic impact is less, or more likely, to other countries. Due to a loss of volumes, there is plenty of spare capacity in Dalian and so no substantial investment or expansion in the port is expected. Back in 2019 the port used US$490 million earmarked for infrastructure to pay off debts rather than expand its oil business and improve facilities. There seems to be no change in strategy here in the short-to-medium term, at least. QINGDAO TRANSPORT HUB In May 2022, a total of 21 “transportation” development and infrastructure projects were confirmed by the local Qingdao government. The announcement explains that nine are involving public roads, four are for rail, five linked to ports and two connected to transportation hub development. The desire to develop Qingdao as a hub location for the wider region remains a core aim of the regional government, with improved connectivity to Beijing, Tianjin and Hebei province in North China, but also to the Yangtze River Delta in the South, the Yellow River to the west as well as with South Korea to its east. “By the end of 2024, the city will put three new railway routes into operation and by 2025, open nine,” confirmed Zhang Jun, General Manager, Qingdao Railway Group. On this basis, the port remains core to the city of Qingdao’s desire to accelerate itself towards what local officials confirm is “an international transport hub.” CLEAN TIANJIN Recent focus in Tianjin has been on Cosco Shipping Port’s (CSP) new zero-carbon terminal which the company states makes the facility self-sufficient and only using clean energy for operations. Both wind and solar power are used, with Phase I of the project completed in January 2022 and Phase II now underway. CSP has confirmed that it is developing its Tianjin Container Terminal (TCT) as an “international shipping hub” through what is described as “optimising operational efficiencies….and promoting synergies of the hub-and-spoke transshipment network in the Bohai Rim region.”

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8 Figure 1: Development of Container Volumes at North China Ports from 2019 to end of April 2022, in ‘000 TEU Source: Dataand.com, with base data from Ministry of Transport of the People’s Republic of China

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8 Figure 2: Development of Container Volumes at Ports in North China from 2019 to end of April 2022, in ‘000 TEU Source: Dataand.com, with base data from Ministry of Transport of the People’s Republic of China

The TCT facility was developed in its current form after its 2019 merger with the Tianjin Five Continents International Container Terminal and Tianjin Orient Container Terminals, which has served to give CSP a strong competitive position at the port. The merger was designed to optimise the allocation of resources, enhance the unified management of the terminals, lower operational costs and increase the overall competitiveness of TCT.

Bulkers also bedevilled by berthing delays While container ships gain a lot of headlines for their queuing to access to ports in China, bulk vessels bringing grain and coal – key basic commodities that China cannot produce enough of for its needs – are also suﬀering similar challenges. Throughout much of Q2 2022, there have been scores of non-container ships waiting along the coast of China, including those wishing to access ports in the north of the country. For example, at regular periods in this quarter there have been more than 220

bulk vessels waiting to access Shanghai, while Ningbo-Zhoushan had more than 130 ships waiting. By comparison, on a collective basis, the northern ports of Rizhao, Dongjiakou and Qingdao saw a total of about 120, at worst. It’s not just lockdowns causing this, other issues cited are lack of personnel to process paperwork and insuﬃcient trucks available to move imported raw materials, like copper and iron ore, from the port to processing mills, thereby leaving the product stranded

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at the port of entry, according to reports from Bloomberg. As a result, ships have been diverted to northern ports more on a more frequent basis, especially Qingdao and Tianjin, simply because trucking is more readily available. Of course, port substitution is diﬃcult for high volume bulks which are primarily reliant on rail for onward distribution. This is another manifestation of the combination of Covid and political factors impacting on Chinese ports.

JULY/AUGUST 2022 | 23

SOUTH KOREA: CONTAINER HANDLING

ROLLING WITH THE PUNCHES South Korea’s ports have been hit with a trucking strike, lockdowns in their largest trading partner market of China and the COVID-19 pandemic. AJ Keyes assesses the impact and what lies ahead With a number of turbulent recent events, container ports in South Korea have faced a range of different challenges, while having to maintain long-term growth requirements. Their ability to adapt to these developments will continue to influence competitiveness. Busan, Incheon and Gwangyang collectively handle almost 94 per cent of all container traffic in South Korea. Busan is dominant with a share of around 75 per cent of the total country market – with this being a stable situation over the past few years. Busan is also handling sizeable transshipment volumes and it is an activity that continues to increase. In 2017, transshipment accounted for an estimated 49.1 per cent of total port volumes but by the end of 2021 this figure had reached 54.1 per cent. Busan has benefitted from both the increased importance of secondary Chinese ports (with linked feedering) and from the progressive establishment of feedering to/from smaller ports on Japan’s west coast. For Busan, China remains its largest trading country partner, with around 28 per cent of container traffic handled, followed by North America (15 per cent) and Japan (14 per cent). Leading port connections, based on volumes, are in China, unsurprisingly, with Qingdao (1.3 million TEU), Shanghai (1.1 million TEU) and Tianjin (1.0 million TEU). TRUCKING STRIKE CHALLENGES However, while recent volume growth has been good in Busan, 2022 has brought challenges. At the time of writing (mid-June 2022) unionised truck drivers implemented a week-long strike that impacted all major ports. Busan reported that daily container road activity was down by 75 per cent, while Incheon (the primary gateway for Seoul) said it operated at “about 20 per cent of normal capacity.” The true depth of the strike is unclear, with official government Transport Ministry estimates stating that no more than six per cent of the 400,000 unionised drivers took part, whereas other sources supporting the truckers say as many as 20,000 drivers participated. Although a resolution was reached, there are knock-on effects. Local reports stated the strike will eventually cost more than US$1.2 billion in lost production and unfulfilled deliveries, while the Cargo Truckers Solidarity union stated that Hyundai’s largest factory complex saw production drop by 50 per cent due to component shortages. Truckers chose to strike over ever-increasing fuel prices, but extension of the truckers’ minimum freight rates and continued talks over expanding minimum pay guarantees brought a tentative peace – for now. BIG PLANS AT BUSAN Aside from the short-term impact of the strikes, the need to maintain sufficient terminal infrastructure is paramount and Busan is investing to keep pace with growth and alleviate congestion while, it claims, “targeting transshipment traffic” at regional ports. This represents a continuation of the successful development initiated with the commissioning of the first berths at Busan New Port in 2009. The Busan Port Authority (BPA) has stated plans to raise annual port capacity to 31 million TEU by 2030, a substantial

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rise on the existing figure of around 21 million TEU per annum. Already in 2022, a new semi-automated terminal, Busan Container Terminal (BCT), supported by Hyundai Merchant Marine (HMM) opened. It can handle ships up to 23,000 TEU capacity, has 11 quay cranes and 44 automated rail mounted gantries (RMGs) and will eventually oﬀer a capacity of three million TEU per annum. “THE Alliance, 2M, and Ocean Alliance carriers want to handle more transshipment cargo at Busan…..they simply cannot do it currently because berth and yard density are very high at all the Busan terminals,” Lee Seung-mi, Commercial Director, BCT recently stated, adding that the terminal commenced with feeder services but is due to accommodate intra-Asian and deep-sea services during 2022. BPA has also awarded a new concession to develop and operate a 1850m quay, deep-water facility to a consortium led by Korea’s Dongwon group at Busan New Port. Operations are scheduled to commence in mid-2023.

8 South Korean containerports have been dealing with a trucking strike, lockdowns in China and COVID-19 issues but are rolling with the punches and battling on

INCHEON STRUGGLES The Port of Incheon is South Korea’s second largest volume container port. Throughput has grown by 2.8 per cent since 2017 and the port increased volumes in 2020 and 2021. However, there are ongoing challenges, with the port’s latest volumes (April 2022) reflecting a drop of 20 per cent over April 2021. The port authority states that ships have been heading directly to China and missing calls at its facilities. “Shipping companies are passing through the Korean port without stopping to save time,” explains a port spokesperson, adding that volumes between Incheon and China had fallen by almost seven per cent recently. GWANGYANG VALUE-ADDED FOCUS Gwangyang completed its third masterplan between 2011 and 2020, and it confirms a container capacity of 3.84 million TEU per annum. Even allowing for the highest recent volume throughput of just over 2.4 million TEU (in 2018), there is substantial space still available. This is endorsed by the port’s stated short-term aims, which are focussed on attracting new “value added industries” and developing a port logistics cluster.

JULY/AUGUST 2022 | 25

KENYA: PORT INVESTMENT CONTROVERSY

KENYA ALLEGATIONS DP World is at the centre of a controversial plan to concession multiple port facilities in Kenya. Mike Mundy reports on serious allegations made and fundamental questions raised about the scheme As Port Strategy goes to press, reports are emerging of DP World having agreed a deal with the outgoing Kenya Government to takeover, develop, manage and operate key port facilities in the ports of Mombasa, Lamu and Kisumu. News of the deal was broken to local media, in forthright terms, by the Kenya Kwanza Alliance, an alliance of multiple political interests led by William Ruto, the current Deputy President and a Presidential candidate. Elections are scheduled to take place in Kenya on August 9 for the post of President, members of the National Assembly and Senate, as well as regional posts. The Kenya Kwanza Alliance presented a five-page statement to the media on Wednesday June 29 in Nairobi – a statement that can only be described as hard hitting, highly accusatory and one which ultimately raises a number of important questions. The opening sentence sets the tone: “Today, we reveal to Kenyans a clandestine plot by the outgoing Handshake Government of Uhuru and Raila to illegally mortgage our ports of Mombasa, Lamu and Kisumu, to a foreign country.” The statement goes on to level several specific accusations including: 5 That the deal had been crafted on a secret basis “under the guise of an Economic Cooperation Agreement with the United Arab Emirates, which the Kwanza Alliance alleges, “epitomises grand corruption…” 5 That, there is “illegality in the opaque and hurried nature of this transfer of national assets.” 5 That, there “may be an engagement between a few people in government who may be keen to conclude the ‘illegal deal’ with speed before government changeover in August.” 5 That, the deal represents a: “Blatant violation of Article 227 of the Constitution and the Public Procurement and Asset Disposal Act 2015.” The key factor here being that in combination these two pieces of legislation dictate that, “when a State Organ contracts for services, such procurement should be done through a system that is fair, equitable, transparent, competitive and cost-eﬀective.” 5 That, “the takeover of national strategic assets cannot be purported to be constitutionally processed and concluded without the involvement of Parliament.” 5 That there is also a violation to the Constitution in that matters relating to ports and harbours fall under the jurisdiction of both the National and County governments. However, the Counties of Lamu, Mombasa and Nakuru were not consulted. DEAL SPECIFICS The Kwanza Alliance statement alleges that the origins of the proposed port deal hail from “a meeting in Mombasa disguised as Raila’s birthday party attended by outgoing President Uhuru Kenyatta, Raila Odinga (currently a presidential candidate) and the Governor of Mombasa Ali Hassan Joho.” Raila Odinga, earlier this year, stated that if elected he would retain President Kenyatta as an adviser in his government. Subsequent to this first meeting the Kwanza Alliance alleges “the trio made several trips to Dubai jointly and severally,” where the parameters of the deal were worked

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through. These, the Alliance contends, were developed to comprise the following, that DP World will: i Redevelop berths 11 to 14 and establish a special economic zone at Mombasa. (Berths 11 – 14, currently handling containers and conventional cargo, that have long been slated for redevelopment as a high-capacity container terminal – existing capacity is put at 420,000TEU.) ii Equipping and operating the container terminal at the Port of Lamu. iii Development of a special economic zone adjacent to the Port of Lamu. iv The development and operation of cold chains and logistics parks at both Kisumu and Naivasha.

8 Berths 11 – 14, port of Mombasa – jewel in the crown of the proposed deal?

GOVERNMENT RESPONSE In response to the Kwanza Alliance allegations Ukur Yatani, Treasury Cabinet Secretary, has confirmed the existence of the agreement but rejected the idea that President Uhuru Kenyatta had mortgaged the country’s infrastructure. Essentially, he suggested the agreement is part of an eﬀort to attract investors into the country and that would not result in it, “losing any of its assets or benefits but realise more revenue and employment opportunities for its citizens.” HOT ISSUE When news of this deal surfaced it was certain to become a hot issue. Mombasa port over the years has been at the centre of diverse corruption allegations and it was more or less certain that this latest development would add fuel to this simmering fire, which has proved to be the case. Clearly, a number of the allegations made by the Kwanza Alliance are very serious and it can be argued deserve a more comprehensive response. One further relevant point is that port opportunities in Kenya have long been sought by foreign port sector investors and as such there are strong grounds to run any related concession process through a properly structured international tender which may realise stronger benefits than those foreseen. With this strong investor interest manifest, why, it is reasonable to ask, has this option, a tried and tested route to achieving an eﬃcient and rewarding public private partnership, not been given serious consideration?

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SUDAN: PORT DEVELOPMENT CONSTRAINTS

SUDAN PROJECT UNCERTAINTIES A new port project has been announced for Sudan but there are reasons to believe this project is not built on strong foundations. Mike Mundy puts the project under the microscope

8 There are major problems associated with developing a new port in Sudan while matters remain unresolved about the concession previously awarded in port Sudan

Almost as soon as the announcement was made, in the second half of June, that Abu Dhabi Ports Company (AD Ports) was to partner with DAL, Sudan’s largest private company, to build a new Red Sea port, 200km north of the existing port complex in Port Sudan it was followed by a statement to the Abu Dhabi Securities Exchange, by AD Ports, noting that it has not yet signed any agreements to build a port in Sudan. The statement further noted: “We confirm to you that the Company will make the appropriate disclosures should there be new projects or investments in accordance with the market’s applicable regulations.” The story was originally released to Reuters by Osma Daoud Abdellatif, Chairman, DAL, who highlighted the US$4 billion new port project as part of a US$6 billion investment package which will also include a free trade zone and a large agricultural project. He additionally explained that the project was originally signed under the civilian-led transitional government which came to power after the country’s former president, Omar al-Bashir, was forced from power in 2019. Further, the agreement, explains Osma Daoud Abdellatif, has been “rubber stamped” by Sudan’s current military leadership which assumed power by means of a coup in 2021, overthrowing the civilian-led government. Reportedly the parameters of the deal were agreed between General Abdelfattah al-Burhan and UAE President Sheikh Mohamed bin Zayed at a meeting in the UAE. Clearly, the two joint venture partners were not ‘in sync’ regarding the timing of the release of news concerning the project. It appears DAL may have jumped the gun and particularly from the standpoint of the requirements of the Abu Dhabi Securities Exchange. Equally, there are other important considerations in this respect. Sudan is not stable in either a political or economic context. There has been strong international condemnation of the military coup and the military leadership’s ongoing residency as the governing political body. There is also strong resistance to this in the civilian population and with no other foreign direct investment deals taking place since the

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military took power there are serious concerns regarding the wisdom of making large scale investments under the umbrella of the current leadership. All the more so as the military leadership is reported by agencies such as the UN Security Council to be continuing to violently repress ongoing protests against the coup. Fundamentally, there is concern that if a solution is not found to restore a civilian-led government then with tensions among Sudan’s different security forces rising the country could descend into conflict and divisions of the type witnessed in Libya and Yemen. As Volker Perthes, U.N. Envoy for Sudan, recently told the U.N. Security Council: “…the stakes are high and the aspirations of the Sudanese people for a prosperous, civilian-led, democratic future are at risk. Unless the current trajectory is corrected, the country will head towards an economic and security collapse and significant humanitarian suffering,” he underlined. Hardly ideal conditions for a multi-billion dollar investment – especially with the deal requiring an upfront payment of US$300 million to Sudan’s Central Bank. OTHER CONSIDERATIONS These are not the only considerations. It is understood that the Government of Sudan still has certain issues that remain to be resolved with International Container Terminal Services Inc. (ICTSI) regarding the concession awarded to it for container and conventional cargo handling operations at the port of Sudan, the country’s existing main port. The concession was awarded following an international tender, overseen by Hamburg Port Consulting, under the Omar al-Bashir regime, with ICTSI was compelled to withdraw in the unstable situation that ensued following his removal from power. In effect, it is believed that with unsolved issues remaining between the two parties the legitimately awarded concession is still in force inclusive of key features such as an exclusivity clause. Yet another influential factor that does not augur well for the prospects of the new port project!

JULY/AUGUST 2022 | 27

RUSSIA: TRANSPORT LOGISTICS

RUSSIA TURNS EAST As a result of the Ukraine war Russia’s transport logistics have undergone some profound shocks and are seeing a growing eastern emphasis. Oleksandr Gavrylyuk reports

8 The TransSiberian Railway is seen as vital to the growing emphasis on moving greater cargo volumes eastwards – massive investment is under discussion

The Kremlin’s devastating war in Ukraine and resulting international sanctions have dramatically changed Russia’s economic landscape as a whole and its transport industry in particular. Russia, which has dedicated three decades of its postSoviet history to fitting into the global economic system, now finds itself beyond its mainstream. Saint Petersburg, Russia’s key sea maritime gateway for the past three centuries, has, along with its other Baltic ports, lost the lion’s share of its container handling volumes. In the face sanctions, liner operators had little alternative other than to leave Russian trades. “Our Baltic terminals were almost paralysed in April, with just sporadic container operations,” comments Olga Gopkalo, a Saint Petersburg-based maritime transport analyst. “But even if the feeder lines decided to return, that would not improve the situation, as long as the European hubs, such as Rotterdam and Hamburg, refuse to work with Russia.” Having withdrawn from the Russian market, the international carriers have halved the volume of ISO boxes operating locally. Furthermore, the structure of container trade has changed - today exports account for 40 per cent of container activity, while the import share is now just 14 per cent. As a result, according to Vladamir Savchuk, Deputy Director of the Moscow headquartered Natural Monopoly Institute, the number of boxes leaving Russia each month is three times that moving in the opposite direction. This, in turn, is expected to result in an overall container deficit in the Russian market of up to 350,000TEU in 2022.

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Similarly, as the West has been closing its markets for Moscow’s commodity exports, Russia’s Baltic seaports have lost their significance as the main westbound gateway. At the same time, Russian traders have started looking for new markets and building up new logistics schemes. Thus, from March to June this year, according to Aleksey Shilo, Deputy Director General of the state-run monopoly Russian Railways (RZD), Russia’s exports of ferrous metals and fertilisers to Asian (and, above all, China) markets expanded by 20 per cent and 16 per cent year-on-year respectively. EASTERN EMPHASIS Growing international isolation has led to the Kremlin selling its mineral resources to China and India with a substantial discount or even below the actual cost of production. This year, Asia has become the largest importer of Russian oil, with Beijing and New Delhi purchasing it with a 30 per cent discount. “In general, we can now ascertain a clearly demonstrated redirection of export freight flows from the nation’s western to its eastern and southern ports, as well as overland rail terminals at the Russo-Chinese border,” highlights an oﬃcial statement from RZD’s logistics branch. Last year, the total volume of trade between Moscow and Beijing reached the record-breaking figure of US$146 billion, up 36 per cent on 2020, as per the data released by Russia’s Foreign Ministry. Since March this year, with the launch of international restrictions, the trade turnover between the countries has somewhat decreased, but China remains the

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RUSSIA: TRANSPORT LOGISTICS

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using its Black Sea harbours and those in annexed Crimea to export grain and metal stolen from the occupied Ukrainian regions. Equally, it has looked to implement schemes for socalled “parallel imports” of sanctioned cargoes via Turkish and Iranian ports.

largest importer of Russian commodities, accounting for 13 per cent of all Russian exports. However, the limited capacity of the Trans-Siberian Railway (TSR), Russia’s key transport system connecting its European part with the Pacific coast, is not suﬃcient for shipping all the planned export cargoes to the Far East. For instance, Russian coal producers have had to reduce their deliveries to China by eight per cent in May 2022 compared to the same month in 2021. Another problem faced by Moscow is a shortage of freight railcars. In April this year, Russia’s freight wagon production shrank by a quarter compared to April 2021 and by 21 per cent in March 2022. The banned export of western-made component parts to the country underpins this negative situation. The suggestion has been made to utilise the northwestern harbours’ idle capacities for handling coal exports to Asian markets. This is, however, an expensive option and really only feasible with high global prices. Under the circumstances, Russian traders have, in the opinion of local observers, to work on transforming their export routes and particularly by the time prices start lowering (possibly by the year-end). For example, Moscow could potentially harness the geographical location of its Black Sea and Caspian ports to boost its export volumes to southern markets, such as Turkey and the Mediterranean region on the one hand and Iran, India and South Asia on the other. Maksim Reshetnikov, Russia’s Minister for Economic Development, has recently ordered its agency to work out new rates for the International North-South Transport Corridor (INSTC), which to-date have been far from competitive. Meanwhile, observers report the Kremlin has been actively

NORTHERN SEA ROUTE Elsewhere, it is planned to intensify shipping along the 14,000 km-long Northern Sea Route (NSR), Russia’s segment of the Northeast Passage). To kick oﬀ the large-scale project, Chinese banks are allegedly prepared to lend the Kremlin up to US$1.3 trillion on preferential terms by 2027. Both Moscow and Beijing would be able to capitalise on use of the NSR, as a shorter alternative to the traditional trans-ocean routes via the Suez Canal, according to Nikolay Nepliuyev, the Russian financial expert. The toughest challenge to be met in the course of the project implementation is to ensure year-round navigation through the route. It remains questionable though as to whether the NSR project is really viable given that the energy related development projects associated with it are scaled down or do not proceed – and in this regard the withdrawal of foreign energy majors is clearly a problem area. Russia and China have been long-time economic and political partners. Moscow’s aggression against Ukraine and the subsequent sanctions have brought them even closer. What was initially seen as an emergency change of traditional trade routes is now evolving into a fully-fledged economic and geopolitical relationship. “Developing a necessary infrastructure to turn Russia eastward is the most important task for the country,” declared Yury Trutnev, Russia’s Vice-Premier, emphasising the key role of TSR and NSR for the future expansion of cargo transportation volumes. “It is not possible to widen NSR due to natural reasons, but renovating and widening TSR will be not only possible, but meaningful for solving our logistics tasks,” he stressed. In the meantime, Russia’s private business circles have voiced their readiness to invest US$25 billion to upgrade the Trans-Siberian and Baikal-Amur railways and increase their aggregate capacity to 260–280 million tonnes by 2035 under a concession agreement with the federal government...

Northern Sea Route Chinese banks are allegedly prepared to lend the Kremlin up to US$1.3 trillion on preferential terms by 2027

8 Plans have been tabled for large scale investment in the Northern Sea Route but questions remain as to the viability of such a project

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JULY/AUGUST 2022 | 29

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COASTLINK: PRIORITIES, OPPORTUNITIES AND INNOVATION

COASTLINK PLOTS PRIORITIES Coastlink 2022* put under the spotlight key issues around building connectivity and short-sea networks for the future. Felicity Landon presents the highlights Port efficiency and smart communication are key elements for lowering shipping’s carbon emissions, Lars Robert Pedersen, Deputy Secretary General of BIMCO, told delegates at the Coastlink 2022 conference held in Antwerp, Belgium in May this year. During the session discussing improving efficiencies through digitalisation, Pedersen focused on the Just-in-Time concept for ship arrivals in port. Referring to the growing pressure at ports around the world to address air pollution generated by cargo operations, he noted that an important focus of port efficiency is to minimise negative impacts on human health and the environment. “The Just-in-Time arrival concept refers to any action that reduces the idle time in ports by means of minimising delays,” he said. “Just-in-Time requires good early communication with the port and harmonisation amongst all the relevant stakeholders involved.” UNCTAD analysis defines potential savings from the concept, he said. Total port time (waiting and working time) averaged out at 7.3 days for bulk carriers. The global average waiting time was 3.46 days. The report estimates the associated cost of the delay at US$38,000 per port call. “With approximately 137,500 port calls by bulk carriers, this represents a cost of $5.2 billion per year,” he said, and these financial savings can be made without even considering the environmental benefits of the changes. A number of digital solutions and products are under development in the maritime industry, said Pedersen, but despite the many benefits of digitalisation, progress has been slow and uneven.

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The Just-in-Time approach represents ‘low-hanging fruit’ via which shipping can reduce its emissions and enhance port efficiency “The technologies are not the main obstacle, but rather the challenge is to make different stakeholders cooperate. Currently there is no – or very little – collaboration and harmonisation between the various solutions. Sometimes there are not even [harmonised] solutions available within the port or country.” BIMCO has developed clauses for Voyage Charter Parties which can support the use of Just-in-Time, including the Virtual Arrival Clause, Sea Traffic Management Clause and Just-In-Time Clause, the latter being adopted last year. “The charterers can request the ship to slow down or speed up, as the case may be, so as to meet a certain arrival time,” said Pedersen. These clauses only govern the relationship between the owners and charterers and cannot impose any obligations on or provide any rights to third parties, he emphasised. He described the Just-in-Time approach as a ‘low-hanging fruit’ for shipping to help reduce its emissions and ports to enhance efficiency. *The Coastlink Conference was held in Antwerp, Belgium 11 – 12 May, 2022

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Overall, said Pedersen, the digital transformation is set to play a vital role in shipping and for shipping companies. “Harmonisation and interoperability are key to the success for resilient, sustainable maritime digitalisation – in particular with regard to the exchange of information. Global standards and collaboration will enable digitalisation and integration. We need to ensure interoperability between public and private systems for the exchange of logistics information.”

8 Shortsea shipping consumes less fossil fuel per ton-km than planes, trucks or trains and there are other influential incentives to shift cargo from road/ train to sea

OVERVIEW: KEY QUESTIONS COVID-19 changed our world – not least because empty shop shelves at key times made the previously invisible transport sector visible, said the Coastlink market overview conference paper. Outlining the challenges and opportunities for shortsea and feeder shipping, this paper questioned whether the world had become too dependent on production in the Far East – “Is the time right to opt for nearshoring, manufacturing closer to home?” The paper also considered the evolution from Just-inTime to Just-in-Case logistics, the need to roll out digitalisation further in a sector that still makes use of physical documents such as Bills of Lading, and the consolidation of megaships that can leave little competition – “often it is take it or leave it for the customers.” “Is big still beautiful or are there limits to growth and can shortsea be an alternative?” the paper asks. There are a number of opportunities for shortsea shipping in the current environment, said the paper – not least as an alternative to congested road transport. “With small coasters, you can enter deep into the hinterland.” Shortsea shipping consumes less fossil fuel per ton-km than planes, trucks or trains; with the shortage of containers and container capacity, there is interest in shifting cargoes back from containers to breakbulk; Brexit has driven a shift from trucks to shortsea shipping, notably to cut out the UK land bridge and ship direct between Ireland and the European mainland; and shortsea ships are ideal for transshipment as the increasing size of deep-sea container ships means they are not able to discharge in small ports.

JULY/AUGUST 2022 | 31

COASTLINK REVIEW: DIGITALISATION

DIGITAL INNOVATION HIGHLIGHTS Innovation in the arena of digitalisation was a prominent area of discussion at the Coastlink conference held recently in Antwerp. Felicity Landon reports A ‘ZEEPORT’ was introduced at Coastlink: a Zero Emission Electric Port, as envisaged by NAVTEC. The ZEEPORT project is a fully integrated approach that takes in the principles of circularity, climate change, water resources management, marine ecology, waste management, air quality and stakeholder participation, as well as decarbonisation of a port, explained Ferhat Acuner, General Manager, NAVTEC. A preliminary feasibility study has been carried out by the company. The ZEEPORT project aims to be a ‘maritime decarbonisation best practice’ decoupling economic growth and GHG emissions and other pollutants in ports, said Acuner. “The next step of this innovative project is to further develop into a zero emission, renewable energy surplus producer port. “The port will produce its renewable energy combined with different renewable technologies, such as wind, biomass, solar energy, battery storage, hydrogen storage, fully electrical ZEE-TUGs and so on.” However, the main focus in Acuner’s ‘Towards Decarbonisation’ presentation was the ‘LEEPORT’, a Low Emission Electric Port, which represents an incremental step towards the ZEEPORT. CASE STUDY Navtec carried out a case study into the energy distribution of a reference port, across equipment and vehicles (tugs, terminal transport and stacking equipment, port vehicles), operations (cargo handling, port access, outdoor lighting) and buildings (terminal office and passenger buildings, warehouses). It then compared annual energy consumption with potential renewable energy sources and adjusted the output based on reasonable availability periods, including solar, wind and biomass, while also allowing for storage. The port’s calculated annual energy requirement was 16.7m kWh. It was calculated that solar could provide 1.8m kWh, wind could provide 10.5m kWh and biomass 8m kWh – adding up to 20.3 kWh; so the ‘energy over production’ result was 3.6m kWh. Preliminary findings were that a €6.5m investment could deliver a 63 per cent reduction in CO2 emissions, plus reduction in other pollutants, cut operational costs by €1.2m a year and generate additional income of €328,590 a year. NAVTEC is a specialist naval engineering and architecture, design and build company . Its portfolio ranges from the world’s first self-propelled floating power plant to the ZEETUG, the world’s first rechargeable fully electric harbour tug. NAVIPORTA: THE SMART OPTION Also during Coastlink’s Digitalisation, Innovation and Collaboration session, Raoul Tan, Director of Naviporta at the Port of Rotterdam, discussed ways of making port and international trade flows smarter and more efficient and asked the question: “How are port authorities going to play a meaningful role in the dawn of the digital supply chain if we are not working together?” The Naviporta platform is an open, neutral and interoperable digital platform underpinned by blockchain. It was designed to facilitate secure exchange of data and enable digital services to optimise document and financial

32 | JULY/AUGUST 2022

processes in supply chains – for example, trade finance, regulatory compliance, proof of provenance and document management. The first service to be launched, Quay Connect, provides fully digital and automated Customs clearance – saving exporters to the UK up to €40 per clearance. Tan explained the need, post-Brexit, for a streamlined process, and how Quay Connect is “propelling frictionless trade between the UK and the Netherlands”. The Quay Connect pilot project was carried out with ABC Logistics, BT, the Fresh Produce Centre and Portbase, the Dutch Port Community System. As Tan explained, the post-Brexit situation has been causing delays and creating additional manual work as well as uncertainties in trade to and from the UK. The new platform delivers direct integration with UK Customs, including proof of authenticity, creating shorter lead times and improved certainty on delivery.

‘‘

8 The Naviporta platform’s Quay Connect service , provides fully digital and automated Customs clearance – reportedly saving exporters to the UK up to €40 per clearance

Think big, start small, act now

Quay Connect has created a ‘fast lane’ for export to the UK while saving time and money, he said – by connecting individual business systems with the required governmental and regulatory bodies into one automated, accurate workflow, in a solution that puts the exporter in control. Tan said Quay Connect’s proven benefits include increased ease of doing business between the UK and the Netherlands, a net eﬃciency gain with 30-60 per cent cost saving, a fully digitalised process, the elimination of manual and cumbersome processes and visibility on the whereabouts of the exported cargo. There were key takeaways from the project, he said: “Start with a clear problem statement. Involve the right parties and partners from the start. Think big, start small, act now.”

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

COASTLINK: CASE STUDY – PORT OF TYNE

IN PURSUIT OF GREEN GOALS The UK Port of Tyne has a multi-component and multi-phase comprehensive agenda to eﬃciently achieve highly beneficial green goals. Felicity Landon explains The Port of Tyne has set a target to be Carbon Net Zero by 2030 and an all-electric port by 2040. Setting out its Green Port Strategy at Coastlink 2022, Eleni Bougioukou, Innovation Manager – Energy, described the Tyne’s transformational journey to be a centre of excellence for clean energy, digitalisation, decarbonisation and innovation. She explained how scenario planning and feasibility studies, to help determine future power needs, were carried out in partnership with Siemens. This work provided a blueprint for the transition to Net Zero, based on an understanding of the port’s current and forecast power usage, a digital twin to allow visualisation, and analysis of energy consumption and business case planning to support the prioritisation of energy projects to ensure maximum ROI and environmental benefits. The port’s green agenda includes electrification of harbour cranes, quayside plant and machinery, the purchase of two new hybrid cranes, replacement of diesel vans with EVs, installation of smart meters and LED smart lighting, solar panels on warehouse roofing, small and large-scale wind turbines, a DEOP (distributed energy optimisation) digital platform, and the adoption of sustainable fuels, with an HVO fuel trial. MARITIME INNOVATION HUB The Port of Tyne has been working collaboratively with other ports in its Maritime Innovation Hub, which was opened at South Shields in July 2019. The first and only Maritime Innovation Hub in the UK, it is a partnership between the Port of Tyne, Connected Places Catapult, Nissan, UbiSoft, Accenture, Nissan, Royal HaskoningDHV, Drax, Oﬀshore Renewables Catapult and the Department for Transport. The hub was set up to inspire collaboration between partners, to develop solutions to technology challenges in the maritime and wider logistics industry.

Later in 2019, the port launched its Tyne 2050 programme – its own 30-year strategy in line with the UK’s Maritime 2050 vision. This encompasses 28 projects across environment, financial sustainability, health & safety, innovation and technology, communities, customers, people, and security & resilience. Alongside these projects, the Tyne Clean Energy Park covers 200 acres of development land and is the North East UK’s most versatile clean energy park, claimed Bougioukou. It provides a co-location option for the renewables sector with unrestricted marine access and opportunities for manufacturing, installation and O&M operations. Equinor selected the Port of Tyne for its flagship operations and maintenance base for its Dogger Bank wind farm, the largest in the world, reflecting the port’s ambition to be a “partner for the new green revolution”, Bougioukou noted. Clearly the two “Ds” go hand in hand, and a digitalised and decarbonised port transition roadmap created by the port in partnership with Siemens and others reflects this. The Tyne’s Smart Port Strategy encompasses steps such as installation of a private 5G network, adoption of a portwide data strategy, digital upskilling of employees, and digitisation of workflows and processes. The aim is to establish the Tyne as a 5G testbed, attracting technology companies to test their products and implement leading-edge technology, while also supporting existing customers. Bougioukou, said potential 5G uses were autonomous land and water vehicles, remote-controlled quayside plant and machinery, remote pilotage, collection of real-time productivity data via IoT sensors. Other examples include tracking plant, vehicles, cargo and personnel, enabling virtual and augmented reality, carrying out environmental monitoring, and providing health & safety monitoring and alerts. 8 The Port of Tyne, setting the pace in pursuing green goals

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

JULY/AUGUST 2022 | 33

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IAPH: MARKET VIEW

EXPECT THE UNEXPECTED The pre-covid normal is gone and there is a need to adapt to a new set of market conditions. This was the game-changing view presented at the recent IAPH World Ports Conference. Felicity Landon reviews the highlights We are not going back to ‘normal’ – the global supply chain has shifted, delegates were warned at the International Association of Ports and Harbors’ world port conference in Vancouver. Noel Hacegaba, Deputy Executive Director at the Port of Long Beach, made this assessment during a session considering port authorities’ perspectives on supply chain resilience and performance. The ports industry has seen disruption in the past but, post-Covid, “any crystal ball you might have used in the past is now obsolete,” he said. “Expect the unexpected, plan not just for recovery but for continuity, revisit your strategic plans more often, look at the bigger picture,” he urged ports. “In the past, port authorities like ours would focus on what happens inside the gates – especially landlord ports like ours,” he said. “It was a very traditional model, and arm’s length relationship with tenants. That is not the case anymore. We have to be at the table; we have to lead.” Stéphane Raison, CEO and Chairman of the Management Board of HAROPA Port, France, agreed: “We have had more than two years of COVID-19 and we can’t say now if we are finished, because, as we see in China, we have a lot of congestion because of COVID-19,” he said. “So, we also have supply chain challenges for 2022.”

‘‘

There has been a lot of frustration around the congestion and delays but there is no ‘stand-out villain’ He also highlighted the war in Ukraine and the consequent blocking of grain exports. “All the challenges we face are more important now if you compare to 2019,” he said. “It is very difficult to adapt to the situation because each year you have more difficulties, more work to do to be sure that you will deliver all that the customer demands.” STICKS AND CARROTS The speakers were asked about ‘sticks’ – including charges for containers not collected – and ‘carrots’ for tackling port congestion and improving container flow. Hacegaba said: “So far, we have had to use the stick in an unprecedented fashion – but it was necessary and we stand behind the actions we have taken. What is key here, looking ahead beyond the disruption, is that we are not going back to normal. The global supply chain has shifted.” High throughput is expected to continue in the years ahead, he said. “So, we have got to do what we can to make sure the throughput can be handled as efficiently as possible.” To put this into perspective, he said, there are two billion square feet of warehousing and distribution space within 60 miles of the Port of Long Beach. “You would think that is enough – but it simply isn’t enough. So we need to find a way to process more containers. We have to look for ways to drive up intermodal business.”

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

There has been a lot of frustration around the congestion and delays but there is no ‘stand-out villain’, delegates were told. Hacegaba said: “This is a work in progress. A port means diﬀerent things to diﬀerent stakeholders. We have been at the centre of all of that because the interests don’t necessarily align. But when you are in a crisis like the last two years, it helps to bring everyone together to see the bigger picture – and understanding the only way through this is to work together. “It has brought us closer to the stakeholders. We are constantly tracking what is happening on the ground, on the water, and what we can do to move containers out of the port as quickly as possible. We are working closer together than ever before.”

8 Noel Hacegaba, Deputy Executive Director, Port of Long Beach, USA sees a need for port management bodies to have a greater involvement in driving process improvements

MORE ASSERTIVE ROLE? Could landlord ports take a more assertive role? Hacegaba said: “When we revisit the leases and agreements, we are going make sure there are measures in place so that we can track the metrics. We need to have some level of control over the progress on the ground of how fast and how reliably containers are moving – even though we have some language in our existing leases, I think we can do a better job going forward of cementing and solidifying that, so we, even as a landlord port, can have some visibility into that and try to drive some of the process improvements we all need.” Reflecting on the pandemic, he concluded: “We never would have envisaged the role we played – putting up test sites, vaccinating 10,000 seafarers, working with our terminals and shipping lines to expedite containers carrying PPE and medical supplies. It was never in our vision but we did it thanks to the great support of our board and stakeholders who came together and incredible staﬀ. “It shows that over a decade of running scenarios and exercises through our incident management training, it actually worked. You never could have planned for something like this but the processes we put in place actually did their job.”

JULY/AUGUST 2022 | 35

IAPH: CLEAN FUEL OPPORTUNITIES

CLEAN FUEL OPPORTUNITIES Felicity Landon reviews the principal findings of the Getting Ready for Zero Carbon Marine Fuels session at the IAPH World Ports Conference – diverse opportunities are identified

8 Maximising safety in the transition to clean fuels is of paramount importance – Amsterdam has developed LNG check lists

Ports have the opportunity to become the epicentre of energy production, energy distribution and energy consumption, according to José Firmo, IAPH Vice-President Central and South America. Speaking at the IAPH World Port’s conference session on ‘Getting Ready for Zero Carbon Marine Fuels’, he said: “I think bunkering and what’s going to happen with green fuels in the future is probably just a component of what ports should be doing in terms of strategic positioning for this new energy business that is coming. I am sure it is going to be much bigger than this.” Firmo, who is CEO, Porto do Açu, Brazil, pointed out the huge amount of energy required and added: “What we probably don’t know about the oil & gas industry is that it declines at a rate of about 15 per cent every year, so just to maintain the same amount of production, a huge amount of money needs to be invested. “So, with the whole story about energy availability in the future coming from the decline of oil & gas and the global growth of required energy, it is just an amazing opportunity – and we are going to transition to something.” Right now, the absolute best strategy is to keep discussing, he said. “Let’s make sure our strategies in our ports are ambitious enough to take that position, not in one aspect of it but in the entire spectrum of how it can change completely the energy landscape.” Flexibility is the key, he added. “Let’s make sure we don’t close ourselves to any one of these solutions.” FUEL READINESS Peter Alkema, Chair of the IAPH Clean Marine Fuels (CMF) Working Group and also representing the Port of Amsterdam’s Harbour Master Division, said: “It’s all about fuel readiness – being a fuel-ready port. That is, having availability of fuel and

36 | JULY/AUGUST 2022

visibility, infrastructure, regulation, your governance, but also having safety management in place.” Ports looking at fuel readiness can start with small amounts in the pioneer stage, he advised. As for regulation, “maybe the regulations are not in place, or you have to make them yourself as a port”. Safety has to be 100 per cent, said Alkema. “You have to arrange for safety management before you can even start a project and support the pioneers in the industry.” The CMF working group has developed LNG checklists, and these are now being developed as liquefied gas checklists including for hydrogen. The working group also has blueprints for checklists for methanol, and checklists for ammonia are being worked on, he said. “There is also the system-based level; for example, we have an audit tool that can support a port authority or any competent authority in assessing the SMS of a bunker operator, assessing the way it interacts with all the other players that are part of the bunkering.” He also noted the value of a ‘bunker terminal ready’ tool which helps terminals to get experience and guidance in receiving vessels fuelled by hydrogen, methanol or ammonia, whether for bunkering or just being alongside. “You may even think,” he suggested, “I am not a bunker hub, so I don’t need all these tools’ – but you are in the future going to receive vessels that sail on big amounts of methanol, big amounts of ammonia, for example, and terminals have to be ready for these vessels. You have to have a certain readiness in time for the new fuels that will be used,” he emphasised. The Port of Amsterdam is already a major energy hub for the Netherlands, noted Alkema. It also has experience in making diﬃcult transitions – from being a major coal port to no longer handling coal for the hinterland in Germany. He further pointed out Amsterdam is already a ‘multifuel’

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

IAPH: CLEAN FUEL OPPORTUNITIES

‘‘

Right now, the absolute best strategy is to keep discussing… port; hydrogen bunkering is happening on a daily basis, alongside LNG and methanol. “We also believe it is a transition period, so you need some time to use some fuels even if they are not carbon neutral,” he said. AMMONIA POTENTIAL The ‘Getting Read for Zero Carbon Marine Fuels’ session also included presentations by Tessa Major, Director Bunkering – Port Relationships and Regulations for Yara Clean Ammonia, and Jason Chesko, Director, Global Market Development and Head of Methanol Marine Fuels at Methanex Corporation. As a fertiliser company, Yara depends on ammonia as the base product; it has 17 plants worldwide and the largest market share in ammonia trading and shipping, said Tessa Major. The new business unit, Yara Clean Ammonia, was set up in February 2021 to target new markets using clean ammonia. “We have an end-to-end approach looking across the entire value chain,” said Major. “We are eyeing hydrogen and ammonia production.” Demand for ammonia as a low-carbon shipping fuel is expected to increase exponentially from 2025, she said. “If 24 per cent of the shipping industry chooses ammonia, you are looking at demand of 182m tonnes per year, which is the

same capacity which is produced globally today. Momentum for ammonia as a fuel is growing rapidly and pilots are growing exponentially.” Yara is not a bunkering company and does not have a vision to become one, said Major, but it does want to connect its clean ammonia with the end user. In some regions the company would have to be “a little bit forward-leaning”. In Norway, for example, Yara has already purchased ammonia bunkering barges, focusing on the oﬀshore industry.

8 Yara wants to connect its ammonia to the end user – pictured the company’s ammonia plant at Porsgrunn, Norway

Green Corridors: Concept to Reality The concept of ‘green shipping corridors’ must be aligned with cargo owners’ interests, delegates at the IAPH session on ‘How to Develop a Coordinated and Resilient Network of Green Shipping Corridors’, heard. Ingrid Irigoyen, Director, Aspen Institute and Facilitator of the Cargo Owners for Zero Emissions Vessels (coZEV) initiative, said cargo owners’ voices were not being adequately represented in discussions around zero carbon shipping. Cargo owners want zero-carbon shipping, and it is important to give confidence to the market that there is a customer at the end of the value chain for the zero carbon transition to happen, she underlined. The coZEV initiative is working to bring cargo owners together, aggregate demand and deploy demand, and all of that is in support of green corridors. Collaboration and working together are vital, she said. “The concept of green corridors needs to be aligned with cargo owners’ interests. coZEV provides them with information about green corridor concepts, she said. “Most companies don’t have dedicated staﬀ for vessel decarbonisation, so it is one of the services we can provide – making it easier for them.” The current situation, said Irigoyen, is that

while a cargo owner might choose net zero commitments regarding maritime transport, “there is nothing they can do except pay a premium for biofuel.” It is important to ensure that the transition to zero-carbon fuels is smooth and aﬀordable, and – after the disruption of the past two years – doesn’t result in more disruption, she said.

‘‘

You are going to need to see more multi-year contracts for zero emission shipping… “Price and reliability will probably still be king for some while but we want the climate impact to be internalised – and this is happening in some companies.” However, she noted, the year-to-year contracting model for container freight “is not going to get us there”. “You are going to need to see more multi-year contracts for zero emission shipping, because that is the only way to underpin the whole value chain of investment that needs to happen. We have seen a little bit more multi-year contracting in the past couple of years – not climate

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

8 Green corridors need to be strongly aligned with cargo owners’ interests

driven, but we can harness that breaking of the mould, to think about those longer-term commitments that will provide carriers, shipowners, fuel producers and investors with the confidence that there is a customer at the end of this value chain that wants this and is going to do their part.” Ports can take steps, she concluded – for example, by thinking about what kind of incentives they are providing for cargo owners to help them make their contribution. “For example, if they are paying a premium for zero-emission – is all they get GHG reduction? Could they get a fast lane to the berth? Could they get oﬄoaded faster, to enable them to be inspired?”

JULY/AUGUST 2022 | 37

HYDROGEN HUB DEVELOPMENT

HYDROGEN PIONEER The Port of Rotterdam has pioneering status in developing the hard and soft infrastructure necessary to fulfil the role of a European hydrogen hub

Source: Port of Rotterdam

The Port of Rotterdam Authority is at the forefront of eﬀorts to harness carbon free hydrogen fuels and exploit the related potential new business opportunities. One strong manifestation of this is its worldwide initiative to secure hydrogen imports. The port has established strong links with Spain in this respect but in addition Nico van Dooren, Director of New Business, Port of Rotterdam Authority, has travelled to diverse countries including Morocco, Saudi Arabia, Canada, the USA and Australia with the realisation of this goal in mind. Spain is a source that has maturing plans for hydrogen production – as identified in its Road Map Hydrogen – and is expected to be an early source of hydrogen supply. Supplies from foreign sources will be in addition to hydrogen generated by the construction of five so-called electrolysers – plants which utilise electricity produced by North Sea wind farms together with water to produce clean hydrogen. The electrolysers, located on reclaimed land in Rotterdam’s outer port area – the Maasvlakte – will be built by Shell, BP, Uniper and Air Liquide with grid operator Tennet delivering part of the electricity via cable. Against a background of wide-ranging changes in energy supply lines due to Russia attacking the Ukraine and the resulting sanctions environment, the Port of Rotterdam Authority recognises that ‘home-grown’ arrangements for sourcing hydrogen will not be suﬃcient to meet demand: for the Netherlands and the hinterland of the port that extends into neighbouring Germany. Overall, the port’s ambition is to produce hydrogen for Rotterdam-based industries, The Netherlands in general and to fulfil the role of a logistics hub for European hydrogen economies. Indicative of this, the port already collaborates with Shell, steel producer ThyssenKrupp and energy producer RWE for hydrogen transportation into Germany.

38 | JULY/AUGUST 2022

The plan is for European, Dutch and German financial support to be leveraged in order to connect the inland port areas Moerdijk and Limburg as part of the development of the distribution network. In overall terms, Rotterdam’s hydrogen hub development plans also serve to complement the European Commission’s recently revised plans which raise the original forecast import volume of hydrogen from 5.6 mega tonnes in 2030 to 20 mega tonnes in 2050.

‘‘

The European Commission has raised hydrogen import targets from 5.6 mega tonnes in 2030 to 20 mega tonnes in 2050 HYDROGEN EXCHANGE In soft infrastructure terms, to support the hydrogen sector initiative, it is notable that the Port of Rotterdam Authority has embarked on a project, together with partners, to establish a ‘Hydrogen Exchange’ using the structure of existing electricity and gas exchanges. As the Port of Rotterdam explains: “Research into the practical setup of a hydrogen exchange in the Netherlands has clarified the products and conditions that will be required to create trade for hydrogen. They include hydrogen certification, an index that would make prices transparent, a spot market and the development of trading instruments to balance the physical hydrogen network and to store the gas. “All this,” the port notes, “was revealed by research conducted by Bert den Ouden on behalf of Gasunie and the port authorities of Rotterdam, Amsterdam, Groningen and North Sea Port, in consultation with market players and governments.”

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

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excellent returnCambridgeshire on investment. Gemini House Business Park, Gemini House Cambridgeshire 1 Bartholomew’s Walk, Ely Business Park, Cambridgeshire 4EAEly 1 Bartholomew’sCB7 Walk, England, United Kingdom (UK) Cambridgeshire CB7 4EA Tel: United +44 1353 665001 (UK) England, Kingdom Fax:+44 +44 1353 1353 666734 Tel: 665001 sales@samson-mh.com sales@samson-mh.com www.samson-mh.com www.samson-mh.com

25/02/2021 15:49

13 JUNE Southampton 15 2023 United Kingdom

Taylor Machine Works, Inc.

C ARGO HANDLING SYSTEMS

The BEUMER Group is an international leader in the manufacture of bulk material handling systems:

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

VAHLE PORT TECHNOLOGY VAHLE is the leading specialist for mobile power and data transmission VAHLE provides the solutions to reduce the carbon footprint while increasing the productivity. RTGC electrification including positioning and data transmission making RTGC ready for Automation. Westicker Str. 52, 59174 Kamen, Germany

Email: port-technology@vahle.de Web: www.vahle.com

25/01/2022 12:03

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

JULY/AUGUST 2022 | 39

PRODUCTS & SERVICES DIRECTORY

For more information visit: seawork.com contact: +44 1329 825335 or email: info@seawork.com

Tel: +46 470 77 22 00 info@fogmaker.com www.fogmaker.com

01/02/2021 13:12

MRS Greifer GmbH 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

Camco ID June 2021.indd 1

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

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

Sany SanyAllee Allee11 50181 Bedburg, Germany D-50181 Bedburg Tel: 100 Tel:+49 +49 2272 2272 90531 90531 100 Email: info@sanyeurope.com info@sanyeurope.com Email: www.sanyeurope.com www.sanyeurope.com

To advertise in the

Port Strategy Directory Contact Tim Hills +44 1329 825335 www.portstrategy.com

To advertise in the

Visy systems reduce VISY Oy expenses, optimize safety & security, and VISY takes pride incapacity solving via increase throughput operational problems,Our specialising process automation. singlein gate automation and system access platform gate operating control solutions in ports and and OCR solutions manage all terminals. Their solutions cargo, assets & personnel streamline processes resulting movements via quay, rail or road in saving money and to keep operations moving. increasing productivity.

25/01/2022 11:42

13 JUNE Southampton 15 2023 United Kingdom TO

Port Strategy Directory Contact Tim Hills +44 1329 825335 www.portstrategy.com

40 | JULY/AUGUST 2022

TT Club Directory March 2021.indd 1

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

For more information visit: seawork.com contact: +44 1329 825335 or email: info@seawork.com

01/03/2021 14:40

IDENTEC SOLUTIONS is an industry-leading, trusted partner in managing and monitoring reefer containers and optimizing entire terminal operations through solutions like Reefer Runner and Terminal Tracker. Contact: Stephan Piworus, Global VP Sales Marine & Ports, spiworus@identecsolutions.com; Mobile: +49 151 74122606 www.identecsolutions.com

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

S IDELIFTER/SIDELOADER

I NSURANCE

Sany ID.indd 1

Contact Tim Hills +44 1329 825335 www.portstrategy.com

P OWER TRANSMISSION

SANY Europe GmbH offers a broad spectrum of high-performance mobile port machines such as Reach Stacker, Empty Container Handler, Heavy Duty Forklift Trucks and Material Handler

Port Strategy Directory

19/05/2021 14:16

Orts GMBH Maschinenfabrik 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.

To advertise in the

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

P ORT AUTOMATION

H ANDLING EQUIPMENT

G RABS

Fogmaker Directory.indd 1

I T PORT AUTOMATION

F IRE SUPPRESSION SYSTEMS

13 JUNE Southampton 15 2023 United Kingdom

Fogmaker develops, manufactures, and markets ﬁre suppression systems for engine compartments with high pressure water mist. Fogmaker is a market leader for automated ﬁre suppression systems with 200,000 installations in more than 50 countries since 1995.

The world leading manufacturer of Sideloaders, self-loading semi-trailers for versatile & efficient container handling. www.hammarlift.com info@hammarlift.com

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

PRODUCTS & SERVICES DIRECTORY

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

T RACTORS

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

Solvo Europe B.V.

T ERMINAL OPERATIONS SYSTEMS

S PREADERS

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 21,000 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

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

T ERMINAL OPERATIONS SYSTEMS

Tel: +44 2476 585 000 sales.team.uk@tvh.com www.tvh.com

T ERMINAL OPERATIONS SYSTEMS

S PARE PARTS

TVH is a global player in the field of spare parts and accessories for heavy forklifts, reach stackers, container handlers, spreaders and terminal tractors. With over 96,000 references in stock and more than 644,000 known references, TVH offers quality replacement parts for many brands and makes, including the hard-to-find ones.

MAFI Transport-Systeme GmbH Tideworks Technology provides comprehensive terminal operating system solutions for marine and intermodal terminal operations worldwide. Tideworks works at every step of terminal operations to maximize productivity and customer service. info@tideworks.com +1 206 382 4470 www.tideworks.com

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

POSTSCRIPT SUMMER OF DISCONTENT This is the summer of discontent in Europe with a raft of port and wider transport strikes in play. What is the solution, is there one? Equally, it is important that wider workforce issues are not overlooked with the current focus on pay and keeping pace with inflation.

‘‘

So, what a cocktail! Striking labour adding to seemingly embedded supply chain problems

Its not an unusual reaction – if inflation spikes, the cost of living rises then it is more or less inevitable that port workers, along with many others in diverse industry sectors, will want significant wage increases to maintain living standards. A simple logic often underpinned by the belief that many port employers have been ‘doing quite nicely thank you’ as a result of the unique operating conditions born as result of the pandemic. This latter view undoubtedly has a selective element – typically the impaired performance of most companies in the first year of lockdowns – 2020 – is set aside in favour of focusing instead on 2021, the year which for most companies was the so-called recovery year. It is not surprising then that, at the time of writing, Europe in particular is the focus of a number of strikes by port workforces. Germany is the prime example – in late June thousands of workers from the ports of Hamburg, Bremen, Bremerhaven, Brake and Wilhelmshaven implemented a second 24-hour strike with a bigger turn-out than the original June 9 strike reported to involve approximately 12,000 port workers. The strike followed a fourth round of wage negotiations failing. In Belgium port activity has been impacted by two separate days of trade union strikes – one at the end of May and another in mid-June. Reports indicate that key ports such as Antwerp-Bruges were to some extent able to manage the situation by planning for reduced working on the strike days which facilitated keeping things ‘ticking over’. In addition to seeking wage increases to offset inflation they also represented a strong protest against wage legislation. The UK is also not exempt from strike action – a national rail strike took place for three separate days in mid-June leading to major concerns over the ability of supply chains to function properly. The UK’s Network Rail, with the latter in mind, prioritised rail freight services over passenger services where they could be operated including in daylight hours. The net effect, however, was still comprehensive disruption, and at the time of writing no certainty regarding the end of these strikes, a reality that also applies to Germany and Belgium’s strikes. ON TOP OF EVERYTHING ELSE So, what a cocktail! Add striking labour to the ongoing volatility of supply chains which continue to suffer from lockdowns in China generating ripple effects along the cargo pipeline, labour shortages and mounting port congestion – as now manifest in northern Europe – and you have an exceptionally

42 | JULY/AUGUST 2022

8 Strikes – ultimately solutions will boil down to one important word, “compromise.” But easier said than achieved

challenging picture building day by day. Ironically, under normal circumstances if one port centre shuts down then ‘one man’s pain becomes another’s gain’ – i.e. typically the business is relocated for a while to another port centre but under current circumstances, in northern Europe in particular, with multiple strikes in progress, and terminal capacities pushed to the limit by the other operational negatives this is just not a feasible alternative. Bottom line, the only route out of this quagmire is negotiation and the word that is open to diverse interpretations, namely, compromise! As history tells us, however, with spiralling inflation in play this is by no means easy to achieve, it has a polarising eﬀect on the two camps of employers and workers/unions. As PS goes to press, the reality of the current situation is, simply put, watch this space… NOT CLOUD THE PICTURE As a footnote to this discussion, it is also important to say that the issue of pay is important but there are other equally important workforce issues – as experience earlier this year in the port of Piraeus, Greece tells us. The Collective Bargaining Agreement signed here by D Port Services, a company that provides labour to COSCO Shipping for the operation of container facilities at Piraeus’s Pier 1 and III, did serve to lift salaries significantly but in addition introduced a number of other measures of benefit to the workforce. These included: the conversion of rotating contracts to full time status on a phased basis; agreement on a range of internal upgrades with positive salary implications, addressing safety concerns and the introduction of health insurance on a fully paid for basis. Eﬀectively, a big step in the right direction in terms of putting in place proper all-round conditions of employment. A factor that should not be overlooked in the current climate of inflation prompting a strong focus on remuneration.

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

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Container Terminals: Paths to Profitability

Trade Analysis ❘ Terminal Strategy ❘ Investment Trends ❘ Business Priorities 13 MAIN CHAPTERS, 220pp 5 5 5 5 5 5 5

Trends and Risks in Container Port Demand The Container Shipping Market Terminal Investment Trends Forecast Demand Growth Winning Competitive Strategies Customer Behaviour in the Container Terminal Industry Servicing Customers

5 Effective Pricing for Stevedoring Services 5 Competitive Assessment of Port-Wide Service and Cost Levels 5 How to Make a Comparative Port Cost Analysis 5 Assessing the Real Risk of Losing Customers 5 Competing for Transshipment Volumes 5 Building Revenue Robustness

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Port Strategy July/August 2022

Articles inside

Expect the Unexpected

Hydrogen Pioneer

Clean Fuel Opportunities

Green Goals

Coastlink Plots Priorities

Sudan Uncertainties

Northern Challenges

Digital Innovation

Kenya Allegations

Russia Turns East

Transshipment Evolves

Rolling With The Punches