Port Strategy May 2020

MAY 2020 VOL 1020 ISSUE 4 portstrategy.com

Post Covid-19 New World/Responses | Special Reports: Brazil & Peru | TOS Innovation

NO. ISOLATE! ISOLATE!!

THE POST COVID-19 NEW WORLD ‘EVERY MAN IS AN ISLAND’ TOS: Keeping pace with automation Concessions: ‘better the devil you know’

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

Beyond the COVID bubble…

‘‘

And the answer is: significant structural changes can be expected in supply chain strategies and possibly right through to changes in optimum vessel size and the associated port requirements

A range of thoughts and views are offered in this edition about the global ports industry in the post Covid-19 era. Not just in the lead feature article – The Post Covid-19 New World - but also in the story lines of a number of PS columnists plus a look is taken at the recent impact on the share price of terminal operators.

A number of analysts express the view that it is too soon yet to know what the full impact of Covid-19 will be but Andrew Penfold in the lead article considers this in the light of previous schisms in the container sector and what clues they may give. The big question is: can we return to business as usual? And the answer is: significant structural changes can be expected in supply chain strategies and possibly right through to changes in optimum vessel size and the associated port requirements.

The story with Covid-19 of course continues to unfold and the challenges continue to build. In the meantime, however, so far as it is possible ports and terminals worldwide still have to plan future investments to meet the requirements of client shipping lines and cargo owners. Some parties feel deciding investment strategies now is a high-risk business and have largely parked this activity until a clearer picture is available after the Covid-19 pandemic recedes. …AND CONCESSION PLANNING One task, however, that port authorities and other government bodies can proceed with is concession renewal, a subject area discussed in-depth in the very last editorial page of this issue, known in-house as ‘the PS Page!’

Experience tells us in this latter article that the preference is generally for renewal with the existing incumbent given that there are no exceptional circumstances to respond to.

Exceptional circumstances requiring a different response can encompass: new port planning initiatives, failures by concession holders and the pursuit of profit above other goals by the party offering the concession. Sometimes, however, rather extraordinarily it can just boil down to indecision, excessive bureaucracy or ‘human factors.’ The suggestion is in the latter respects that the port management bodies concerned need to formulate a more empirical approach in order to not place a block in the path of progress. Concession terms that wind right down to the very last days and are then renewed at this late stage inevitably dictate a halt to timely investment in the latter years.

This can prove a big impediment to business development and should be avoided if at all possible.

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

News Reporter: Rebecca Strong rstrong@mercatormedia.com Regular Correspondents: Dave MacIntyre; Iain MacIntyre; Felicity Landon; Alex Hughes; Martin Rushmere; Stevie Knight; John Bensalhia; Kate Jones; Ben Hackett; Peter de Langen; Barry Parker; Charles Haine; Charlie Bartlett; Maurice Jansen; Bob Post; Tero Hottinen Production Ian Swain, David Blake, Gary Betteridge production@mercatormedia.com SALES & MARKETING t +44 1329 825335 f +44 1329 550192 Media Sales Manager: Tim Hills thills@portstrategy.com Media Sales Executive: Hannah Bolland hbolland@portstrategy.com Marketing marketing@mercatormedia.com Chief Executive: Andrew Webster awebster@mercatormedia.com PS magazine is published monthly by Mercator Media Limited, Spinnaker House, Waterside Gardens, Fareham, Hants PO16 8SD UK t +44 1329 825335 f +44 1329 550192 info@mercatormedia.com www.mercatormedia.com

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MAY 2020 | 3

The three point seatbelt, invented in Sweden.

Nils Bohlin invented the three-point seatbelt for Volvo in Sweden, with it eventually being fitted in most cars globally, helping protect drivers and save lives. Bromma has continued this proud Swedish heritage of innovation by introducing the first 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

MAY 2020

15 NEWS

6

26 New Brazil Concessions Open

Brazil’s president Jair Bolsonaro is down-playing COVID-19 and keen to get Brazil back to work, so wants port concessions to keep moving forward

10 Volumes for Haropa Drop

Leading French port group, Haropa, had a difficult 2019 with a drop in volumes, with Q1 2020 continuing the trend – and its not all because of COVID-19

13 New Port in Sweden on Target

Stockholm Norvik Port in Sweden for containers and rolling cargo remains on target to open in Q2 2020, with Hutchison Ports at the helm

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

16

REGULARS 15 Corona Depression – Short or Long?

Will COVID-19 cause a long or a short economic depression? While too soon to predict, opinions are forming

FEATURES

33

18 The Post COVID-19 New World?

Will the container business be able to return to normal? Analysis confirms that a new world is more likely to emerge

25 Rolling with the Punches

After a tentative reaction to COVID-19, Brazilian port operators now see a patriotic duty to keep ports open, as a review of ongoing activities, including at Santos, clearly shows

33 Keeping Pace with Automation TOS system suppliers continue to innovate to meet today’s and tomorrow’s needs with integration and cost reduction being two key aspects addressed

15 Collaboration not Confrontation New rules of engagement between employers and employees may apply in the post-Covid-19 era with collaboration at the centre of these

16 The I-Word – an Economic fillip?

The I-word could be a channel for injecting an economic fillip in the US, but it means passing another gargantuan piece of trillion-dollar legislation

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

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MAY 2020 | 5

NEWS REVIEW

BRIEFS Cruise the New Engine Room in Brisbane?

The Port of Brisbane has a new A$177 million International Cruise Terminal opening later this year. State Premier, Annastacia Palaszczuk, described the terminal as becoming “a new economic engine room” for the region and says that it is “not only good news for cruising and the Port of Brisbane but for the entire economy.” About 180 cruise ships were scheduled for visits to Brisbane for the 2020/21 season, before the outbreak of coronavirus restrictions.

Liebherr Orders in Russia and Berbera

Liebherr is supplying two rail-mounted gantry cranes to the Freight Village Vorsino located outside Moscow since 2012, as part of an expansion to see capacity rise to over 500,000 TEU per annum.

At the same time, Liebherr Container Cranes and DP World Berbera have signed a contract for the supply of eight RTGs for DP World’s terminal in Berbera, Somaliland, to be operating before the end of 2020.

Ecuador’s port records Figures released by Ecuador’s Undersecretariat of Ports show that in 2019 Guayaquil Port Terminal (TPG), Bananapuerto and Fertisa handled a combined 9.937 million tonnes. TPG reported 853,372 TEU for the year, Contecon 823,951 TEU, Bananapuerto 320,145 TEU and Fertisa 86,315 TEU. TPG’s success is due to deepening the access channel to 13.5 metres says terminal director, Luis Enrique Navas.

6 | MAY 2020

NEW BRAZIL CONCESSIONS OPEN It’s full steam ahead for new concessions in the Brazilian ports of Santos and Rio de Janeiro, despite the impediment of having to deal with the coronavirus pandemic.

Antaq, the regulatory board for ports and waterways, has been given approval by the Tribunal de Contas do Uniao (TCU), a government watchdog, to proceed with the tender for two areas on the right bank of Santos, Brazil’s biggest port, in the Ponta da Praia district. In Rio de Janeiro similar progress is being made in both the downtown port area and the port of Itaguai, some 40 miles away.

Brazil’s president Jair Bolsonaro is known as the “Trump of the Tropics” and, like his idol in North America, is down-playing COVID-19 and is keen to get Brazil back to work “as soon as possible,” so wants port and infrastructure concessions to keep moving forwards.

The areas in Santos, known as STS 14 and STS14A in the Santos Port Authority Master Plan, will be designated for cellulose exports.

The winner of the Santos tender will be expected to invest around Reais134 million ($27 million) for the former and Reais146 million for the latter, for 25-year concession on terminals sharing three berths, and with good road and rail links.

Santos currently only has one cellulose terminal, at DP World Santos on the left bank, but that facility is also the third biggest box terminal in the port and with cellulose, paper and plywood exports booming, more capacity is needed, according to Antaq.

Further to the north, Companhias Docas do Rio de Janeiro (the port authority for Rio), published in April 2020 in the Diario Oficial (Official Gazette in which all concession documents are first published) a call for companies to come forward and declare interest in five areas for liquid bulk and dry bulk operations.

Bruno Pinheiro, the chairman of Antaq’s Permanent Lease Tender Committee, said that

8 The Trump of the Tropics is pushing ahead with port concessions

despite the continuing COVID-19 crisis, the Brazilian government and Antaq would “continue its work of encouraging more port concessions and improving the country’s infrastructure.

“Despite these difficult moments that Brazil and the world are going through, we need to stay focused and continue with the federal government’s successful port bidding program,” said Mr Pinheiro.

“The sector needs infrastructure and private investments, which are fundamental for national economic development, generation of income and employment.”

DP WORLD AUSTRALIA CRITICISED DP World Australia has run into a deluge of criticism for its lack of sensitivity in raising terminal access charges at major Australian ports when the country’s supply chain is already under pressure from COVID-19 restrictions.

The new charges took effect in Melbourne and Brisbane on May 1 and in Sydney on May 8, with DP World describing the notice periods as providing, “A balance in delivering benefits to key stakeholders and enable transport operators to provide an extended notice to their customers”.

However, port customers see the situation very differently.

Container Transport Alliance Australia director Neil Chambers described the fee hikes as “tone

deaf.” He added, “At a time when the Australian economy is under significant strain, DP World Australia sees fit to raise its landside terminal access pricing for full import containers and for some other access charges levied on container transport operators.

It beggar’s belief.”

“This foreign-owned company, in a pseudo-monopoly position within the container logistics chain, has shown little regard for container transport operators already facing a significant cash-flow squeeze, or for Australia’s importers who from May will pay significantly more for landside terminal access once the fees are passed through the supply chain by transport operators,” he said.

The Freight & Trade Alliance (FTA) has also added its concerns. The position of the FTA, along with that of the Australian Peak Shippers Association (APSA), is that infrastructure surcharges should be eliminated, with stevedores having to recover costs from their commercial clients, which means the shipping lines.

In turn, this would leave shipping lines to negotiate freight rates and terminal handling charges with their commercial clients, namely exporters, importers and freight forwarders.

Both the FTA and APSA believe that Government regulation is the only way this can be achieved.

This issue looks to continue for some time yet.

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

APMT COMPLETES ALABAMA EXPANSION

The Queensland port of Townsville has begun construction on a port upgrade project to allow visits by vessels up to 300 metres in length. A total of A$193 million is being invested by the Queensland Government in improvements to the port channel, new berths and an intermodal facility.

Construction of a 2.2km protective rock wall will pave the way for up to six new berths. It is the port’s biggest project in 30 years.

Piraeus Surpasses Valencia Piraeus in Greece, controlled by Cosco, has overtaken Valencia to become the largest volume container hub in the Mediterranean. It is now fourth overall in Europe, behind Rotterdam, Antwerp and Hamburg. In 2019, Piraeus handled 5.65 million TEU, compared to 5.44 million TEU at Valencia, where Cosco also operates the largest box terminal. By comparison, the Moroccan Port of Tanger Med, posted strong growth of 38% in box traffic in 2019, with a rise to 3.8 million TEU.

Lucky Bay to Tranship The South Australian grain port at Lucky Bay is eliminating the need for major jetty investment by building a transhipment vessel to load grain from the port onto ocean-going vessels. The mv Lucky Eyre will feed grain to ships up to Panamax size waiting in deeper water five nautical miles out at sea. The 87-metre self-discharging vessel has a capacity of up to 3500 tonnes and requires less than four metres of draught.

8 | MAY 2020

Source: asdd.com

Townsville Port Upgrade

APM Terminals (APMT) has completed its 120m container dock extension at the APMT Mobile facility, at the Port of Mobile in Alabama, on the US Gulf. Three days after the expansion was completed, the terminal simultaneously handled two container ships at the newly expanded berth for the first time.

The berth extension now enables 2 x 8,000-10,000TEU vessels to be safely handled at the same time. The quay extension is part of a US$50 million Phase 3 investment initiative to raise terminal capacity and productivity at the facility operated by the terminal operating subsidiary of the AP Moller Group.

APM Terminals explained that with weekly calls from postPanamax container ships, the

expansion completed by the port authority has removed possible vessel berthing conflicts at the terminal, while dock enhancement improvements to the mooring and fendering systems means that Super Post-Panamax vessels can now be accommodated. The terminal is already equipped with two Super Post-Panamax and two Post-Panamax ship-to-shore gantry cranes.

The APMT Mobile Phase 3 modernisation project complements prior investments by the Alabama State Port Authority and APM Terminals totaling US$450 million in marine and rail container intermodal terminals. These investments will be joined by a draft of 50ft by 2024, with the US Army Corps of Engineers issuing permits and receiving full federal and state

8 Port of Mobile can now handle two container ships simultaneously

funding for the deepening. The channel and harbor improvements are expected to begin later this year.

APM Terminals Mobile currently has four direct all-water weekly services from Asia, calling at various Ports in China and Southeast Asia, with three services also calling in Busan, South Korea too. The facility handled 419,316TEU in 2019.

The Alabama State Port Authority Board of Directors has also named John C. Driscoll as director and chief executive officer for the Port Authority, effective June 1, 2020. He replaces the long-standing and highly respected James K Lyons, who is retiring at the end of 2020.

NEW MOVES BY ITAPOÁ PORT CONTAINER TERMINAL The Itapoá Container Port is located in southern Brazil’s State of Santa Catarina, a region that is playing an increasingly important role in Brazil’s economic development.

The Itapoá Container Port is a Private Use Terminal, administered by two partners (Portinvest Participações S.A. and Aliança Administração de Imóveis e Participações Ltda), both of which are located in the Brazilian city of Itapoa. The planned expansion is an ambitious project, with potentially important ramifications As with ports all over the world, Brazil’s terminals are coping with the gradual and steady increase, worldwide, in the average size of vessels. Larger ships have the capacity for more cargo, thereby achieving scale-driven cost improvements and making

transportation more efficient and agile. The Itapoá Container Port began its operation in June 2011, with infrastructure capable of handling 500,000 TEU per annum.

To help fulfil increasing market demand, this new project is developing a 170-metre expansion in the port’s pier and constructing 40,000 m2 of additional storage area.

The Itapoá Container Port project is being implemented by parent company, Itapoá Terminais Portuários S.A. In its current format, Itapoá Container Port has been operating above its real capacity for a number of years now and this long-overdue expansion will enable the port to handle demands created by current market conditions.

At the end of the expansion phase The Itapoá Container Port

will have a total storage area of 100,000 m2 and a pier with 800 meters in length, increasing its capacity to handle 1.2 million TEUs/year.

One of Brazil’s construction companies, Piacentini, was hired to manage and conduct all of the expansion work.

IDB Invest in Washington D.C. is providing loans for this project, with an aggregate value of one hundred and fifty million Brazilian Reais (RS$ 150,000,000), which is approximately a financing package worth US$ 35.4 million.

There are also two railway construction projects in the region which could eventually help support the port, Ferrovia do Frango and Ferrovia Litoranea, although these are both still going through the process of environmental licensing.

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

NEWS REVIEW The move from three terminal operators to only two has now officially occurred in the Kingdom of Saudi Arabia’s Jeddah Islamic Port, located in the Red Sea. With effect from April 1, 2020, Red Sea Gate Terminal (RSGT) has officially commenced operations at the North Container Terminal (NCT). The concession held by former operator, Gulftainer, finished.

A new 30-year concession agreement for this existing north port facility concluded at the end of last year between RSGT and the Saudi Arabian Ports Authority (Mawani). Under the terms of the arrangement, there will be US$1.7billion of investment in infrastructure, equipment and technology by 2050, with annual container throughput capacity growing to 8 million TEU. Confirmed expansion plans will see the expanded area of 1.5 million m2 increased annual throughput capacity to 5.2 million TEU by 2023, according to RSGT. The existing RSGT operation is already able to accommodate Ultra-Large Container Ships of 20,000TEU and above. At the end of the first three-year phase of investment, it will be equipped with 24 Super Post-Panamax quay cranes, 67 rubber-tyred gantry cranes and provide 4,900 reefer plugs.

The Jeddah South Container Terminal (JSCT) will continue to be operated by DP World, where the operator also has its own plans for expansion and investment. The current annual capacity of 2.4 million TEU is being increased to 3.6 million TEU per annum by adding 500m

New Port for northern Chile?

Andes Iron says it will abandon construction of its Dominga port project in the north of the country if CAP’s Cruz Grande port project becomes a reality.

Instead, it will connect its Dominga copper mine to the Cruz Grande port. This facility is due to start producing 12 million tonnes of high-grade copper concentrates. The Dominga port and plants require investment of US$1.5bn.

RSGT EXPANSION IN JEDDAH COMMENCES OPERATION

of extra quay and introducing automation, while also dredging to 18m water depth.

Expansion at JIP is being undertaken to compete for

growing container volumes in KSA, which have risen by an average of 10.2% per annum since 2000, with the West Coast of the Kingdom (which also includes

8 RSGT commenced operations at enlarged JIP facility on April 1, 2020

King Abdullah Port) the more dominant region handling around 65% of total volumes.

GOVERNMENT TO MANAGE PORT OF LISBON In Portugal, the government has ordered the civil requisition of the Port of Lisbon, albeit as a move of “exceptional character” since it considered that agreed minimum service levels were not being met by striking stevedores. The strike, which is not due to end until April 13, was beginning to pose a threat to the supply of vital goods not only to Lisbon itself, but

also to the Azores and Madeira.

The problem has been exacerbated by the insolvency of labour provider A-ETPL, which was unable to provide sufficient labourers to meet stipulated minimum service levels.

However, the government points the finger at the SEAL union and other dock workers, stressing that it had to step in given the COVID-19 crisis now

sweeping the country, which has seen panic buying in shops impacting on the overall logistics supply line.

Separately, a row has broken out at Leixões, where the mayor of Porto doubts the need for a 250-metre extension of the existing breakwater.

Dalrymple Bay Coal Terminal Rehab

KOTAHI-PoT Extension

Traffic on Rise at Salaverry

A rehabilitation plan has been developed for the Dalrymple Bay Coal Terminal in Queensland. Under the lease agreement between DBCT Management and the Queensland government, the company may need to also rehabilitate the onshore and offshore infrastructure of the facility to its natural state.

The terminal has a lifespan of another 30 years.

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

A long-term volume commitment agreement between the Port of Tauranga and Kotahi Logistics has been extended to mid-2031.The agreement between New Zealand’s largest containerised freight exporter and the country’s international cargo gateway is expected to provide the port with confidence to further invest in expanding its container terminal.

BRIEFS The Peruvian Port of Salaverry handled 2.8 million tonnes in 2019, compared to 2.5 million tonnes in 2018. According to administration and finance manager Julio Pflucker, the extra 300,000 tonnes is down to modernisation work, which should see a volume of three million tonnes handled in 2020.

He said dredging work reduced port closures from 100 days a year to just 25 days in 2019.

MAY 2020 | 9

NEWS REVIEW

BRIEFS XXXXX

VOLUMES FOR HAROPA DROP

Two new concessions for Aratu, Brazil

Feasibility studies carried out by the Planning and Logistics Company, EPL, in respect of two future terminal concessions in the Port of Aratu have been passed to the National Audit Committee (TCU) by the Ministry of Infrastructure. Further studies, at the ports of Santana (AP) and Maceió, are also being reviewed.

The four projects could generate investment of US$90 million. Once approval is given by TCU, bidding deadlines will be established.

Nelson Port Project Ongoing

Progress on Port Nelson’s recently-launched NZ$20 million redevelopment project of Main Wharf South continues the port has confirmed. “The port is currently compromised in its ability to receive vessels greater than 245m without the completion of the project,” it stated.

The redeveloped wharf is expected to accommodate 260m to 270m cargo ships and 300m cruise vessels and thereby create growth opportunities for the region’s importers, exporters and community.

Tarragona is Spain’s Leading Agribulk Port

The Port of Tarragona remains the leading port facility in the handling of agri-food products in Spain. In 2019, it handled more than 6 million tonnes of this traffic, up 4.5% on the previous year. To consolidate its position longer term, the port authority is launching a new digital tool, the Agri-Food Delivery System (SEA) in May to improve service efficiency.

10 | MAY 2020

Container volumes handled by leading French port group, Haropa, have seen a fall of around 25 per cent in the first quarter of 2020.

While many ports on a global basis are seeing a decline in throughput (a round-up is on p18-19 and p21-23), a combination of the COVID-19 pandemic and, crucially, strike action, saw container volumes handled fall to 530,000 TEU. The ports grouping comprises the leading container port in France, Le Havre, plus the River Seine cargo facilities at Rouen and Paris. The operator confirmed that the number of container vessels in March 2020 was 156, a total of 16 below what was seen in March 2019.

However, while the reduction in ships calling can be attributed to COVID-19, it was only towards the end of March 2020 did the decline in vessels arriving begin to occur. By this time, container traffic had already been negatively impacted by ongoing industrial action by port workers in January and February 2020 who were supporting protests against President Macron’s planned pension reforms.

Moving forward, Haropa has also warned that it does expect to see a further decline in traffic in the short-term. “The effects of the pandemic-related economic crisis are now also being seen through a slowdown in global consumption and European exports, which will have a significant impact on container

8 Industrial worker action impacted Haropa Ports before COVID-19 arrived

and ro-ro traffic for import and export in April,” it said.

In addition to the COVID-19 issues, Haropa’s overall cargo volumes in Q1 2020 were down by 12.8 per cent to almost 20.4 million tonnes due to refinery shutdowns in France and a fire at one facility at the end of 2019.

Haropa maintains that it is the fifth largest port complex in northern Europe had already experienced a difficult 2019 in which its total traffic volumes decreased by 5% overall to 90 million tonnes. In addition, container traffic fell by 3.5% to 2.9 million TEU, largely due to widespread industrial action by the workforce in December 2019.

‘HOTSPOT’ ADVICE FROM SWEDISH CLUB The Swedish Club has launched a loss prevention tool which combines years of accumulated claims records with AIS tracking, in order to deliver tailored advice to its members’ vessels.

The P&I club has compiled a list of about 30 ‘hotspots’ around the world – ports or areas where its claims records and analysis show a higher number of incidents. Its ‘Trade Enabling Loss Prevention’ (TELP) system uses AIS technology to automatically identify when a member’s vessel is

heading for a hotspot. Tailored advice is then automatically generated and sent out to the member about five days before arrival.

“We know where our fleet is and, based on our claims knowledge, we have identified the hotspots,” says Peter Stälberg, senior technical advisor at the Swedish Club.

Relevant issues include navigational or weather hazards, cargo problems, issues with pilotage or towage, or unusual number of groundings. This

information is combined with updates from the club’s local correspondents, to give vessels a full picture – including, now, the latest information on COVID-19 restrictions and working practices.

TELP was trialled by four members in a four-month pilot last year and is now available to all the club’s members.

A more detailed assessment of the product, its potential and the value that can be provided to users will be provided in the next edition of Port Strategy.

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

Valenciaport

where everything is connected

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

NEWS REVIEW

NEW STOCKHOLM PORT ON TARGET TO OPEN A new deep-sea port for containers and rolling traffic in Sweden remains on schedule to open, on target, in Q2 2020.

Stockholm Norvik Port is located approximately 50km south of Stockholm and less than 5km north of Nynashamn, which places it in the middle of the growing Stockholm Miller Valley region.

Dubbed as the “Baltic Sea freight port of the future” the new facility is expected to be operational by the end of May 2020 and will replace the current CTF facility at Frihamnen, Stockholm. Leading global terminal company, Hutchison Ports, will be the operator.

The Autumn of 2020 is when the ro-ro operation at Stockholm Norvik Port is currently slated for opening.

Stockholm Norvik Port has its new, environmentally friendly ship-to-shire gantry cranes in place after arriving in March 2020.

The Super-Post-Panamax units are listed as the largest in the Baltic Sea region and will be operated remotely from a control centre in the ports main operational building. This means that there is no operator in the crane directly and 80 per cent of the lifting operation will be automated.

“The super-post-Panamax cranes are the largest on the Swedish east coast and they are adapted to handle the largest container vessels operating in the Baltic Sea,” Johan Wallén, Director of Sales and Marketing at Ports of Stockholm, explained.

Stockholm Norvik Port will be

8 Stockholm Narvik Port has the largest cranes in the Baltic Sea region

The Brazilian government has pushed truck drivers and port workers to the front of the queue for a national flu vaccine so that health officials get a chance to monitor the health of more than a million workers in those sectors.

Brazil’s President Jair Bolsonaro has made it clear that as the ports in Brazil handled more than 95% of all the South American country’s foreign trade it was vitally important that they, and the transport networks that feed them, remain functioning during the “current time of crisis which has Brazil at war against COVID-19”.

The Ministry of Infrastructure has distributed a total of 2 million vaccines in total to include public transport drivers, security and rescue services plus chronic patients. This year they are being pushed out two months early before the southern hemisphere winter kicks in, from June onwards,

so that closer monitoring of key workers can be carried out.

Out of a population of 213 million people, around 1.5 million are truck drivers, with more than 1 million casual or freelance truckers, and they are the key to keeping the economy of the world’s fifth biggest country open for business.

In May of 2018 an eight day truckers’ strike brought Brazil to a standstill and ever since then Brasilia has done its level best to keep the trucking community (and especially the 700,000 members of the Association of Autonomous Truck drivers, or Abcam), onside” and a raft of measures after that – including a controversial Minimum Freight Rate Table – have been carried out by government to that effect.

Since the corona crisis hit Brazil in early March the authorities have focused on the safety and

well-being of truckers and port workers so as to keep open vital supplies of food and medicines throughout the country. Free PPE and other resources have been provided in key ports such as Santos, but the flip side is that Brasilia will not countenance strike actions or stoppages by these sectors (see Feature on page 25).

“It is our duty to guarantee these conditions and provide security for everyone on the roads. Transport professionals and port workers will have this support because the Federal Government is guaranteeing this extra facility to workers who are providing a great service to our country during these difficult moments”, said the Minister of Infrastructure, Tarcísio Gomes de Freitas.

IADB Port Expansion in El Salvador

Dominican Republic is Regional Hub

Ziranlog Invests in Suape

Barranquilla Draft Reduction

As part of the National Infrastructure Plan drawn up by the Inter-American Development Bank (IADB) for El Salvador, it is proposed to invest US$27.4 million to US$30.8 million in new schemes. This does not include a further $2.8 million set aside for work on Quay C at the Port of Acajutla. Increasing container traffic at Acajutla has prompted development.

Photo: Ports of Stockholm

utilizing a straddle carrier operation and took delivery of its first units in February 2020 from ZPMC in China. There will be a total of eight straddle carriers, each capable of building stacks four containers high.

Upon operations commencing at the port, the straddle units will be manually operated but the capability, and intention, to be fully automated and moving autonomously is a target within the short-term.

PORT WORKERS & TRUCKERS AT FRONT OF QUEUE

Transit or transhipment traffic handled by ports managed by the Dominican Port Authority has increased by 55.7 per cent in the past three years. In 2019, total container traffic in 2019 grew by 22.6 per cent to 1.8 million boxes, compared to the 1.4 million boxes reported for 2016. The Port Authority says that the country is fast becoming the regional hub for the Caribbean due to better infrastructure.

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Ziranlog, part of the Ziran group, is to invest US$3 million in Brazil’s Suape Port Industrial Complex, occupying a 5.66ha site. The company will undertake the storage and movement of containers for both importers and exporters.

Rio de Janeiro-based Ziranlog is present at Guarulhos, Betim, Itaguaí, Vila Velha and Salvador and has storage capacity of up to 15,000TEU.

BRIEFS Changes to water levels in the Magdalena River, unusual atmospheric ocean conditions and high sedimentation, prompted Colombia’s maritime authority (Dimar) to decrease the draft in the Port of Barranquilla’s access channel from 9.5m to 9.2m. Maintenance dredging of the channel temporarily ceased, with three vessels diverted to Cartagena and Santa Marta.

MAY 2020 | 13

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THEECONOMIST BEN HACKETT

CORONA DEPRESSION – SHORT OR LONG? 8 How long will lockdowns last?

Four months after the advent of the coronavirus, leading to COVID-19 and the world is being plunged headfirst into a rapid and steep recession. At the beginning the impact on economics and global trade were brushed aside. Logistics supply management was nimble and flexible and would be able to find alternative sources from China. Then, by late February, we shifted into a global pandemic and supply chains began to come asunder as sourcing became a problem due to economic shut down as well as the ban on exports of key health products.

Economists began making uninformed projections of V shaped, U shaped and no shape recovery from an unquantifiable, non-economic and non-financial disease that was quickly bringing the globe to a jarring halt as 80+ countries introduced lockdowns forcing their populations to stay at home, closing down industry across the

board. It is estimated that some 80 per cent of the major industrial capacity was shut down as a result.

The range of forecasts by banks and economic forecasting

houses ranges across graphs and even within forecasters scenarios the ranges of high to low is so wide as to show the lack of confidence in their projects. As recently as January 20, 2020

projections by the IMF suggested “Global growth is projected to rise from an estimated 2.9 per cent in 2019 to 3.3 per cent in 2020 and 3.4 per cent for 2021”. The penny dropped in late March, the IMF view changed suggesting that the coronavirus pandemic will push the global economy into the deepest recession since the Great Depression and projecting that trade would collapse by 32 per cent, with the U.S. suffering at least a 10 per cent unemployment rate.

Global trade volumes during the Great Recession of 2008-9 contracted by 12.2 per cent.

Compare that with 32 per cent.

What is unmeasurable is the length of the lockdown of people and as a result industry in this virus pandemic. What is also unknown is how long it will take to bring people back to work and to get the supply chains working again. And the biggest unknown is what changes will there be in the manufacturing sectors as nationalism is on the rise.

THESTRATEGIST MIKE MUNDY

COLLABORATION NOT CONFRONTATION One of the interesting questions that Covid-19 poses is: How will it impact the future relationship between port and terminal employees and their respective employers?

Particularly in the largely private sector led terminal operating sector it is clear that there is a strong emphasis on cutting costs – a natural and necessary step when volumes fall and when in some cases the prospect of a failing business arises.

Fortunately, trade needs to keep moving, supply lines need to be maintained and, as such, the prospect of sustained employment in the port and terminal sectors is better than in many others. Nevertheless, the impact, for example, of mounting void sailings, estimated in the

container sector to be in the order of nearly 400 between mid-March and the end of April, and a laid-up container fleet, now accounting for more than three million TEU, cannot be underestimated.

If a finger has to be pointed at particular sectors of the port and terminal businesses where job security is most at risk, then two striking candidates are port ranges populated by high capacity container ports that face intra and inter port competition and the completely different sector of employees engaged in cruise port activities.

A case in point in the first instance is the UK and north European port range. Here, those container terminal operators that function with large workforces – i.e. that have not yet adopted comprehensive automated

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solutions – will doubtless initially seek to reduce or eliminate what can be called all non-essential costs, and beyond this if possible take advantage of government schemes that present the ability to furlough labour with government picking up the cost.

Longer term, however, should COVID-19 trigger a sustained downturn, sparking a much tougher competitive climate with the need, in some cases, for survival focused cost reduction measures then the question of the permanent lay-off of labour may arise. And especially so with common-user terminals that have no direct line support. It is hard to escape the reality that labour costs, particularly in mature economies, represent the larger part of terminal operating costs.

The situation in the cruise

sector speaks for itself – there are zero cruises for the foreseeable future, although reports do indicate bookings for 2021 are looking healthy.

Clearly, these are unusual times and much depends on how quick the ‘recovery’ is.

Short-term the goal is survival, longer term there promises to be a need for adjustment.

Given the latter scenario there appears to be little mileage in maintaining the traditional style confrontational approach that typically plays between unions and employers in many regions.

COVID-19 has triggered positive innovation in many diverse respects it is to be hoped that if the situation demands it there will be a spirit of collaboration rather than confrontation should labour issues across the board demand it!

MAY 2020 | 15

THENEWYORKER BARRY PARKER

THE I-WORD – AN ECONOMIC FILLIP? Yes, we have heard it before.

Investment in infrastructure (the “I-word”) was a centerpiece of President Trump’s campaign four years ago; it also figured in peace-making overtures between Democrats (led by House speaker Nancy Pelosi) and the party of Trump, the Republicans, during the various political feuds of subsequent years. After urgently agreeing on roughly $3 Trillion + of emergency relief (this does not include monetary actions by the U.S. Federal Reserve Bank), policy makers at the highest levels are likely to enact further stimulus measures.

The I-word has again been mentioned as a possible channel for injecting an economic fillip. But the opinion of many legislators, including on the Republican side of the aisle, it would be difficult to pass another gargantuan piece of legislation (an additional $2 Trillion has been mentioned) which did not provide short-term very visible benefits to out of work

constituents. Consider also that definitions of “infrastructure” go beyond motorways and railways, in the aftermath of the pandemic, “healthcare” which is up against flimsy and unconnected supply chains at every turn, might, legitimately (in my view) be included. However, it’s not possible to handicap political outcomeseven in “normal” times, which these surely aren’t. So I won’t really try to make any predictions.

8 Is fresh infrastructure legislation due?

Nevertheless, we can point to loud talk from Ms. Pelosi, even at the height of the Q1 “impeachment” debacle (and before the virus erupted- bringing the U.S. into a true “recession”), on her desire to introduce fresh infrastructure legislation during the Springtime. Beneficiaries would include segments previously discussed- but also

“healthcare”. In this critical, dare I say “existential” segment, the broken distribution links have been painful. In the past, I’ve advocated that ports follow their passions, which means pursuing specialties where they might have a competitive advantage compared to their rivals.

What I do see coming (not a prediction, but an idea worth exploring) is that imports, storage and landside movements of materials that might dramatically reduce the severe of the next outbreak (think masks, protective equipment, breathing apparatus and related machinery) will be receiving special attention. Such cargoes are no longer something that’s stuffed in a 40ft box; they are now, and will be for some time, critical materials. When the scramble to get a piece of that next Infrastructure pie ($2 Trillion or otherwise) ensues, maybe in the Summer, ports that have specially addressed the “health care” supply chains should find their places near the front of the line.

THEANALYST PETER DE LANGEN

SHARE PRICES DURING COVID-19 PANDEMIA In this column, I am venturing into an area I have little expertise in (and as a disclaimer: no personal stake); the evolution of stock prices of terminal operators in the COVID-19 pandemia. There are various listed terminal operating companies, some with an international portfolio (such as ICTSI and Hutchison Port Holdings), others with one or various terminal operations in a specific country, such as HHLA (Hamburg, Germany), Luka Koper (Koper Slovenia), Santos Brazil (various ports in Brazil) and Westports (Port Klang, Malaysia).

A first noteworthy conclusion from the stock price evolution of these companies is that overall, they generally have performed worse than the overall stock

16 | MAY 2020

market (comparing to the national indices). This intuitively makes sense, after all, trade is (and is likely to remain) more adversely impacted than the economy as a whole. For instance, for many tech firms, the effects on demand are not as large as for ports, in some cases, demand of technology firms has even grown.

Second, seaports seem to have fared better than airports.

That may indicate that investors think the long-term effects on air travel will be larger than on maritime transport. To my mind, this also makes sense as the virus risks may make people wary of travel for some time to come, while our current experience with working from home may lead to a lasting reduction of business travel.

Third, the one segment that performs well during this crisis, like the 2008 financial crisis, is oil tank terminals. The listed companies Vopak and Sinopec both have fared better than the indexes in their respective home countries and better than container terminal operators.

Finally, there are huge differences between specific terminal operators. There does not seem to be a ‘COVID-19 impact logic’ to explain these (or at least I do not see it). HHLA and Santos Brazil has performed relatively bad, while Westports has performed remarkably strong, even (marginally) better than the overall Malaysian stock market.

The global operator ICTSI has performed worse than HPH. Upfront, two potential

explanations could be proposed: 1) Terminals in countries where the lock-down has been (or is expected to be) more severe will see the shares decline most; 2) Shares of companies with relatively more transhipment volumes decline more as this segment is most vulnerable.

However, HHLA has a more limited transhipment share than Westports, and I would think ICTSI has a more limited transhipment share than HPH. And the effects of the lockdown in Germany seem similar to those of Malaysia.

A word of caution for those who interpret this as a motive to buy shares of port companies now that they are low: over the last decade, shares of port companies have underperformed compared to the overall stock market.

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

NEWS REVIEW

VALENCIAPORT SUPPORTS SAVINGS FOR USERS

The president of the Valencia Port Authority (PAV), Aurelio Martínez, has confirmed that the measures of economic support to companies in the port sector are urgent actions to support the economy and employment during the difficult COVID-19 period.

The measures form part of a royal decree of the Government and prepared by State Ports, and includes the reduction in port rates, which are likely to be in place for “several weeks” Martínez explains further.

“Ports can collaborate with a wide diversity of companies with difficulties caused by the consequences of COVID-19 and are going to generate savings for their users of one hundred million euros.”

It is understood that the support will be available to help regular maritime services, ro-ro transport, ships, container transport and cruises, although as Martínez explained, not every company is going to be in the

same economic position so there will need to be an assessment on a case-by-case basis.

Regarding the revision of income to ports, Martínez affirmed it is “perfectly reasonable for ports to collaborate in such a delicate moment for individuals and for companies. Adjusting rates to a new reality is the right thing to do.”

8 Aurelio Martinez

The president of Valenciaport made these statements during a webinar presenting the Quarterly Economic Environment Report of the Valenciaport Foundation conducted by Dr. Vicente Pallardó, researcher at the Institute of International Economy.

NY TERMINAL GOES LEGAL Global Container Terminals (GCT), which operates a terminal on Staten Island, is reportedly seeking 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.

In an interesting development, Maersk Line has confirmed that its vessels and those of Hamburg Sud were planning to stop calls at GCT New York by May 1, 2020.

The company did also state that

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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.

Maersk Line has confirmed it is in a legal dispute

NPA RENEWS 21 CONCESSIONS The Nigerian Ports Authority is to formally renew the concessions/leases of 21 terminal operations, including those of AP Moller Terminals and West African Terminals.

Updated agreements associated with the concessions/ leases have been forwarded to the Ministry of Transport, the Infrastructure Concession, Regulatory Commission and the Bureau of Public Enterprises for formal approval.

The renewal process also provided for the set-up of a sub-committee made up of stakeholders including members of the House Committee on Privatisation and Commercialisation.

The Committee will liaise with Nigeria’s Attorney General and Minister of Justice “…. to fast track the completion of the review, renewal and execution of all the negotiated supplemental agreements within 60 days.”

MICT NORMAL WORKING Manila International Container Terminal (MICT), the premier container facility in the Philippines, has recently experienced congestion due to a slow period of containers being removed from the terminal as a result of COVID-19.

This is a common issue for many terminals globally.

However, as of mid-April, MICT reports that the terminal is back to normal operations with overall terminal utilisation under 67 per cent and reefer utilisation below 65 per cent.

“Thanks to the extraordinary efforts of our frontline employees and many port stakeholders, the terminal has been able to pull off this feat. Efforts should continue, however, to ensure that we have no repeat of the dangerously low level of pull-outs we experienced at the end of March and in early April,” underlined Christian Gonzalez, Executive Vice President, ICTSI.

MAY 2020 | 17

CORONAVIRUS: OUTLOOK

THE POST COVID-19 NEW WORLD Andrew Penfold of Mundy Penfold Ltd looks at the current COVID-19 pandemic and asks whether it will ever be business as usual for the container industry Economic growth and, indeed, world trade are the driving forces for the port sector. This is especially noted in the consumer and semi-manufactured goods that drive containerisation. We are now faced with a period of uncertainty that is unprecedented.

The container sector that emerges from the crisis seems certain to be quite different from what we have known for the past twenty years. It seems likely that core assumptions will need to be reconsidered before globalisation is back on track – if this is still a realistic prospect.

The potential depth of the downturn remains unclear, but the impact on container trade and, therefore port demand, will be profound – even if we have a V-shaped recovery.

From the current perspective (mid-April), this looks like the ‘Blackest Swan’ event that we have seen.

ANY PAST PRECEDENTS? There are several ways of looking at this. In strict terms of economics and trade growth it is possible to look at past crises and see how their recoveries progressed and try to assess what this might mean for the COVID-19 situation. In terms of economic output, the hit remains unclear. Various agencies have placed this at between two and three per cent of global output – but it will be the pace of recovery that is the main uncertainty.

There are two key peacetime situations where a very steep contraction at the global level was noted. These were the first Oil Shock in the early/mid 1970s and – probably more relevant – the Global Financial Crisis.

The current anticipated GDP contraction is much steeper than in either of these cases. The oil shock saw a stagnation and then limited contraction over 1974-75 which resulted in a trade contraction of around 2.7 per cent. Despite the economic dislocation, and resulting inflation, recovery was swift.

The Financial Crisis saw a steeper decline in GDP and a much sharper drop in trade. Here, too, recovery was swift. Prompt policy responses ensured the downturn was V-shaped.

We don’t know how deep the current problems will be – nor their likely duration. Two cases are assumed: 5 Case A sees a contraction in trade of around 23 per cent this year, with further limited contractions noted in 2021. In terms of global output, 2019 levels will not be reapproximated until the mid-2020s. This is the real nightmare scenario.

5 Case B assumes a sharp contraction this year of around 11 per cent, with some renewed expansion in 2021. This V-shape entails severe trade damage but looks more like the fallout from the Financial Crisis twelve years ago.

These comparisons are summarised in Figure 1.

IMPACT ON CONTAINER DEMAND Our container model has been revisited under these revised macro-economic conditions in order to provide a general overview of the scale of anticipated impacts. Of course, these will vary on a case-by-case trade basis, but the overall magnitude is of immediate interest.

Focusing exclusively on global import/export demand (i.e. netting out transshipment) the COVID-A case sees a contraction of around 19 per cent in global container port volumes this year, as Figure 2 shows.

18 | MAY 2020

‘‘

It seems unlikely that the container market will return to ‘Business as Usual’

8 COVID-19 will create a more fragmented container industry

The depth of the problems spill over into 2021, with further more limited contraction. Renewed growth commences from 2022, but total volumes do not reapproximate 2019 levels (550 million TEU) until 2024-2025. This represents a complete dislocation of the container sector.

The COVID-B case – although still severe – generates a decline of around 12 per cent this year with some recovery noted in 2021. By 2022, total volumes have reached 2019 levels once again.

Initially, negative effects will be focused on the major arterial trades – Transpacific, Asia-Europe and Transatlantic – but all trades will be impacted as the developing markets see lower investment and weaker demand.

CAN WE RETURN TO ‘BUSINESS AS USUAL’?

Aside from these severe volume impacts it seems certain that structural changes will be noted. Let’s take a look at these.

Perhaps most importantly, the supply chain reliance on remote manufacturers will be further re-examined. This was already underway with regard to China ahead of COVID-19 but it is clear that OECD countries will be increasingly reluctant to place supplies of strategic goods in China. Although now well established, Chinese market share will be revised downwards.

At the same time, the advantages of Chinese manufacturers were already under review ahead of the crisis as costs have increased. Attention was turning to alternate suppliers with low cost structures – Indonesia, the Philippines, Vietnam – and it seems certain that these pressures will intensify.

There will be great pressures to repatriate manufacturing

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CORONAVIRUS: OUTLOOK

8 Figure 1: World Trade Development - Crisis Comparisons (y-o-y trade %)

8 Figure 2: Forecast World Import/ Export Container Port Demand to 2023 (mTEU)

nearer to OECD consumption and this onshoring process will accelerate. From this perspective protectionism will be revitalised.

So, two key outcomes will be a reduced reliance on distant trade suppliers – especially in key strategic sectors – and a redistribution of these suppliers away from China to other Asian countries.

IMPACT ON THE PORT SECTOR Much of the port and shipping investment of the past ten years has been predicated on ‘Megamax’ vessels serving the Chinese export trades to Europe and North America.

If these volumes decline, there will be an overcapacity of large vessels and a lack of suitable port capacity in alternative Asian exporters. It seems likely that in the medium term this will see increased reliance on transshipment hubs in South and Southeast Asia until port investment catches-up in these new suppliers.

The level of uncertainty will remain very high and it will become more difficult to secure funding for port investment.

A more fragmented industry is the likely outcome, with the emphasis switching away form the largest scale ports and vessels and a more regional integration of supply chains.

Port investors have become used to regular and sustained increases in demand but the key assumptions driving this will need to be reconsidered. Within a sharply smaller market, optimum investment will become critical as the structure of world trade is revised.

It seems unlikely that the container market will return to ‘Business as Usual’. Although these are early days and the emphasis is now (rightly) on short term survival, it is vital that the current changes are considered at the highest levels and a reappraisal of key assumptions is undertaken.

It is not just a matter of contraction followed by recovery but, rather, an examination of the new world that will emerge from the crisis.

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

MAY 2020 | 19

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COVID-19: RESPONSES

8 The Alexander Humbolt, one of a growing number of vessels to be routed via the Cape of Good Hope in Asia – Europe service

“EVERY MAN IS AN ISLAND” What a turnaround! Coronavirus has driven us away from the idea of ‘no-man is an island’ in completely the opposite direction. Physical contact is quite rightly frowned upon, the ethos now is isolation and lock down (as depicted in comic terms on our front cover)! The knock-on consequences of Covid-19 are large scale and far reaching for the shipping and ports sector as highlighted below PS’s front cover illustration highlights the irony and frustration involved in Covid-19 – vessels turned away, bucket loads of void sailings, congestion at import gateways and a general disruption across the ports and shipping sector. The following article highlights some of the more prominent impacts felt today and the opinions and views expressed as a result.

The majority of impacts felt pose questions about ‘what next’ and from a macro point of view – the big questions – the preceding article, The Post Covid-19 New World, raises some interesting thoughts. Other views and immediate responses are included below where the opinions of various market analysts are reported as well as shipping developments.

MARKET ANALYSIS Drewry Global Demand: At the beginning of April market analyst Drewry concluded: “It is too early to say precisely how Covid-19 will impact the container shipping world and how it will measure against the container market’s nadir of 2009 due to the uncertainty surrounding the virus.” Drewry sees this as only being possible when three key questions are answered, namely: 5 Will the virus spread with the same force in every geographical region?

5 When will the virus be contained so that normal social and economic activity can be resumed?

5 Will government rescue measures be sufficient to prevent a permanent scarring of the global economy?

Against this background Drewry presents three possible demand scenarios with the base one seen as most likely.

Drewry’s base forecast foresees a demand collapse over the first nine months with recovery from 4Q20. This, it says, will necessitate strong capacity management by the shipping lines and cost-cutting by measures such as re-routing some Asia-Europe voyages via the Cape of Good Hope thereby saving on Suez Canal fees.

Maritime Strategies Volume Falls: Maritime Strategies International (MSI) forecasts in the March edition of its outlook forecast a turgid time for container shipping. It states: “There seems little doubt that containerised trade will shrink in 2020, with nearterm rates of decline potentially approximating – or even exceeding those seen during the financial crisis. MSI estimates falls in traffic volume in March – May compared to 2019 will comprise the following: 17.8% on Asia-Europe trade, 15% on trans-Pacific and 13% on the trans-Pacific US East Coast route.

It further considers that “…no trade will escape the impact of Covid-19” and that “Regional trades will come under severe pressure, owing to economic contraction, disrupted supply chains and reduced transshipment cargoes.”

The total volume drops in March – May estimated for Asia – Middle East trade, Asia – Latin America, Atlantic westbound traffic, intra-Europe and intra- Asia are put at 12%, 10%, 8% and 5% respectively compared to 2019.

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

MAY 2020 | 21

COVID-19: RESPONSES

100

95

90 Global S/D index

85

80

1Q18

3Q18

1Q19

3Q19

1Q20

3Q20

Global S/D index adj. for idle fleet

8 Figure 1: Drewry global supplydemand indices forecasts (1980=100)

Source: Drewry Maritime Research; Container Forecaster 1Q20 report

8 Figure 2: China container port traffic: Scheduled TEU and vessels to China – 2017 to early March 2020 Source: ClipperData, PR News

Ocean Insight Asian Shipping Lanes: Ocean Insights (OI) reports a 23% reduction in container vessel capacity in Asian trades between mid-January and mid-March this year.

It additionally estimates a seven per cent reduction in container vessel capacity on a global basis – from a peak in midJanuary of 16.8m TEU capacity to a level of 15.5m TEU capacity.

OI further points out that blank sailings have played a major part in these capacity cuts with nearly 400 likely to be implemented in the period mid-March to the end of April.

UNCTAD Centrality: UNCTAD, like Drewry, considers it too early to gauge the full impact of COVID-19 – it does note, however, that over recent weeks there have been significant changes in the operational behaviour of container shipping and it uses

22 | MAY 2020

the measure of scheduled TEU and vessel calls in China to highlight this – both deployed capacity and vessel calls can be seen to have dropped significantly (Figure 2). UNCTAD highlights the centrality of China to the movement of goods around the world as a direct determinant of the high number of blank sailings but also acknowledges that there are other trade routes where this phenomenon is manifest.

THE OIL MARKET Oil Price: The US Energy Information Administration (EIA) forecasts that crude oil prices will average US$33.00 a barrel for 2020 and US$46 a barrel for 2021 – a far cry from the average of US$64 a barrel in 2019. There is now a glut of oil worldwide – on land and at sea stored in vessels – with the latter responsible for a hearty spike in daily charter rates for VLCCs and other tankers.

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

COVID-19: RESPONSES

8 ESPO has called for resource support from the EU for European ports to cope with the impact of Covid-19

Overall, the EIA predicts that 2020 demand will be 95.5 million b/d, 5.2% lower than in 2019, which represents the largest drop since the EIA began keeping records.

The EIA has also come up with some numbers for pricing over the longer term. It sees that, by 2025 Brent crude will rise to US$79/b. By 2030, EIA expects demand will drive oil prices to US$98/b. By 2040, prices will be US$146/b, again quoted in 2019 dollars. At this stage, cheap oil sources will have been exhausted, necessitating significant added cost to extract oil. By 2050, oil prices are put at $214/b!

As a measure of the glut of oil now prevalent and the associated boom in storage requirement at the end of April there were approaching 30 oil tankers sitting off the coast of southern California waiting to offload their cargo. These tankers accounted for more than 20 million barrels of crude.

SHIPPING Carrier Loss Estimate: Copenhagen- based Consultancy Sea Intelligence estimates that the Covid-19 triggered drop in demand in the container shipping sector and associated wave of blank sailings could result in a collective loss of US$23 billion for container shipping lines. As evidence of the severe cuts being made to sailings it points out that at the beginning of April cuts were in prospect for the next four week period that represented 29 – 34% of capacity.

Cape of Good Hope Option Taken: CMA CGM is one of a number of lines seeking to reduce costs via routing select vessels in Asia – Europe – Asia trade via the Cape of Good Hope. The route chosen by CMA CGM is in excess of 3000 nautical miles

longer than the Suez Canal option. The journey typically takes five days longer than the three week Suez route. With Suez tolls in the region of US$400,000 to US$500,000 per transit and the added fuel bill for a Cape transit in the order of US$200,00O the savings to be made are clear.

ESPO Call: The European Sea Ports Organisation (ESPO) has made a case to the European Union that proposes: 5 European ports, stakeholders and port customers must, as required, be the recipients must of EU and national relief measures.

5 More flexibility regarding infrastructure projects that are delayed due to national lockdown measures – flexibility on deadlines is one major point made plus the need for improved guidance on aproject by project basis.

5 Passenger ports, subject to big drops in activity, must be given special consideration. The need is identified for initiatives aimed at restoring trust in the health and safety and sustainability of passenger and cruise shipping.

Newbuilding Slippage: As of the end of March the new container vessel order book showed 48 Ultra Large Container Vessels (ULCS) on order but with delivery days for a number of these vessels expected of up three months as a result of Covid-19. The 26 vessels due for delivery this year will all be effected. The order book as of the end of March for ULCSs represents a TEU capacity of 1,099,676TEU with deliveries going through to 2024. Interestingly, presently only two ULCSs are scheduled to be commissioned in 2021 i.e. against this original timetable.

KEY INFO’ SOURCES COVID-19 British Ports Association: https://www.britishports.org.uk/coronavirus IAPH: http://www.iaphworldports.org/news/7351 IMO: http://www.imo.org/en/MediaCentre/HotTopics/Pages/Coronavirus.aspx (with links to other sources) UK Government: https://www.gov.uk/government/publications/covid-19-shipping-and-sea-ports-guidance UNCTAD: https://tft.unctad.org/ports-covid-19/ World Ports: https://sustainableworldports.org/world-ports-covid19-information-portal/

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

MAY 2020 | 23

B A S E D ON A TRUE ST ORY

THE LEGEND OF SPARE PARTS BE VERY CAREFUL WHERE YOU SOURCE Y O U R S PA R E PA R T S F R O M … Visit elme.com to read the saga of the result of not using Genuine for your spreader.

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SPECIAL REPORT: BRAZIL

BEING ON A WAR FOOTING Port operators in Brazil have reacted positively, if at first tentatively, to combat the effects of the coronavirus pandemic (COVID-19 ) on the supply chain, as Rob Ward confirms

Although protests from stevedores did occur to the COVID-19 pandemic over safety issues/lack of personal safety equipment, it did not disrupt the cargo flows for very long. Neither did the threats of strikes in Santos, the key port in South America with 4.17 million TEU handled last year (up 1 per cent over the 3.87 million TEU for 2018, according to statistics from the Santos Port Authority) or at any smaller ports.

In fact, not only have all Brazil’s leading container ports – all 23 of them out of 35 ports in total – remained open during the crisis to date, but container volumes have actually risen, significantly at many of them. This is due to increased demand for Brazilian foodstuffs from around the world, especially from China, where the virus originated.

In addition, import demand has also been very strong, especially throughout late February and into March, owing to the backlog that developed out of China, when several of that country’s ports were partly closed or even paralysed back in late January and early February, when the virus was particular virulent, and production closed down. Chinese New Year, from January 24 to February 1, also occurred.

This position caused congestion in key ports such as Shanghai, Xingang, Tanjin and Ningbo, which only recently eased up with the knock-on effect impacting on imports into Brazilian ports some 30 to 40 plus days later.

IMPRESSIVE GROWTH Overall, the throughput figures at Brazilian ports for both imports and exports have been really impressive. During the first two months of 2020, the three box terminals in Santos – DP World Santos, Santos Brasil and BTP - handled 682,300 TEU, which was up 19.6% over the same period of 2019. These

two months saw imports rise by 19.3 per cent to 343,800 TEU and exports rise 20 per cent up to 338,500 TEU, according to Santos Port Authority figures.

“Initially Brazilians were hoping that the coronavirus was going to be a Chinese and a European problem only, especially with President Bolsonaro downplaying it and calling it ‘just like a bad flu’, but as it spread around the world, stevedores, especially in Santos, became more and more worried,” said a Santos based shipping agent.

He added, “Brazil has gained new markets in China owing to its trade spat with the US and this continued even with the corona spread. The virus came late to Santos, only in early March, and the workforce have adapted admirably with rising, indeed record, volumes of containers, and despite numbers pegged back about 10 per cent by self-isolating stevedores and truck drivers.”

Even today (late April as we go to press) Brazil has still only registered 40,500 COVID-19 cases and 2,575 deaths, relatively low compared to the total population of 212.6 million. Some 14,500 of those are in Sao Paulo, the most populous state which includes Santos.

8 Brazil has gained new markets in China owing to its trade spat with the US

DEMAND FOR BRAZIL’S EXPORTS Specific Brazilian export sectors showed even more highrising figures. During January and February of this year China imported 115,400 metric tonnes (around 8,500 TEU) of Brazilian chicken, up 59 per cent over the same period of 2019, with most of that being shipped from the southern ports of Paranagua, Porto Itapoa, Itajai and Navegantes.

Brazil is also among the leading global exporters of beef, cotton, coffee and orange juice and all these exports have been strong out of Santos so far this year.

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

MAY 2020 | 25

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SPECIAL REPORT: BRAZIL

‘‘

Initially Brazilians were hoping that the coronavirus was going to be a Chinese and a European problem only, especially with President Bolsonaro downplaying it and calling it ‘just like a bad flu’, but as it spread around the world, stevedores, especially in Santos, became more and more worried The South American country’s total beef exports hit a record $7.5billion in 2019, up 20 per cent over 2018, with China accounting for 26.6 per cent and Hong Kong a further 18.4 per cent of the total revenues. Volume was up 11.3 per cent from 1.63m tonnes to 1.83m tonnes (or approximately 120,000 TEU) for beef.

In March too, total Brazilian agribusiness recorded a rise of 18.8% in volumes and 13 per cent in revenues, up to $9.29 billion, which accounted for 48.3 per cent of all Brazilian exports, with fresh beef leading the way with $555million worth of sales.

China now accounts for 43 per cent of all Brazil’s agribusiness exports, up from 34.2 per cent during March of last year, according to Ministry of Agriculture figures. During March 2020, China bought $451million worth of Brazilian meat (beef, Chicken and pork), double the amount of March 2019 and comprises a third of all Brazilian agribusiness exports.

Leandro Carelli Barreto, a director with the Solve Shipping consultancy, said that although Brazilian ports suffered a few “teething” problems during the first few days and weeks of the coronavirus arriving on Brazilian shores (in mid-March) the overall impact has been “far less than anyone could have imagined”.

“Although there were some problems in Santos at the beginning, until the dock workers there signed a fixed solution that kept them working, and a few teething problems with

space because of the weakening Brazilian currency, the Real, (making exports much more attractive than previously) overall the ports in Brazil are in really good shape,” explained Mr Barreto, talking to Port Strategy in early April.

8 Santos stevedores see a patriotic duty to keep working and keep the port open

STRIKE THREAT? However, it was uncertain for a while as the powerful Santos dockers’ union, Sindestiva, threatened an all-out strike until face to face talks with Brasilia saw them back-down.

Rodnei Oliveira da Silva, the leader of Sindestiva, said that he would recommend a 30-day strike if requests for protective equipment and practises and job security were not met. Two weeks later he claimed he was only trying to improve safety and was not serious about striking.

One ship-to-shore crane operator said that most Santos stevedores saw it as their patriotic duty to keep working and keep the port open. According to Deyvis Araujo it is important to stay safe for his young family (he has two children under three years old), but it is crucial for his country for him to keep working, as long as safety measures are in place.

“We are not thinking just about the micro, but also about the macro, in Brazil. Everyone is responsible, it is a difficult time, and we have the feeling that we are at war. This is the feeling that passes through our hearts,” he told the Folha newspaper.

Importance of Santos In Brasilia Tarcisio Gomes de Freitas, the Minister of Infrastructure, and the Santos Port Authority (SPA, formerly Codesp) responded strongly and promptly to the pandemic.

SPA issued a 10-point plan of safety measures and called upon the Emergency Co-ordination Committee to supervise procedures. Meanwhile De Freitas underscored how important a fully functioning port of Santos was to the country if it was to remain open for business during such a crisis, comparing it to “being on a war footing”.

On top of that, management at the three main Santos box terminals moved all non-essential staff out of their offices to cement social distancing. A quick Port Strategy survey found the three container terminal operators had, on average, converted about 90% of their office staff into home workers, with a handful of key

personnel visiting the office just once a week.

However, Mr Barreto remarked that the impact of the pandemic on Brazilian trade during the first few weeks and months may have been surprisingly positive, but he cannot see that continuing into the second quarter of the year.

“The problems at the ports in China were over a month ago and they have been resolved now,” said Mr Barreto. “Brazil is also selling a lot of iron ore to China and we also had a record crop of soya beans so that too will be exported to China. “This means that China is already over the low points of the crisis and is now buying strongly from around the world and Brazil and Santos are happy to help that process, at least until it dries up.

Due to several blank sailings, most ships are full for April and May and many carriers are only taking bookings for June, but by then this ‘mini boom’ will likely be fading.”

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

Barreto’s view was backed up by a commercial manager at one of the three leading Santos container terminals (BTP, Santos Brasil and DP World), who said he did not want to be identified, but did explain the position further.

“Looking at the forecasts and talking to colleagues at other terminals, here in Santos we seem to have a lot of cargo booked in for April and May and we are optimistic until the end of June,” said the veteran commercial manager. “On the export side there are strong exports of cellulose [especially from Suzano and Eldorado], cotton, orange juice and many countries are panic buying coffee now because of the Coronavirus,” he added.

However, he did also sound a note of caution. “I am convinced we will all be busy enough despite the Corona virus, until the end of June, but after that? Well, God help us!”

MAY 2020 | 27

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SPECIAL REPORT: PERU

ROLLING WITH THE PUNCHES In the past year, Peru’s port operators adjusted to the trade war between China and the US and now face the effects of COVID-19 pandemic. Rob Ward assesses developments

8 Stronger inbound but weaker outbound cargo in Q1 for APMT

During the first four months of this year Callao, the country’s biggest port, has been heavily impacted by the coronavirus. Container flows have proven more erratic than previous years owing to, firstly, the effect of port closures and logistical networks in China, along with the usual disruptions caused by the Chinese New Year (from January 25 to February 1). Then came the effects of the government in Peru realising the severity of the virus outbreak and its worldwide spread.

The Peruvian government installed a State of Emergency on March 17, and state run bodies such as the Autoridad Portuaria Nacional (APN) have worked closely with port terminal operators – such as DP World Callao (DPWC) and AP Moller Terminals in Callao (APMTC) – to implement the containment safety policies.

Working from home wherever possible, and strict protocols for port workers – including daily checks of temperature, the use of Personal Protective Clothing (PPEs) when necessary, work distancing, disinfectant availability and a raft of other measures – have quickly become the norm and just as well, for both terminals have been particularly busy and tested at times, especially during February and March. Around 85 per cent of DPWC staff are direct employees, and around 15 per cent of APMTC’s, with the rest made up of non-core “casual” labour.

There have been two stand-offs with dockers – one at each terminal – over safety issues being implemented but both were quickly resolved and with only one shift apiece affected for DPWC and APMTC. The outcome was a number of staff testing positive for COVID-19 and being told to selfisolate at home for two weeks.

GOOD 2019 – BUT “LUMPINESS” IN Q1 2020 The two terminals shared the 2.5 million TEU Callao throughput last year, up 7 per cent over the 2018 figure. DP World’s operator handled about 53 per cent of the total and the AP Moller subsidiary the rest.

According to figures from Santiago-based ECLAC (A United Nations body covering Latin America), APMTC saw inbound flows jump 9 per cent and 57 per cent in January and February but fall by 1.7 per cent in March (giving an overall 18

per cent increase in Q1 2020). Meanwhile, DPWC showed -10.3 per cent in February but only -0.8 per cent, for March for an average fall of -4.1 per cent for Q1.

APMTC saw loading activity drop by -59 per cent (mainly due to a fall of -72 per cent in January) and DPWC by only -11 per cent, underlining the “lumpiness” of movement and also the fact that some MSC and Maersk Line services were switching some cargo flows to their own sister company.

Combined totals showed 243,320 TEU loaded and 217,000 TEU unloaded.

“DPWC is also much more sensitive to the Chinese and Far East markets and so was more affected by a number of blank sailings (six out of 20 on that trade lane),” said a Callao based shipping agent. “Both terminals have been dealing very well with chaotic cargo flows.”

In addition, there was a shortage of dry boxes for imports post-Christmas period and a shortage of reefer boxes for export – Peru exports vast quantities of avocados and other fruit and vegetables plus fish – which is slowly being resolved with a number of extra loaders: one from Hapag Lloyd as Port Strategy went to press.

BACK TO NORMAL One port consultant who works closely with one of the two box terminals in Callao said that both terminals in Peru’s leading port were operating “pretty much as normal” despite stevedore numbers being slightly down, owing to handful of dockworkers being absent owing to precautionary quarantining. “Through April, ships have been arriving from Asia full again, and carriers have cleared the backlogs that had built up out of China during January and February,” he added.

He further stated that China was sucking in a lot of fruit, vegetable and fish exports (especially shrimp) out of Peru, with much of this cargo re-routed via South Korea and Southeast Asia earlier in the year when Chinese ports were closed.

Electronics and household goods are filling inbound boxes.

“We are also seeing exports of grapes and avocados to the US. Ships are becoming full right now as everyone is playing catch-up, but I can’t see it lasting beyond June,” added the consultant, reflecting similar views to those being experienced in Brazil.

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

MAY 2020 | 29

SPECIAL REPORT: CHILE

RIDING CREST OF REEFER WAVE Porto Itapoa, the container terminal partly owned by Maersk Line, has leapt into third position in the Brazilian box hierarchy, as Rob Ward discovers It has been a great past year for Port Itapoa, leap-frogging both local rival Navegantes and Rio Grande, who were previously in third and fourth spots.

During 2019 the Porto Itapoa box terminal, located on the north coast of the southern state of Santa Catarina, handled 735,139 TEU, up 14 per cent over the previous year, according to the recently published Annual Yearbook from the Brazilian National Authority for Ports and Waterways (Antaq).

By comparison, Navegantes-based Portonave (now 100% owned by MSC) handled 709,346 TEU during 2019, up slightly up from its 2018 figure, while Tecon Rio Grande (TRG), operated by Wilson, Sons, saw throughput slide more than 10 per cent to 679,911 TEU, after losing several deepsea calls.

However, with the addition of River Plate bound cargo now being unloaded at Rio Grande for transhipment to Argentina and Uruguay, TRG is expected to make a throughput comeback this year.

Porto Itapoa was a long-term project put together by Alianca Navegacao, the Hamburg Sud Brazilian flag subsidiary now owned by Maersk group, and local companies LOGZ Investment Fund and Grupo PortoSul. METEORIC RISE The President of Porto Itapoá, Cássio Schreiner, emphasises that the rise has been meteoric and the numbers for 2019 need to be celebrated as the result of intense and professional work.

“Porto Itapoá was born from scratch just eight years ago in a municipality that embraced us from the beginning,” stated Schreiner. “It was necessary to invest in infrastructure, train people and establish a logistical and entrepreneurial culture.

With all these challenges, it is extremely gratifying to see this result and to see this effort turning Porto Itapoa into the largest port in Santa Catarina for containers, and the third largest in Brazil, in such a short space of time.”

‘‘

It is extremely gratifying to see Porto Itapoa turned into the third largest port in Brazil in such a short space of time The small town of Itapoá is located on Babitonga Bay, just 50 miles from the industrial city of Joinville and Araquari, where BMW has a production facility. It is also around 50 nautical miles from the Itajai port complex (hosting Portonave and APMT Itajai) and a mere eight miles from the mainly breakbulk and dry bulk port of Sao Francisco do Sul. The hinterland for Porto Itapoa includes some of the biggest chicken exporters in the world, such as BRF Foods and Marfrig.

Since opening for business in June 2012 (with the berthing of the Hamburg Sud vessel Cap San Lorenzo), Porto Itapoa has grown its throughput much faster than expected and two years ago increased its capacity from 500,000 TEU per annum up to 1.2million TEU per annum, with the addition of two more STS gantry cranes. It also has 2,892 reefer plugs to cope with the burgeoning export of refrigerated cargoes.

Alberto Machado, a commercial manager for Porto Itapoa, told Port Strategy that the large increases were boosted by a 25 per cent rise in imports and 46 per cent increase in transhipment boxes.

In first place in Brazil, as ever, is Santos, the biggest port for containers in South America, with 4 million TEU handled last year (up 5 per cent), according to the Antaq figures. It has been the number one volume port in Brazil for containers for many decades and contains the two leading individual terminals in Brazil, namely Santos Brasil (1,680,369 TEU in 2019) and Brasil Terminal Portuaria (BTP, which handled 1,654,436 TEU last year). The third terminal – DP World Santos - gained volumes after the closure of Libra Terminais in early 2019. It takes up sixth position overall in Brazil, with 717,186 TEU handled last year, if considered as a standalone, private terminal.

The second biggest port for containers in Brazil – hosting the second largest terminal operator – is Paranagua and Terminal de Conteineres de Paranagua (TCP), which handled 865,110 TEU during 2019, an increase of 11% over 2018.

Boosted by significant increases in reefer exports – especially chicken and pork to China in the wake of that country’s trade war with the US and well-known problems with swine fever – Porto Itapoa has also seen exports increase to further cement its position as a leading port in the country.

8 Porto Itapoa has had a meteoric rise up Brazil’s box volume rankings

Porto Itapoa Details Porto Itapoa has been operating with an 800m quay (two berths), deploying six Super Post Panamax gantry cranes, 17 RTGs and two reach stackers.

There is a depth alongside of 16m, with vessels restricted to 12.5m draft only by the entrance channel.

Around 10 shipping lines use Porto Itapoa, via nine different services - three to Asia, two to the Mediterranean, one to East Coast of North America, one to Northern Europe, one to US Gulf and the ABAC/Conosur service to West Coast South America.

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

MAY 2020 | 31

TERMINAL OPERATIONS: TOS

KEEPING PACE WITH AUTOMATION As terminal automation increases, Dave MacIntyre assesses the performance of Terminal Operating Systems (TOS) in keeping pace and benefits offered

8 A system installed in a straddle carrier with the ITS D-MON ISPS card security system connected to Navis N4 TOS

As terminal operators identify the port characteristics that make automation viable and more specifically the processes that make sense to automate, TOS providers are needing to ensure their product offers scalability and integrated solutions that fit the terminal’s size, location and overall needs.

TJ Rucker, president of Tideworks Technology, says for clients being automation-ready is paramount, even if they are not ready to fully automate today. “We want to ensure that we’re isolating necessary applications to a variety of subservices and standardising where possible on automated service integration. Our system provides optionality for operators to increase automation in the future, as it makes sense for their terminal.”

He adds that it is important to be able to integrate not only for data collection and visibility, but across all different vendors and their solutions.

“We developed Tideworks Insight data-platform as a BI [business intelligence] agnostic tool that aggregates disparate data sources and allows a terminal to paint a picture that they couldn’t otherwise do with a single view into the data.”

The company has developed open APIs (application program interfaces) into a collection called the “Tideworks Unified Gateway” (or TUG). TUG facilitates more straightforward integration with third-party systems, including accounting or ERP systems, automated data capture technologies, and geopositioning systems to bring greater data visibility.

Another important feature, says Rucker, is for the system to present data in an understandable form.

“Imagine an operator is deploying 60 pieces of equipment to an operation every day, three times a day. That’s 180

pieces of equipment sustained throughout 365 days. If the operator could figure out which one of those pieces of equipment was the most underperforming and could sustainably correct the situation or even determine too many pieces of equipment are being deployed, consistently through 365 days, the operator could improve performance by correcting the inefficiencies in the operation, resulting in significant cost savings.”

Clearly, TOS is expected to play an important role in reducing costs. Tideworks Insight, for example, can be used to manage assets and use only what is needed to save money.

“The pricing component is the biggest obstacle,” says Rucker, explaining, “For the most part, today it is the same price for lines to bring in a vessel of two different sizes – even though the complexity of operations may be dramatically different with a larger vessel.

“A variable model, where the price per unit changes as the operation becomes more complex and difficult to operate, would accommodate for the increase in costs associated with larger vessels.”

COST SAVING POTENTIAL More cost-saving potential for terminals is in reducing their day sales outstanding (DSO). In a large organisation with hundreds of millions of dollars in DSO activity, reducing that activity by a single day can improve cash flows by millions of dollars.

Automating billing enables the operator to convert its sales, investment and inventory into cash flow. Tideworks’ Mainsail 10 allows operators to track payments and manage customers. They can automate gate billing with specific

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

MAY 2020 | 33

TERMINAL OPERATIONS: TOS accounts to allow pre-payment, and invoices created automatically.

Terminal operators approaching automation can take small steps forward, says Rucker, and adds that they need a TOS that helps scale operations to accommodate increased volumes well as in times of contraction – such as during a recession or a pandemic like COVID-19 – when supply chains are negatively affected.

“Operators need access and visibility to their data to work smarter, no matter the external influences that are present.

Operators want to know which equipment to pull to stay efficient. Terminals need to be thoughtful about cost cutting when times demand it.”

ACCELERATING TIME TO VALUE Barbera of Navis says terminals need to decide whether they want to be early adopters or look to more mature technologies in order to accelerate time to value. If they fall into the second category, there are concepts and blueprints within automation that have been proven to be quite effective.

“For import/export terminals, an end-loading operation with automated yard cranes and manned shuttle carriers as the horizontal transport, has proven to be quite effective. This is becoming a blueprint for import/export operations with very good results in terms of time to value and operational performance.

There are also practical considerations too, according to Barbera. “The rise of retrofitting strategies makes sideloading operations with automated RTGs14:53 is a very attractive WSP Jan-Feb 2020_WSP 27/01/2020 Page 1 option … the technology is growing rapidly since it offers a

step-wise approach towards automation compared to the traditional big bang approach.”

Barbera succinctly sums-up the position here. “The options are becoming good standards for automation and vendors should be ready to deliver turn-key solutions and blueprints.”

8 PortSpective management live tracking and operational visualisation works in parallel to a site running JMT TOSS

CONTROL CHOICES Russian-based Solvo says that sometimes the main challenge is to choose which system will be in control of terminal equipment – would that be a PLC developed on the side of the equipment vendor or would that be a role of a TOS?

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34 | MAY 2020

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TERMINAL OPERATIONS: TOS

Since quite a few functions might be duplicated in both systems or interfere, the question becomes a cornerstone for a project manager, and this is where emulation software may help.

Dan Pershin, Solvo’s Head of Marketing, says most TOS systems now include various data collection capabilities outof-the-box, however those are not always enough to meet growing client requirements, as his company has discovered.

“Solvo TOS for example offers handheld OCR support to help tallymen recognise and input container numbers in the system using a handheld camera and this is on top of a standard integration with fixed cameras and OCR portals.”

He explains further. “The same goes for barcode reading for general cargo, RFID or even voice-picking for crane operators. Support of these technologies is a feature in our TOS as a standard add-on aspect not requiring deep customisation or complex adaptations in most cases.

GAME-CHANGING FEATURES Moving forward, Pershin outlines the company’s next steps.

“Now we are working on another potentially game-changing feature in auto-ID and data-collection, AR-glasses support for terminal operators, a feature known to the public from warehouse management automation now could be in demand in ports and terminals as it may increase the speed of internal logistics flows.”

Pershin says most vendors propose a best-practices approach which implies that the customer may have to adopt their business processes and workflows to the way the TOS operates and not vice versa.

‘‘

The terminal operator sometimes gets a very complex system overloaded with functions and due to that may have productivity issues.

Smaller terminals, however, tend to look for a commercial TOS which would require minimal customisations and would cover a minimum 70 per cent of their requirements out-of-the-box “Our approach has always been to meet a customer halfway – we do offer best practices in terms of interfaces, systems logic, configuration and user interfaces but are very flexible in even changing the current logic of the system’s main modules (using add-ons) in case a customer has a very specific workflow that his operation relies on.”

Solvo sees the challenge most terminals or ports face would be to find a solution that would address their needs while fitting their budget and time constraints.

“The general trend now is for the biggest operators to come up with their own in-house software systems that would best suit their needs and that would be in their full ownership and control, so the customisation may be provided to the deepest extent possible,” says Pershin.

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MAY 2020 | 35

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TERMINAL OPERATIONS: TOS He also clarifies one outcome noted here. “The terminal operator sometimes gets a very complex system overloaded with functions and due to that may have productivity issues.

Smaller terminals, however, tend to look for a commercial TOS which would require minimal customisations and would cover a minimum 70 per cent of their requirements out-of-the-box.”

Pershin concludes that with the changing expectations of customers such as vessel sizes, larger exchanges and pressures on yard space, more terminals require sophisticated solutions that would be able to cope with any type of cargo.

INTERNET OF THINGS International Terminal Solutions Ltd (ITS) runs a Port Automation Team of Microsoft-embedded OEM developers, building enterprise-grade platforms with the latest Windows 10 The Internet of Things (IoT).

The IoT platform forms a hub and can connect to a myriad of information sources such as GPS, driver identification and equipment metrics. This sub system provides the ability to make available data metrics from previously difficult-toreach sources and data can then be shared to secured networks for such things as operational visualisation, TOS automation, and BI. Richard Lambert, Managing Director of the Port Automation Team, says the key criterion for any TOS should be how well it can talk to other systems, which is crucial to encompassing automation, BI and IoT. “One of the key changes in a short space of time is greater availability of data and even in relatively-small operations, this is only set to increase with the IoT. “For example, BI doesn’t have to involve crunching huge amounts of data looking for unfathomable patterns, it can also help with safe operational methods, operational performance, and investment strategies when it comes to equipment purchase and estimating operational outcomes.

Lambert says many TOS systems have various levels of automation built into them, however, to leverage the automation, the TOS systems need to be connected to the real world. An essential step to taking control of the operation, and having measurable metrics and KPIs, is knowing what is going on in the terminal, live and first hand.

To undertake any form of data analysis you first need the data. “We work alongside some TOS systems providing data and providing management visualisations for items that aren’t supported in the TOS. This allows terminals with different TOS to have the live operational visibility that they need regardless of their size.”

He explains why flexibility and is crucial. “Flexibility is a cornerstone of our port automation systems and means allowing the terminal access to a full range of data that may or may not be able from other systems. For the more common functions we provide browser-based screens including metrics for live equipment movements and maps, containers being carried, and operational performance screens. We do recognise we are unlikely to cover all the terminal’s special requirements so in addition to providing a good level of operational live visibility we also allow the terminal operator to ‘take charge or their own data’ by providing an open database allowing creation of their own dashboards or BI analysis.”

8 Long Beach Container Terminal staff review the Navis information screens

8 T J Rucker of Tideworks

Automation Challenges At Navis, Carlos Barbera, Senior Director of Product Management, confirms automation presents unique challenges for the TOS. “It must be able to account for various factors inside and outside the terminal. It has to account for physical and digital parameters and provide optimisation while accounting for potential human intervention.

“It needs to have a user experience which focuses on interruptions versus having to manage regular process flows. At the end of the day, it must also deliver the operational performance which justifies the enormous investment in the infrastructure.”

Navis’s automation platform accounts for various different phases of automation from semi- to fully-automated while maximising the return on investment (ROI).

Barbera says the TOS stores and creates a great amount of valuable data, for example, container routing information, cargo

availability, vessel operations, ETA, start and completion.

“This data is valuable within the terminal and also beyond the terminal, since it directly impacts how other industry players make decisions in order to remove inefficiencies and maximise resources.

“As an example, the TOS calculates in real-time the estimated time of completion of the operation and by providing real-time visibility of these calculations, other partners can make strategic and tactical decisions.”

Navis says small terminals typically have simpler workflows and processes. This means the level of customisation required is low and it is more feasible to aim for high levels of standardisation. Medium to large terminals usually require more sophisticated workflows and they are often bound by stricter local regulations, hence significant customisation.

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

Some of the challenges fall into the categories of: 5 ● Intelligence: With greater volumes, systems and algorithms need to become smarter by eliminating unnecessary equipment travel, reducing distances and waiting times while maximising the output of the machines 5 ● Zero downtime: The TOS of the future needs to support upgrades and maintenance tasks with no downtime or impact in the operation 5 Time to value: Standardisation, blueprints and the Cloud could be drivers to shorten time to value significantly 5 ● Connectivity: The TOS needs to stay connected to other players in the industry.

Having real-time information on appointments, train schedules, vessel arrival etc., can make a big difference in how a terminal is optimised

MAY 2020 | 37

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Port of Tarrogna

The EU has confirmed funding for SafePort through its Horizon 2020 research and innovation programme. Felicity Landon reports

Port-maritime engineering company, Siport21, recently announced that it had completed a feasibility study into the proposed new Baleares dock at the Port of Tarragona; this was to assess the extension plans which would allow access by large cruise vessels in phase one, and by large bulk carriers in phase two.

The study analysed the impact of the proposals in terms of safety, navigation access and effect on current and future operations. It included maritime traffic, ship manoeuvring and dynamic mooring analysis, passing ship studies and ship manoeuvring simulation.

The work included sessions with Tarragona’s pilots in the real-time ship simulator, as well as coordination with the port authority’s technical staff.

THE DRIVING FORCE Siport21’s work will likely deliver more information than is actually required for this specific project. The same could be said of nearly 1,000 technical studies carried out by Siport21 in 48 countries – and this is the driving force behind SafePort, the ‘Smart System for the Evaluation and Control of Maritime Safety in Port Access and Operation’ Now moving into the first phase of development, thanks to Horizon 2020 funding, SafePort has been designed by Madridbased Siport21 to provide port and terminal operators and authorities with decision-making tools for managing the safety and efficiency of ship operations in port, in real time, as well as for the analysis and management of emergency response.

Managing director José Iribarren says: “SafePort is based on the Smart Port 4.0 concept. It combines simulation and modelling, integration of different digital methodologies,

8 Port of Tarragona’s pilots, in real-time ship simulators, have been supporting unique navigational studies

data collection and analysis, and prediction through machine learning algorithms.”

As a consultant specialising in the installation and implementation of ship manoeuvring models and simulators, Siport21’s technical studies over the past 21 years have generated far more information and data than was necessarily required for the design and construction of the port facilities they were tied to, he explains. SafePort can pull all of that together and make use of it.

TIMING IS EVERYTHING Sometimes, timing is everything. The company first came up with the idea of SafePort a good 15 years ago. However, there were two obstacles. First, says Mr Iribarren, potential users – port authorities – were not particularly responsive to the concept.

“That was mainly due to a lack of communication between infrastructure and operational teams in ports. Now this has changed – we see more concern and more connection between the departments, and more focus on the management of port safety aspects, efficiency and environmental issues, including energy saving and avoiding congestion. These issues are being looked at in a more global way.”

Second, Siport21 had a large amount of information and data which needed to be processed using IT instruments that were ‘not as easy and cheap’ as they are today.

“So, the idea was there for a long time and we made suggestions to several ports, but the market was not ready, and the tools were not there. But there has been a huge evolution in the past few years. Organisations are more open to improvement and optimisation, and more open to using all the information available as deeply as possible.”

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MAY 2020 | 39

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PORT VESSEL SAFETY Siport21 brings to SafePort the benefits of hundreds of studies related to operations and navigation which have generated information on tidal influences, weather conditions, ship types, port layouts, traffic and so on.

With funding now in place, it will look for partners to work with across IT companies and developers and Port Community System platforms; weather forecast agencies; and instrumentation specialists providing sensors and other systems.

NEED TO INTEGRATE ALL INFORMATION In essence, SafePort will integrate all the information relating to the port, ship and meteorological data, and from technical analysis and studies, to put together detailed, evidencebased operational rules for ships. The plan is to build a generic system which can then be adapted to meet the needs of different ports.

As Mr Iribarren explains, decisions are frequently based on what has gone before – the way things have always been done. The idea of SafePort is that it could show ports instances, based on objective data, where they might not be making the most of possibilities, whether that is ensuring the best use of tidal windows or adjusting the timing of ship operations depending on weather conditions.

SafePort integrates all the information related to the port, ship and meteorological data; it takes efficient advantage of the set of available analyses and technical studies; it provides more detailed and well-informed operational rules for ships; it reduces discretion in the application, and considers a higher number of relevant variables. All of those are based on the intensive use of simulation, modelling and virtual media.”

PORTS OF 2030 The arrival of new technologies will transform ports just as they will transform the supply chain and the production industry, says emerging technologies expert Anna Navarro.

In a study which analysed a dozen 4.0 emerging technologies that could be relevant in ports, Ms Navarro concluded that technology would reach ports in three waves.

Drones, big data, the Internet of Things, virtual reality and 5G being expected to reach maturity between 2019 and 2024; 3D printing, intelligent robots, augmented reality, blockchain

‘‘

So, the idea was there for a long time and we made suggestions to several ports, but the market was not ready, and the tools were not there. But there has been a huge evolution in the past few years. Organisations are more open to improvement and optimisation, and more open to using all the information available as deeply as possible and drones for light cargo delivery can be expected between 2024-2029. Beyond 2029, level 4 and 5 autonomous land vehicles and hyperloop will begin to be seen, she believes.

In a follow-up survey, more than 50% of experts questioned expected IoT, big data, autonomous vehicles, blockchain, 5G and drones to be the key technologies in ports of the future.

In reality, says Navarro, it will not be a single technology that defines what ports look like in ten years’ time, but a combination of technologies. Equally, she says, there are questions as to whether 3D printing, drones and hyperloops represent opportunities or threats for ports.

What’s clear is that the ports of 2030 will be digital ports, “thanks to the progressive incorporation of 4.0 technologies”.

However, she emphasises, based on the opportunities offered by these emerging technologies, ports will have to adapt to the new digital realities of the world in which they operate, creating new business models which incorporate new ways of operating and new services to offer.

8 José Iribarren is seeing a huge evolution in the integration of data for shipping

Paperless Recruitment Digitalisation is at the forefront of activities for Israel Ports Company, which develops and operates the Israeli Ports Community System (IPCS) – and it has recently won an award for the digitalisation of its recruitment processes.

“For us, being paperless is not only in trading but also about being paperless inside the company – for example, in the digitalisation of tenders and publications,” says CIO Gadi Ben-Moshe.

The company has designed a process in which all job vacancies are now published digitally, with the submission of applications also being paperless.

The system, which is combined with Cloud SAP services, automatically filters out applicants without the necessary qualifications and allows applicants to find out about Israel Ports Company through an

interactive tool showing the company’s structure. Authorised managers can go into the system and evaluate candidates, avoiding duplication because all the relevant applicants and information is in one place.

“This system delivers efficiency for us and transparency for the applicants, who can find out about the company,” says Mr Ben-Moshe.

“We are continually looking for ways to make things more efficient – not only outside to the port community but also within the company itself.”

BLOCKCHAIN FOR BILLS OF LADING Israel Ports Company has also recently launched a pilot project using blockchain technology for transferring bills of lading. ZIM Shipping Company, Adama Agricultural Solutions (one of the world leaders in the

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

agrochemical field for manufacturing materials for plant protection, and one of Israel’s largest exporters), freight forwarder and customs broker Damco Logistics and PPL 33-35, which operates Ukraine’s Port Community System, all participated in the processing of the first bill of lading through the system.

“The electronic bill of lading will constitute a significant step up in advanced technology at the ports and a significant improvement in the maritime supply chain process, by enabling a more rapid release of cargo and saving time and the cost of using courier companies,” says Mr Ben-Moshe. “This new approach is expected to deliver significant savings in time and money to all participants in the maritime supply chain, while maintaining a high level of information security and preventing forgeries.”

MAY 2020 | 41

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IT INNOVATION: STRATEGIC TECHNOLOGY TRENDS

SHAPING THE FUTURE: PART 2 In the second part of the series, Matthew Wittemeier and Dr. Eva Savelsberg of INFORM GmbH outline strategic and emerging tech trends for 2020

8 Technology steps we take today have real impacts on the ability to compete in the future

We pick up where we left off last month in this two-part series exploring emerging technologies that are starting to shape or have a high probability of shaping, the future of our industry. If you haven’t read Part 1 on the emerging technologies that are worth keeping your eyes on, it’s worth doubling back but this article can be read as a standalone.

Part 2 focuses in on the strategic trends that are also working to shape the conversation around technology in the maritime sector.

WHY ADD TRENDS? What we learned in 2019 was influenced by our work with 2038: A Smart Port Story. Throughout 2019, we brought out Parts 2 and 3 of 2038, and it is in these parts that we had the unique ability to move beyond just talking about technology to really explore its impact on humans, society, and the interaction between them. It was in these broader social and strategic trends that we also see a true ability for our industry to shape, and be shaped by, technology as possible solutions to challenges familiar and new.

STRATEGIC TRENDS There are three strategic technology trends that are worth retaining a focus on in 2020: ecosystems, data standards, and the rise of APIs. None of these items should come as a surprise, but they are all worth a quick recap, nonetheless.

ECOSYSTEMS If 2018 was the year of blockchain in the port industry, 2019 was most certainly the year of the Port Community System (PCS). As an example, PCSs are one example of two “ecosystem” trends that are worth pointing out, but first, let’s define “ecosystem.” The dictionary defines an ecosystem as a group of interconnected and interacting parts.

The first ecosystem trend to note is the rise of the

interconnection of the physical port environments (i.e., if you physically work at a port, you connect your IT systems to the broader network). Many PCSs are leveraging the ecosystem approach to collect and share data leading to improved overall ecosystem efficiency. This, by all accounts, is a good outcome.

The second ecosystem trend that is propelling technology conversations forward are models emerging from some of the major technology providers that are painting a picture of a single-technology ecosystem. Again, in principle, this sounds like a great outcome. However, it’s worth taking a small, science detour.

Let’s start by noting that the definition of an ecosystem doesn’t indicate that an ecosystem is good or bad – just that it is. This should be our starting point in understanding the trend. Remember, our natural environment is an ecosystem, and it includes many things that are harmful like viruses and volcanos (we hope it is a coincidence that they both start with a “v”). Science tells us that an ecosystem that isn’t balanced that provides an overly favorable environment for any single part tends to lead to a bad outcome whereby that single part eventually disrupts the ecosystem in a negative way.

Science lesson finished, that brings us back to the proposed technology ecosystems. If they are a proprietary system that is designed to enable a single vendor greater influence, then we’d argue that these are, in fact, not a good thing. But, if designed well, where all parts, all vendors, terminal operators, ports, etc., have a shared input and can gain a comparable benefit, then these technology ecosystems could be the solution we so desperately need to address the dataexchange challenges facing our industry.

DATA STANDARDS We have seen a lot of movement on data standards throughout 2019, with many positive initiatives taking place with several processes evolving simultaneously to define a

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MAY 2020 | 43

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IT INNOVATION: STRATEGIC TECHNOLOGY TRENDS data standard for the industry actively. Each is focusing on distinct aspects of maritime and terminal operations. At TOC Europe 2019, we heard an update on TIC 4.0, the PEMA data standard initiative working to define hardware equipment standards. We have also seen regular updates throughout the year on the Port Collaborative Decisions Making (PortCDM) initiative, which is more focused on the vessel and port side of the equation. Yet perhaps most excitingly, 2019 marked the emergence of the Digital Container Shipping Association and having seen multiple presentations from them throughout the year, it is probable they’ve got the ability to consolidate and coordinate the standards conversation.

Movement towards a data standard in maritime is great, but there are questions and risks that we should be closely considering now. Will competing frameworks for standards be able to merge into a single comprehensive framework?

Do they need to? Are we inviting all players to the table to help fledge out these standards?

Data Standards are one thing, sharing is another.

In 2038: A Smart Port Story, we predicted that in the early 2020s, there would be a “Data War.” “During the Data War of 2020, companies battled one another over control of information – no one wanted to share – data was seen as a commodity opposed to an enabler of innovation.” There are some early signs we’re headed down this route, but there are also some early signs that we’re forging a different path too.

The emergence of Port Community Systems (PCS) in 2019 has truly shifted data sharing and collaboration into the forefront of maritime, and this is a good thing. We are seeing some progressive models emerge in pockets around data ownership, data security, and collaboration. Yet we are still seeing many players choosing not to collaborate and to withhold access.

RISE OF THE API If “API” is a new term for you, you should become more familiar with it. Let’s start by defining it. An API, or application program interface, is defined as a set of functions and procedures allowing the creation of applications that access the features or data of an operating system, application, or other services. The idea is cleverly simple. Essentially, there is a set of out-of-the-box “interfaces” to interact with a system – to request and deposit data. They are easy and cost-effective to integrate and are standards-based.

In short, a software vendor writes an API for interacting with their software system. As an example, TOS provider X

‘‘

APIs rose to prominence in the early 2000s when they began being implemented in web projects, but in fact, they’ve existed since the 1970s. We are going to make a prediction and say that APIs are the future of data exchange and should be replacing costly, bespoke interfaces wherever and whenever possible.

The rise of the API should help to address many of the challenges we see around data exchange

writes an API for retrieving a list of outbound containers. Port Y can query that API for a current list of outbound containers as needed. APIs can work as a one-way or two-way interface, serving and receiving data.

APIs rose to prominence in the early 2000s when they began being implemented in web projects, but in fact, they’ve existed since the 1970s. We are going to make a prediction and say that APIs are the future of data exchange and should be replacing costly, bespoke interfaces wherever and whenever possible. The rise of the API should help to address many of the challenges we see around data exchange.

8 Data Standards are one thing, sharing is another

CLOSING THOUGHTS – TECHNOLOGY AND MILLENNIALS MATTER We closed our first edition of this tech talk by drawing attention to why Millennials matter, and we’re going to do the same again this year. At TOC Europe 2019, we brought the industry’s first entirely Millennial-focused panel to the global stage, and while they shared some of the opinions of their Baby Boomer counterparts in the industry, they did diverge on several. We are also, excited to say that we will also be bringing the Millennials in Maritime session back to TOC Europe as well as expanding its scope.

In short, their comfort level with technology saw them being more favorable towards technology-based solutions to many of the challenges facing our industry. They also seem far more supportive of fully automated environments and the idea that our traditional jobs in ports were shifting away from manual labor and towards technically based roles, something our industry desperately needs to embrace sooner than later.

You can read a comprehensive overview of the sessions insights on our six-part series on the INFORM blog.

How we attract and retain technology-savvy Millennial workers over the next decade will shape our industry well past that horizon. The steps we take today have real impacts on our ability to compete in the future and involving Millennials in those conversations is not just wise, we would argue it is fundamental.

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SPECIAL REPORT: HAMBURG

MOVING ON FROM THE 1970s Hamburg is pressing on with infrastructure upgrades to keep its position as Germany’s primary container port, as Michael Mackey discovers

8 New Kattwyk Rail Bridge will double rail capacity

Hamburg is not anxious about its key markets longer term, except one, but is bracing itself for waves of disruption caused by COVID-19.

“For Europe and Asia I am quite confident there will be recovery quite soon. The biggest headache I have is the US, they are not prepared for this type of health emergency,” Axel Mattern, CEO of HHM, the marketing company for the Port of Hamburg said in an interview with Port Strategy.

Hamburg is very major destination for Asian shipping lines with many direct services and more than a third just China alone, he explained.

Not that Hamburg plans to use this to pause its infrastructure programme or its development – not at all.

These initiatives remain important for Hamburg, especially the Kattwyk Rail Bridge which is “going to be doubled,” Mattern declared to Port Strategy.

The improved Kattwyk, which will allow a more efficient movement of cargo, is typical of Hamburg’s strategy of finetuning a facility already in good working order. This is also true of the Burchardkai Link, a new rail connection to Hamburg’s biggest container terminal, which is about using the same bridge to simplify the system and move traffic from the roads to rail.

Still to be decided though is the renewing of the Koehlbrand Bridge which connects two parts of the port. This bridge was built back in the 1970s when trucks were smaller and much fewer in number. Needing to rebuild for the needs of the 2020s has opened up the possibility of replacing it with a tunnel.

Engineers favour a tunnel which would allow both road and rail transport. “Drilling is much easier than building a bridge, which then should be twenty metres higher (than the current, dated one,)” explained Mattern.

There is another practical (and big) problem though, namely cost. “Everyone is hoping the decision will be a tunnel but it’s a financial issue of course. It is a little bit more expensive to build a tunnel,” said Mattern. It’s very much a case of watch this space as a decision is expected, or needed, very soon as it will take 10 years to build the tunnel.

Hamburg does not tend to shy away from big infrastructure building or indeed any kind of big project and has just finished a major widening and deepening of the River Elbe, albeit after many years of legal issues and delays.

The new wider River Elbe will allow double the numbers of ships of more than 14,000 TEU it can take from its current 600900 ships to 1,800. However, as Mattern said “that’s theoretical.”

There are only so many ships of that size in the market and Hamburg will not have to deal with them all at once.

“The deepening is going to be finished next year” Mattern added. That’s less about capacity but more about “flexibility on the operational side.”

Alongside hardware, there is also interesting development relating to technology with Hamburg one of the test fields for 5G and drones. The port has also just bought a water surface drone to perform semi-autonomous hydrographic tasks in its waters. Being talked about are underwater drones to monitor quay walls and Elbe sediment in future, along with airborne drones to be used, possibly, to inspect the load-bearing cables of the Koehlbrand Bridge.

The 5G testbed, an initiative with Deutsche Telekom and Nokia, stretched across some 8,000 hectares of port area with a base station installed on Hamburg’s television tower, over 150 metres up in the air. The testbed had been set up to test 5G applications in an industrial environment. Hamburg is currently waiting for the telecommunication companies to establish a nationwide 5G infrastructure.

‘‘

The biggest headache I have is the US, they are not prepared for this type of health emergency

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

8 Axel Mattern, CEO of HHM

MAY 2020 | 47

EMERGING MARKETS: INDONESIA

FOREIGN AND FLEXIBLE Despite a difficult world economy at present, Indonesia’s ports are planning major redevelopments, as Michael Mackey discovers

8 Sorong Port is just one of a number of planned developments in Indonesia

Container throughput at the Port of Tanjung Priok decreased 4.2 per cent in the first quarter of this year and the number of containers entering Tanjung Priok was 1.57 million TEU, down 69,000 TEU from the same period last year.

“Compared to last year, for February the decline in container flows at Tanjung Priok Port was 5.13 per cent while in March the decline was 4.2 per cent. It is still showing a decline but the percentage is getting smaller,” said Managing Director of PT Pelabuhan Indonesia II (Persero)/IPC, Arif Suhartono.

“During the COVID-19 outbreak, shipments of export and import goods to China experienced disruptions and China was a major contributor to the flow of international containers at the Port of Tanjung Priok. Now, economic activity there is gradually recovering. I expect the trend to improve in the next quarter,” Suhartono explained.

EXTENSIVE PLANS Indonesia has plans to become a global maritime axis, which is something the Indonesia Port Corporation (IPC) aims to play a key role by building extensive new facilities, as IPC President, Elvyn G. Masassya said at the recent ASEAN Ports and Shipping Conference. A second big change will be the welcoming of foreign investors.

New or much improved facilities are planned at seven different points of Indonesia: Belawan/Kuala Tanjung, Tanjung Priok, Tanjung Pura, Surabaya, Makassar, Biting and Sorong/Seget, Masassya said.

Tanjung Priok in Jakarta is its national gateway status, with the rest best seen as local hubs, parts of national hub and spoke system, Masassya said. The emphasis, though, will be on serving the regional, South-East Asian or ASEAN market.

“We have to increase our direct call among ASEAN countries. We can rely on ASEAN countries,” Masassya said noting the “huge” trade potential.

Of the seven facilities Tanjung Priok and Surabaya are on different parts of Java, the economic centre and most populous

48 | MAY 2020

part of Indonesia. The other five are spread, one each for the archipelago nation’s major islands, as Masassya pointed out.

UPHILL STRUGGLE Belawan/Kuala Tanjung is on the Northern end of Sumatra, Tanjung Pura is on Western Borneo. Makassar on Southern Sulawesi is balanced by Bitung on the same island’s north with Sorong/Segret on the Western tip of economically underdeveloped West Papua. (“Very challenging” was Masassya’s view on the uphill struggle it faces.)

Sorong is where work is expected to start next year and at the end of its third (undated) phase will be able to take ships of up to 5,000 TEU and will have a 50ha container yard fronted by a 1,440m berth for a total capacity of 2.95 million TEU per annum.

By contrast Tanjung Pura, a terminal at the Port of Kijing will be focus on shifting commodities. A sixty-nine-year concession with development in two phases, the first one ending next year with a second, planned for 2026, will see a port capable of handling 1.95 million TEUs as well as fifteen million tons of dry bulk and just over twelve million tons of liquid bulk.

FLEXIBLE AND FOREIGN PARTNERS Equally as striking is the willingness of IPC to work with foreign partners and in a very flexible way.

Brown field sites offer opportunities including Strategic Partnerships, Bond Issuance, Commercial loans and overlapping PPP and BOT options. Another category of commercialization (for existing facilities) will allow the use of IPOs, Disinvestment, Rental Schemes and Asset Securitization.

“The most important thing,” Massasya told the ASEAN Ports and Shipping Conference, “Is that we are open to collaborate with everybody, so the concept of PPP is not a strange one. We open for PPP, we open for joint venture we not rely on bank loan anymore, we can run the business together. This we call collaboration.”

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

EMERGING MARKETS: GABON

REALISING THE POTENTIAL Oliver Andrews and Reuel Andrews from Africa Finance Corporation look at one successful way that potential can be realised in Africa

8 GSEZ multipurpose port is improving efficiencies for export and import of containerised and bulk goods

As a vital part of the supply chain, ports are key to Africa’s development especially in the wake of COVID-19 and the opportunity for Africa to take a prominent place within the global supply chain. Ports are not only as a way of delivering and transporting resources and finished goods around the continent and world but also a conduit for attracting foreign direct investment and building self-sustaining ecosystems around them.

Out of 55 countries in Africa, 16 are landlocked which is why ports are an essential conduit to act as access to the significant variety of resources Africa possesses. While ports hold much promise, they do not yet attract a lot of capital. Yearly investment into African infrastructure only amounts to approximately US$62 billion but requires between US$130150 billion each year, representing a significant funding gap. In the past few years, 42 per cent of infrastructure funding has gone to the transport sector but, ports, which are one of the key subsectors, have lacked enough investment to develop appropriately. As a result, this has fed into the difficulties Africa has faced in fulfilling its potential within the global economy.

Now is the ideal time for Africa to focus on improving the quality and quantity of ports, thereby encouraging more trade and transport of goods globally. There are innovative financing options emerging, but the most impactful form of financing is the public-private partnerships (‘PPP’) model, which is ideal for the continent’s development and the overall need to stimulate the global economy post coronavirus.

than they should be when it comes to maritime trade or the production of African goods. Moreover, in the past, focus has been on investing on other parts of infrastructure (such as roads) to transport goods to the ports, but that is where investment has ended. Ports were just seen as a means of extracting revenue, an end point as it were, not as the gateway of trade to the rest of the world or a means of reducing the overall cost of producing local goods. With a lack of investment leading to poor reliability and efficiency, the ports that do exist haven’t been used to their potential.

According to PwC, US$2.2 billion per annum could be saved in logistics costs if the average throughput at the major ports in Sub-Saharan Africa doubled; imagine the benefits if these saved costs then flowed into the economy instead?

8 Oliver Andrews

WHY ARE PORTS UNDERDEVELOPED? Despite the high volumes of goods that require transport, the development and integration of ports in Africa remains uneven. Some lack facilities, while others lack reliability or efficiency, which makes African countries less competitive

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MAY 2020 | 49

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EMERGING MARKETS: GABON

‘‘

The overall goal of the GSEZ was to accelerate Gabon’s economic transformation through diversification from oil and an increase in overseas and domestic investment Thankfully, the perspective is now changing with port investment requirements being defined through the impact of global shipping line strategies and port integration into dominant logistics chains. This integration creates value exponentially. First, it attracts new investors who are not traditional port investors, creating a more liquid, stable and valuable market, and connects the port to other parts of the development. It also encompasses a more holistic view of the projects and how they aren’t just gateways to global trade but also have a social impact, with the investment in the area increasing, enabling an ‘ecosystem’ to develop.

As part of raising the appeal of ports, it has been key to look at innovative ways of filling the investment gap. One solution that has emerged is the PPP model, which entails local and national governments working with private investors to finance, develop and/or operate a project. PPPs have become a means to manage port operations more effectively, bringing not just investment from private investors but also their expertise – bringing together the best of both worlds. This therefore helps solve the problems of funding, as well as insight, to help improve their offering which has hindered their competitiveness globally.

WHY HAVE PPPS NOT BEEN USED MORE TO DEPLOY CAPITAL FOR PORT DEVELOPMENTS IN THE PAST? The World Bank states that many countries fear that more private-sector involvement complicates regulation and increases the risk to a country of not achieving its development goals. From an investor’s point of view, there are worries of political issues, policy uncertainty, weak regulatory environments and law enforcement, especially when working in emerging markets.

At Africa Finance Corporation (‘AFC’), a multilateral African development financial institution providing project structuring expertise and risk capital to address Africa’s infrastructure development needs, we feel these concerns are unwarranted, as thankfully with time, improvements have been made and best practices adopted, allowing PPPs to flourish. More and more countries, particularly in the developing world, are now enacting legislation to permit private investment infrastructure, and alongside these safer regulatory environments that protect the country and the investor.

It is also essential that changes and improvements for PPPs to work better are encouraged by industry players such as ourselves at AFC. Along with other similar investors such as the Africa Development Bank and the IFC, we work together to bridge the gap between governments and foreign investment and can promote a better PPP model through encouraging transparency as well as enabling the scaling of investment.

We particularly play a role to help PPP investors understand the environment in which they are investing. In a continent like Africa, a private investor will need persistence and resilience with a long-term view of the project success. In addition, a deep local knowledge of each target market and each local environment, and dynamics is essential to ensuring projects aren’t derailed.

As with most things in life, a good track record and successful projects have created more trust and interest in this type of financing for these projects.

TIMES ARE CHANGING One successful example is the Gabon Special Economic Zone (GSEZ), which comprises several components including an international seaport, minerals seaport, airport project and water and electricity projects. The overall goal of the GSEZ was to accelerate Gabon’s economic transformation through diversification from oil and an increase in overseas and domestic investment – and it succeeded to such an extent, AFC, alongside its investment partners, are seeking to replicate it elsewhere in Africa.

With funding from a PPP, the GSEZ multi-purpose port has improved efficiencies for the export and import of containerised and bulk goods and it is equipped to cater for grains, liquid products (e.g. palm oil) and petroleum products.

So far, the GSEZ has led to a 600% increase in palm oil exports as a result of the general cargo port and 4.8 million metric tons of manganese exported thanks to the minerals port. Of the 4,600 jobs created, 97% have been filled by residents.

This demonstrates something we see as the ‘ecosystem’ creation. Not only did investment into these ports improve efficiency, and impact its trade competitiveness, but also improved job creation and the local economy has thrived.

With this success, it has now attracted further foreign investment, highlighting the opportunity there is through the investment of ports in Africa. Now known as ARISE P&L, its next focus is to replicate this through investment in the Multipurpose Industrial Terminal of San Pedro in Cote D’Ivoire and the Nouakchott port in Mauritania. In particular, the Nouakchott port will directly contribute to resilient infrastructure, promote inclusive and sustainable industrialisation, growth. The aim is to create 500 direct and indirect jobs and create a future regional port hub of the sub-region; just like the ports in Gabon, this will use PPPs with investors realising the full potential of ports and their contribution to the local ecosystem.

As we see this initiative to replicate the model, this should also put pressure on the more established ports in Africa to improve their offering. If all goes to plan, this new momentum of investment from PPPs, encouragement from institutions like us to attract foreign investment, and continued progress with government policy, ports are once again being put on the map as gateways to the development and future for Africa.

8 Oliver Andrews is Executive Director and Chief Investment Officer, and Reuel Andrews is Director of Transport and Logistics at Africa Finance Corporation

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

8 Reuel Andrews

MAY 2020 | 51

POLICING SANCTIONS

FEASIBILITY OF ‘DARK’ TRADE In this second part, Ron Crean of London-based Windward, outlines what ports and terminals need to be wary of to be safe from sanctions What if there was good coverage in an area and yet also a chunk of a ship’s time unaccounted for? Well, then the move is to the final step which is to assess the feasibility of ‘dark’ trade. If you see a significant amount of time unaccounted for, the ship may have been able to call at a port or meet with another vessel for transhipment, yet to load or discharge cargo takes time – as much as several days. In the case of this example in the Eastern Mediterranean, it is clear to see how high the risk of sanctions evasion is during the ship’s period of ‘dark’ activity.

LOST OR ‘DARK’?

There may be a reason to assume a lost signal is actually ‘dark ‘activity and escalate the case for further investigation.

However, to establish more conclusive evidence we need to take a deeper look at four factors: 5 ● Geographical context: Is the ‘dark’ activity near a known transhipment area or sanctioned port? Going ‘dark’ in the eastern Mediterranean, Gulf or off the coast of Venezuela is certainly different than doing so in the North Sea. 5 ● Historical sailing activity: Has this vessel traded with a sanctioned country in the past? If they used to visit there before sanctions were introduced it’s more likely they might still be trading there covertly after sanctions kicked in.

5 Established patterns of illicit behaviour: Is the vessel following a similar pattern to known cases of sanctions evasion, smuggling or trafficking? This is the most damning evidence since there is usually no economic justification for the anomalous operations employed by bad actors.

5 Context of the trade: If a vessel discharged at port, then was lost, and then discharged again, it is a strong signal that somewhere during the time it wasn’t transmitting it loaded cargo with unknown origins. Or if a vessel is sailing all the way to a certain area, disappears and then resumes transmissions while heading elsewhere, it indicates it had a financial motivation to sail towards a certain area to begin with – possibly to load or discharge.

Which brings us back to the Grace 1. Behavioural analysis provided the strongest signals that sanctions may have been violated. If we look at the vessel’s port calls and historical locations, the Grace 1 was last detected in port almost two

‘‘

Source: Windward

The challenge for port operators is to stay on the right side of these onerous behavioural sanctions’ requirements by adopting the latest screening tools, before the regulators come knocking

8 Map Showing Radius Where Vessel Could Have Sailed While ‘Dark’. Note: AIS transmission gap shown with dotted line

8 Was the Grace 1 lost or “dark?

years ago, in Qingdao, China. Since then, it’s been operating continuously at sea; any port calls it may have made have been masked by turning off its mandatory AIS transmissions.

As with the recent case of the Pacific Bravo, the use of front companies, transhipments, ‘dark’ operations, and identity changes creates new risks for ports and terminals which are now required by OFAC to go beyond existing vessel tracking and list-based screening.

The scale of the problem is undoubtedly daunting.

Screening by list matching alone is no longer sufficient to get ahead of sanctions risk and protect a business and its reputation. Yet the burden of knowing what every vessel is doing is huge and likely to throw up many false positives.

Reducing the number of vessels in that category needs a new approach. Companies need to consider what tools they can access to get a grip on the issue sooner rather than later because the risk must be understood and recognised as being urgent. As the U.S. sanctions of Venezuelan oil show, those working in the maritime supply chain have to get a grip on the issue now more than ever, finding ways of reducing the compliance burden while still addressing the new behavioural requirements of OFAC. The challenge for port operators is to stay on the right side of these onerous behavioural sanctions’ requirements by adopting the latest screening tools, before the regulators come knocking.

8 Ron Crean is Vice-President, Commercial, of London-based Windward, a leader in maritime analytics and supports a wide-range of industry participants reduce possible sanctions risk and meet regulatory expectations.

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

MAY 2020 | 53

REACH STACKER HYBRID H9

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PRODUCTS & SERVICES DIRECTORY

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.

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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.

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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.

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Contact Tim Hills or Hannah Bolland

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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

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.

Scheldedijk 30, Haven 1025 2070 Zwijndrecht, Belgium +32 3 250 52 11 info.deme@deme-group.com Staubli directory 40x58_Stäubli 29/01/20 www.deme-group.com

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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.

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

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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.

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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 WASA Dredring Directory_Wasa Director www.rohde-nielsen.dk

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

C ONSULTING ENGINEERS

Taylor Machine Works, Inc.

HPC Hamburg Port Consulting GmbH

D REDGING

• 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

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/

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

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.

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

56 | MAY 2020

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/

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BLOK Container Systems Ltd

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

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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

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VAHLE PORT TECHNOLOGY

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

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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

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! www.certus port automation.com +31 78 6815196 The Netherlands

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

For the latest news and 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

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

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

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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.

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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.

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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.

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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.

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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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DECEMBER 2019 | 53

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

DECEMBER 2019| 53 53 DECEMBER MAY 2019 2020 || 57

POSTSCRIPT

CONCESSIONS: ‘BETTER THE DEVIL YOU KNOW…’

‘‘

This is the era of concession renewals and it is clear that taking up this option in a timely manner is usually the best approach

With port privatisations taking off in the 1990s, and concessions typically lasting 20-30 years, port authorities around the world are now having to decide how to proceed: extend or retender.

So far, the majority of port authorities have favoured extensions and renewals, employing a common-sense and timely approach. If a concession holder has paid the concession fees on time, been a responsible port stakeholder in terms of HSSE and CSR, provided good service and invested as necessary; then no obstacle is seen to concession renewal. Indeed, forward thinking port authorities move early to negotiate extensions with the aim in mind of securing ongoing and timely investments.

From, say, the seven-year point towards the end of a concession term it becomes progressively unlikely that a concession holder will want to undertake major capital investment or carry out expensive capital refurbishments and preventive M&R without the surety of an ongoing presence at the terminal concerned. It is usually not possible within the latter time frame to achieve the required return on investment.

So, what stops some port authorities in this happy position from proceeding with the logical step of concession renewal?

Some causes are institutional, such as an inflexible and unreasonable regulatory system where one size has to fit all despite clear evidence to the contrary.

The EU’s recent procurement rules come to mind!

Or it can be due to an excessive and slow-moving bureaucracy or just the good old human nature factor of the assumption that a better deal can be done elsewhere. On the latter point, history shows that such assumptions are more often than not proved wrong – and this, it has to be said, is a big factor in the vast majority of port management bodies taking up the option of concession renewal.

There has proven to be a lot of merit in the old adage: “better the devil you know than the one you don’t!”

FOLLOW THE PACK Of course there are cases where concession renewal is not appropriate – where, for example, a concession holder has clearly failed to meet the requirements stipulated in the concession contract, or where the

58 | MAY 2020

8 Concessions – renewal is usually the best option…

financial terms of the contract were overly favourable to the private operator and the only way to find a new market based pricing structure is via a public tender, or where trade and public planning requirements have changed significantly, thereby requiring different port development solutions.

In the case of Buenos Aires, for instance, the latter factor was identified as the driver behind the plan not to renew existing container terminal concessions at its Puerto Nuevo facilities and instead replace them with one integrated terminal. Of course, the new plan also has to be right and, in the case of Buenos Aires, the plan to keep the port in the same highly urbanised location (surrounded by an urban area housing 14 million people with a density of 5000 people per square kilometre) – begs a lot of questions. Why not take this opportunity to move container operations to a new location with space and better connections to the hinterland?

Government masterplans can also interfere with seemingly logical concession extensions. This seems to apply to the recent news that PSA, in joint venture with the Saudi government, has been awarded the rights to all container terminal operations in Dammam. This has the negative effect of reducing competition in the port (as the other incumbent operator Hutchison Ports has to exit the port) but it is part of the Kingdom’s longer term vision to diversify its economy by, inter alia, challenging Jebel Ali’s position as a logistics hub for the Persian Gulf.

The fact remains, however, that in most cases, the sensible course of action for a port authority is to renew a concession where the holder has done a good job and, subject to the usual due diligence, is judged to be able to continue to do so. Port authorities in this situation that choose not to do so or just dither and prevaricate before eventually getting around to it can basically be seen to be failing in their duty. “Duty” not just economically but also socially with key issues arising such as creating uncertainty in the workforce.

Thus, the best advice is to ‘follow the pack’ – the benefit of straightforward concession renewal has been proven in Europe, Asia and the Middle East.

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

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