Port Strategy June 2020 by Mercator Media

JUNE 2020 VOL 1020 ISSUE 5

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SANTOS SHOCK COVID-19: Game-Changer and Innovation Catalyst 11th Hour Buenos Aires Concession Extensions

PORTSTRATEGY INSIGHT FOR PORT EXECUTIVES

The international magazine for senior port & terminal executives EDITORIAL & CONTENT Editorial Director: Mike Mundy mmundy@portstrategy.com Guest Editor: Mike Mundy mmundy@portstrategy.com News Reporter: Rebecca Jeﬀrey rjeﬀrey@mercatormedia.com

VIEWPOINT MIKE MUNDY

Looking to the future

COVID-19 has laid the seeds of change in transport and distribution strategy – right through from the individual’s work environment to the advancement of potentially revolutionary concepts such as additive manufacturing. It is a clear game-changer

Under current lockdown rules – for those of us that are under them – the future has a limited horizon, basically centring on the end of lockdown. Getting to see friends and family, socialising – basic things that are now seen for their true value. Professionally, we can also expect a reappraisal of priorities and the establishment of new ways of working. Going forward the door is opening to increased home working – facilitated by recent experience, the ability of individuals to employ the I.T. tools that enable this and importantly the recognition by companies that home working does actually work as well as oﬀer significant savings and performance benefits. Just as things may change in the context of individuals’ work lives – as both employees and employers see the merit in home working – and wider benefits are generated such as reduced travel, congestion free streets and a major reduction in greenhouse gases – changes are also to be expected in distribution and supply chain strategy. In terms of operation, there promises to be a larger automated dimension. Looking at the container terminal interface for example the following can be expected to become progressively more prevalent: data transfer in digital as opposed to physical mode, automated booking and communication systems, the remote scanning of cargo units, full or part automated handling operations depending on local circumstances and a raft of I.T. driven support systems right through from administrative, security, training and maintenance tools to a multi-faceted automated customer interfaces. Elsewhere in the supply chain – in logistics and warehousing centres – it is reasonable to expect that we will see much wider use of robotics. There is also the distinct possibility of major changes in supply chain arrangements with the advancement of concepts such as additive manufacturing, as referenced in my Strategist column in this issue. Additive manufacturing enables digital-physical products. Products which are designed virtually throughout the supply and value chains and only become physical in the last steps of the process. Imagine this when the concept is refined to a highly cost competitive level, the impact on traditional supply chains is potentially enormous. In the near-term there will also be new emphasis on “near shoring” and a general diversification of supply chains entailing of course less dependency on China as a global manufacturing base. These themes, the drivers behind them and the potential consequences are explored in more detail in two interesting articles featured on page 18 and page 21 respectively. COVID-19 promises to make its mark in a lasting way on transport and distribution strategy. The longer it lingers the greater the potential for meaningful change.

For the latest news and analysis go to www.portstrategy.com/news101

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JUNE 2020 | 3

The three point seatbelt, invented in Sweden.

Nils Bohlin invented the three-point seatbelt for Volvo in Sweden, with it eventually being ďŹ tted in most cars globally, helping protect drivers and save lives. Bromma has continued this proud Swedish heritage of innovation by introducing the ďŹ rst spreader Twin Twenty Detection System to the market, helping to detect dangerous situations when lifting two 20ft containers at once. Innovation, quality and reliability is what you can expect from Bromma, as it is what we expect from ourselves.

Bromma, leading through innovation. bromma.com

CONTENTS

JUNE 2020

15 NEWS

26 TT Line Quits Melbourne 26 Oakland Scores New Mid-East Link 28 Kalmar Inks Termont, Montreal Deal 28 APMT Tema Expansion is Early 28 GPH to Sell Port Akdeniz? 29 New Stevedore Launched in Charleston 29 New Fenders Means Tilbury2 Almost Ready 10 Tough April 2020 for JNPT 13 Busan Port Authority to Assist Liner Companies 13 Itajai Defying COVID-19

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

Social Media links LinkedIn PortStrategy portstrategy YouTube

REGULARS 15 Global Order in Distress

The recovery from COVID-19 will take longer than optimists expect, rolling out slowly before becoming more robust in 2021

15 Additive Manufacturing Impetus

Even before the coronavirus pandemic reared its head global supply chains were heading down an increasingly digital route but COVID-19 has provided added impetus

16 Reputational Considerations

Commodity movements are highly price sensitive, but “reputational considerations”are certainly a part of the matrix for choosing a port

For the latest news and analysis go to www.portstrategy.com/news101

FEATURES

17 Shock Resignation at Santos The man who was brought in to “revolutionise” Santos, South America’s biggest port, has surprisingly resigned, after just over a year in the hot seat,

21 Diversification Potential

The maritime industry is often accused of being slow to change and not entrepreneurial but COVID-19 may change this perception

33 BA Concessions Extended

Armageddon, or the end of the current concession road at least, almost came for the three container terminals that operate at Puerto Nuevo until Maersk Line agreed not to switch terminals at the 11th hour

39 Balancing Costs & Progress Market rather than economic regulation appears to be the way forward in Melbourne

49 Fuel for Thought

A review of eco-friendly RTG cranes highlights eﬀorts to raise eﬃciency levels while lowering emission levels

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The Congress is a meeting point that provides senior executives with the solutions they require to meet regulatory and operational environmental challenges. Say in touch at greenport.com Join leading port executives www.greenport.com/congress

JUNE 2020 | 5

NEWS REVIEW

BRIEFS

OAKLAND SCORES MID-EAST LINK

New Equipment for RWG Rotterdam World Gateway has received two new quay cranes from ZPMC in China. The units have a lifting height of 56m and can service ships that are 26 container rows wide and are the largest of their kind available. Along with these latest two cranes, which are due to be operational in second half of 2020, RWG has also invested in 25 new automated guided vehicles (AGVs).

Rail for Northport

New Zealand’s Northport has received what is understood to be its first-ever consignment of heavy-weight rail, in the form of a 5407-tonne shipment on the 13,110GT general cargo vessel Thorco Liva, from China. The 107.7km of track is predominantly destined for a major Northland rail upgrade – which includes a spur line to Northport. The rail track was unloaded over a five-day period.

Botany Rail Ranked A Priority Infrastructure Australia has ranked the Port Botany Rail Line Duplication as a priority project for the country. The Australian Government has welcomed the classification, with Deputy PM and Infrastructure Minister Michael McCormack saying it is critical to improve freight reliability at the port. The government has committed A$400 million to meet Sydney’s future freight demand by funding the rail duplication and Cabramatta Loop projects which will enable more freight to be transported by rail through Port Botany.

6 | JUNE 2020

The Port of Oakland, on the US West Coast, has confirmed a new service that includes, for the first time, a direct link from the port to the Mid East region. The new oﬀering, called the Far East-Pacific 2, is operated by the ONE grouping from Japan utilises vessels with capacity up to 14,000 TEU. The first vessel, the ONE Aquila, called to the Oakland International Container Terminal at the end of the first week of May. However, the service itself is not entirely new to the port because the Far-East Pacific 2 option does represent a combination of two existing strings to Oakland, which have been consolidated by the ONE carriers. “Naturally we’re encouraged by

this development,” confirmed Port of Oakland Maritime Director, John Driscoll. “The size of the ships means extra cargo capacity coming to Oakland and the Port rotation extends Oakland’s reach in global markets.” A call at Jeddah on the West Coast of the Kingdom of Saudi Arabia, in the Red Sea, is the new market that is opening to Oakland. Previously any cargo that moved to this location would have had to do so via an indirect routing option elsewhere. The Port of Long Beach is also on the service rotation and is the first inbound call in the US, so it is reasonable to assume that a high proportion of imported containers will discharge there, with Oakland oﬀering stronger potential for

8 Oakland now has a direct link to the Middle East

export loads. Farm goods from California are one example of a prominent part of the cargo mix according to the port. Oakland handled a total of 2.5 million TEU in 2019, although volume growth has been quite limited because the 2010 port throughput was just over 2.3 million TEU. There has also been a decline of -5.2 per cent in Q1 2020 (581,665 TEU) versus Q1 2019 (612,151 TEU). However, this was a much smaller decrease than other US West Coast ports for this period with Long Beach at -7.4 per cent, Los Angeles seeing -22.7 per cent and Seattle-Tacoma confirming -18.2 per cent.

TT LINE QUITS PORT MELBOURNE In a surprise move, Tasmania’s Bass Strait ferry operator, TT Line, has announced it will quit Port of Melbourne for its Spirit of Tasmania ro-paxes service and move to Geelong. The decision has been prompted by what the company says is significant congestion in the greater Port Melbourne area, particularly when cruise ships are in port, that causes delays in loading and discharge of passengers. TT-Line chairman Michael Grainger said the company felt this position will only worsen in the future, further impacting its operations. The move to Geelong, on the other hand, provides the opportunity to enhance passenger

movements and provide room to expand its freight oﬀering in line with expected future demand. It will also feature a dedicated freight terminal, streamlined and segregated passenger and freight entry and exit points, 150 truck parking bays and a 24/7 secure freight yard. The new freight yard will enable cargo pick up and drop oﬀ at any time, day or night, with access to heavy transportapproved roads. “Passenger feedback on this part of our operations has been critical, with passengers citing boarding queues of up to two-and-a-half-hours, which in turn impacts the sailing schedule,” Grainger said, adding,

“It has had an increasingly negative impact on our ability to deliver the level of service required for eﬃcient operations.” TT Line says Geelong’s Corio Quay solves three key elements of concern, namely ease of access, ease of check-in procedures and a lack of traﬃc getting to and from the terminal. This, in-turn, is seen as an opportunity to attract more tourists to Tasmania from New South Wales, Queensland and South Australia, as well from regional Victoria. The Tasmanian Government has recently criticised the cost structure of working through Melbourne, as imposed by the Victorian Ports Corporation.

For the latest news and analysis go to www.portstrategy.com/news101

We are in this

TOGETHER

During these difficult times it is important that we all work together to keep cargo flowing safely and efficiently. We are committed to helping you in whatever way we can to keep your business operating safely and global trade moving. By working together, we keep things as safe as possible for your and our people. Kalmar, making your every move count.

#weareinthistogether #besafe

NEWS REVIEW

BRIEFS

TERMONT INKS KALMAR DEAL

Iran Dry Port Traction Iran’s largest inland facility, Aprin Dry Port, is finally under development. Iranian Perse Transport Bar and Switzerland’s TransInvest Holding signed a deal in September 2019 for the 700ha site 20km of Tehran. An agreement has now been signed between the Iranian customs oﬃce (IRICA) and national railways authority (RAI) to allow movement of cargo from ports in the Gulf to the dry port where customs clearance will be given.

South Island “Catch-up”

Maintenance dredging has been conducted at the South Island ports of PrimePort Timaru and South Port by the trailer-suction dredge Albatros, owned by Dutch Dredging. The “catch up” dredging at South Port has ensured that its berth pockets and swinging basin remain at 9.7m draught, while the annualised dredging at PrimePort now ensures that the port’s main access channel depth remains at 10.8 metres.

GPH to sell Port Akdeniz? Global Ports Holding (GPH) confirmed in its Annual Report for 2019 it is in exclusive negotiations to sell Port Akdeniz. Located in Antalya, Turkey, Akdeniz is GPH’s largest commercial port, although it is assuming a drop of 75 per cent of marble exports (in containers) moving to China until September 2020, meaning a drop in port box volumes of 35 per cent to the end of April 2021. The prospective buyer is not named.

8 | JUNE 2020

Kalmar, part of Cargotec, has concluded an agreement to supply container terminal operator Termont Montréal Inc. (Termont) with a range of Kalmar SmartPort process automation solutions for its cargo-handling equipment fleet. The order, which also includes service deployment, configuration and ongoing support, was booked in Cargotec’s 2020 Q1 order intake, with delivery scheduled to begin during Q2 of 2020. The order comprises a range of Kalmar SmartPort process automation solutions, which includes SmartStack, SmartLift, SmartScreen and SmartMap, all of which will be fully implemented across the entire cargo-handling equipment fleet. SmartStack and SmartLift are process automation solutions which together help improve lift

equipment operator productivity, reduce human error and improve terminal safety. Kalmar SmartScreen optimises work instructions for operators in order to reduce non-productive moves. SmartMap enables real-time and historical visualisation of equipment location and container routing in the yard. Termont is based at the Port of Montréal. Their Maisonneuve terminal has been operating for over 25 years and handles over 500,000 TEU of containerised. The company’s new VIAU terminal, also in Montreal, provides additional space to accommodate customer growth. Termont’s fleet of cargo-handling equipment includes rubber-tyred gantry cranes, Front End Loaders and terminal tractors. Collectively, these two terminals oﬀer capacity of more

8 Termont in Montreal says using Kalmar helps give clear visibility over operations

than 1.4 million TEU per annum. Julien Dubreuil, General Manager at Termont confirmed why the deal is especially timely for the operator. “Particularly during situations like the current pandemic, the ability to remotely access real-time and historical equipment data is invaluable. SmartMap, for example, will give us clear visibility over what our machines are doing between jobs and therefore help us identify where we can make improvements in operator training. Furthermore, we have been using the Navis N4 terminal operating system for some time, and now have the opportunity to automate a number of data collection functions to improve operator productivity, safety, and data accuracy.”

APMT TEMA EXPANSION IS EARLY Meridian Port Services (MPS) has successfully completed the entire Phase 1 development of the Tema Port Expansion Project (Terminal 3 of Tema Port) - two months ahead of schedule. The concession terms stipulated that the first two berths needed to be operational by June 28, 2019, with the entire Phase 1 works ready to “go-live” by June 28, 2020. Both dates were successfully met. Operator of the facility, APM Terminals, referenced the combination of teamwork, solid project finance and determined shareholders amongst the main

reasons for delivering this major infrastructure project ahead of the contractual date in 3.5 years (41 months). The new harbour basin was created on a 3km stretch of waterfront beach land on the Atlantic Ocean and also directly on the Meridian Timeline. The construction process involved building out into the sea, from the beach, with a 1,550m breakwater, with a 2km arm extending eastwards from the breakwater parallel to the quay wall. The infrastructure undertaken delivers a substantial

450ha of maritime waterfront. The new harbour basin is accessible through an entrance channel that is 3,500m long and 225m wide, with a turning basin/ circle of 500m diameter. The access channel has been dredged to 18.7m, while the turning basin has a 17.4m depth and the quay wall has a water depth alongside of 16.9m draught to accommodate ships that require a 16m draft when berthing. Other key components of the project include the provision of 1,400 reefer plugs and a 60-bay unstuﬃng shed for Customs.

For the latest news and analysis go to www.portstrategy.com/news101

NEWS REVIEW A new joint-venture stevedore has been launched in the Port of Charleston on the US South Atlantic coast. Charleston Stevedoring Company (CSC) is a new venture formed by Marine Terminals Corporation – East (Ports America), Ceres Marine Terminals Inc. (Ceres) and SSA Atlantic LLC (SSA) and will provide container terminal and stevedoring services. The new operation will work in close coordination with the support of the South Carolina Ports Authority (SCPA) and will, according to SCPA, enable the most eﬃcient use of the Port of Charleston’s terminal assets and resources, as SCPA President and CEO Jim Newsome confirmed. “The Southeast is the best place to be in the port business with both its thriving business sector and growing population boosting imports and exports. CSC will enhance the ability to market the Port of Charleston to a broader customer base with a focus on continued growth for this strategic market.” CSC President, Dan Hall, further explained the benefits that the Port of Charleston can expect to derive from the new arrangements. “Improved container terminal services through the consolidated operations at all berths, as well as more eﬃcient vessel turn times and improved equipment utilisation. The combined company will optimise use of terminal capacity and improve integration between terminal, vessel and gate operations.” In 2019, Charleston handled almost 2.44 million TEU. For Q1 2020, the port has seen a small decline in throughput, compared

Burgas New Quays

BMF Port Bulgaria, which has been operating the Burgas East 2 and Burgas West terminals under 35-year concessions signed in 2012 and 2013, respectively, has confirmed it is planning $178 million/ €165 million contracts for new quay walls. The operator has confirmed that three local companies have supplied oﬀers. All contracts benefit from European Union funding support under the Connecting Europe Facility.

CHARLESTON STEVEDORING COMPANY LAUNCHED

to Q1 2019, although the decrease is much lower than other major East Coast North American ports. For Q1 2020, Charleston handled 593,865 TEU, which was against 597,933 TEU for Q1 2019,

a drop of just -0.7%. This compares to -6.9% in Savannah and -8.2% for Virginia’s terminals and is most likely due to Charleston having less exposure to the Asian trades than other

8 New stevedore venture in Charleston targeting eﬃciencies

ports on the eastern seaboard. Data for New York/New Jersey was not available for comparison.

NEW FENDERS AS TILBURY 2 ALMOST READY Netherlands-based SFT has confirmed an order of new fenders for the largescale Tilbury2 infrastructure project. Tilbury2 involves the construction of a new port terminal and associated facilities on land at the former Tilbury Power Station on the north bank of the River Thames. When operational in 2020, the new facility will be the UK’s largest unaccompanied

freight ferry port, the country’s biggest construction processing hub, which will include a new significantly larger rail head which can accommodate the longest freight trains of 775m. As the port is located on the river Thames which has large tides, the fender panels had to be very long. One of them measures almost 12 m to cover the tidal range of around 6 m.

With such a large steel panel, a design with 2 cone fenders per panel was needed. SFT has delivered 9 sets of double SPC 1400 Cone Fenders and 6 sets of double SPC 1200 Cone Fenders. Tilbury is expecting to double its cargo in the next 10-15 years.

New ADP Service

Special Apple Charter

THE Alliance at LG

Abu Dhabi Ports has announced that its digital subsidiary, Maqta Gateway, has expanded its digital logistics solution, MARGO, by providing a new commercial service for warehouse storage. Customers now have the opportunity to book standard warehouses or specialised temperature controlled-storage facilities (for food and medical supplies) through simplified paperfree booking processing and remotely managed reservations.

For the latest news and analysis go to www.portstrategy.com/news101

About 31 million apples have been loaded on the 10,842GT reefer vessel Baltic Spring at Napier Port on a special charter sailing for Antwerp. T&G director of operations Craig Betty says given current global supply chain uncertainty; the business sought to “rethink alternatives” to ensure European customers continued to receive the produce. There are 5400 pallets being shipped, most being JAZZ, Braeburn and Pink Lady apples.

BRIEFS The first call from THE Alliance on its FE3 service at DP World’s London Gateway facility is June 28, 2020, with the 14,993 TEU vessel, Salahuddin. The London Gateway call is being made because the shipping line operators merged their FE2 and FE4 services. The deployment will comprise 11 x 14,000/15,000 TEU vessels and London Gateway is the only UK port of call and the last outbound port in North Europe before sailing to Jebel Ali and Asia.

JUNE 2020 | 9

NEWS REVIEW

Long Beach joins SEA-LNG

Long Beach has joined SEA-LNG, a multi-sector industry grouping that drives global adoption of marine LNG. Long Beach is the third North American port to join the coalition and means that seven of the top 20 global ports are now members, according to the organisation. The Southern California port said that it joined the coalition to support a competition global LNG value chain for cleaner maritime shipping and being ready for LNG fuel in the market.

New CTB Cranes for Hamburg

The HHLA Container Terminal Burchardkai (CTB) in Hamburg has received two more new cranes, following the first three units being delivered in November 2019. The new container gantry cranes providing the ability for handling ultra large container vessels. Currently gantry cranes can accommodate ships 24 containers wide, but these new units can reach 26 rows of containers across ships. The new gantry cranes manufactured by ZPMC will replace smaller units.

New Park at Port Botany

NSW Ports has constructed a new 2.4ha empty container park at Port Botany. Located within the port, the facility is leased by Tyne Container Services and will operates on a 24 x 7 basis when it opens in June 2020. The terminal adjoins the existing company site, so will eﬀectively “super-size” capacity by providing space for an additional 5,000 TEU and will support needed growth and eﬃciencies in the supply chain.

10 | JUNE 2020

TOUGH APRIL 2020 FOR JNPT Jawaharlal Nehru Port Trust (JNPT) registered a throughput of 283,802TEU in April 2020, which represents just 80% of the total number of imports handled in April 2019. Obviously, the decline is due to COVID-19, but there are signs that the position is improving in India for the country’s leading volume container facility. Factories in the country’s hinterlands are opening up and exports are expected to increase. One other notable metric observed in April 2020 was that JNPT handled 499 container trains, making it the highest number of container trains handled in one specific month by the port. This resulted in an increase of the rail coeﬃcient during the month to 22.39%, which compares to the fiscal-year monthly average of 16.04%. JNPT has taken various measures to limit the impact of the outbreak while attempting to protect trade and port-users from disruption. These include no dwell time charges being levied for all import/export containers moved by road and rail, no shifting charges applied for change of mode or for containers moved by rail after 48 hours to ICD Mulund or ICD Tarapur as they have been declared as ‘extended port gates’ of JN Port. Plus, extended gate facilities have been made available to ease congestion at the marine facilities.

8 Slow start to new fiscal year for JNPT, but signs of improvement too

Port

Volume in TEU

+/-

Jawaharlal Nehru Port

5.03 million

-2.0%

Chennai Port

1.38 million

-14.6%

Kolkata Port

844,000

+1.7%

Chidambaranar Port

804,000

+8.8%

Cochin Port

620,000

+4.2%

Visakhapatnam Port

504,000

+12.0%

Deendayal Port

446,000

+82.8%

New Mangalore Port

153,000

+15.9%

Kamarajar Port (Ennore Port)

131,000

+129.8%

Mormugao Port

32,000

-13.5%

Mumbai Port

27,000

No change

Paradip Port

12,000

-7.7%

The April 2020 volumes at JNPT represent the first monthly period in a new fiscal year. The full-year 2019 period for all of India’s 12 state ports are shown in the Table, based on Indian Ports Association (IPA) data. Clearly, the

8 Containers Handed at India’s 12 State Ports in Fiscal Year 2019 (April 2019-March 2020)

impact of COVID-19 was not fully felt at the ports, although the March data would have seen a slowing down.

LAST MINUTE BID BY MARIMEX REFUSED Santos backyard port operator, Marimex, has launched a last minute bid to continue providing its customs services for containers by filing two lawsuits to try and get a concession extension to its large facility at South America’s biggest port for boxes. However, the Ministry of Infrastructure (MINFRA) in Brasilia has refused the request and wants to use the area in question - in the much sought after Alemoa district of the port of Santos, close to the Brasil Terminal Portuaria container terminal - for the growing railroad operations of Rumo Logistica, the biggest rail operator in Brazil.

Marimex legal advisers argue that the previous port authority Codesp (it is now called Santos Port Authority, or SPA), and regulatory bodies such as Antaq (Brazilian national body for waterborne transport and ports) were sympathetic towards an extension until May of last year shortly after Casemiro Tércio Carvalho became CEO of Codesp. At that time Carvalho said that once existing concessions came up to expiry dates, extensions would only be made if they fitted into a new port master plan or PDZ – Development and Zoning Plan. He also said he wanted the PDZ to facilitate better inland

links, via rail and road, to reduce frequent Santos bottlenecks. Carvalho has since resigned but the MINFRA minister Tarcísio Gomes de Freitas is continuing to try and reduce bottlenecks and make more space for Rumo Logistica. What we will do in Santos is closely linked to the North-South railroad bidding and the extension of the Malha Paulista [covering the link from Sao Paulo down to Santos] concession. I have cargo that will arrive via Ferronorte, cargo arriving via the Malha Paulista, and via the North-South rail link. There can be no bottlenecks. I have to optimise the operation.”

For the latest news and analysis go to www.portstrategy.com/news101

Source: Indian Ports Association (IPA)

BRIEFS XXXXX

NEWS REVIEW

BPA TO ASSIST LINER COMPANIES The Busan Port Authority (BPA) could oﬀer flexibility and incentives to assist shipping line companies ahead of the opening of Phases 2-5 and 2-4 at Busan New Port (BNP). From 2022, a system of volume-linked rental rates could be oﬀered instead of the current process in which a fixed rent is paid based on the area of the wharf, regardless of the amount of loading or unloading undertaken. The rationale for the change is based on a volumelinked rental system could reduce the terminal operators’ financial burdens and discourage them from engaging in a price war by cutting fees. The restructuring of the rental system is currently being explored by a working group comprising BPA, the Ministry of Oceans and Fisheries and Korea Maritime Institute. Phase 2-5 is located on the western side of BNP and is scheduled to open in July 2020, while Phase 2-4, which is to be constructed on the southern part of the new development, is scheduled to open in May 2022. Once developed, the six berths of Phase 2-5 and Phase 2-4 will have an annual throughput capacity of 3.9 million TEU, but there is concern amongst all stakeholders in the port that strong competition between terminal operators and shipping lines could result in a rates war to secure cargo. With addition capacity also coming on-line with Phase 2-6 and weakening demand overall,

No Triple Star

The Port of Tauranga will see a loss of Maersk Line’s Triple Star sailings in May and June as this shipping line continues to adjust capacity deployment. The service oﬀering links New Zealand with East Asia, although Maersk Line has confirmed that it has minimised the impact on local shippers by rebooking Triple Star-blanking week cargo on its weekly Southern Star and J-Star services instead.

8 Concerns over volumes and competition at BNP

these concerns may indeed be well-founded. There are currently five other terminal operating companies

and liner operators operating facilities at BNP, collectively handling around 15 million TEU annually. These include DP

World, PSA International, HMM, Ocean Alliance, THE Alliance, 2M and Macquarie Korea Infrastructure Fund. The major concern for BPA is that Phases 2-5 and 2-4 were originally planned using forecasts that Busan’s annual container volumes would probably grow by around 4 per cent, its long-term average, but growth was just 1 per cent in 2019 and now the COVID-19 pandemic will result in volume reductions in 2020, with disruptions to shipping demand that has seen liner operators cut sailings.

ITAJAI DEFYING COVID-19 Against a complicated background of dealing with the coronavirus pandemic, the Brazilian port of Itajai registered a 10 per cent increase (up to 115,231 TEU) in throughput during April 2020 and an 11 per cent increase (up to 426,546 TEU) for the first four months of this year. The Itajai Port Complex (IPC), which includes AP Moller Terminals Itajai and Portonave (owned and operated by MSC with investment arm, Terminal Investment Ltd) said that the new draft – the IPC now has a 12.5 meters depth – and booming demand for chicken and pork exports to China (whose own pork meat packers are suﬀering from African Swine Flu) are fuelling the rising volumes.

Marcelo Salles, the CEO of the IPC, said that the most exported products were poultry, pork, some beef, wood and wood by-products, such as cellulose, while imports were mechanical and electronic goods and parts, chemical products and diverse textiles. “It is incredible really that even with this extremely delicate situation that we are going through, due to COVID-19, with some of our local shippers having their production processes interrupted in some moments, we have still managed to grow,” said Salles. APM Terminals Itajai has recovered in recent years after severe flooding destroyed two of its berths. A share of the overall IPC throughput - which has

topped 1m TEU for the past decade making it the second biggest for boxes in Brazil after the port of Santos – fell from 50 per cent to 10 per cent but has now edged its way back up to 40 per cent. Over the 12 month period to the beginning of May 2020, the IPC terminals collectively handled 1.273 million TEU, up by 8 per cent and close to its all-time record. Salles and the two terminal operators were pleased that of the containers handled over a diﬃcult 12 month period, 938,187 TEU were full containers, up 10 per cent, making it one of the most profitable ports in Brazil.

Honolulu Connection

Kalmar & SSA Deal

Approval for Kembla

Pasha Hawaii has commenced its US West Coast to Hawaii service in order to provide a regular link between Long Beach, Oakland and Honolulu. The first vessel, Horizon Reliance, berthed at SSA Terminal Pier A in Long Beach and is part of a schedule oﬀering two sailings each week. The service represents a vital link in supporting the Hawaiian economy with groceries, construction and agriculture.

For the latest news and analysis go to www.portstrategy.com/news101

Kalmar has signed two separate orders with SSA Marine to supply 36 Ottawa T2 terminal tractors. There will be 12 machines for Manzanillo International Terminal in Panama, with the second deal for 24 machines for SSA Mexico. Delivery is scheduled to take place by the end of Q2 2020. The new tractor units will transport containers from quay to yard as both of these SSA terminals already use RTGs.

BRIEFS The New South Wales Government has approved the application of Australian Industrial Energy to modify its existing development consent for the Port Kembla Gas Terminal, allowing for it to handle increased volumes of gas. The terminal’s permitted output will be increased, and it will be able to receive more LNG cargoes. Once started, construction is expected to take 14-16 months overall..

JUNE 2020 | 13

THEECONOMIST BEN HACKETT

GLOBAL ORDER IN DISTRESS The knowledge that the coronavirus is highly contagious and that it can be deadly is certain and the impact on the global economy has been dramatic in its success in bringing it to a virtual standstill. What is less clear is what to do next after the shutdown. This lack of a clear understanding of the disease and what to do next is leaving the global order in distress. The growth of nationalism has been dramatic over the past few months as the closure of borders has dominated as one of the knee jerk reactions. The maritime industry has been hit hard, first by the collapse of exports from China and Asia, then by the restrictions on vessel movements into ports, followed by the more dramatic collapse of demand for goods. The tanker sector is turning into a storage industry and container vessels are increasingly in lay-up or blanking sailings in an eﬀort to trim supply to demand. The near total lack of airplanes in the air is by far the

most dramatic impact. Ship’s crews have been hit hard as well as very few ports will allow for the interchange of crews, thereby creating virtual prisons. As the number of daily deaths and new infections has come down to levels of “manageable” highs countries are now slowly trying to find the new norm. What is meant by the new norm? In the first and most important instance it means trying to find the acceptable balance

between new infections and opening the economies. In other words, by lifting restrictions on the various lockdowns around the globe what is the acceptable death rate to counterbalance the looming recession? The distress is caused by forecasts of Great Depression Era collapses in economic growth (GDP) and the rise of unemployment to 15 per cent or more. There is no experience on how to deal with this. As we look

8 Inability to change ship’s crews has created virtual prisons

towards the coming three to six months, we only see uncertainty as each nation seeks the answer for itself. With global trade likely to be at least 15% below 2019 there is reason for distress. My expectation is that the recovery will take longer than optimists expect. It will roll out slowly before becoming more robust in 2021.

THESTRATEGIST MIKE MUNDY

ADDITIVE MANUFACTURING IMPETUS Even before the coronavirus pandemic reared its head global supply chains were heading down an increasingly digital route but COVID-19 has provided added impetus. Are you sitting at home reading this? A lot of you will be, having been compelled to work in this safer environment rather than your usual workplace. As part of this new experience it’s a fairly safe bet to assume that the majority of you will have drawn much more heavily on digital resources and extended your skill base accordingly. Digital tools like Zoom, Microsoft Teams and Hangouts Meet from Google have rapidly become

established as everyday business tools with this further accelerated by measures such as those recently introduced by Google whereby it is now providing free access to advanced features of Hangouts Meet for designated user categories. Eﬀectively COVID-19 is a major stimulant to I.T. capacity building plus it is sparking a wave of innovation in the digital world aimed at providing both general and specialised solutions. One strong indicator of this is at European Union (EU) level where it is backing the European Digital SME Alliance, which represents about 20,000 SMEs across the EU, and is literally cataloguing numerous digital solutions for business as well as promoting

For the latest news and analysis go to www.portstrategy.com/news101

broad-based innovation. Looking at supply chains, for example, the Alliance is focusing attention on the very interesting subject of Additive Manufacturing. It notes: “Traditional supply chains are the basis of physical products. They are cumbersome, expensive, polluting, and inhibit fast-paced innovation. Products get sent around the world for diﬀerent steps in their assembly and value chain. “Digital products, on the other hand, have completely diﬀerent value chains. They are ethereal, almost infinitely scalable, and can innovate at the speed of human imagination. “With the advent of additive manufacturing, i.e. 3D-printers and automated factories, a third

category of products is possible: digital-physical products (DPPs). These are products which are designed virtually throughout the supply- and value chains and only become physical in the last steps of the process.” The potential revolutionary consequences of Additive Manufacturing are plain to see and COVID-19 is without doubt now a major force behind the increasing efforts to bring this new approach to the market at scale and with highly competitive cost features. It is not beyond the bounds of possibility that COVID-19 may ultimately become recognised as a primary catalyst to building a new generation of supply chain offering much greater reliability and efficiency overall!

JUNE 2020 | 15

THENEWYORKER BARRY PARKER

REPUTATIONAL CONSIDERATIONS When describing shipping matters, clichés such as “best of times/ worst of times” are abounding at present. While the dimmed fortunes for many of the liner companies, blanked sailings and all that, are getting much of the attention, developments in the energy world are worth noting. A recent news highlight has been the hordes of tankers anchored at roadsteads of major ports – and featured on mainstream media in prime-time slots. Even though media commentators have described the buildups as “floating storage”- they may more properly be labeled as “congestion” with filled tanks at oil refineries preventing the discharge of the vessel. In the tanker world, however, the excitement is shifting from crude oil to materials moving in mid-sized and smaller vessels. One well known entity in the refined products trades, the listed company Scorpio Tankers, is talking to investors about a pending “super-cycle.” Admittedly stock picking is not in my wheelhouse, but the shifting supply chains, already in progress, bear some attention. The gist of the “products story” is that cargoes of smaller sizes will be shuttled between ports

more frequently. As businesses have shut down, and are now re-starting, the narrative has shades of “IMO2020” (where patterns of moving distillate fuels around were predicted to be erratic) on steroids. With automobile traﬃc beginning to increase, according to analysts including Rystad Energy, gasoline movements around harbors will begin to increase. However, because of the landside storage situation, vessels will be waiting, cargo orders will shift, and traders will become more “creative” in their landside and barging arrangements. Media coverage of the buildup along the West Coast

(while confusing storage with congestion but we will cut them a break on that) has highlighted cooperation among local stakeholders, including the U.S. Coast Guard, monitoring anchorages and local maritime interests. While cargo sourcing dynamics evolve, it will be important for all interests in the ports to pay attention to hydrocarbon supply chains. Yes, these are quite often the province of private terminals (though some may rent waterfront quays and landside space from landlord ports) but cooperation, always important, will be vital. As I’ve written previously, in diﬀerent

8 Almost 30 tankers at anchorage oﬀ coast of Southern California at end of April

contexts, industrial commodity movements are highly price sensitive, but “reputational considerations”- including the responsiveness of all concerned to disruptions (including those tied to crewing matters, grist for a whole separate article) and to shifting trade flows, do matter. And where cargo flows are “discretionary” (a word borrowed from the liner side), hard core commodity traders may not admit it, but reputations are indeed part of the matrix for choosing a port.

THEANALYST PETER DE LANGEN

PUBLIC PURCHASE OF IMPERIAL QUESTIONED The COVID-19 pandemic is likely to lead to increased state involvement in the transport industry; for airlines it has already begun. Such state involvement is always complicated, as demonstrated by the Ryanair complaint that governments bailing out flag carriers amounts to state aid. Against this background is the news that the regional state-owned inland port company of Cologne will purchase the main European activities of Imperial logistics (the sale price

16 | JUNE 2020

is a little over €175 million, the profit of the activities over the past year was almost €20 million) is extra noteworthy. The main activity involved is barge shipping. The activities were for sale for some time, the most logical buyer would have seemed an investment fund or a competitor such as Rhenus. In that light, it is worth wondering why a state-owned company would want to purchase these activities, if the current owner wants to divest and focus on logistics in Africa and other private candidates were not

willing to match the price of Cologne port. Relevant in this respect is the fact that most of Imperial’s barge fleet consists of tankers for oil, oil products and chemical products. The growth prospects of these segments are limited. Thus, there is a risk that Cologne port is purchasing a mature/declining activity that private investors are not interested in. Therefore, in my view, the board and shareholders (i.e. the city of Cologne) need to be able to specify precisely what public interests are at stake and

why these can only eﬀectively be secured through purchasing the Imperial activities. My unsolicited advice for the municipal council members of Cologne that still have to approve the deal is, first, pointing out that barge transport is more environmentally friendly than road /rail is nowhere near a convincing reason for purchasing the Imperial activities. Second, ask the management if they consider a scenario where they transform the activities and sell them after the transition is done. If the answer is ‘yes’, there is the red flag.

For the latest news and analysis go to www.portstrategy.com/news101

NEWS FEATURE

SHOCK RESIGNATION AT SANTOS The man who was brought in to “revolutionise” Santos, South America’s biggest port, has surprisingly resigned, after just over a year in the hot seat, as Rob Ward explains Casemiro Tercio Carvalho was appointed as President of the Santos Port Authority (SPA, formerly called Codesp), in February 2019. He hit the ground running at the Intermodal South America conference in Sao Paulo outlining his ambitious, indeed revolutionary, programme to many port users and, indeed, to this writer at the time. Among his “avowed intents” was to “kick-start” the stalled privatisation programme at South America’s biggest port for containers (4.3 million TEU handled in 2019) and to make the SPA profitable. With much gusto Carvalho re-negotiated expiring contracts and turned a Reai468.7 million ($125.3 million then, but $80.03 million today) loss in 2018 into a Reais87.3 million ($14.9 million) profit for 2019. Despite COVID-19, a tender process will be initiated in August 2020 for a wood-pulp terminal and a study is underway to pave the way for the privatisation of the SPA port authority itself. Carvalho was hand-picked by Infrastructure minister Tarcisio Gomes de Freitas but, according to three confidential sources in Santos and Sao Paulo, the ex-SPA head seems to have had a disagreement on some aspects of the privatisation processes currently being undertaken in Santos. He also got caught in the crossfire between Brazil’s President Jair Bolsonaro (the Trump of the Tropics) and Sao Paulo state governor Joao Doria, who will stand against him in the next, 2022, Presidential Election. Doria has been scathing about the maverick president’s “negligent and idiotic” downplaying of the Coronavirus and Carvalho has close links with Doria’s PSDB party. The departing SPA president also declared last year he would “take politics out of Codesp” and make it “much more professional” so it is somewhat ironic that he has departed with whispers in Brasilia that Bolsonaro may eventually appoint someone from the Centrao party, who he is targeting for Congressional support, to eventually head up the SPA. Carvalho had also made a number of enemies in the port, say the Santos-based sources. “Tercio ruﬄed more than a few feathers,” said one individual, who wished to remain anonymous. “Some me operators and port users believe that many of his changes ges were necessary, but he tried to carry them out too quickly kly and with a touch of arrogance at times.” Individuals supporting him within SPA and one shipping ng agent who knew him well, say that the “entrenched vested ted interests” in Santo were not interested in any progressive ive changes and so a tough incumbent heading up the SPA was “definitely needed”. Another former colleague added further her clarity. “I think Tercio was just super confident, I don’t think he was arrogant,” he explained. Carvalho said in early 2019 that a number of contracts cts Codesp had signed with long-term port terminal operators ors were “far too generous” and when they expired they would uld have to be re-negotiated with far less onerous terms for the port authority. This would, he argued, prepare Codesp (now ow SPA of course) for privatisation, which was his and Brasilia’s a’s ultimate goal. Five of those contracts were with Transpetro (the state ate res controlled oil giant), Suzano (a wood pulp producer), Termares asa (an inland container warehouse operator), Transbrasa

Transitaria Brasileira (a warehousing and logistical company with an inland terminal) and Perola SA (a fertiliser terminal) and the extra income derived from the “new, fairer contracts” (at least in Carvalho’s view) helped secure Codesp its 2019 profit of nearly $15 million. In his resignation letter Carvalho outlined his achievements and stated that heading up the port of Santos was “the biggest challenge” of his career so far. He added in the note: “New lease contracts are now at market prices, with the correct remuneration for the SPA”. Carvalho’s successor has been named as Fernando Biral who has been working as Carvalho’s vice president - and as Chief Financial Oﬃcer for Codesp - since April of last year. Not much is known about him outside of SPA, but he has a reputation as being “a serious technico” with an “outstanding financial background with blue chip companies”. SPA said all of Carvalho’s team had been kept on and no other changes were anticipated. “Hmm! At least for now,” said a veteran terminal manager. In our July/August edition there will be a feature on Biral and his plans for Santos.

For the latest news and analysis go to www.portstrategy.com/news101

8 All change at the top in Santos

8 Out: Casemiro Tercio Carvalho had ambitious plans for Santos, but has resigned (far left) In: A “serious technico” - current Vice President and CFO, Fernando Biral, takes over in Santos

JUNE 2020 | 17

CORONAVIRUS: OUTLOOK

EMERGING FROM COVID MIST In the second of a two-part series, Andrew Penfold, of Mundy Penfold Ltd, looks at the potential implications following the COVID-19 pandemic crisis for ports and terminals

8 Disruption from Hanjin a foretaste of the potential deep-sea reorganisation to come?

The COVID-19 crisis has seen a complete re-evaluation of supply chain strategies and called into question many of the axioms that have driven container trade since the early 1980s. What does this mean for container ports and what strategies can be adopted to minimise risk and make the most of (limited) potential upsides? This will always be case-specific, but some general approaches are starting to emerge from the COVID-19 mist. Of course, strategies for a V-shaped recovery will differ from an L-shape or prolonged dislocation. Its unclear which will be actually realised but the outcome will be determined by: 5 The pact of employment and consumer spending recovery; 5 Pace of debt management and reduction for countries, companies and individuals; 5 Speed of medical response – vaccines and other measures. In this case let’s assume (and hope) that these issues can be handled and that we see only a relatively limited crisis – in temporal terms at least. If there are renewed infections and lockdowns, then all bets will remain off. LET’S LOOK AT CONTAINER TERMINALS Globalisation and scale economies have been the driving forces to date. Handling larger vessels as rapidly as possible with increased consignment sizes have been the priorities. The customer has been the shipping line (both for commonuser and dedicated terminals). Just-in-time inventory has been at the heart of this strategy. It seems that some of these assumptions must be revisited – especially as the sustainability agenda was already questioning some of this structure of globalisation. There will be a different outlook for line-owned and common-user terminals. At first glance, the former may seem to have greater security of supply. Where a line or lines are the owners it seems certain that they will seek to route

18 | JUNE 2020

their containers via their own assets. However, many lines are under severe (and worsening) financial pressure and it seems likely that some asset disposal will be called for. Terminal assets remain desirable and have a significant value. The line-owned sector also has much less flexibility to remodel its activities. In contrast, a common-user terminal serving several different lines and alliances has greater scope to offer added value – a warehousing role, greater involvement in the logistics chain, closer links to the cargo owner, etc. There is some untapped potential here. One thing is also clear, the largest ports are likely to be the worst effected as lines seek to get closer to their customers and a more fragmented trade structure – perhaps favouring smaller ships – is a possible outcome. CHANGES IN THE SUPPLY CHAIN The chain has been proved to be highly vulnerable to sudden and localised disruption. This was always understood but the scale of impact has been thrown into stark relief in the current crisis. This has seen severe shortages of components and raw materials which have been accompanied by price gouging in some instances. These problems have been exacerbated by supply variability, with void sailings seeing longer transit times and cancellations. Inventory policies are being closely examined. In the short term, this will mean greater stockpiling of key components and consumer goods, with this placing great pressure on storage capacity. This is a potential revenue source for container terminals. Major shippers simply don’t have the required capacity in-house and will pay for this service. With revenues falling off a cliff in some sectors and rapidly increasing elsewhere a reformatting of the chain is unavoidable. Another unlooked-for outcome has been port congestion as

For the latest news and analysis go to www.portstrategy.com/news101

CORONAVIRUS: OUTLOOK a result of uncertain vessel arrivals and increased dwell time, together with shorter term issues such as truck driver shortfalls. QUESTIONS TO ANSWER… Uncertainties are at an unprecedented level for terminal operating companies. These include: 5 Is the investment in 18,000TEU and larger vessels correct for future trades? Will near-sourcing and political pressure count against the current China-centric model? 5 What happens if a line goes bust? The disruption from Hanjin could be only a foretaste of potential deepsea reorganisation to come. 5 Will the alliance structure survive the crisis and what will any change mean for terminal ownership? 5 If this turns out to be a long-term problem, how do I restructure my business? These questions cannot be answered yet, but it is clear that efforts can be made to minimise risk. OPTIMUM TERMINAL RESPONSES Customers (lines and shippers) will seek to simplify supply chains and increase stocks. The terminal must get closer to the ultimate customer. This means joint digitisation – the terminal must become an active link in the chain and provide a storage safety valve. This will be more beneficial for the cargo owner than for the line, so closer direct liaison with large shippers will be vital. The common-user terminal will once again become a warehouse. Industry will seek to diversify geographical dependency. China’s share will fall, and other sources increase. The terminal has a role here to coordinate services and offer overall packages to the cargo owners. Joint ventures with shipping lines have long been a feature of the terminal sector. Partnerships should be offered with major cargo owners – the international stevedores are well placed to offer these. Successful development will reduce volume risk and limit exposure to particular (increasingly vulnerable) lines. As well as developing these additional marketing approaches, increased focus on current liner-based deals will

Uncertainties are at an unprecedented level for terminal operating companies

‘‘

require a reduced spread in tariff levels to reduce revenue risk and also a focusing on string incentives. It is usually possible for a common-user terminal to deploy a lower cost structure than a line-owned facility. This will be even more attractive as lines come under severe pressure to contain costs. WHERE ARE THE REAL RISKS AND OPPORTUNITIES? By far the greatest risk will be from lower growth and volumes – the jury is still out on this fundamental question. If demand is displaced to other non-Chinese suppliers then the impact on containers will be limited, unless near-sourcing allows trucked or ro-ro alternatives. If this does accelerate (perhaps encouraged by ‘green’ priorities), then there will be severe disruption for large container terminals. There is real scope for the container terminal to become a more active link in the chain. As well as providing increased buffer stock capacity the terminal can offer increased chain visibility and the potential to increase associated activities – e.g. limited product adjustments for local markets. POTENTIAL CHANGES FOR ROLE OF PORTS? The container terminal could be a different product if these limited advantages are maximised. Up to now, the emphasis has been on ever greater volumes moving through the terminal at greater speeds. This emphasis on velocity may change, with a partnership between major suppliers and a more intimate role in their supply chains. Of course, this can only be achieved with highly flexible assessment of the market and its potential (especially in the next six months). Different scenarios must be modelled, and management focused on maintaining the required flexibility to meet these changes as they are manifested. Such a development with a further focusing on the containment of costs seems like to only realistic approach to the crisis that is being faced. 8 The container terminal could be a different product in the future

For the latest news and analysis go to www.portstrategy.com/news101

JUNE 2020 | 19

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CORONAVIRUS IMPACT

DIVERSIFICATION POTENTIAL The maritime industry is accused of being slow to change and not entrepreneurial enough. JP Verschuure feels that COVID-19 may change this situation

8 COVID-19 has exposed the vulnerability of global supply chains – nearshoring is one alternative but diversification has to be seriously considered

Even the most pessimistic scenarios agree that the COVID-19 pandemic will be over quicker than the time it takes to develop a port facility. Given that most investments in the port industry last for 30 years, coronavirus should be placed in a long-term perspective. However, re-start of economies and changes in industry will occur at an extreme pace and ports need to be ready to respond to these rapid changes. The question is, however, how much will actually change? NEARSHORING? POSSIBLY - BUT HOW NEAR AND FOR HOW LONG? The COVID-19 pandemic has underlined the vulnerability of global supply chains. However, the largest problem has really been that production in China stopped while demand in Europe was still up, and now when production is resuming in the Far East, weak demand is occurring in Europe and the Americas. Clearly, the pandemic occurring out of sync across various continents has been more problematic than the actual impact of the virus on shipping of goods over long distances. Manning a ship only requires relatively few staff who have limited contact outside the other crew members. The only disruptions actually reported in the industry have been difficulties with crew changes happening. However, with clear protocols and increased testing of crews, shipping should continue almost as normal. Few ports have actually reported full operational shutdowns during the “Great Lockdown” due to the tremendous commitment showed by the stevedores and port staff to keep the waterfront port of logistics chains running normally. In fact, the reverse might be true because trucking of goods has been more impacted than shipping with borders closed and long delays/congestion at ports. Nearshoring will struggle with these challenges.

Adopting digital applications to make supply chains more efficient and transparent, plus use of automated terminals, means operations can proceed normally during pandemic disruptions. In general, supply chain issues were not caused by them being global. Even within Europe great differences are occurring in how the pandemic spreads, just moving production nearer may not solve the problem of production/consumption being disrupted at different moments. Also, it is not feasible to nearshore all supply chains to within trucking distance for all customers. The great variety of products and combinations of complex half products and raw materials will result in supply chains still spanning across countries even continents. So how near would nearshoring feasibly be? The second question is how long this nearshoring trend will be advantageous. When the impact of the pandemic fades, the differential in the costs of the goods produced in global or local supply chains will still be there. This cost differential will have to be traded off against potential disruptions in supply chains from a resurgence of the current pandemic or a new pandemic. Producers with a cost advantage may have gained market share. A low growth environment in which each percentage point of margin may make the difference between business survival or not, saving money by adopting global supply chains may actually be even more attractive. DIVERSIFICATION RATHER THAN NEARSHORING An alternative to nearshoring, diversification of supply chains may offer a much better solution. Using other relatively cost competitive production locations, the exposure to local outbreaks may be sufficiently hedged. This could drive a further acceleration of shifting production from China to other Asian countries or alternatively to Africa, Central and Latin America.

For the latest news and analysis go to www.portstrategy.com/news101

JUNE 2020 | 21

CORONAVIRUS IMPACT This process was already ongoing by the dispute between China and the US, while the labour cost differential between China and other labour cost competitive countries such as Vietnam, Indonesia and India was diminishing before the outbreak and driving an economic reason for diversification. These three factors will result in more fragmented trade flows across the world. Additional port facilities would be needed in new emerging markets and port facilities near current production clusters may face lower utilisation rates. As the shipping lines have invested heavily in very large container vessels for the current main trade route between the Far East and Europe (with port facilities upgraded to facilitate them), the cascading of vessels to secondary trades may pick up even more pace. This in turn will cause pressure on the port infrastructure in these emerging markets to upscale. NEARSHORING RAW MATERIALS? COVID-19 shows that for strategic and essential goods global supply chains are very fragile. Medication, hospital equipment and PPE were confiscated at borders in some cases and prevented to be shipped internationally. Goods where supply chain reliability are more important than costs savings offered by global supply chains are likely to be produced more locally. New production methods, like 3D printing, make localised production more feasible. These local production facilities still require raw materials or half products to be shipped in, at the expense of less trade in finished goods. The trend in nearshoring will likely better suit more fragmented trade routes. SHORT SEA TERMINALS BACK ON THE MAP Supply chains will remain continental supply chains, rather than national ones due to requirements of specialisation and economies of scale. Reaching the end customer by trucking is expensive and generates road traffic. Many governments are trying to reduce use of road from a sustainability point of view. This could see greater use of short sea shipping. If oil prices stay low for longer, deploying small vessels and sailing shorter routes becomes more profitable as well. Ports close to either production clusters or population centres and with efficient rail yards will benefit, with interest in inland terminals and river facilities seeing increased popularity - strategies which international terminal operators are embarking on already. STIMULUS PACKAGES FOR GREEN INITIATIVES AND MORE…. Huge stimulus packages have been announced to mitigate the initial fallout of the Great Lockdown trying to kickstart economies. Governments in Europe are keen to increase their power in the private sector on the back of the financial injections into the economy, with governments looking at port initiatives to help kickstart economic activity again while trying the make ports greener. Subsidies for more shore power initiatives, replacing diesel generated equipment with electrified ones and stimulus of intermodal transport are the most obvious candidates if it is up to the public sector. For the private sector spending most attention on keeping up with the fast changing market situation sustainability may not be top of their agendas, despite good intentions. It will help economies if governments can front load refurbishment programmes for facilities developed during the maritime boom of the 1980s and 1990s now that traffic is lower. Whether this trend will spread to emerging markets in the short term is questionable, but with the experience gained in Europe, this may trickle to other regions in a post COVID-19 world. “NEW” WORLD OF INFLATION A side effect of the tremendous stimulus packages is that inflation will likely come back with a vengeance in time. After

a brief time of deflationary pressures, the macroeconomic conditions of stagflation as witnessed in the 1930s are increasingly likely to repeat themselves. For terminals, this means making sure tariffs are carefully linked to inflation being updated as frequently as possible. However, these new conditions may also offer an opportunity to actually increase the revenues. Dynamic pricing and other innovative pricing models in combination with further digitisation of processes, could lead to better aligning interests of shipping lines and terminals. minals. At the same time dynamic pricing can ensure that tariffss are adjusted to volatile conditions. The ability of port terminals minals to adapt to inflation, also results in investors vestors retaining an interest in port terminals. nals. In current volatile times, port assets are considered a safer option in comparison rison to other industries. They will be looking ooking for any distressed shipping line terminal assets being offloaded to raise cash. However, with uncertain short-term rm economic outlooks it will require investors vestors and governments to look beyond yond the timespan of COVID-19 to o see upside potential when the maritime world has adapted ed to the new post COVID-19 reality. ality.

8 Greater use of short-sea shipping could emerge in the post COVID-19 world

8 Rebel Group is a consultancy ancy and investor group active in n projects in ports, transportation, ation, renewables, urban development pment and healthcare. The Port and Logistic group conducts ts advisory work such as PPP structuring, commercial, ry financial & technical advisory t. and software development.

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JUNE 2020 | 23

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SAFE NAVIGATION

TELP TARGETS HOTSPOTS The Swedish Club has analysed years of claims data to identify 30 high-risk ‘hotspot’ locations. It is now using AIS technology to warn insured ships of the risks. Felicity Landon reports

8 Ship sailing challenges – reality versus anecdotal?

A tricky approach channel, challenging crosswinds, a high number of collisions, more groundings, issues with pilotage, or diﬃculties with cargo? Take your pick. But how much is anecdotal and how much is reality? Seafarers will no doubt oﬀer up their own stories of ports to be worried about. However, the Swedish Club has taken the statistical, factual approach, drawing on decades of claims records to draw up a specific list – a collection of 30 port claims ‘hotspots’ around the world. This list is now being used to issue direct advice to its members, if an insured ship is approaching one of the high-risk destinations. WHAT IS TELP? The Gothenburg-based P&I club’s ‘Trade Enabling Loss Prevention’ (TELP) system uses automatic identification system (AIS) technology to track members’ vessels and provide highly targeted alerts to those moving towards an area of particular risk, a ‘hotspot’. Then, about five days before arrival, tailored advice is automatically generated and sent out to the ship’s owner or manager – explaining any particular challenges or pitfalls they should be prepared for. An added dimension is that any new alert or information from local correspondents is added in where appropriate. And to prevent information overload, the system is designed so that it will not resend the same information to the same ship within three months, unless there is new or changed

information. With COVID-19, of course, guidance and regulations can change every day. “TELP is up and running and performing very well,” says Peter Stälberg, senior technical advisor in the Swedish Club’s loss prevention team. “We are working on the interface to make it even smoother and eﬃcient for us to use.” AIS A STUMBLING BLOCK In fact, he reveals, one of the stumbling blocks has been around AIS usage. “The AIS information we receive from the vessel is given manually by the ships, so if they don’t provide the correct information, or if the ship doesn’t update its AIS information, they will not get our information in a timely manner.” Ships do not have to punch into GPS that they are heading for a specific port or destination, says Stälberg, and sometimes they may not want the world to know, as he explains. “A lot of ships may want to hide where they are going because they might still be negotiating a contract – they might be given instructions to set course for a destination before the contract is closed. And they don’t want to give away where they are heading, because other ships in the area might be trying to get that cargo too.” However, he says, at least 80 per cent of ships provide good AIS information ‘and possibly this is a carrot to do so, because it will result in better information for them’. The club is not about to release its list to the world – the

For the latest news and analysis go to www.portstrategy.com/news101

JUNE 2020 | 25

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SAFE NAVIGATION TELP service is freely provided to its members only – but ports are welcome to contact the club to see if they are on the list for being claims intensive, confirms Stälberg. They might even be surprised. BASED ON INSURANCE CLAIMS The list has been based on years of insurance claims, as he explains. “We handle about 2,000 claims per year. They are all profiled – what happened, where and why.” That isn’t the whole answer, however – the information is then combined with the trading frequency of the insured fleet. “Of course, we have a lot of claims in Antwerp – but it is one of the biggest ports in the world, so that is not surprising. But a number of places clearly stood out in our statistics where the risk was high. It could be navigation or cargo based, or because of tricky restrictions. Ships that go into these places regularly probably know this already – although even they might not have the full picture. But shipping is a global business, and medium and smaller size cargo ships particularly can be heading to places where they have never been before.” The important factor is that the club is ‘not speculating but working with dry facts’, he emphasises. “For example, the risk of running aground might be ten times higher in one port than in another, or the risk of a cargo claim may be much higher in one country than in another, for the same cargo. It is important that we do not let exceptions steer this – we know we have good quality in our statistics, and we have been looking into this for many years.” The list of hotspots will be subject to constant review and regularly updated, says Stälberg. “We will continue to look into our statistics, to identify the top claims intensive places around the world and see if any new ones come up. However, a port doesn’t – in my view – go from a nice place to a risky place overnight. It takes time.” FOREWARNING OF SPECIFIC RISKS TELP is clearly aimed at improving safety for Swedish Club insured ships by forewarning them of specific risks ahead – with the overall goal a reduction in claims and, therefore, costs for the club and its members. Does he expect the hotspots themselves to improve matters as a result? There is not a straightforward answer to that. “There may be nothing that can be done about a diﬃcult-tonavigate approach to a port – for example, the Mississippi River has strong currents and sandbanks, and is a risky area. It is also possible that a port has a tricky approach and does not realise

A lot of ships may want to hide where they are going because cause they might still be negotiating gotiating a contract – they might ght be given instructions to set course for a destination before ore the contract is closed. sed. And they don’t want nt to give away where they y are heading, because cause other ships in the area might be trying to get that cargo too

‘‘

that – I don’t know if they compare themselves with other ports. Maybe they would be surprised.” However, wever, he emphasises, TELP is much more about its members’ ships than the hotspot itself. “Take cargo damage, theft, difficult jurisdictions – as an insurance company, it is not our responsibility nsibility or capacity to change the behaviour of a country ountry or mindsets when it comes to bribery. We can an only inform our members that they are facing these challenges.” In some ome cases, the club found there were two different nt criteria for the same hotspot – for example, navigational ational hazard and cargo problems. On the other hand, there were cases where it had the perception ption of somewhere being a difficult place, but the statistical tatistical analysis based on trading patterns showed ed something different. “Also, o, we are re-evaluating all the time – there are alwayss new trades and cargoes to consider. The 30 hotspots ots are the places that stood out in the ‘first round’,” Stälberg rg confirmed. There re will also be continuing follow-up to see how effective TELP is. Suppose the club provided information ation that an approach channel was challenging – but the ship ran aground anywhere. “Then we can always lways ask if they actually saw and/or acted on the advice.”

Correspondents and COVID-19 9 When TELP was trialled with a handful of ships last year, there was positive feedback. The addition of local correspondents’ advice to the information was particularly welcomed and that led to a decision to integrate all local correspondents’ advice into the system, even if it does not relate to a hotspot. And then came COVID-19. “The system has proved to be extremely valuable in that respect,” says Peter Stälberg. “There is a tremendous amount of information flowing around – every correspondent is sending us information all the time and telling us what the local rules are, what happens if a ship comes

in, whether there needs to be quarantine, whether personnel can go on board, and so on. “We knew the correspondent information was appreciated last year – it is coincidence that the system is perfectly designed to handle all this COVID-19 information. There is an absolute overflow of information from authorities, countries and websites. Through TELP, we provide the relevant information only to the ship going to that particular place. So, we are not sending out information to all our members about the COVID-19 requirements in Gothenburg, but only to the ships actually heading to the port.”

For the latest news and analysis go to www.portstrategy.com/news101

For the local correspondents, there’s another spin-oﬀ from the system. “It’s a bit of PR for our correspondents, who can assist the ship outside the claims handling area, too – for example, with pre-cargo inspection and tallying.” The Swedish Club, founded by shipowners in 1872, has branch oﬃces in Hong Kong, London, Oslo, Piraeus and Tokyo. It provides protection & indemnity, freight, demurrage & defence, hull & machinery, hull interests, loss of hire, war risks, and other insurances, with more than 6,000 vessels entered with the club across all classes of insurance.

JUNE 2020 | 27

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CONTAINER SHIPPING STRATEGY

WHAT IS DRIVING CAPE CHOICE? With utilisation rates dropping and the idle fleet increasing, linking Asia and Europe via the Cape of Good Hope is an appealing option. AJ Keyes asks why

8 Sailing via the Cape of Good Hope, the CMA CGM Alexander von Humboldt

With the fallout from COVID-19 really now hurting the container liner industry, including substantial blanked sailings for the short-term, at least, the option of sailing from Asia to Europe via the Cape of Good Hope may suddenly look like an attractive option – but why is this? In the early weeks of April, the Shanghai Shipping Exchange confirmed that container ship utilisation rates from Asia to North America and North Europe were running at around 85%, a decrease of around 10% from the position just a week or two earlier. The extent of the issue is clear to see. In recent weeks, THE Alliance announced additional Asia-Europe blank sailings, bringing total cancellations in April and the start of May to seven (of a planned 25 sailings) and eight for Asia Mediterranean (of a planned 15), which was soon followed by temporarily merging the Asia - North Europe services FE2 and FE4 into a single loop (FE2) for the entirety of both May and June. Similarly, the 2M Alliance has suspended its Asia - North Europe AE-2/Swan service and Asia – Mediterranean AE-20/ Dragon string for all of the second quarter. So, any ability to deploy ships rather than lay-up is to be welcomed, as Associate Director at WSP, Steve Wray confirmed. “These are exceptional times and it is a matter of looking at every conceivable option to get through the challenging, short-term diﬃculties,” he stated. VIA THE CAPE OF GOOD HOPE IS NOT NEW The idea of sailing via the Cape of Good Hope is not new, but it has occurred on regular occasions in the past. Notably, it happened in the past when a raft of extra tonnage of ships were introduced and were diﬃcult to place, albeit that was in 2016 and not since and before that in 2012 when a similar issue occurred and there were concerns about Suez Canal transits and costs. CMA CGM first commenced with this sailing option on its FAL-1 service, with the 16,0202 TEU CMA CGM Alexander Humboldt choosing to navigate along the West Coast of

Africa after departing from Algeciras, Spain, with the next scheduled port of call being Port Klang in Malaysia. At the same time, the 15,000 TEU CMA CGM Chile sailing via the Indian Ocean to Le Havre via the Cape of Good hope on a westbound sailing, as Wray confirms. “With our analysis partnerships, we can utilise AIS satellite data to track the route vessels are taking and we are seeing use of the Cape of Good Hope instead of the Suez Canal.” He makes another useful point, too, that really helps to explain the current position. “Oil prices are currently low. So, while the route adopted by the CMA CGM vessels is around 3,000 nautical miles longer the savings from avoiding the Suez Canal tolls make it a worthwhile option.” With Suez Canal Authority tolls for the sizes of ships shifted by CMA CGM up to US$500,000 per transit, if not more, then the additional days in the sailing schedule, if around five, would likely see extra fuel costs of, approximately, US$250,000 per ship. While these are only approximate numbers, they do prove the point that this is a tremendous saving greater than any current discount scheme that the Suez Canal Authority is believed to have had in force until May 2020. Add to this cost equation the additional, but secondary, benefit of deploying a ship but without incurring more cost then the concept may indeed make some sense. SUEZ CANAL AUTHORITY REACTS Of course, the Suez Canal Authority has reacted, as expected. In an eﬀort to keep container vessels transiting its waterway the authority has already cut its vessel transit rates, by up to 75 per cent for some ships.

These are exceptional times and it is a matter of looking at every conceivable option to get through the challenging, short-term diﬃculties

‘‘

For the latest news and analysis go to www.portstrategy.com/news101

JUNE 2020 | 29

CONTAINER SHIPPING STRATEGY

8 Cape routing is currently appealing, despite the additional sailing time involved

However, the discount is not uniform and does apply diﬀerent by trade route. For example, vessels heading east from the East Coast of North America will obtain a full 75 per cent discount, while ships from North Europe, Algeciras and Tangiers will receive a much more modest 17 per cent cut. For vessels operating out of Northwest Europe will be oﬀered a small 6 per cent cut in fees. At present, the reductions will be applied between May 1 and June 30, 2020. However, it is reasonable to assume that the Suez Canal Authority may consider extending the discount programme, subject to the strategic decisions taking by the liner industry, itself primarily driven by the price of oil. It is understandable why the Suez Canal Authority has had to act, as Wray confirms. “We estimate that the Suez Canal Authority could potentially lose substantial revenues in the

It really is a cost comparison equation, of fuel costs versus Suez Canal. While the price of oil remains low the Cape of Good Hope route presents a serious option to lines – as evidenced by a number of lines following the lead of CMA CGM

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region of US$10 million as a result of this change in strategy of some of the major shipping lines and Alliance groupings. The low oil bunker prices, availability of ship capacity and weaker European demand simply make it a much more viable option at the moment.” One other potential upside could be the opportunity to make calls en-route to West Africa and South Africa and major African ports will be hoping that they too can benefit from the current trend. OTHER LINES FOLLOWING CMA CGM APPROACH With substantial experience in serving the African continent, then once again the Cape of Good Hope option makes sense for CMA CGM, as it does for other major operators also already serving the West and Southern African markets. Consequently, in addition to CMA CGM and OCEAN Alliance sailings, other operators including COSCO, Evergreen, Mediterranean Shipping Co (MSC) and the ONE grouping have also all chosen to route their shops via the Cape of God Hope on a combination of Europe-Asia and East Coast of North America to Asia backhaul runs. Clearly, the critical driving factor will remain the price of oil. This is a sailing route that only really makes financial sense while oil prices are lower. As Wray points out, “It really is a cost comparison equation, of fuel costs versus Canal costs, While the price of oil remains lower, then the Cape of Good Hope could well remain in favour. On this basis, it is not surprising that other shipping lines are following the lead taken by CMA CGM.”

For the latest news and analysis go to www.portstrategy.com/news101

JUNE 2020 | 31

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BUENOS AIRES: CONCESSIONS

BA CONCESSIONS EXTENDED Armageddon, or the end of the current concession road at least, almost came for the three container terminals that operate out of Puerto Nuevo, in Buenos Aires. Rob Ward investigates

8 At the 11th hour, Maersk Line agreed to stay at TRP

The seemingly simple decision by Maersk Line to switch its North Europe Samba service from Terminales Rio de la Plata (TRP) to Terminal 4, operated by its sister company APM Terminals led to an eruption of protests followed by a high-level game of poker between Maersk Line, TRP and the AGP (Administracion General de Puertos, which oversees all the ports in Buenos Aires on behalf of the Argentine government). In a week of high drama involving those three parties, plus dockers’ unions in Buenos Aires, the Argentine government and DP World (majority shareholder of TRP, along with local shareholder with considerable political influence, the Roman family), the Danish shipping company eventually changed its mind to retain the status quo and not cause any further issues or involvement with the “Casa Rosa” (the Pink House where the Argentine government sits). At the 11th hour, Maersk Line agreed to stay at TRP, protecting stevedores’ jobs that would have been lost, and that seemingly ensured the AGP to grant T-4 and TRP a twoyear extension to May 2022, for the existing terminal concessions. The exact position is still a little unclear with BACTSA as it has already used up some of the contract extension time allotted and under the terms of their original contract it should only be allowed a 12-month final extension. “It will be interesting to see how they resolve that matter,” confirmed a rival port terminal manager. RAILROADED A Buenos Aires-based consultant with links to several of the box terminals operating in the Argentine port city said that Maersk Line should never have allowed itself to be “railroaded” into such a deal if it did not fit its own liner shipping plans – and especially if the medium and long term problem had not been resolved.

“They (Maersk Line) have given in to extreme pressure from AGP, the government and both the management and unions at TRP,” he told Port Strategy, on condition of anonymity. “With the economic recession in Argentina volumes had been falling at all the terminals (just 920,000 TEU through Puerto Nuevo in 2019, about 50 per cent of total Argentina throughput, and down from 968,000 TEU in 2018) and T-4 had space for Maersk Line to switch its Samba service and was perfectly entitled to do so. However, with a left-wing government elected a few months ago the shipping line had to be seen to be doing something to support the unions and protect jobs. “The immediate problem has now been solved but the medium and long term issues of operating in a cramped area surrounded by a bustling city, has just been kicked down the road for another two years,” the local industry specialist confirmed. The stakes were very high for all sides as the clock ticked towards a Friday, May 15 deadline that would have seen an immediate end to the 25 years plus concessions of both TRP and T-4, if Maersk Line had maintained its decision and insisted on the Samba service switch. Six hundred dockers jobs were also at stake, said TRP and the unions. This is because the terminal would then have been left with just one coastal service, the Mercosur Service from Log-In Logistica (with CMA CGM’s Mercosul Line as a partner), the last remaining Brazilian owned carrier, which would be unlikely to stay without any deep-sea callers, say sources. In that worst case scenario, AGP would have taken control of the berthing at both terminals – along with innocent bystander BACTSA (owned and operated by Hutchison Port Holdings) in Terminal 5 – until a new tender document could be released for a $1.9 billion complete re-development of the Puerto Nuevo site (see Musical Chairs in Buenos Aires, April 2020).

For the latest news and analysis go to www.portstrategy.com/news101

JUNE 2020 | 33

BUENOS AIRES: CONCESSIONS NEW PLAN AWAITED The last plan was scrapped by new President Alberto Fernandez, who was elected with a mandate from the powerful trade unions in Argentina and it has not yet been time-tabled for resuscitation. During the interim period the three port terminals would have lost their concessionaire status and become, instead, licensees. AGP would have had control over which ships were berthed at what terminals, with unions calling for an equal spread of ships and cargo to all four terminals. This included Exolgan, which might also lose out with such an arrangement as its current share of the Buenos Aires total throughput is more than 40 per cent, much higher than the 25 per cent it could have expected. Earlier Fempinra (the Federation of Argentine shipping, port and shipyard workers) had issued a strongly worded demand from its Finance Secretary Roberto Coria (who is also Secretary General for the Argentine Union of Crane drivers), to both Jose Beni, general secretary at AGP, and Rodrigo Luchinsky, president of the monopolies watchdog, the National Commission for Defence of Competition (CNDC). The Federation was demanding “the necessary measures to prevent the progressive concentration and anti-competitive actions,” and were made against a background of the Coronavirus pandemic and the imminent expiration of the concessions. As a result, it wanted “an interim system lasting until the next tender, where the cargo that enters, is distributed equally, not only to Puerto Nuevo but also to Exolgan (Port Dock Sud) that, is receiving a multiplicity of cargo in its commercial alliance with T4-APM Terminals, Grupo Maersk ”.

8 “Casa Rosa” Pink House where Argentine government sits – will be hoping the matter is now closed

The union is arguing, incorrectly, that Maersk Line and MSC, via their two terminals, are operating a duopoly to the detriment of shippers and port users across Buenos Aires port facilities. Evergreen and other Asian shipping lines have tended to call at BACTSA, Terminal 5, although the ONE group of carriers has recently switched to Exolgan. “We need these changes for Argentine foreign trade, for the stability of jobs and regional economies and for it not to be destroyed in monopolistic hands by corporate greed as has been pointed out the President of the Nation,” added the union. SOWING THE SEEDS VIA HAMBURG SUD The seeds for the TRP vs. Maersk Line clash were probably sown when the Danish outfit took over Hamburg Sud in 2018, historically always a strong player in the East Coast of South

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

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34 | JUNE 2020

For the latest news and analysis go to www.portstrategy.com/news101

BUENOS AIRES: CONCESSIONS America trade lanes, and started amassing servicers at T-4, which today has 78 per cent of cargo handled provided by its own group. A third brand is also included, Alianca Navegacao, the Brazilian flag cabotage (Brazil) and Gran Cabotage (Brazil and Mercosur, including Argentina and Uruguay) carrier. Patrick Campbell, the president of Centronave, which represents various shipping groups in Argentina, told Port Strategy that the company had been involved in trying to find a compromise and was relieved that “in the end it had to be Maersk’s decision and now we can get back to business and battle the many other problems in Argentina”. Puerto Nuevo handles around 50 per cent of all Argentina’s containerised cargo shipments. Yet because of the explosive political scenarios in Buenos Aires most parties are reluctant to provide exact container throughput on a terminal by

In the end it had to be Maersk’s decision and now we can get back to business and battle the many other problems in Argentina

‘‘

terminal basis, but various sources have confirmed that Exolgan in 2019 had 43 per cent of the market (around 688,000 TEU), Terminal 4 had 20 per cent (320,000 TEU), Bactsa 19 per cent and TRP 18 per cent. Since then TRP’s share has fallen to around 15 per cent and T-4 has gained some market share as overall port throughput has slumped by around 20 per cent during the first four months of 2020.

Resistance and Monopoly When the announcement for the switch was made back in March various sources in the Argentine capital warned Port Strategy: “The dockers’ unions will not like that, so expect some resistance.” This definitely occurred from the unions and its continuing power was bolstered by the backing of several politicians. Management at TRP had been aligned throughout the stand-oﬀ with its workforce in

fighting the proposed terminal switch, claiming such a move by Maersk Line was helping to set up a monopolistic situation, with the Danish operator ensuring all of its group services were in T-4. The “monopoly” cry has been made despite containers also being moved at Terminal 5 (operated by Hutchison Port Holdings) in Puerto Nuevo, and also from Exolgan (where MSC’s stevedoring and

Forklift Centre Half May 2020.indd 1

For the latest news and analysis go to www.portstrategy.com/news101

investment arm Terminal Investment Limited is the main shareholder) at Dock Sud, which is only six miles away. Shippers in the Buenos Aires conurbation (which covers some 15 million people out of Argentina’s 45 million total population) could also use the growing out of town facilities at Terminal Zarate (60 miles away) and TecPlata (some 34 miles by road and 27 nautical miles sailing distance).

24/04/2020 11:33

JUNE 2020 | 35

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CHILE: PORT OPERATION

CHILE HOT ON COVID-19 Among all the South American countries, Chile seems to have escaped many of the worst ravages of the coronavirus, as Rob Ward confirms Chile has certainly fared much better than poorer Ecuador, where the main port city Guayaquil has been devastated by COVID-19 with 1,000s of deaths and Brazil which, after a slow start, has seen a high number of new infections and fatalities, topping 20,000 in mid-May 2020. Under President Sebastián Piñera, Chile reacted early to the pandemic, closing schools and businesses as well as introducing “rolling lockdowns” targeting specific towns or areas of Santiago with high infection rates but keeping other areas open, and the ports remained open throughout, despite some doubts. However, it is known that COVID-19 is a rapidly changing matter in the days just before going to press, Chile’s figures, especially in the capital Santiago, jumped considerably – with intensive care units now running at 90 per cent of capacity - and this may in the weeks ahead add further casualties to the key ports of San Antonio and Valparaiso. So far they have been almost unscathed, with just a handful of workers going into 14 day quarantine “due to family members contracting COVID-19”. As of May 21, 2020, Chile had recorded 49,579 confirmed cases with 21,567 recovered and 509 deaths, however just two weeks earlier there had been around 12,000 cases, 6,000 recovered and just under 300 deaths. Most of the increase came from polluted Santiago. During the first four months of this year container throughput at San Antonio, the biggest container port, was 565,928 TEU, down 11.3 per cent from the 638,203 TEU handled during the same period of 2019. By comparison, Valparaiso handled 245,103 TEU, down 26.8 per cent. The total for Region V, the two ports added together, was down 16.7 per cent compared with 2019. For the full year 2019 San Antonio handled 1.7million TEU, up 2.9 per cent over 2018, while Valparaiso’s throughput was 898,715 TEU, down 0.5 per cent. During the first two months of this year Chilean exports held up well due to continuing demand, especially from China, for its various fruits (especially grapes, avocados, blueberries, plums and apples) and other foodstuﬀs, including fish, while imports were steady because they had already fallen between October and December of last year due to the riots and economic disturbances that plagued the country. Peak period for fruit and vegetable exports to China and the Far East are usually December through to February. “We have been impacted heavily by the situation with China as around a third of our trade is with them,” said Simon MacKenzie, the president of the Chilean National Association of Shipping Agents (or Asonave). However, the eﬀects of COVID-19 have now started to impact at the base of the Chilean economy and in the second half of March movement was down by 20 per cent. This is expected to continue into April, according to figures from Camport, the Chilean Chamber of Ports and Shipping. MacKenzie, who is also a director of Ian Taylor Shipping Agency, added that – as of mid-May – all the Chilean ports were open for business and there had been only a few days at the beginning of the Andean country’s lock-down where productivity slowed as dock workers flexed muscles and

insisted on suﬃcient Personal Protective Equipment. This was quickly granted, and a series of protocols were put in place for safety procedures, including daily temperature checks, widespread use of PPEs, work distancing and disinfectant availability/use. “The authorities were quick to undertake a raft of measures to make working in the ports safe and they are working,” he confirmed, adding, “Also, the tactic of Dynamic and Selective Quarantining [focusing on problem areas only] has worked well and kept the country open for business.” Chile has also pushed ahead vigorously with the digitalisation of its customs procedures which is drastically reducing the need for face-to-face contact in the logistics supply chain. “Overall, Chile has advanced a lot in terms of digitalisation and one-stop customs clearances and this has helped tremendously,” MacKenzie stated, further adding that there were some issues with cruise ships during the southern hemisphere summer season (November to March) and one small port was closed in the far south, and several cruise vessels were only allowed to take on board supplies and bunkers but no passengers were allowed oﬀ if any cases of COVID-19 onboard.

Overall, Chile has advanced a lot in terms of digitalisation and one-stop customs clearances and this has helped tremendously

‘‘

For the latest news and analysis go to www.portstrategy.com/news101

8 During the first two months of this year Chilean exports held up well

8 Chile’s President Sebastián Piñera reacted early to the pandemic and kept ports working, safely

JUNE 2020 | 37

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MELBOURNE PORT ANALYSIS

BALANCING COSTS & PROGRESS During the COVID-19 era, the debate continues in Melbourne about rising port costs but also sees positive news about future infrastructure developments. John Burgoyne reports

8 The near-term future development of container capacity in Melbourne will take place at Victoria International Container Terminal (VICT) – a second phase expansion up to 1.5mTEU/yr is waiting in the wings

It is a commercial reality that a fast-growing port like Melbourne, requiring regular upgrades and encumbered with high operating costs principally due to regulation and rigid union-backed labour practices, will see the port and its tenants continue to support revenue generating measures such as port infrastructure and wharfage charges. Bottom line, these are necessary to support annual increases in operational expenses and capital expenditure. In March container terminal operator DP World (DPW) implemented another hike in its infrastructure surcharge. This charge is paid by the landside customers such as freight companies. This latest increase generated much negative publicity, coming as the COVID-19 crisis was rapidly unfolding. DPW has regularly hiked these charges and its insistence on doing so in the COVID-19 era, even when drawing widespread criticism, shows that it believes its actions in this respect are reasonable and justified. DPW’s timing may have been “tone-deaf”, as described by one industry participant, but the fact remains its competitors Victoria International Container Terminal (VICT) and Patricks have in the recent past also increased these charges. One of the main catalysts behind these charges is the recent strengthening of the bargaining power of the world’s global shipping lines which comes to the fore in terminal contract negotiations. This follows on from consolidation in the liner sector and the formation of ever larger operating alliances. Today there are only a handful of shipping lines controlling the majority of container cargo moving to and from Australia. The lines involved use their buying power to push down Melbourne port costs by “shopping around” at Melbourne’s three container terminals.

As a result, the container terminals are compelled to look elsewhere to generate additional revenues to recover their costs and fund required investments. One avenue is to try to have the landside users of the port to pay a share of the port costs. Hence the infrastructure surcharge and other ancillary charges. DPW, Patricks and VICT have all successfully employed this tactic. Summing up, it is reasonable to assume that total port costs find their natural level in a competitive environment lower shipping line port costs are to an extent balanced by higher landside costs and the market finds its equilibrium. INDEPENDENT ASSESSMENT The State of Victoria, pressed by industry representative bodies such as the Freight Transport Association (FTA), commissioned a report by Deloitte into rising infrastructure charges and ancillary charges such as truck booking fees. While its findings have not been released publicly it is known that it does not come out against such charges in an outright manner but instead highlights the need for increased

One of the main catalysts behind these charges is the recent strengthening of the bargaining power of the world’s global shipping lines which comes to the fore in terminal contract negotiations

‘‘

For the latest news and analysis go to www.portstrategy.com/news101

JUNE 2020 | 39

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Transport Events May 2020.indd 1

15/04/2020 09:00

MELBOURNE PORT ANALYSIS The underlying thinking appears to be that having three competitive container terminals in Melbourne will allow the market to arrive at competitive and eﬃcient pricing for port services

‘‘

transparency and monitoring as opposed to economic regulation. The underlying thinking appears to be that having three competitive container terminals in Melbourne will allow the market to arrive at competitive and efficient pricing for port services. The idea of economic regulation has effectively been parked by the Victorian State Government with it stating that the earliest it would look at this again is following the completion of the Australian Competition and Consumer Commission’s (ACCC) review of Part X of the Competition and Consumer Act 2010 scheduled to be completed later this year. RAIL ACCESS PLANS The issue of increasing port charges is an important consideration in the context of port expansion plans. This is particularly true in cases where Port of Melbourne Corp (PoMC), the port’s management body, and the port’s container terminal operators are asked to take into account wider public concerns. The city’s different stakeholders have many demands on how the port should be developed, particularly with the port sitting in close proximity to large urban areas. These will require funds to be carried out. This begs the question can the port increase its charges to meet these demands or will the government step in to contribute with subsidies in order to meet society’s wider objectives? A case in point is the current focus on the issues of Melbourne’s traffic congestion, road safety and pollution. As a solution to these problems, the Victorian Government has long been promoting getting a proportion of trucks off the roads and placing more emphasis on rail cargo by modernising and expanding rail access to the port. It charged PoMC with

improving rail access at the port and in response, PoMC developed a comprehensive strategy which delivered 12 actions points. The first of these, which has now been formally approved, is the delivery of “new and upgraded on-dock and near dock rail solutions in the Swanson Precinct” – where two of Melbourne’s three terminals (DPW and Patricks) are located. The second action point is to develop a rail connection to Webb Dock where the third terminal (VICT) is located and where future expansions of the port will primarily happen. PoMC will need to connect Webb Dock to meet the long-term challenge of reducing traﬃc congestion and environmental sustainability. However, the problem is that connecting Webb Dock by rail will also be much more expensive. So how will this be financed? PoMC proposes that the new rail facility at Swanson Dock will be financed by levying an additional A$9.75 wharfage charge for each import container discharged in Melbourne. The funding for Webb Dock rail link is unclear. Perhaps some funds from the wharfage increase will be allocated to the Webb Dock project but it is likely that further funds will be needed. Will this come from further port charge increases or might the Government subsidise a project with the explicit aim of tackling the wider public problems of congestion and pollution? For the time being it is watch this space on this score.

8 The issue of larger vessel access is another important issue that remains on the agenda in Melbourne as called for by liner operators – currently the port can accept vessels of up to near 10,000TEU capacity. Beyond 10,000TEU capacity West Gate Bridge imposes air draft restrictions making access to Swanson Dock problematic

8 The older Swanson Dock terminals will be the primary beneficiaries of Melbourne’s new rail access strategy with Webb Dock next on the agenda but funding for this as yet unclear

For the latest news and analysis go to www.portstrategy.com/news101

JUNE 2020 | 41

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TERMINAL DEVELOPMENT: TAIWAN

MAJOR PROGRESS IN KAOHSIUNG Significant changes have been confirmed in the Port of Kaohsiung as part of a major relocation and reclamation plan at Taiwan’s largest container facility, as AJ Keyes discovers The Taiwan International Ports Corporation (TIPC) has confirmed it has completed the construction of infrastructure to create a new large container transhipment terminal. The nation’s largest-ever port land reclamation project, costing an estimated US$3.75 billion, is known as “Port of Kaohsiung Intercontinental Container Terminal (ICT) Phase II” represents the cornerstone of Taiwanese government plans to meet the long-term needs of global shipping at the port. The construction includes a 6,810m outer breakwater, 6,721m of new quay length, 422.5ha of reclaimed land, with the new land having space for 19 new deep-water wharves and adjacent yard/support land. These include a total 2,415m of quay length set to accommodate five, 18m deep-water berths, able to service the latest mega-container vessels. In addition will be petrochemical and bulk cargo berths. TERMINAL RESHUFFLE At the same time, TIPC has confirmed that Wanhai will take over from Evergreen in operating Kaohsiung’s Terminal 5 facility, in what TIPC stated is “major progress” in the terminal reshuﬄe at the port. In 2018, a lease agreement with Evergreen Marine Corp. (EMC) for wharves S1-S5 was signed for the Port of Kaohsiung’s Container Terminal No.7. Upon completion of the Terminal No.7 in 2022 and 2023, EMC will then return its current Terminal No.5 (berth No. 79~81) and Terminal No.4(berth No. 115~117), respectively, and shift to the new reclaimed terminal which represents a facility that has twice as much available land. The second step of the process has now been unveiled, with another Taiwanese national carrier Wanhai, move from its current Terminal No.2 to the current EMC’s Terminal No.5 in 2022. When this occurs, the company will return its existing Terminal 2 (Berth No. 63~64) to TIPC. A lease agreement will be signed shortly. Figure 1 provides a good visual summary of these activities, as supplied by TIPC. “The Container Terminal No.7 project gave the Port of Kaohsiung an unprecedented opportunity of terminals relocation. It also brought carriers opportunity of terminal expansion,” confirmed Shao Liang Chen, President of TIPC. INTERESTED CARRIERS TIPC has also confirmed that there are currently ongoing negotiations with a number of interested carriers looking to take over operations of Wanhai’s current Terminal No.2 facility. Wanhai first leased a terminal of Port of Kaohsiung in 1987. Its current facility at Terminal 2 covers a total of 21 ha, comprises two 2 berths with a quay length overall of 520m and a water depth of 14.5m of water depth. In comparison, the three-berth No. 5 terminal has a 41-hectare yard area, so provides an increase almost double the size of the existing facility. TIPC has confirmed that Terminal 2 has a throughput of 1 million TEU per year and this could increase to to 1.8 million TEU per annum when it takes over the Terminal 5, so the relocation will oﬀer Wanhai the opportunity to significantly increase its activity in the port and for the longer-term. By comparison, EMC is currently the 7th largest container shipping line operating, based on annualised TEU slots

deployed, with a vessel capacity of 1.2 million TEU at the end of Q1 2020. The company has an existing fleet of 192 ships, which will be complemented by an orderbook for a further 65 vessels comprising almost 542,000 TEU slots. As part of this large orderbook there will be more larger vessels coming on-stream, with deliveries of two 24,000TEU vessels and twenty-eight 12,000TEU ships between 2020 and 2021. Consequently, EMC moving its container handling activities within Kaohsiung to the new, bigger Terminal 7 facility is also consistent with the company’s overall strategy to operate a higher number of larger vessels. Chen added that TIPC is examining how Kaohsiung port can be further reconfigured to improve its operations. Reconfiguration of existing infrastructure to maximise existing infrastructure and a major reclamation project clearly show that Kaohsiung Port is ensuring that it can meet longerterm container cargo potential.

For the latest news and analysis go to www.portstrategy.com/news101

8 Kaohsiung Port is investing heavily in its future

8 Figure 1: Terminal Changes in Kaohsiung Port

JUNE 2020 | 43

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COAL TERMINAL DEVELOPMENT: CANADA

NO CLEAR WINNER IN BC There’s a huge brawl underway in British Columbia, Canada. At stake is the future of coal ports, especially of coal export terminal facilities, as Gordon Feller reports

8 Neptune Terminals expansion underway to meet future coal demand

Coal remains an important industry to Canada. It employs approximately 42,000 people directly and indirectly and salaries are significantly higher than the average national wage. It is also indelibly linked to the mining industry in the country and, according to the coal industry itself, fosters a “knowledge-based economy” because it requires highly skilled and technical specialists, including engineers, geologists, and technologists. According to the Government of Canada, the main use for coal is electricity generation and in 2018 the country produced 62 million tonnes, of which 85 per cent is from Alberta and British Columbia (BC). Of this total, 34 million tonnes was exported, primarily through ports on the West Coast. In 2018, the Government also announced final regulations to phase-out traditional coal-fired electricity by 2030. So, does this mean the end to coal handling for ports? Unsurprisingly, there are two sides to this argument, those opposed to the existing and any new terminals and those factions who are in favour of existing and, potentially, new facilities. The key arguments from both sides is considered further. A WIN FOR THE CLIMATE Those opposed to the coal industry state that the climate emergency is one key reason why BC is suﬀering from many more floods and forest fires than usually would be the case, while coal trains leave a trail of toxic dust and climate destruction, in return for scant economic benefits. The impact on local communities is also negative and there has been some success. A campaign stopped Fraser Surrey Docks, which wanted to ship substantial annual volumes of US thermal coal to power plants in China through this Canadian facility, when in Q1 2019, the Vancouver Fraser Port Authority cancelled a project permit for the export terminal. The project was initially approved in 2014, for a facility that would handle more than four million tonnes of coal annually, most of it transported by rail from the U.S. The project was opposed by Metro Vancouver, Surrey, Vancouver and environmental groups, who raised climate and health concerns and after five years were successful. Environmental group Ecojustice called the decision “a win for the climate,” and a death knell for the coal export project. By comparison, those in favor of the existing and new terminals build their arguments around the infrastructure and

economics. Transporting coal requires an efficient and interconnected network of rail and port infrastructure critical to get Canadian coal to market. Moreover, coal is one of Canada’s top bulk commodities transported by rail and handled by ports, with annual activity of between 30 million tonnes and 40 million tonnes transported by Canadian National (CN) and Canadian Pacific (CP) rail operators and handled by west-coast ports in BC. Both CN and CP have made major efforts to support the coal industry through increased cooperation and track sharing. This commodity and infrastructure activity can offer numerous benefits, including employment, investment in physical infrastructure, taxes and royalties. Plus, as the Government of Canada confirms, the country’s domestic coal consumption still reaches up to 40 million tonnes annually, with the majority of this consumption used for coal-fired electricity – although around 4 million tonnes is transformed each year into coke and used in the iron and steel industry. THE PORT PERSPECTIVE? To keep pace with recent and projected demand, there is ongoing infrastructure investment, such as at Neptune Terminals in Vancouver (BC). Anticipated capacity of the facility is expected to be increased as a result of the improvements, from 12.5 million tonnes per annum to 18.5 million tonnes per annum - in terms of capacity, this equates to approximately an additional coal unit train per day being processed at the facility, and approximately 0.3 additional ships per week being loaded at the berth. The port authority further highlights that the proposed handling facilities fit entirely within the existing terminal footprint, and the increase in annual capacity is achieved through faster “turn” of the coal stockpile. With the proposed improvements, the process of transferring coal from trains to stockpiles to ships would become more efficient, allowing greater throughput hence overall coal export capacity. With 2019 seeing a total of 36.9 million tonnes of coal handled at the port, it remains a high-volume activity and revenue generator. On the face of it, the position represents a crucial choice between the impact on the environment and the economic benefits to the country, local regions and direct/indirect workforce connected with the movement of coal from mining source to port of export. At the moment, there is no clear winner.

For the latest news and analysis go to www.portstrategy.com/news101

JUNE 2020 | 45

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CONTAINER OPERATIONS

NYCT LOSES LEGAL CHALLENGE A New York container terminal operator has lost its legal challenge against Maersk Line switching terminals. AJ Keyes looks at what caused the situation to occur Global Container Terminals (GCT), which operates a terminal on Staten Island pursued an emergency restraining order to prevent A.P. Moller Maersk-owned Maersk Line and Hamburg Sud from exiting its facility for the APM subsidiary, APM Terminals in Port Elizabeth, New Jersey. The decision to follow the legal path occurred when Maersk Line confirmed in April that its vessels and those of Hamburg Sud were planning to stop calls at GCT New York by May 1, 2020. The Danish company did also confirm that it was willing to pay a settlement of $5.5 million, including an early termination fee of $2.1 million and additional consideration of $3.4 million. However, GCT USA President John Atkins claimed in a court filing that there is an agreement with the shipping lines that was due to run until the end of 2022, which could only be terminated early at the end of 2021, and only if six months’ notice is given. THREE LINER SERVICES INVOLVED IN THE FIGHT The liner services involved are the NAE operation which links the US East Coast with Manzanillo (Mexico) and Cartagena (Colombia), the ECSA option which is a North-South string between New York and Brazil, Argentina and Uruguay and the ECSA service which connects ports on the East Coast of South America to New York and Europe. Three in total. Despite the hopes of GCT, it lost the first move in its process. A judge in a New York District Court ruled that Maersk Line (Hamburg Sud) can terminate the agreement with GCT and switch vessel calls to the AP Moller Maersk APM terminals facility in Port Elizabeth, New Jersey – in accordance with the desire of the shipping lines. Maersk Line had already stated that the rationale to move these services is to improve operating eﬃciencies for each of the services and because space had become available at its New Jersey terminal after US$200 million invested in upgrades – which seems a logical and reasonable decision. DETERMINED GCT Despite the legal ruling, GCT seems determined not to lose the Maersk Line and Hamburg Sud business and is, reportedly, considering what other options may be open, in a statement subsequently released after the ruling. “While the federal court in New York determined that a preliminary injunction should not be issued, meaning that the damages suﬀered by GCT are compensable in monetary damages, GCT is continuing legal proceedings for full damages against Maersk in order to protect our business and the integrity of the contractual commitments by our customers. GCT is pursuing and will pursue all legal avenues to protect its interests relating to this wrongful action — a breach of agreement that Maersk has admitted in court documents.” COVID-19 IMPACTS BOTH SIDES There is no doubt that to any terminal operator the loss of liner services is a blow, in terms of both volumes and, ultimately, revenues. This is probably never more true than during the present COVID-19 pandemic in which volumes for 2020 are expected to be down, thereby meaning a drop in

revenues too. Yet at the same time, the desire of Maersk Line to move its services to its fellow AP Moller Maersk terminal is probably understandable from the liner operator’s point of view at this challenging time when volumes that are carried are also impacted by coronavirus. So, based on the fact that a New York judge has ruled in favour of the shipping line in this instance seems to mean that round one goes to AP Moller Maersk. The desire of this shipping line to be able to have the freedom of choice is, of course, important and Maersk Line will feel it has oﬀered a good compensation package to GCT in order to undertake the process. However, the container shipping and port industry can certainly fall into the category of “never say never” so this saga may yet have further to run.

8 So far, the New York District Court has said Maersk Line can switch terminals at the port

GCT is continuing legal proceedings for full damages against Maersk in order to protect our business and the integrity of the contractual commitments by our customers.

‘‘

For the latest news and analysis go to www.portstrategy.com/news101

JUNE 2020 | 47

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CONTAINER HANDLING: RTGs

FUEL FOR THOUGHT Increasingly, eco-friendly rubber tyred gantries are helping ports to raise efficiency levels while lowering emissions. John Bensalhia reports The RTG crane is a fine example of modern eco-friendly port equipment and machinery. Developments in environmentallyfriendly technology offer up benefits such as lower emission rates and quieter operations. Crane manufacturers are providing new RTG products that help ports manage high demands of work while helping the environment. “We are currently delivering a fleet of Konecranes hybrid RTGs to the Port of Houston,” says Svend Videbaek, Marketing Specialist, Konecranes Port Solutions. “Nine units are already onsite, with eight more scheduled for delivery by year-end. Hybrid operation is, of course, a large eco-efficiency improvement, but the overall performance of the RTG in terms of container load control and efficient movement is the determining factor.” “The Konecranes Active Load Control system is also a prerequisite for fully automated operation, since Konecranes RTGs equipped with this system can handle yard surface fluctuations with ease.” Videbaek adds that the Konecranes Core of Lifting is an important factor with respect to eco-efficiency as a whole. “This refers to how Konecranes designs and manufactures the core crane components in-house – the motors, the gear reducers and the control system (inverter drives) – to work together as a seamless whole in our cranes, specifically for crane motions. This covers all the cranes that Konecranes makes, not just our container cranes.” MINIMISING ENERGY LOSS Kalmar is investing heavily in optimising RTG control software to minimise energy loss while controlling crane movements. “A good example of this is the Kalmar SmartPower RTG,” says Petri Vuorenpää, Director, Product Management, Intelligent Crane Solutions. “It is equipped with an intelligent power management system, enabling a considerably smaller diesel engine and thus, much lower energy consumption and emissions than with traditional RTGs.” A notable issue with energy consumption increase is using lighting with traditional floodlights. Vuorenpää explains that LED lights have been in Kalmar’s offering for some time. “Instant full brightness of the LEDs when switched on also allows automatic shutdown of the lights, when general lighting levels are considered adequate for the operation. In addition to the lower energy consumption, this makes the lifespan of the LEDs even longer.” ZERO EMISSION RTGs In addition, in late 2019 Kalmar also launched a battery pack for the Zero Emission RTGs, to enable stack changes without need for an auxiliary diesel generator, therefore eliminating all local exhaust emissions. Liebherr RTGs are offered with a number of different configurations, offering many environmental benefits. These include Liebherr ERTGs, which are available with cable reeling drum or busbar power source. “Both configurations offer zero local emissions and an active front end allowing for energy regeneration back to the grid,” says Trevor O’Donoghue, Marketing Manager, Liebherr Container Cranes Ltd. “As a genset is not required, hence noise pollution, emissions and waste lubricants are eliminated.”

Another eco-friendly Liebherr product is the Hybrid RTG, which typically uses energy recovery and storage systems, allowing the installation of lower power diesel engine models. “Energy is recovered from the lowering cycle, which is in turn stored and recycled during the hoisting cycle, allowing for significant reductions in fuel consumption and emissions,” says O’Donoghue. “The reduction in engine size with noise dampening installation features allows ports/terminals to operate diesel powered RTGs in compliance with strict emission and noise level restrictions.” Petri Vuorenpää says that Kalmar has a selection of ecofriendly process automation solutions that help move containers more eﬃciently. “Solutions of the SmartPort product family are able to track containers and container handling equipment all the way from the gate to the quay. Productivity, equipment utilisation rate and eco-eﬃciency are increased by optimising travel paths and waiting times by triggering dispatching and job instructions based on the location of the container handling equipment.”

8 Zero emission and hybrid RTGs are becoming available

HEADS-UP POSITION RTG crane cabins are being designed with the operator’s environment in mind. The Konecranes BOXHUNTER is not only made for operator ease, but also for use in challenging inland locations. The BOXHUNTER enables the operator to sit and work in a comfortable heads-up position with direct visibility of any loading and unloading of the truck. The operator is able to climb into the cabin in a matter of seconds, saving valuable operation time. Kalmar’s RTG cabins concentrate on the ergonomics and environment of the operator. “All the eco-friendly features are an integrated part of the RTG design, not just some add-ons to the cabin,” says Petri Vuorenpää. “To minimise energy consumption, air conditioning systems are temperaturecontrolled. This ensures suitability for both hot and cold climates. A special sun protection roof is applied to prevent direct sunlight to heat up the cabin, minimising the need for air-conditioning.

For the latest news and analysis go to www.portstrategy.com/news101

JUNE 2020 | 49

CONTAINER HANDLING: RTGs The same climate principles apply to Liebherr’s RTG cab designs, with low emissivity glass used to reduce solar heating and subsequent air-conditioning requirements. “The operator’s console is ergonomically designed with additional driver aids to ensure optimum driver focus and productivity,” says Trevor O’Donoghue. “Liebherr Operator Cabins feature an integrated heating and cooling system allowing for operation in climate conditions from – 40 °C to 55 °C.” REMOTELY-OPERATED RTGS Remotely operated RTGs can be controlled through a local belly box arrangement or through the Liebherr Remote Operator Station (ROS) desk. “With the ROS-controlled execution, the need for a driver’s cabin on the RTG is eliminated and by default, the energy demand from heating or air-conditioning in the driver’s cabin,” says O’Donoghue. “Multiple Liebherr RTGs can be operated by one remote operator, further reducing energy demand.” Maintenance procedures are an important part of the product development process, with new RTGs requiring less maintenance than old cranes. Maintenance intervals of Kalmar cranes are typically 1000 operating hours, optimising usage of oil, grease and spare parts. “Our customers like Exolgan in Buenos Aires in Argentina are very happy with the maintainability of our new RTGs,” says Petri Vuorenpää. “In addition, Kalmar eases maintenance by retrofitting conventional power units with eco-friendly solutions like electrification and hybrids or by converting power units with more fuel-stingy technologies.” O’Donoghue further explains that maintenance features such as hydraulically operated gantry steering and trim/skew

50 | JUNE 2020

systems have been replaced with electrically operated equivalents, which help to streamline maintenance procedures. “Likewise, in the Liebherr ERTG designs, and in the hybrid machines with smaller engines, maintenance requirements are optimised further.” He explains these benefits. “Maintenance intervals can be extended through monitoring individual drive and component usage rather than adhering to predefined monthly intervals.” Ports are retrofitting and upgrading existing RTGs with new systems in order to boost levels of eﬃciency and sustainability. “One of the biggest opportunities to improve the ecoeﬃciency of RTG cranes lies in retrofitting to fully-electric

8 SCSPA is investing in RTGS for eﬃcient operations and maximum environmental benefits

For the latest news and analysis go to www.portstrategy.com/news101

CONTAINER HANDLING: RTGs operation,” says Videbaek. “This is a new possibility for operators of diesel-driven RTGs.” The Port of Valencia’s container terminal, MSC Terminal VLC has recently seen busbar retrofitting of its extant Konecranes RTG cranes. The busbar retrofit converts operations to an all-electric method, with a power supply

coming from a low electrified fence that provides the physical contact. It’s a method that has reduced CO2 emissions at the terminal by around 20 per cent. The fully electric system also reduces noise levels, and from an eﬃciency point of view, there’s no need for refuelling or spending extra time on maintenance, which in turn boosts productivity levels.

SCSPA Investing for Environmental Efficiency For RTG drivers at South Carolina Ports Authority (SCSPA), operations are assisted with the port’s newest generations of 42 RTGs. “These are outfitted with GPS autosteer,” explains Stephen Brisben, S.C. Ports’ mechanical technical specialist, crane and equipment maintenance. “This allows the operator to traverse the container stacks with no steering inputs. This helps to reduce operator fatigue, as well as the potential for collisions.” All of SCPA’s RTG cabs feature air-conditioning with filtration and sound dampening features to reduce operator fatigue. SCSPA is investing to ensure eﬃcient operations and maximum environmental benefits at all terminals, including the Port of Charleston. “Our newest generation of RTGs

(39 in total) are powered by a variable speed Tier 4 Final diesel genset,” says Brisben. “These gensets use a ‘fuel saver’ feature where the diesel only runs at a speed required to support load demand, resulting in an approximate 25% fuel savings. They also use exhaust after-treatment components to greatly reduce emissions.” Brisben adds that all of the flood and walkway lights on these RTGs are LED, reducing power consumption. The fully electric spreader bars on the newer RTGs increase eﬃciency, while eliminating maintenance costs and enhancing environmental benefits. SCSPA is also upgrading 12 older RTGs with hybrid battery/genset engine systems, replacing the hi-power diesel engines, at the

Wando Welch Terminal, the state’s busiest container terminal. “The new engines will reduce emissions and fuel consumption,” says Brisben. “This was made possible through a $2 million grant awarded by the U.S. Environmental Protection Agency to both S.C. Ports Authority and the S.C. Department of Health and Environmental Control.” Later this year, SCSPA will receive 25 new hybrid RTGs for the Hugh K. Leatherman Terminal, a new container terminal at the Port of Charleston, which is set to open in March 2021. “These new RTGs have hybrid battery/genset engine systems, which reduce emissions and fuel consumption,” says Stephen Brisben, “To increase maintenance eﬃciency and reduce down time,” he concludes.

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PORT MANAGEMENT

TOWARDS A BETTER INDUSTRY Peter de Langen, regular contributor to Port Strategy as The Analyst, recently published a book entitled “Towards a Better Port Industry” with Routledge. Is it similar in content to the monthly columns? asks AJ Keyes “Well, the regular Port Strategy columns aim to provide an interesting perspective and an actual issue or news item,” confirms Peter, adding, “whereas the book is somewhat more ambitious and aims to provide professionals in freight transport and maritime logistics, and specifically the port industry, with a solid conceptual understanding of the port industry, including best practices for port management and development, and an overview of new trends and developments.” When asked about the key conclusion that can be drawn from his efforts, the reply from de Langen is succinct. “A considerable part of the output deals with getting port governance right, as this is, in my opinion, the root cause of many bottlenecks and inefficiencies in ports.” NO OPTIMAL PORT GOVERNANCE MODEL This is an interesting concept and de Langen may have a point. While there is not one ‘optimal’ port governance model his research does offer some clear insight on the matter. First, port development is a commercial activity and should therefore be undertaken by a corporation, not by a public port authority, as is the case in many countries. Second, on top of the need for regulation, there are good reasons for state ownership of this port development company. While state ownership is not required in all cases, for most large ports, especially those in urban areas it is appropriate. Third, in case of state ownership, the public owner is advised to draw up a very specific ‘shareholder policy’ and with that policy in place refrain from interfering in the decision making and appoint an independent and professional supervisory board. Fourth, in this framework investments in port development are rightly considered based on their business case. Governments are advised also to assess the ‘value case’ as port development often creates value for society as well as value for users. As a consequence of this analysis, de Langen states that partial public funding, ideally mainly through loans is appropriate. He then outlines that port development is the development of an integrated ‘port business ecosystem’ that includes logistics, manufacturing and leisure such as cruise and marinas. Thus one developer for the total ecosystem works better than a model in which various developers are responsible for various parts of the ecosystem, such as a Free Zone or an industrial park. This is relevant for quite a few countries that operate a ‘disintegrated model’ including Oman, Indonesia and Brazil. DISRUPTIVE TRENDS De Langen draws parallels with the monthly columns in Port Strategy and a key area that always receives a lot of attention – namely, new (disruptive) trends. “In the book I argue that

one of the main reasons for investments without return, for society as well as users, is that decisionmakers often assume ‘business as usual’ while disruptions deeply influence global value chains and the port business ecosystem. A deep understanding of such trends is needed for successful port development. Many port development companies may benefit from more focus on attracting circular, sustainable energy and leisure activities to their business ecosystems,” he explains.

8 Experience at the Port of Rotterdam supported Peter de Langen’s research

If this book contributes to the ‘Rotterdamization’ of the ports industry, I consider that a good thing

‘‘

ROTTERDAMIZATION One final areas of definite interest to the reader will be the preface, where de Langen claims the book is based on experience in over fifty countries. “Well, unfortunately we no longer get stamps in our passports, so I have no definite proof, but with a couple of friends we keep track of the countries we have visited so all I had to do was to count the ones visited for work and that gives a good overview of the depth of understanding.” In the preface references are also made to the influenced from de Langen’s experiences in Rotterdam, both at Erasmus University and as corporate strategist at Port of Rotterdam. This is something he clearly feels passionately about. “If this book contributes to the ‘Rotterdamization’ of the ports industry, I consider that a good thing,” he concludes. Fair point.

For the latest news and analysis go to www.portstrategy.com/news101

JUNE 2020 | 53

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PRODUCTS & SERVICES DIRECTORY

3690 N Church Avenue Louisville, MS 39339 USA +1 662 773 3421 contactus@taylorbigred.com www.taylorbigred.com

When experience really does matter! Over a century of port industry experience. A strategic group of ‘best in breed’ people, partners and solutions, capable of delivering holistic, turn-key, advanced port-centric solutions for any brown and greenfield terminal around the world.

Contact Tim Hills or Hannah Bolland

DEME is a world leader in the highly specialised fields of dredging, marine engineering and environmental remediation. The company can build on more than 140 years of know-how and experience and has fostered a pioneering approach throughout its history, being a frontrunner in innovation and new technologies.

+44 1329 825335 www.portstrategy.com

Scheldedijk 30, Haven 1025 2070 Zwijndrecht, Belgium +32 3 250 52 11 info.deme@deme-group.com www.deme-group.com

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LASE Industrielle Lasertechnik GmbH

Port Strategy Directory

LASE offers innovative and productive solutions for ports by combining state-of-the-art laser scanner devices and sophisticated software applications. We are specialised in the fully automated handling of containers, cranes or trucks. Rudolf-Diesel-Str 111 D-46485 Wesel, Germany Tel: +49 (0) 281 - 9 59 90 - 0 info@lase.de www.lase.de

igus® GmbH Spicher Str. 1a D-51147 Köln, Germany Tel. +49-2203-9649-0 info@igus.eu igus.eu/P4.1

For the latest news and analysis go to www.portstrategy.com/news101

G-SERIES

Dellner Dampers is an innovative Swedish company that supplies solutions to mitigate vibrations and absorb kinetic energy. Standard and customised buffers and dampers for port side applications such as cranes, spreaders and more. All designed and produced in Sweden. Tel: : +46-(0)157-45 43 40 Fax: +39 049 8848006 Email: info@dellnerdampers.se Web: dellnerdampers.se

E LECTRIFICATION SOLUTIONS

P4.1 e-chain® Energy chain with optional intelligent wear monitoring for double the service life, travels of up to 1.000 m, speeds of up to 10 m/s and fill weights of up to 50 kg/m.

HPC is an internationally renowned consulting firm with profound experience in the global port, transport and logistics sector and a clear operations/owner’s perspective. Container Terminal Altenwerder, Am Ballinkai 1 21129 Hamburg, Germany

Tel: +65 9186 6846 jon.arnup@trent-global.com www.trent-global.com/

C RANE COMPONENTS

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

C OMPONENTS

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

YOU CAN DEPEND ON BIG RED!

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

D REDGING EQUIPMENT

Email: neuero@neuero.de Tel: +49 5422 9 50 30 neuero.de/en/

Taylor Machine Works designs, engineers, and manufactures more than 100 models of industrial lift equipment with lift capacities from 6,000-lbs. to 125,000-lbs.

D REDGING

Specialist for pneumatic ship unloaders and mechanical ship loader. NEUERO follows the MADE IN GERMANY quality tradition. Now with more than100 years of tradition in the manufacture of reliable and high-quality conveyor systems worldwide.

C ARGO HANDLING SYSTEMS

NEUERO Industrietechnik GmbH

Taylor Machine Works, Inc.

HPC Hamburg Port Consulting GmbH

T: +49 (0)40 74008-0 info@hpc-hamburg.de www.hpc-hamburg.de

C ONSULTING ENGINEERS

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

• Portable pneumatic conveyors or grain pumps; • Pneumatic continuous barge and ship unloaders; • Mechanical continuous ship unloaders; • Mechanical loaders; Complete turnkey projects for port terminals

VIGAN Engineering s.a. Rue de l’Industrie, 16 1400 Nivelles (Belgium) Tél.: +32 67 89 50 41 www.vigan.com info@vigan.com

C ARGO HANDLING EQUIPMENT

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

VIGAN manufactures dry agribulk materials handling systems:

C ONSULTANTS

For more than a century, Bedeschi is providing effective and reliable solutions in a wide variety of industries (bulk handling, marine logistics and mining), capitalizing on synergies and cross competences. Via Praimbole 38, 35010 Limena (PD) – Italy Tel: : +39 049 7663100 Fax: +39 049 8848006 Email: sales@bedeschi.com Web: www.bedeschi.com

B ULK HANDLING

Bedeschi S.p.A

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

JUNE 2020 | 55

PRODUCTS & SERVICES DIRECTORY

Verstegen is worlds leading manufacturer of rope operated mechanical grabs for the dry bulk industry. Stevedoring companies and ports are using our grabs for handling all kinds of bulk materials. Marconibaan 20 Nieuwegein Netherlands 3439 MS Tel: +31-30-6062222 Fax: +31-30-6060657 info@verstegen.net www.verstegen.net

Westicker Str. 52, 59174 Kamen, Germany

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

BLOK Container Systems Ltd BLOK cuts Shipping Line pollution: increases safety and productivity in Port • BLOK Spreader – lifts 4x40’ empties • BLOK Rig – automatic twistlocking • BLOK Trailer – 8 teu

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

Liebherr-MCCtec Rostock GmbH Liebherr provides advanced maritime cargo handling solutions with a focus on quality, innovation and performance. With more than 50 years’ experience in vessel handling and container stacking, Liebherr supplies premium port equipment for highly efficient port operations across the globe. Liebherrstraße 1, 18147 Rostock Rostock, Germany +49 381 6006 5020 maritime.cranes@liebherr.com www.liebherr.com

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

CERTUS Port Automation B.V. Rietlanden 3 3361 AN Sliedrecht The Netherlands t: +31 85 006 8800 www.certusportautomation.com

S HIP UPLOADERS

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.

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

CAMCO Technologies NV Visual- and Micro Location- assisted process automation solutions for container, ro-ro and rail terminals worldwide. Accurate crane, gate & rail OCR systems and Gate Operating System software helping terminals accelerate terminal and gate activity. Technologielaan 13 Leuven, Belgium +32-16-38-9272 +32-16-38 9274 info@camco.be www.camco.be

ShibataFenderTeam Group ShibataFenderTeam is one of the leading fender manufacturers with 50+ years of group experience and an extensive global network. As a specialist for customized fender solutions, they focus on vertical integration with in-house manufacturing and full scale testing, offering high quality products at competitive prices. SFT offers the full range of marine fender products. info@shibata-fender.team www.shibata-fender.team

P OWER TRANSMISSION

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

I T PORT AUTOMATION

G RABS MRS Greifer GmbH

Orts GMBH Maschinenfabrik

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

Tel: 00441926611700 enquiries@blokcontainersystems.com www.blokcontainersystems.com

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

The TT Club is the international transport and logistics industry’s leading provider of insurance and related risk management services. TT Club specialises in the insurance of liabilities and equipment for multi-modal operators.

VISY Oy VISY takes pride in solving operational problems, specialising in gate automation and access control solutions in ports and terminals. Their solutions streamline processes resulting in saving money and increasing productivity. Tel: +358 3 211 0403 Email: sales@visy.fi Web: www.visy.fi/

M ARINE FENDERS

info@alimak.com www.alimak.com

SANY offers reliable quality container handling trucks. Benefit from the experience of over 4,000 reach stackers build over the last 12 years, with up to five year full machine warranty. Sany Allee1 D-50181 Bedburg Tel: +49 2272 90531 100 Email: info@sanyeurope.com www.sanyeurope.com

I NSURANCE

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

H ANDLING EQUIPMENT

E LEVATORS

Alimak Group Sweden AB

Sany Europe GmbH

I T PORT AUTOMATION

Verstegen Grijpers BV

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.

H ANDLING EQUIPMENT

G RABS

E LECTRIFICATION SOLUTIONS

VAHLE PORT TECHNOLOGY

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

Bruks Siwertell is a market-leading supplier of dry bulk handling and wood processing systems. With thousands of installations worldwide, our machines handle your raw materials from forests, ﬁelds, quarries and mines, maintaining critical supply lines for manufacturers, mills, power plants and ports. www.bruks-siwertell.com sales@siwertell.com service@siwertell.com

Siwertell Directory - Ship Unloaders Category.indd 12/05/2020 14:12 1

56 | JUNE 2020

Certus copy June 2020.indd 1 Fornew the latest news and

11/05/2020 11:06 analysis go to www.portstrategy.com/news101

PRODUCTS & SERVICES DIRECTORY

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. 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

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

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

Port Strategy Directory

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

Contact Tim Hills or Hannah Bolland +44 1329 825335 www.portstrategy.com T RACTORS

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Providing complete solutions for your container cranes

To advertise in the

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

T ERMINAL OPERATIONS SUPPORT

Bromma is the industry’s most experienced spreader manufacturer, known worldwide for crane spreaders of exceptional reliability. Today you find Bromma spreaders operating in 97 out of the top 100 ports worldwide. Malaxgatan 7 , P.O. Box 1133 SE-164 22 Kista, Sweden Tel: +46 8 620 09 00 Fax: +46 8 739 37 86 sales@bromma.com spareparts@bromma.com

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

S PREADERS

Bromma Conquip

T ERMINAL OPERATIONS SYSTEMS

S PARE PARTS

TVH PARTS NV TVH supplies every part you need for heavy forklifts, reach stackers, container handlers, spreaders and terminal tractors. As a one-stop shop, the company offers a full service in spare parts and accessories for container handling equipment, with a guaranteed fast delivery at a competitive price. Brabantstraat 15 BE-8790 Waregem Tel: +32 56 43 42 11 Fax: +32 56 43 44 88 info@tvh.com www.tvh.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

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

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

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Email subscriptions@greenport.com or call +44 1329 825 335 • Comprehensive online directory • Instant access to industry news • eNewsletter • Magazine subscription • Expert opinion

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For the latest news and analysis go to www.portstrategy.com/news101

JUNE 2020 | 57

POSTSCRIPT

A TIME FOR CLARITY Questions are surfacing about the ownership of the fast-growing logistics company Monaco Resources Group (MRG). More clarity on this fundamental issue is appropriate, particularly in the wake of its purchase of the Euroports terminal operating group in joint venture with two Belgian government-owned companies

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58 | JUNE 2020

In 2019, Belgian public authorities formed a joint venture with the fast-growing company R-Logitech to purchase the terminal operating group Euroports. One year on, questions are increasingly being asked about the identity of R-Logitech’s ultimate owners. Euroports is a major European port company, with 20 maritime terminals and six inland terminals. Up to 2019 it was owned by private equity investors (respectively, Antin, Arcus and Brookfield). In June 2019 it was sold to a consortium of PMV (an investment company owned by the Flemish regional government), FPIM (an investment company owned by the Belgian federal government) and, lastly, R-Logitech as the majority owner with 53.4 per cent. The Belgian government partners have 23.3 per cent each. The ownership of both PMV and FPIM – Belgian government companies - is clear and transparent. In contrast, however, the ultimate ownership of R-Logitech is not. In fact, it is judged to be opaque. Indeed, recent media reports suggest that its owners and managers are endeavoring to keep it this way. R-Logitech is owned by Monaco Resources Group (MRG) which is registered in Monaco. MRG was established in 2011 and has grown its revenue to €1 billion in 2019 (with a loss of €12 million). Most revenue (87 per cent) is generated in Europe. Apart from the acquisition of Euroports, MRG has also bought the distressed assets of Necotrans (the French logistics company focused on Africa) and a UK-based logistics concern. MRG’s deal making and marketing material is very focused on developing in Africa. So far Africa only accounts for 12 per cent of its revenue but MRG has a number of high-profile contracts, such as the Guinea Garafiri bauxite project. MRG’s interest in Africa piqued the interest of the informative Africa news service Africa Intelligence which has featured a number of articles that highlight the transparency issue and endeavour to throw some light on it. Africa Intelligence points out that MRG is owned by Cycorp First Investments, which is based in Cyprus and does not reveal its ultimate beneficiaries, and suggests that MRG’s disclosures in a bond prospectus about certain members of its management and board members were selective to put it mildly. Africa Intelligence also referred to a letter from Alcoa (the US mining conglomerate), dated June

8 Euroports – transparency issue raised

2016, in which Alcoa rules out working with MRG after “preliminary research on MRG has revealed some concerning issues regarding prior commercial activities.” EXTRAORDINARY For any large ports and logistics company active in Europe to operate without fully disclosing its ultimate owners and sources of funding is extraordinary to say the least. In the case of MRG, it does beg the question have its Belgian partners conducted full and proper due diligence on MRG and Cycorp First Investments? Equally, were these partners aware of the of the reservations of a large US-based mining conglomerate and its reported unwillingness to even meet with MRG? Over the last few decades there has been growing pressure for companies to be more transparent – as epitomised by the EU’s Transparency Directive introduced in 2004 and revised in 2013. This aims to secure a flow of regulated information to deliver transparency with “regulated information” including financial reports, information on major holdings, voting rights, information disclosed pursuant to the Market Abuse Directive (2003/6/EC) etc. Securing proper disclosure is, however, still to a significant extent ‘work in progress’. It is common knowledge that companies continue to be able to use jurisdictions with low disclosure requirements to circumvent jurisdictions with stricter standards. It is not realistic to think that such practices will go away anytime soon and even with stricter regulation it is foreseeable that there will still be loop-holes via which entities can hide key features such as ultimate ownership. Such an incidence may, however, be considered most unusual where public-sector companies, using public funds, forge an alliance with a private entity, and particularly for the purpose of managing and operating a large group with activities across diverse countries. Certainly, it seems most appropriate in conjunction with the PMV – FPIM alliance with MRG. MRG exercises control over extensive important European port infrastructure and clarity on company fundamentals – not least ownership – is essential.

For the latest news and analysis go to www.portstrategy.com/news101

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