Port Strategy September 2019

SEPTEMBER 2019 ❘ VOL. 1019

ISSUE 7

portstrategy.com

INSIGHT FOR PORT EXECUTIVES ICTSI’s PNG impact | Baltic bonanza | Mitigating crane knockdowns | North Africa focus

INTERMODAL IN EMERGING MARKETS: Going down the right track?

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 ❘ Editor

Time to get real on forecasts

More realistic market and revenue forecasts are needed for port projects - without these overinvestment beckons and the ‘usual suspect,’ (the Taxpayer), is being the biggest loser

Assessing the earnings potential of port investments is more difficult than many other types of infrastructure where there are more stable or guaranteed levels of demand.

There is the basic challenge of assessing a market’s overall demand growth. Just like macroeconomists struggle to predict a country’s GDP or the next recession, trade economists face big challenges when looking into the future. The ability to switch liner calls or cargo from one port to another is also particularly challenging. This makes the task of demand forecasting for any given port doubly difficult. Factoring in a range of variables (such as new port projects, future vessel sizes, varying parcel sizes as alliances constantly change, hinterland connectivity developments) can present a Rubik’s Cube like task.

Given the inherent complexity of trying to make an even-handed forecast of a port’s cargo flows 10-20 years nto the future, there is quite a lot of room for interpretation and scope for persuasive and convincing “project boosters” to build very positive scenarios to attract investors and lenders. Indeed, some parties contend there is a systemic bias towards “positive forecasting”.

How many times have you heard of consultants being persuaded by port promoters to ‘bend it like Beckham’ to make the traffic more suitable to attract investors or creditors? Equally, there can be elements of consultants taking projects down the road with an eye to maintaining billing…

Even creditors are often susceptible to unrealistic turnover predictions.

With an eye to meeting their lending targets, experience shows they can accept unrealistic forecasts – especially if they can get sovereign guarantees to cover their risk – passing the buck back to the taxpayer.

Indeed, taxpayers are generally the most vulnerable to such bias towards rosy-tinted cargo forecasts. Often, government institutions (like port authorities or regional governments) use over-optimistic forecasts to obtain financing (for developing hinterland roads/rail and port infrastructure) from multilateral institutions like the EU, EBRD or IFC. The multilaterals provide grants or loans – either way, a tax payer somewhere pays.

How to counter such bias? An obvious answer is less public funding for port projects. The private sector is capable of investing and meeting most needs of shipping lines with less (but more judicious) government support.

Further, one can imagine independent central government watchdogs with a critical supervisory role. When over-enthusiastic port authorities or regional governments present their expansion plans – based on being located “at the centre of the world” - then the watchdogs may point out that it might also be “in the middle of nowhere”!

Too much capacity too soon can ruin a market – making the chance of achieving fair and reasonable returns ‘mission impossible’ for the sector’s serious long-term investors.

Certainly, this message comes through in the article focusing on the Adriatic in this issue. An allied message is that if government wants the private sector to take up projects they have to be bankable and flooding the market with too much capacity too soon is in no one’s interest.

Another example, also discussed in this issue, is the Anaklia Port Project which is now foundering following the exit of a key consortium member. This is clearly a project based more on hope and aspiration than genuine need.

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

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BALANCING ENVIRONMENTAL CHALLENGES WITH ECONOMIC DEMANDS

CONTENTS

SEPTEMBER 2019

12 14 FEATURES

8

NEWS

18 Stability and growth predicted for Baltic region

COLUMNS

16 Chink of Light for Baltimore Port of Baltimore is still hopeful that the Howard Street Tunnel will come to fruition but faces a funding gap of US$103 million

18 Yilport Takes on Taranto Yilport is the new operator at the Italian port of Taranto and has plans to expand capacity, although needs to attract traffic to the transhipment hub first

18 DP World Axes Jobs in Australia The increasingly bitter labour dispute at major ports in Australia has seen a new development, with DP World axing several hundred jobs as both sides struggle to reach a workable settlement

10 Investment in Peru’s Ports Investment is planned or underway at Peru’s ports of Salaverry, Chancay and Callao to improve infrastructure and modernise facilities

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

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24

12 Adding value to Geography In its new Master Plan 2050, PANYNJ planners have captured the essence of evolving further into a “Logistics Platform” and reaching more deeply into the processes of port users and attracting “Discretionary cargo”

14 Check and double check, the best project evaluation criteria It is vitally important that comprehensive effort is put into proper consultant selection and particularly in conjunction with the demand for and overall economic evaluation of the feasibility of a project.

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

After the sale of DCT Gdansk, strikes in Gothenburg and cargo volatility in St Petersburg, the future now looks increasingly more stable, with cargo growth anticipated and investment in infrastructure occurring throughout much of the Baltic region

24 Alternative dredging funding to the fore Economically viable dredging projects that have languished from a lack of funds could now get a kick start, with debt financing via dredging companies a potential option moving forward

28 Chinese funding issues on railroad to nowhere?

In emerging African countries numerous projects have been advanced without sufficient and co-ordinated planning or cost/benefit analysis. Now, Chinese funding appears to have halted

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BALANCING ENVIRONMENTAL CHALLENGES WITH ECONOMIC DEMANDS

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SEPTEMBER 2019 | 5

THE STRATEGY

The Port of Baltimore has long been seeking to rectify the inability to get doublestack containers through the Howard Street Tunnel. The port is located 155 miles inland, offers deep water for larger ships and has good terminal infrastructure, but the lack of doublestack capacity has remained a logistical disadvantage at a time when other competing regional ports are pushing ahead with intermodal rail investment.

In 2016 and 2017, the port applied for Federal funds to help support the US$466 million project cost. As of March 2019, $147 million was to be provided by the Maryland Department of Transportation, CSX Transportation has agreed to add $91 million – this left a shortfall of $228 million, with the hope that Federal coffers would assist.

The port has been partially successful, with confirmation that the Infrastructure for Rebuilding America programme will be providing $125 million.

However, it still leaves a

A CHINK OF LIGHT FOR BALTIMORE?

funding gap of $103 million and uncertainty where the money will be coming from to bring the project to fruition.

There are also other more localised issues too. Baltimore residents have commented on social media sites that the Howard

Street Tunnel is already 150 years old, runs underneath a major US city that does have some flooding issues and, perhaps most importantly of all, was not designed to cater for the amount of rail activity that is being targeted.

In comparison, New York/New

ONE-HAPAG LLOYD MERGER POTENTIAL?

8 Funding gap for Howard Street Tunnel remains

Jersey’s new $356 million Greenville Rail Yard is finally giving the GCT Bayonne terminal intermodal rail and aiming to remove more than 375,000 truck trips per year.

Japanese grouping of carriers that form the Ocean Network Express (ONE) and Hapag-Lloyd to join forces, one day.

The assertion is certainly of interest and may represent a logical approach, especially when remembered that both groupings are themselves proponents of largescale mergers – the ONE carriers are the combined container shipping fleets of K Line, Mitsui OSK Lines and NYK Line, while Hapag-Lloyd

has added both CSAV and UASC into its operating network in recent years.

In recent years shipping lines have increased alliance participation and joint-ventures to bring greater operating securities and cost savings.

Using information available in Q2 2019, Hapag Lloyd was the 5th largest container fleet operator, with the ONE carriers in 6th place. Combined the two carriers would have a fleet of

over 3.23 million TEU, which would place the combined entity in 3rd place only just behind MSC (which had around 3.38 million TEU).

Aponte also said vertical integration is a key part of the future roadmap for container shipping lines – in particular, an increasing, but selective move into land transportation and logistics, where it “makes sense” to do so. A move also reflected by major terminal operating companies as well, such as DP World and Abu Dhabi Ports.

Automation deal for Pier 400

Port Calls on New Service Confirmed

Long Beach masterplan enters 21st Century

Expansion complete in Virginia

After much dialogue and discussion, APM Terminals and local International Longshore and Warehouse Union (ILWU) members have reached a deal.

In exchange for new automated equipment to be introduced at the Pier 400 facility, the operating arm of AP Moller will pay for a retraining programme for all existing workers that will “reskill and upskill longshore workers” for the future.

Hapag-Lloyd and the ONE carriers have confirmed the rotation in its joint new Middle East/India/Africa service starting in October. After Jebel Ali, Mundra and Nhava Sheva, Colombo will be called for transhipment boxes, with a Hapag-Lloyd-only call at Reunion and then sailing to Africa.

Durban and Capetown are scheduled, before Tema, Lagos and a return to South Africa and Dubai.

The Port of Long Beach has released its new masterplan – the first comprehensive update completed since 1990. The master plan covers a Harbor District of nearly 2,700 acres of land and more than 4,500 acres of water and sets out four key goals, with a strong focus on container ships and activities. These goals are charged with accommodating forecast demand for a diverse range of cargoes.

Virginia International Gateway at the Port of Virginia has confirmed that its $320 million terminal expansion programme has been completed as part of increasing container capacity at its two major terminals (VIG and Norfolk International Terminal) by 40%. VIG has gained an 800ft quay extension and new equipment to berth 3 larger ships simultaneously.

When Gianluigi Aponte talks, the industry, rightly, listens. When asked about future possible liner consolidation, the Executive Chairman of Mediterranean Shipping Company (MSC) announced at the first annual meeting of the newly-formed Italian shipping owner association, Assarmatori, that he eventually expected the

BRIEFS

6 | SEPTEMBER 2019

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

THE STRATEGY

BRIEFS

YILPORT TAKES ON TARANTO

No second box terminal Uruguay’s National Ports Authority (ANP) has dismissed Mediterranean Shipping Company’s proposal to build a second container terminal at the Port of Montevideo. The decision follows a failure to submit a relocation plan because the original site chosen by MSC for the terminal was deemed inadequate. Separately, ANP has inaugurated an 180m extension to Montevideo’s Quay C, which is now 540 metres long and has water depth of 14m in the extended area. This Quay D cost US$82.5 million to build.

Bolivia’s President, Evo Morales, wants a new megaport to be built at the Peruvian city of Ilo, to handle cargo from Brazil, Bolivia and Peru.

Ilo would be the terminus of the proposed 3,755km Integrated Inter-Oceanic Railway Corridor (CFBI) that links the Atlantic Port of Santos to Puerto Suarez, in Bolivia, before continuing via Montero and Bulo into Peru, to Ilo port on the Pacific.

Moín concession review

DP WORLD AXING DOCKWORKER JOBS IN AUSTRALIA

Bolivia wants Ilo Mega-Port

The government of Costa Rica is reviewing the concession awarded to APM Terminals for the Moín Container Terminal, to ensure that terms and conditions are being fulfilled. The agribulk export sector wants tariffs charged to be reviewed because of alleged service inefficiencies. Costa Rican exporters, producers and associations have all complained, prompting President Alvarado to comment, "If the productive sector is pointing this out, it [requires…] urgent attention.”

8 | SEPTEMBER 2019

Industrial action by workers in key Australian ports continues to occur and terminal operator, DP World, has reacted by axing 200 dock worker jobs.

As reported in the July/August edition of Port Strategy, there were widespread strikes across the major container ports in Australia where DP World operates. This action has subsequently been followed-up by a second round of industrial action at the Sydney, Melbourne, Brisbane and Fremantle terminals that comprise the global operator’s Australian portfolio.

This second stoppage will further impact the entire supply chain, according to DP World, and cause delays, extra costs and

capabilities being increased to around 4 million TEU per annum.

Taranto has previously handled sizeable container traffic since it opened in 2001 when Evergreen Marine held a 90% stake and volumes soon increased until its highest total of 857,000 TEU was handled in 2006.

However, traffic levels subsequently fell year-on-year, primarily due to increased competition. There has been no regular liner activity since 2014.

The Taranto port concession will be the 21st marine terminal of Yilport’s global portfolio and the company’s first foray into Italy. It has an annual container-handling

8 Yilport takes on challenge at Taranto

Yilport Holding has its 21st marine terminal in its portfolio.

The Italian regional court (TAR) has rejected an appeal of Southgate Europe Terminal Consortium and provided official confirmation that the 49-year concession of Taranto port can now be operated by Yilport.

The decision follows Autorita di Sistema Portuale del Mar Ionio (the Ionian Sea Port Authority) approving the concession for the Molo Polisettoriale to the Turkish operator in November 2018.

Yilport has outlined an intention to double the annual handling capacity of the facility, with the existing container handling

logistical issues for shippers and ocean carrier operators. In a statement, the company’s chief operating officer confirmed that four vessels had been redirected to other stevedores to mitigate delays but an estimated 40 ships and 110,000 containers will be delayed.

In addition, confirmation has been given that there will be 100 dock workers being made redundant at each of the Sydney and Melbourne facilities, which equals around 11% of the operator’s total stevedoring workforce – these job losses are in addition to 50 stevedores due to be leaving the Melbourne operation through voluntary redundancy.

Both the labour unions and DP

capacity of 2 million TEU per annum, with a water depth of 16.5m. Yilport has plans to expand the capacity to 4 million TEU per annum over the next 10 years, along with further investment in technology and equipment.

Even before further investment to 4 million TEU per annum, Yilport needs to attract regular shipping line callers back to Taranto.

There are fewer shipping lines or Alliances to target and capacity already exists in the Central Mediterranean area. So, the approach adopted by Yilport will definitely be interesting to follow.

World Australia continue to maintain how issues with the other party remain. The Maritime Union of Australia claim management “refuse to meet” and the operator says an agreement is only possible if the workforce withdraw claims and accept less job security and less favourable working conditions. In contrast, DP World Australia confirm that negotiations have been ongoing since April but the workforce demands could potentially increase the operator’s costs by over A$15 million per year – with the union unwilling to make any concessions.

This fractious dispute looks set to continue.

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

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THE STRATEGY

BRIEFS New Azores terminal

SALAVERRY REVAMP AS CHANCAY AND CALLAO INVEST

A public tender for the design, construction and operation of a new container terminal at the Portuguese Port of Praia da Vitória, in the Azores Archipelago, is to be issued within six months.

A two-phase development is planned, with Phase I reclaiming land to the north of the existing port, which will have 560m of quay and 16m water depth. The South Quay will also be extended by 180m.

Development review In El Salvador, representatives from the Port Commission (CEPA) and JICA, along with the presidential commissioner of Strategic Projects, are undertaking a review to assess future development of La Unión Port, in terms of infrastructure, mobility and logistics. Key outputs are expected to be included in the government’s forthcoming master plan that covers the countries ports and airports.

DP World wants Caldera DP World has submitted a proposal to the government of Costa Rica to assume control of the Port of Caldera. The country’s Minister of Planning confirmed, “They want to invest and they are going to make us an investment proposal in the Central Pacific, which is much more than just Caldera. Incop [Costa Rican Institute of Pacific Ports] is working on a master plan, of which [DP World] is already aware and their proposal will go hand in glove with it.” The Port of Caldera has been operated by Port of Caldera SPC on a 20-year concession since 2006 but the Minister thinks it will be necessary to rethink the existing concession because of what DP World puts forward.

10 | SEPTEMBER 2019

The Port of Salaverry is undertaking an infrastructure layout upgrade that will see two, modern terminals developed, converting the Peruvian port into a commercial hub. An agreement signed between the Transport Ministry and Salaverry Terminal Internacional S.A. will see investment of $270 million in the renovation of existing facilities and new construction, which also includes provision of a large number of reefer plugs.

The modernisation is targeting current cargo levels of around 2.3 million tonnes rising to 4.0 million four million tonnes, with the port acting as a hub for Peru’s north coast, capturing additional national and foreign cargo.

In Q1 2019, $11 million was spent, with maintenance work carried out on Pier 1B. Stage 1 work

will also see the implementation of computer systems, repair to Dock 2, construction of silos, remodelling of offices and workshops, as well as installation of an 80-tonne MHC and other quay and yard equipment.

Stage 2 will involve the repair and expansion of Pier 1, the construction of three warehouses to handle soybeans, fertiliser and concentrates and provision of 1,500m2 of yard space, with holding capacity for 115 heavy goods vehicles in the pre-port area.

At the same time, Cosco Shipping Ports Consortium, which is building the new Peruvian Port of Chancay, has proposed an addendum to its original contract, increasing investment in the port by $723 million to $3 billion. The original proposal planned construction of a single multi-

8 The Port of Salaverry is undergoing a revamp

purpose port as part of the first phase, but the new proposals mean three new quays are also to be build, boosting the cost from $447 million to $1.17 billion.

At the Port of Callao, APM Terminals, which operates the North Multipurpose Terminal, has invested $1 million in new IT that records, streamlines and monitors logistics for operations. Given the acronym MOST, the new system has reduced customer service times by 67% and operational times by 12%. MOST allows maritime agents, customs agencies and carriers to upload and gather information and generate authorisation for embarking and unloading of all types of general cargo.

GOVERNMENT AIMS TO SELL OFF RIO DE JANEIRO PORT The Brazilian Government has indicated that the Rio de Janeiro Dock Company is on the list for eventual privatisation. Initially, dock companies currently operating the ports of Espirito Santo and São Sebastião would be floated, followed

by Rio de Janeiro.

However, the government has accepted that the Port of Rio de Janeiro company is in a fragile financial state and requires a cash injection prior to any transaction. This means a

complete restructuring will be necessary, after which the transfer of assets to the private sector can be considered.

The privatisation of dock companies is regarded as a “paradigm shift” in the country, but one that has potential to improve quality and efficiency of ports and attract investment.

Docas de Espírito Santo is under consideration as the first choice for privatisation because it is a large port, with low labour liability and fewer employees.

At the same time, Brazil’s National Secretary for Ports estimates that total investment in ports in 2019 will be $1.33 billion.

However, this could rise considerably by handing over port management to the private sector and confirms that the existing model makes hiring difficult and suffers too much bureaucracy.

Currently, 18 Brazilian ports are managed by federal dock companies, while another 19 are administered by states and municipalities.

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

THENEWYORKER

COLUMNIST

BARRY PARKER

ADDING VALUE TO GEOGRAPHY In the previous issue, which was a humorous attempt to call out some short-sighted planning, the notion of the “big picture” was an important undercurrent.

Sometimes referred to as an “ecosystem” – a major point was that different activities in a port are tied together.

In doing research for a transport project, I came across a related, and equally important concept – that of the “Logistics Platform”. A world renowned economic geography expert, Dr. Jean-Paul Rodrigue (yes, a “hometown boy” – he’s a Professor at Hofstra University, not far from midtown New York) has completed important writing on this subject that’s worth encapsulating.

Many ports have the elements of Logistics Platforms, including transhipment of cargo (onto other vessels, or in intermodal handoffs with surface transport) and processing of cargo (Foreign trade zones come to mind).

In one article written for a leading financial institution, the Professor brings up the idea of “Adding value to geography.” Good port planners are doing exactly that. The port’s location is pre-determined, but a little bit of thinking outside the box will go a long way. In a section of the article,

he describes a well-situated group of ports that created a transhipment ability, decades ago, that put them way out in front when it came time to capture moves from developing trade flows. But then, a linkup with strategic processors of cargo (which, in turn, gave rise to additional cargo moves for finished products, some by the air mode), moved the ports’ business to yet another level.

Closer to home, the local port has just completed a Master Plan

THEANALYST

looking out to 2050. While its authors use different words, the PANYNJ planners have captured the essence of evolving further into a “Logistics Platform” and reaching more deeply into the processes of port users and attracting “Discretionary cargo” (my definition, it could go somewhere else unless you have a unique offering”. One example of using location as an important pivot point concerns offshore wind, where the local port, which “…

8 PANYNJ expected to support the supply chain

is uniquely situated to provide critical support to the offshore wind needs.” can leverage geography. Quoting further from the plan, which details various facilities where terminals could be situated, the authors of the plan note that: “The Port is also expected to support the supply chain (import of raw materials, parts, components, etc.) associated with offshore wind.”

COLUMNIST

PETER DE LANGEN

In June 2019, the winners of the fourth edition of the African Ports Awards (APA) were announced in Lomé, Togo (see http://www.fondationapa.org).

I had a small involvement as member of the Jury. The role of this Jury is minimal as the awards are based on performance data of the ports. There are different awards in different categories, all based on performance data that African ports submit. This focus on performance data is why, in my view, this initiative is helping to promote the conversation between all stakeholders about performance.

12 | SEPTEMBER 2019

AFRICAN PORTS AWARDS - IMPORTANCE OF PORT PERFORMANCE INDICATORS The performance indicators used for the awards are, as in all cases, open for debate. For instance, while the shipping lines like to focus on the turnaround (for instance with an indicator like ‘moves per ship per hour’), the APA indicator is focused on the productivity per meter of quay- as this is a more suitable indicator of the efficient use of the expensive assets in the port.

As with similar initiatives to measure performance, like UNCTAD’s efforts to measure maritime connectivity or Marine Traffic’s efforts to measure ship

waiting time, the process of developing and fine-tuning the indicators is one of gradual improvements. For instance, one issue that is especially relevant in Africa is the ability of ports to effectively serve landlocked countries. The APA rightfully includes an award for the best Transit Port, which is based on the transit volumes (both total volumes and specifically container volumes). While these volumes are obviously relevant, they only tell a part of the story and may be more directly related to the economic strength of the

landlocked countries than to the performance of the ports serving these countries. In an ideal world, the volumes would be supplemented with additional indicator on costs, transit times and reliability.

There is long road ahead for APA, not least in convincing more port authorities to submit data and publishing (part of) the data so that it is available for all stakeholders, but the ball is rolling….

As a note of transparency: the role as jury member is unpaid, I have no material interest in the success of APA.

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

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THEECONOMIST COLUMNIST BEN HACKETT

As the global economy faces the prospect of a potential recession, the maritime industry needs a reality check.

The maritime industry, be it ports (too many) or shipping lines (too much capacity), is forever an optimistic business, always looking on the bright side of things. There is often a sense of denial about the economic situation and the belief that next year will be better. This is despite a very long run of poor financials and competitive price pressures.

Early this year pundits suggested that the industry was on the firm path to recovery and that despite warning signs to the contrary there would be an upturn in demand and freight rates.

Wrong on both counts. Had they read this publication more closely and followed the advice of “The Economist” they might have fared better.

The advent of the three super alliances initially caused many to miss the signs of the downturn in the making. Better management

COMPLACENCY OR WISHFUL THINKING BOTH LEAD TO DENIAL

of capacity and service rationalisation seemed to be the panacea for the industry and was meant to help ports and carriers alike. The players opined that the rash of new vessel orders was at an end and that economies of

THESTRATEGIST

8 The maritime industry needs a reality check

scale had reached its zenith.

Again, wrong on both counts, as new orders are flowing in and we now have ships 24 containers wide further expanding capacity.

The message from the U.S. has been consistent over the past three years. America first and the use of economic sanctions and trade wars has become the preferred strategy tool to bully friend and foe alike. Irreparable damage is being done to global trade and the global economy. In Europe, the UK and Germany reported negative GDP in Q2 of this year and Italy is flat on its back.

France reported marginal growth for the same period. In Singapore, on a quarter-by-quarter seasonally-adjusted annualised basis, the economy contracted by 3.3% and Thailand’s GDP grew at its slowest rate in nearly five years in the second quarter.

As freight rates remain flat to negative and shipping capacity keeps getting withdrawn, it is clear that complacency must be replaced with reality when looking forward to 2020. It is going to be a tough year for all participants.

COLUMNIST

MIKE MUNDY

What drives a port authority or other government agency to develop the infrastructure for a new terminal and offer a new concession when there is little or no prospect of the facility offering a satisfactory rate of return to potential operators?

History tells us that such projects can be politically motivated, both at a local and central government level. It can even be one influential political figure putting ‘weight’ behind a project – the desire to initiate a project in or near his or her hometown is one example of this.

Fingers have been pointed at the port of Hambantota in Sri Lanka and at the recently suspended Bagamoyo new port project in Tanzania in this respect.

The ready availability of financial grants or soft loan facilities can be another reason – one example

14 | SEPTEMBER 2019

CHECK AND DOUBLE CHECK, THE BEST PROJECT EVALUATION CRITERIA that springs to mind in the EU is of a new facility being built to replace an existing terminal seen as a desirable location for waterside urban development. While, however, such an existing facility may have ‘washed its face’ achieving satisfactory returns, for an entirely new facility is inherently problematic in a relatively low volume situation. All the more so, when there are efficient established terminals nearby.

There is one other notable cause of such projects being brought to the market that are really not fit for purpose, namely poor consultancy.

This can be something as straightforward as a consultancy providing a rationale for a project with the next phases of the project in mind and the associated billing.

There can also be consultancy for a financing agency with the delivered consultancy fitting a given agency’s lending criteria, again leading to further billing opportunities.

Generally, serious problems can arise when consultants belie their name and instead work as ‘enablers’ giving the clients what they want rather than what is good for them. And, of course, usually when mistakes become apparent, related to elements such as demand forecasts, these are often a long way ‘down the track’ and so accountability is difficult to realise.

This flawed consultancy problem becomes all the more dangerous, and ultimately costly to government, when it is allied or spurred on by one or more of the pitfalls referenced earlier.

It is vitally important that comprehensive effort is put into proper consultant selection and particularly in conjunction with the demand for and overall economic evaluation of the feasibility of a project.

Our industry does have ‘white elephant’ projects dotted around the world. Avoiding initiating one of these is absolutely essential, in order to not waste hard earnedtaxpayer generated revenues and to bring the best economic result. A lot of airport projects nowadays require traffic forecasts frommore than just one source. Given what is at stake in the ports sector, with more marginal and ‘white elephant’ projects appearing this appears to be a wise course of action.

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

THEENVIRONMENTALIST COLUMNIST DEAN DAVISON

IMO 2020 – WHO IS GOING TO PAY? Much has been written about January 1st, 2020 and the introduction of IMO 2020. For the remainder of this year there will be ongoing speculation about what will happen once low sulphur fuel is introduced and it is not until we truly get into 2020, and the operating dynamics of shipping lines are made known, that will we truly understand the impact.

So, before we speculate any further, it’s a good opportunity to take stock of the situation and look at what we know already. The International Maritime Organization (IMO), the U.N. specialised agency with global standard-setting ability has several key objectives to achieve as part of its remit. These include creating / implementing universally adopted regulatory frameworks for the shipping industry, the overall safety and security of shipping, prevention of marine and atmospheric pollution by ships and environmental performance of international shipping Therefore, on January 1st, 2020 the new Low Sulphur Regulation will require that ships reduce their emissions of sulphur by 85%, with the current 3.5% m/m (mass by mass) sulphur content of fuel to drop to 0.5% m/m. Indeed, some areas already have 0.1% m/m restrictions, notably the Baltic Sea. For the container shipping industry, there are three options available, with both positive and negative factors applicable, as Table 1 confirms.

There are clearly choices that need to be made, although perhaps the clearest one is not openly evident yet. However, regardless of the preferred option it is certain that additional costs will be incurred and with fuel representing over 50% of operating expenses for a shipping line it could be a cost that cannot be is a cost too far!

Here we find probably the crux of the matter and another decision that will need to be made – paying the costs. From the ocean carrier side, Hapag Lloyd’s president for North America has already stated that “Carriers that do not recover the costs to grab market share, would be looking at a short-lived

venture,” while the President of ZIM USA agreed that carriers would be “stupid” if they do not pass on the increased cost of fuel to their customers.

Nevertheless, at the time of writing, the exact economic impact is not known, simply because there is no industry standard for fuel-surcharges computation or a clear picture of the underlying costs for lowSulphur fuel. If we consider that Bunker Adjustment Factors (BAFs) are already a very difficult cost to pass on, especially when it is a “sellers” market, it will not be an

easy task convincing shippers of the need to pay new BAFs – especially when BAFs themselves are regarded as involving secretive rates.

So, as we approach the 4th quarter of 2019 and January 1st, 2020 really starts to appear on the horizon there is a delicate balance.

Of course, IMO 2020 is a positive environmental achievement and it is coming to the container shipping industry, for sure.

At the same time, there is no doubt that IMO 2020 will increase costs in all trade lanes and the shipping operators will look to

8 LNG fuels involve major ship investment

pass on or share costs with cargo shippers and owners, even though it will be extremely difficult to achieve.

As a result, does it mean that it will ultimately be consumers that will have to meet these additional costs? And in the same way that carbon neutral costs are a feature in the airline industry, will consumers be happy to pay more to ensure a more environmentally friendly ocean-going freight transport activity?

Table 1: Summary of Options for Container Shipping Line Operators from January 1st, 2020 Option

Positives

Negatives

Use Expensive low sulphur fuel/fuel blends

No change in ship mechanics

Higher fuel price cannot be maintained by ship operators

Cost of fuel may equalize as supply matches demand

Reported engine difficulties with new blended fuel types

Able to turn on and off

Costly and timely to install

Continuation use of normal high sulphur fuel

Short to medium term fix

Install Scrubbers

Refuelling infrastructure unchanged Use LNG Fuels

Energy efficient

Large Investment in new ships

Clean fuel

Typically lose cargo capacity

Considered to be the future of fuel

Bunkering infrastructure behind

Source: WSP

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SEPTEMBER 2019 | 15

PORT PROFILE: PAPUA NEW GUINEA

CLOSE COLLABORATION UNDERPINS PNG PORT REFORMS PNG has stepped into the world of modern port operations with a collaborative approach of involving local landowners as shareholders in two new terminal operating companies, Iain Macintyre reports

8 South Pacific International Container Terminal (SPICTL) operation in Lae

Significant infrastructure upgrades complemented by the engagement of global terminal operator, International Container Terminal Services (ICTSI), are expected to deliver an efficient and prosperous future for the two largest ports in Papua New Guinea (PNG).

Through a K$1 billion investment from the Government of PNG, the Port Moresby operation was fully relocated across the bay to the newly-built Motukea Port International Facility during 2018. A K350 million investment to expand Lae Port, which includes the greater Lae Tidal Basin project and Huon Industrial Park development, is also due to be completed later this year.

Complemented by other significant transport infrastructure upgrades in the country, the two facilities are now “on par with the best ports in the region in terms of size and efficiency”, according to state-owned PNG Ports Corporation.

Seeking to “maximise the value to the nation of the investment,” PNG Ports signed 25-year terminal operating agreements with subsidiaries of global terminal operator, Philippines-based ICTSI, in late 2017 – South Pacific International Container Terminal (SPICTL) in Lae and Motukea International Terminal (MITL) in Port Moresby.

The public-private partnership sees PNG Ports responsible for the provision of infrastructure at the two ports, with the ICTSI subsidiaries providing cranes, berth and yard equipment as well as having responsibility for operational, management and development functions.

With this new arrangement having recently completed its first full year of operations in PNG, ICTSI South Pacific chief executive Anil Singh speaks positively about progress.

16 | SEPTEMBER 2019

“We hope to extrapolate historical data to map mutuallybeneficial business and commercial plans,” he told Port Strategy, before adding, “These may indeed guide the PNG Ports Corporation’s strategic plans for further efficiencies and improvement, and we are pleased that we can continue to those discussions for the future.”

He also remains positive about the relationship that has developed between both parties since the arrangement commenced. “We at ICTSI South Pacific are confident of the Government of PNG’s commitment to the transport and infrastructure sector.”

In fact, Mr Singh describes the partnership and operational arrangement, which commenced after the infrastructure developments had advanced at the two ports, as both “typical” and “unique”.

“This is a typically own, operate and transfer model that is prevalent globally. The ICTSI group also works with other concession models. For PNG, the ports were previously owned and operated by the Government though the PNG Harbours Board (later corporatised to PNG Ports Corporation). The latest step, putting in place concession arrangements, has given ICTSI South Pacific the opportunity to modernise the port operation though adopting international best practises,” he says.

The arrangement is already delivering significant efficiency improvements. At the time of the official opening of Motukea Port in June last year, it can be noted that the 25,483-GT containership, mv Siangtan, was turned around in just 12 hours

by SPICTL in Lae, compared to the “usual time” of two days.

Mr Singh is, rightly, very proud of this achievement. “Yes, it is

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PORT PROFILE: PAPUA NEW GUINEA

very impressive when you think about efficiencies in terms of a day-and a-half saved from what was a standard 48-hour vessel discharge time.

He also believes that this level of operations is what the facility is looking to achieve regularly, with the help of ongoing investment. “We attribute this to our investment in modern equipment, working closely with a key government agency like PNG Customs so our terminal operating systems (their ASYCUSA and our N4) are in sync, and our investment in human capital,” he stated, before adding further comments on the success of the relationship, to date.

“Many of our young men and women have never worked before, nor attained a decent level of education. But our commitment to their growth and their commitment to financial independence has been a winning combination.”

Mr Singh says ICTSI South Pacific is continuing to invest in its operations at the two ports, specifying that “Acquiring state-ofthe-art machinery, upgrading our digital platforms and training our human resource will ensure that we are ready for the growth forecasted for PNG by economists and the commercial and development banks.”

Although describing PNG as having similarities to other emerging markets in which ICTSI has experience, such as the Democratic Republic of the Congo and Mexico, he says PNG is the “most unique” and explains further.

“It is the most heterogeneous country in the world, where the people are deeply connected to their land. As such, it was important to engage with, and include, the indigenous people from the impacted communities to participate as requested in the Terms of Agreement (TOA) between PNG Ports Corporation and ICTSI South Pacific.

“A provision in the TOA calls for the involvement of local landowners by giving the impacted communities 30% equity as a loan repaid through dividends. In other words, a carry equity, allowing the impacted community to be involved as partners.

“For our MITL in Port Moresby, these are the indigenous people of Tatana and Baruni villages and for SPICTL in Lae, they are the indigenous people of Aahi and Labu villages. Our operations [share] a unique business model which is guided by the environment, social and governance criteria.”

Nonetheless, despite the progress already made and the positivity that has been generated, Mr Singh acknowledges that, “as with everything new”, there have been a “fair share of teething problems”.

“It was a well thought through partnership. Though a delicate

8 Motukea International Terminal (MITL) operation in Port Moresby

balance, we each appreciate that our success hinges on our ability to looking out for each other. PNG really does draw its strength from its many cultures and languages.”

Looking ahead, Mr Singh says the Government’s decision to privatise this port infrastructure will take the country to “new heights in port development” and he thinks similar processes may occur moving forward.

“The model has been successful and might encourage the Government of PNG to consider privatising other smaller ports in the country. Modernisation, utilisation and optimisation are necessary to keep abreast of the world’s larger ports. In the fullness of time, we expect SPICTL/MITL to reach the level of modernisation status of Philippines, Singapore and the United Kingdom.”

He further understands the benefits that need to be derived, especially from a state perspective. “The Government’s investment in infrastructure is with the desire to unlock development potential. They appreciate that infrastructure is key to economic growth. But a return on their investment is equally important and that is why we are here.”

Singh concludes that he believes a port can only become a “true national asset” when each achieves efficiencies in its operating procedures.

“A sustained improvement in container moves per hour, reduced berth utilisation and optimising the deployment of equipment – and harnessing the will of a trained human capital – is the pendulum shift an emerging economy like PNG needs.

“We at ICTSI globally and indeed in PNG are committed to achieving this.”

Port system upgrade to boost economy At the official opening of the Port Moresby Motukea Port International Facility in June last year, PNG Ports Corporation chairperson, Sir Nathaniel Poya, said the new terminal alongside the expanding Lae Port would improve the nation’s productivity and stimulate economic activity.

“The improved efficiencies will bring down the prices of key imported commodities,” he stated.

“It is a fact that about 80%-90% of the items in the basket of commodities in the Consumer Price Index are shipped through the sea ports.

These improved port efficiencies have the potential to significantly benefit exporters and

importers using the Motukea and Lae terminals.”

Independent economic modelling has predicted productivity improvements in the terminal operations will increase real GDP growth for PNG by 0.1% (K199.8 million) this year, increasing to 0.62% by 2023 and reaching 2.69% (K3.88 billion) by 2027.

As an island nation, PNG’s economic growth and prosperity is highly dependent on the efficient flow of goods through its wharves – Lae Port and Port Moresby handling about 40% and 20%, respectively, of the country’s total trade.

“This growth performance is impressive and driven by improvements in the export

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

competitiveness of exporters arising from their reduced operational costs, states Poya, confirming, “The productivity enhancements will also have downward pressure on the market prices of goods and services. As a result, consumers will benefit from lower final costs for imports that are shipped through the international terminals, given that there will be improvements in port productivity levels as well as ship and truck turnaround times.

He concludes, “Cost reductions in the transport of imports should be available to be passed on to the end consumers through the logistics chain.”

SEPTEMBER 2019 | 17

AREA SURVEY: BALTIC SEA

STABILITY AND GROWTH PREDICTED FOR BALTIC REGION DCT Gdansk sale, strikes in Gothenburg and cargo volatility for St Petersburg, but the Baltic port region is set for growth and expansion, says AJ Keyes

8 DCT Gdansk is under new ownership

Based on container volumes handled, 2018 was a good year for ports that comprise the Scandinavia-Baltic (Scan-Balt) region, as Associate Director for WSP’s Maritime Advisory Group in London, Steve Wray, confirmed. “Total Scan-Balt volumes increased from 7.83m TEU in 2017 to 9.49m TEU in 2018, mainly a result of economic recovery at Saint Petersburg and Kaliningrad together with further growth at DCT Gdansk.

Poland and Russia recorded a 28% share of total activity each, with Finland seeing 12% and both Sweden and Lithuania providing 8% each.”

The Scan-Balt region is a large area consisting of a relatively high number of ports, but in terms of transhipment options over facilities in North Europe, such as Rotterdam and Antwerp, or German ports, the choice of a hub port option for shipping lines is quite low.

Table 1 compares the volumes of selected major ports in the North Continent region and Baltic that handle transhipment demand between 2014 and 2018. While not all the volumes shown will move to the Baltic via feeder, the throughput trends highlighted remain a useful marker for comparative purposes – including DCT Gdansk as a Baltic hub port.

The development of DCT Gdansk in the region market has become more focussed since it opened, as WSP’s Wray confirms. “When DCT Gdansk commenced operations, transhipment really helped launch the port, but Polish importexport demand is now a key factor in current development levels and projected growth.”

The impact of transhipment on volumes at the larger northern European ports in 2018 is shown in Table 2. DCT Gdansk still

recorded an incidence of 37%, but this was much lower than the 57% and 77% for Bremerhaven and Wilhelmshaven, respectively.

With largescale infrastructure and deep water for the larger ships, DCT Gdansk competes effectively as a transhipment hub for the Baltic and Russian markets against the German and Benelux ports. However, recent growth from import/export Polish hinterland markets is also relevant, as endorsed by new owner PSA, with its Corporate spokesperson adding, “Poland has a strong track record, and the country’s growth is above the European average. We strongly believe in the potential of DCT Gdansk to take advantage of this favourable economic situation to further position itself as the main hub to serve the CEE and the Baltic regions.”

TABLE 1: REGIONAL TRANSHIPMENT VOLUMES, 2014-2018 ‘000 TEU Le Havre

2014

2015

2016

2017

2018

562

606

606

792

792

Rotterdam

4,427

4,252

4,273

4,192

4,381

Antwerp

3,052

3,572

3,714

3,626

3,815

614

390

390

150

158

Zeebrugge DCT Gdansk

690

435

405

560

725

Hamburg

3,697

3,520

3,564

3,209

3,178

Bremerhaven

3,361

3,336

3,349

3,140

3,124

50

329

371

401

501

16,453

16,440

16,672

16,070

16,673

Wilhelmshaven Regional total Source: WSP

18 | SEPTEMBER 2019

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AREA SURVEY: BALTIC SEA

Table 2: Transhipment Volumes/Incidence at Ports in North Europe & Baltic Markets, 2018 Port

Total Transhipment Transhipment Throughput Incidence

Le Havre

792

3,000

26%

Rotterdam

4,381

14,513

30%

Antwerp

34%

3,815

11,100

Zeebrugge

158

1,578

10%

DCT Gdansk

725

1,950

37%

Hamburg

3,178

8,730

36%

Bremerhaven

3,124

5,480

57%

501

650

77%

Wilhelmshaven

DCT Gdansk has seen strong overall growth in its throughput, as Figure 1 shows. Between 2009 and 2018 the port recorded throughput increases of 26.2% per annum from 240,000 TEU to 1.95 million TEU. Growth that was confirmed by a corporate spokesperson at new owner, PSA International: “Volumes have steadily grown over the past years to reach 1.9MTEU in 2018 and we expect the growth to continue in 2019 and beyond.”

By way of comparison, at Gdynia in Poland, the two terminals operated by ICTSI and Hutchison Ports still generated good growth of 7.3% per annum over the same period, with collective volumes rising from 378,000 TEU to an estimated 715,000 TEU. Positive increases, but below the activity in Gdansk, although this is also partly attributable to not handling the larger ships on Asia-Europe trades and serving the Baltic with feeder demand.

Nevertheless, the Polish ports collectively do show continued and ongoing growth in recent years, with the 2011 total of around 1.35m TEU in 2011 surpassing 2.83million TEU in 2018.

The ability to receive larger ships remains an important factor to PSA International, as its Corporate Spokesperson confirmed: “DCT Gdansk is an ice-free location that has zero maritime restrictions, making it the optimal location to serve as a hub port and is the only terminal in the Baltic Sea capable of taking the largest vessels afloat.”

The current phased expansion at DCT will see the terminal increase capacity to around 3.0 million TEU per annum, with additional future investment seeing berths 3 and 4 developed in time, subject to demand.

With the background of growing volumes and investment in infrastructure, it was no surprise that when Macquarie Infrastructure Partners placed DCT Gdansk onto the market in 2018 that there was immediate, and strong, interest from a number of potential new owners and investors. Ultimately, a joint venture of Poland’s sovereign wealth fund, PFR, and global terminal operator, PSA International, subsequently acquired the facility at a reported €1.5 billion ($1.7 billion).

Although DCT Gdansk is growing volumes and investment in infrastructure continues, there are developments at other ScanBalt and competing ports too. The Scandinavian container port market comprises a mix of regional trades and not transhipment activity, some direct shipments via Gothenburg and a limited element of feedering into Baltic ports.

Despite the significant sailing distance from the main EastWest shipping routes, APMT signed a 25-year concession at Gothenburg to operate the Skandia Container Terminal (SCT) in 2011, therefore endorsing potential that exists. The shipping line was already the principal customer, albeit originally with feeder ships rather than direct deep-sea calls.

Maersk Line clearly envisages that sufficient demand exists in Sweden to warrant consideration of a direct call, which can occur after the ship has discharged cargo at other key hubs enroute. Concession-holder at Gothenburg, APM Terminals, is

already underway with its investment that will see the port being able to provide a total annual capacity of 2 million TEU by 20192020, an increase over current levels of 1.7 million TEU per annum. The investment plan of SKr250 million will introduce new straddle carriers to increase current yard capacity by 25% and build a second container yard, along with introducing automated truck gates.

However, there was a serious workforce dispute in 2017 resulting in a large volume decline, as WSP’s Wray notes: “The 2017 total of 643,000 TEU was down on the 2016 figure of 798,000 TEU and well below the decade-high throughput of 900,000 TEU seen in 2012. There was a recovery in 2018 back to 753,000 TEU, but the prolonged labour dispute has severely impacted the port with throughput effectively falling by 30% and there could be potential for the expansion to slip back.”

It is also important to assess the deepening of the River Elbe and its impact on the Port of Hamburg. Although this port is not located directly in the Baltic Region, it has a strong, traditional role as a hub port for serving Russia and the Baltic market, but lack of water depth on the Elbe restricted larger container ships calling from Asia. The dredging project has finally been approved and will enable the port to again target the larger vessels, although the time taken to commence has allowed other ports to advance their credentials for serving the Baltic region.

In addition to St Petersburg (see Russia, With Love panel), Kaliningrad is an example of a Baltic port where there has been recently development activity. In February 2018, dredging works commenced to deepen the port and approach channel to 14.5m and are expected to finish in 2020-2021. The investment comprises straightening of port entrance to reduce wind and tug boat restrictions for large vessels, dredging of approach channel to 17m and KKT basin to 14.5m. Longer-term there could be construction of an Outer Port - a conceptual plan to reclaim deepsea container terminal (130 ha.) outside of the northern port entrance with development cost of €1.0bn is known, but unconfirmed.

In addition, the Southern Port development (adjacent to the KKT facility) is another conceptual plan to reclaim and expand southern area. It is very ambitious. The construction costs associated with the plans are significant. Wray at WSP believes that there are better options. “There is room for further expansion within the existing port at considerably lower costs,” he confirmed, before adding, “The Klaipeda Outer Port project must be considered unlikely to be developed within the next 10 years. The development would then be subject to feasibility Figure 1: Development of Total Container Volumes at Gdynia and Gdansk, 2009 – 2018 in ‘000 TEU

Source: WSP

20 | SEPTEMBER 2019

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AREA SURVEY: BALTIC SEA

studies to value economic rationale of the project vs. capacity needs in the country.”

Of more relevance is Mediterranean Shipping Company requesting the Klaipeda Smelte facility to increase its capacity to 800,000 moves per annum – the equivalent of 1.2 million TEU - by 2020. The transhipment share at this facility has increased from around 40% in 2017 to 65% currently, with MSC seeking to see it rise further to 80% over time. The main destinations for cargo being transhipped are St. Petersburg, Tallinn, Helsinki & Rauma. It is reasonable for the Port Authority to have offered its major shipping line customer, MSC, highly competitive port dues and handling rates to entice the cargo to be moved.

To satisfy the requirements of MSC and larger ships calling to the facility, a number of improvements are ongoing. For example, the lengthening of the STS crane rails with an additional 100-150m in northern direction and new ship-toshore cranes with an outreach of 21 containers (due in September 2019) and 10 additional RTGs will be added.

Collectively, the terminal capacity increases from 450,000 TEU per annum to 800,000 TEU per annum.

Longer-term, Smelte is planning to add a third berth of 347m (with 16m draft) by reclaiming the northern corner of the terminal. This new berth will be equipped with 4 ship-to-shire cranes, capable of handling 22,000 TEU vessels, while raising the terminal capacity from 800,000 TEU per annum to 1.3 million TEU per annum. Approval by Port Authority for the project is pending, but the development could be operational by 2022.

These developments indicate that Klaipeda is likely to be a transhipment hub for the Baltic Region. This could impact existing hub ports, especially Antwerp where MSC already has a largescale terminal operation. It further confirms that a hub port in the Baltic area is a feasible prospect moving forward – though St Petersburg could see fewer direct calls with larger ships, with feeder activity remaining more prevalent moving forward.

So, this provides a good summary of the position from a competing port perspective, but what about the shipping lines?

There are a number of deep-sea container liner services calling to the Baltic market, including a combination of both global operators and major Alliance groupings. WSP’s Wray provides clarity, “The 2M Alliance of Maersk Line and MSC are calling to the region with ships up to 20,500 TEU, while the OCEAN Alliance carrier group is also utilising very large ships of between 18,000 TEU - 21,000 TEU. So, we have scheduled regular calls from some of the bigger container ships calling in the region, most notably at DCT Gdansk (2M Alliance’s AE10 service) and also to both Gothenburg and Aarhus (on the 2M Alliance’s AE5 string).”

There are other deep-sea services using slightly smaller vessels than the largest as part of the Asia-Europe trades, with MSC the dominant shipping line service provider offering a further five services (in addition to its participation in the 2M Alliance). In fact, the operator links the Baltic region with the Mid East using ships in the 8,500 TEU to 13,000 TEU range, with Gdynia and Klaipeda on the rotation and a further two MSC services operate to/from Australia and provide regular scheduled calls at Gdynia and Klaipeda, with vessels in the size range of 5,500 TEU to 8,000 TEU. These deep-sea services are all in addition to feeder options that also exist into the region from the main transhipment hubs in North Europe. The limiting factor in the past had been quality of port infrastructure, notably water depth and crane sizes. The position is now changing, with DCT Gdansk, for example, enabling the larger ships. It means that any port wishing to compete for this tonnage will need comparable infrastructure.

Feeder services remain an important connection between the large deepsea port and the smaller outlying facilities in serving the Baltic region. The “hub and spoke” process is wellestablished in the Baltic region.

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There are currently an estimated 77 scheduled services that can be classified as feeder that are serving the Baltic region.

This comprises a mix of specialist feeder ship operators, plus the regional activities of the main deepsea liner companies undertaking this method of serving the Baltic, including: 5 Unifeeder - a North European and Baltic specialist feeder operator, making 8,000 ports calls at 46 ports annually, using 32 vessels. Acquired in 2018 by DP World. Currently involved with 13 services in the region 5 X-Press - world’s largest common feeder operator, global activities, with 100 vessels and 5.6 million TEU carried annually.

Operates as part of seven regional Baltic services.

5 Seago - now part of Sealand, which is an AP Moller Maersk company. Offers 20 services in Europe & Mediterranean, with 11 directly to/from the Baltic.

Clearly, all major hub ports (Antwerp, Rotterdam, Hamburg, Bremerhaven, Gdansk etc) see a significant number of connections to the Baltic region - this is not surprising, based on their established roles in serving the markets in Russia and Scandinavia.

The sizes of ships employed can vary, from smaller units of under 600 TEU up to the largest vessels of 3,600 TEU. However, the more typical size of feeder ship currently being used is in the 1,500 TEU - 1,900 TEU range and likely to expand too, especially as larger vessels call to transhipment hub ports with bigger exchanges.

There are several key conclusions that can be drawn relating to the Baltic region and port activity – especially for the transhipment business.

The emergence of DCT Gdansk (in particular) is relevant for the German ports which have previously represented the tradition role of serving the Baltic region via transhipment.

Ports in Scandinavia and Russia represent former spoke markets to the largescale hub facilities (especially in Germany) and have seen some direct calls, such as in Gothenburg (as port infrastructure has improved).

Current port investment is largely focused on building out existing projects, rather than Greenfield developments, as well as projects to improve access to the largest vessels.

The level of infrastructure currently available is already substantial, with deep water, largesized terminals, long container quays and many cranes – however the availability of the container volumes moving warrant the largescale port offerings.

8 Gothenburg sees direct calls from Maersk Line and hopes to be over recent workforce issues

8 Steve Wray

SEPTEMBER 2019 | 21

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AREA SURVEY: RUSSIA

REBOUNDING RUSSIA RETURNS FROM PAST VOLUME VOLATILITY Container penetration in Russia remains relatively low, but 2017 and 2018 were good years for its ports 8 Strong volume growth at St Petersburg since 2016

“Russia remains a strategically important market to serve.

Access can be gained via Russia’s own ports, but also through other gateway and hub options,” stated Steve Wray, Associate Director of WSP’s Maritime Advisory team.

Total volumes have certainly been volatile at St Petersburg, as Figure 1 shows. Decreases between 2014 and 2016 due to weak economic conditions occurred, but stronger increases for 2017 and 2018. In comparison, the dip caused by labour issues in Gothenburg and growth in Klaipeda show both ports still well behind Russian activity.

First Container Terminal is offering increases from improved operational efficiencies as it reaches maximum build-out, with expansion occurring at Berths 49-50 (Petrolesport) where 365m of quay and equipment is part of a 5.5ha project giving around 375,000 TEU to the container space available. From 2020 Fourth Container Terminal has known, but unconfirmed, timescales to add 1.05 million TEU. Ust-Luga is developing a Phase II expansion, whereby annual container capacity will reach 2.2 million TEU per annum, with a reported third phase, bringing total capacity to 2.9 million TEU per annum – however, timescales remain unconfirmed.

There remain, of course, access issues to the port due to the weather with ice ensuring that non-ice-strengthened ships are unable to reach terminals for up to six months per year, leaving Russian hinterlands targeted through other Baltic countries.

The current estimated capacity at the port of 3.1 million TEU is

due to increase to 4.7 million TEU by 2020 and eventually reach 6.6 million TEU. However, the ports will hope that no weakening economic uncertainty will negatively impact the positive traction gained in 2017 and 2018.

Figure 1: Total Volumes at St Petersburg, Gothenburg and Klaipeda 2012-2018, in ‘000 TEU

Source: WSP

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SEPTEMBER 2019 | 23

DREDGING: FINANCING

ALTERNATIVE DREDGING FUNDING TO THE FORE

Photo: Jan de Nul Group

Economically viable dredging projects that have languished from a lack of funds could now get a kick start, as Stevie Knight discovers

Work on Guayaquil’s access channel “won’t cost a penny to either the Ecuadorian government, the people, or the city,” former Mayor Jaime Nebot has told media.

This assertion is despite cutting out the rock creating the infamous ‘Los Goles’ bottleneck while deepening the section directly outside the port to 12.5m, installing an up-to-date VTS – and keeping it all in the very best condition.

The reason for this confidence is a 25-year concession picked up by Jan de Nul, who will pay for it by exacting a toll of US$0.62 per gross registered tonne on all passing ships. A basic calculation confirms that a 55,000grt vessel call will generate US$34,100 in revenue when the project is completed and the charges are levied.

This size vessel translates into a typical 5,000teu box ship and it is possible to further assess the impact of these costs on the overall transport logistics chain. “Although this approach channel charge may put around US$10 to US$15 on a container arriving at Guayaquil, by looking at the map you can see it stands to save each one a truck journey of between 120km and 180km over routing to other ports,” says Johan-Paul Verschuure, Technical Director at WSP. While he envisages bigger ships calling at larger facilities, Verschuure believes Guayaquil will still successfully retain most of its cargo, even when the new channel means, “it can deliver containers directly to the doorstep of a large part of the Ecuadorian population - and keep large numbers of trucks off the roads” There is one further point to make here. The toll could be detrimental to vessel calls from lightly-loaded big ships as the extra charge makes the channel fee relatively expensive for the

24 | SEPTEMBER 2019

8 Pay-as-you-go contracts could kick start a number of projects

number of boxes onboard. For example, the biggest vessel to call at the port to date, mv CMA CGM Cochin, would have had to pay more than US$70,000 for the privilege of seeing Guayaquil again.

A TEMPTING IDEA The idea of a toll is tempting others. Santos Port Authority's CEO, Casemiro Tércio Carvalho, is looking for solutions that could alleviate the port's substantial dredging costs.

Interestingly, he has already called for 'donations' of surveys and investigations as “a democratic way of structuring the concession so that the bid adheres as closely as possible to the needs of the port and community”.

That might be considered a new definition of 'democratic', and further, getting the figures to line up could be challenging given the substantial remit. This appeal already appears to embrace VTS and channel marking, mooring/turning areas, environmental monitoring and remediation, tug services and emergency response alongside the dredging.

Competition will help and Mr Carvalho already appears to be supportive of Chinese-sourced bargains. “Both the relatively cheap prices offered by Chinese companies and the new equipment they put in our local market are very important,” he recently told the Global Times.

IS SIZE IMPORTANT? The opportunities outlined thus far are not limited to big ports in developing countries. So, could smaller projects also benefit?

Mr Verschuure underlines the business model here is scalable and a port engaging in an appropriate draft revision

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

We say YES to safety Care for people is in the heart of our organisation. All people working at Van Oord, employees and contractors alike, are expected to be proactive in meeting their responsibility to work safely. Only by working together we can reach our ultimate goal of eliminating all personal injuries and guarding the environment. Stimulating safety leadership is strongly embedded in our safety programme: say YES to safety. vanoord.com/safety

DREDGING: FINANCING

Photo: Jan de Nul Group

may also find the gains are much deeper, more fundamental “than just adding extra capacity to the port’s land side... as an extra couple of metres could change the size and the type of vessels it handles” which in turn will make a difference to both its hinterland and market share.

However, predictions must demonstrate that there will be enough, stable traffic to swallow both the cost of the dredging and the necessary due diligence studies. In short, “dredging companies will be exposed to more market risk than they are currently used to”, says Verschuure, adding, “so they will require a return for shouldering this particular burden. As a result, bids will rest on far more than cubic metres and ship utilisation.”

Arriving at a viable business case may require a delicate balancing act. On the one hand, the deal must avoid unrealistically high traffic forecasts from the dredging company which will result in too low a fee to recoup the costs. However, if they offer too bearish an outlook (if the bid is not undercut by a competitor) it could result in an unfeasibly expensive charge for local shippers.

Verschuure adds that a port authority should always conduct its own analysis. “Run the projections and figures as if you were doing the dredging yourself, and if the answer you are getting is a long way from what’s being offered, be wary, you need to make sure you’re working from the same assumptions and expectations,” he warns.

However, ports in development hotspots may have a harderto-evaluate issue on their doorstep - competition. Guayaquil is no exception here. Attracted by the region’s potential, DP World is creating Posorja, a deep-water coastal port that will almost certainly grab some of the cargo flow.

This inevitably impacts what’s on offer. However, a spread of proposals will tend to arrive at a realistic assessment and a competitive bid.

Therefore, Mr Verschuure advises, “put in the effort to generate interest, make sure you have a good selection of highquality dredging firms involved in the tender process... but also, budget for a proper, unbiased consultation so you are on the right track before you start – it’s not a lot in the overall scheme of things and it does make a difference to be well prepared”.

It was never envisioned that the (necessarily low) user fees would absorb the US$180m price tag, so the two governments agreed to help cover ongoing costs and capital returns. Partly because neither country was wholly responsible, the binational commission did not deliver on its promises and by 2003 the seven-partner consortium was owed US$11m. As a result, all but one cut their losses and walked away. Jan de Nul finally picked up the pieces and gained a very lucrative contract – the renegotiated terms included a longer, 18-year concession to make up for the lack of a cash enticement.

EQUITY There are other ways of structuring the contract if a toll-based concession is not an option and state aid is not forthcoming. For example, offering the dredging company a stake in the port itself. This is an approach that’s being followed by Georgia’s mega-project at Anaklia, which will have a 16m access channel and where Van Oord is to provide ‘equity in kind’ to the value of US$5.2m, according to the development consortium.

Bringing additional finance to the table in this way could be the trigger some projects need, although it also has challenges.

Firstly, as it is not a direct monetary exchange “you both must agree on what is a fair value for the stake” points out Mr Verschuure, and that can be difficult to agree upon.

It also requires a further layer of due diligence for both parties.

For the dredging company, this will entail not just looking at the technical aspects, but at the port’s whole business case including the country’s macro-economic situation. For its part, the port will have to consider the implications this relationship holds for future dredging contracts and securing competitive pricing.

Photo: William Alden [CC BY-SA 2.0]

FILLING THE GAP It should be pointed out that levy-based concession figures do not always immediately add up. But if they do not, there are other options available which could close a hole in the finance.

“Governments may be willing to step in with some funds themselves if it can be seen to benefit the entire logistics chain,” says Mr Verschuure.

However, it must be noted that these sources are not always reliable. Take one of the earliest toll-charge dredging projects, a long traffic channel that aimed to open-up Parana port in Argentina and Nueva Palmira, Uruguay to Panamax-sized ships.

8 The ‘concession’ business model is scalable, but predictions have to demonstrate there will be enough, stable traffic to swallow both the cost of the dredging and the necessary due diligence studies

26 | SEPTEMBER 2019

8 Debt financing via dredging companies leads to a much greater focus on environmental compliance, “and is a good way to bring in international standards and expertise”

LONG-TERM GAINS Despite the challenges, a great deal recommends these types of deferred finance. There is a guaranteed draft for the term of the concession and it offloads a lot of onerous documentation and project work.

Further, if the dredging companies attract the debt financing themselves, they will have to adhere to the stringent requirements attached to the rules set by the financial institutions, which means there will be a “much greater focus on, say, environmental compliance” says Mr Verschuure, adding that “it is a good way to bring in international standards and expertise”.

Finally, he believes interest in this kind of deal will rise. “Not all port authorities have the experience or backing to attract international finance, whereas the dredging companies are doing it all the time... and they can deliver the whole package.”

If they catch on – and there’s reason to believe they may these pay-as-you-go contracts could reshape the industry’s physical and financial landscape.

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

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MULTIMODAL: EMERGING MARKETS

CHINESE FUNDING ISSUES ON RAILROAD TO NOWHERE? In emerging African countries numerous projects have been advanced without sufficient planning and cost/benefit analysis, as Iain MacIntyre reports

8 The rail network exists and is used by passenger trains, but serving freight remains an issue

Kenya now has a brand new US$3.6 billion rail infrastructure network in place. However, the “railroad to nowhere” is not operating as part of a vital cost-reducing trade link to landlocked Uganda, as originally intended. Following completion of the 470-kilometre section from Mombasa on the Indian Ocean coast to the Kenyan capital of Nairobi, the Chinese source of funds abruptly ceased.

The project had been heralded under Chinese President Xi Jinping’s “Belt and Road” (BRI) initiative. Yet China, which is understood to now be the single-largest financial of infrastructure projects in Africa, has had an apparent change of focus and is withholding the US$4.9 billion required to complete the second half of the connection into Uganda.

It is understood the Chinese Government has concerns over the financial viability of both the completed section and, especially, the unfinished section. Moreover, on a larger scale, there appears to be doubt as to whether Kenya and other poorer African nations can successfully service such huge loans.

A March 2018 report published by the Washington-based Center for Global Development stated: “China’s BRI hopes to deliver trillions of dollars in infrastructure financing to Asia, Europe and Africa. If the initiative follows Chinese practices to date for infrastructure financing, which often entail lending to sovereign borrowers, then BRI raises the risk of debt distress in some borrower countries. We conclude that eight countries are at particular risk of debt distress based on an identified pipeline of project lending associated with BRI.” With the railroad currently ending about 120 kilometres west of Nairobi, the Governments of Kenya and Uganda are reportedly now planning to forge a completion, of sorts, through reinstating an old Colonial-era rail line.

Meanwhile, in a directly-related development, the completed Mombasa-Nairobi railway is understood to have created considerable congestion at the Nairobi Inland Container Depot.

28 | SEPTEMBER 2019

This Kenya Ports Authority-operated facility is regarded as a major hub for serving the Nairobi market, so issues with respect to congestion and inefficiencies show the need for thorough planning in advance to ensure that connecting developments can ensure there are no bottlenecks in the overall system.

Neighbouring Tanzania is another African country that has ambitions to capitalise on international cargo movement opportunities to and from Uganda and other land-locked nations in the Continent, through its Port of Dar es Salaam.

In pursuit of this goal, a significant standardisation project was recently completed between the national rail operators of Tanzania, Zambia and the Democratic Republic of the Congo.

Among other developments, Africa’s first bullet train is to be developed between the western Tanzanian town of Isaka to the Rwandan capital of Kigali. Expected to cost US$1.3 billion for Tanzania and $1.2 billion for Rwanda, the rail line is expected to be completed in 2022.

However, although the country’s railway development plans appear to be advancing positively, it remains to be seen how these will successfully link with the half-completed expansion of capacity at the Port of Dar es Salaam. This US$420 million project, which is due to be finished at the end of next year, was urgently required to handle burgeoning cargo volumes – and railway upgrades will only add further traffic to the equation.

Such pressures have not been alleviated by the recent stop/start nature of overall Tanzanian port development plans – notably the suspended US$10 billion Bagamoyo Port project.

When halting development of what would have been the largest gateway in East Africa in June, Tanzania President John Magufuli reportedly accused the project’s Chinese backers of “exploitative and awkward” terms that would “only be accepted by mad people”.

Meanwhile, the 750-kilometre railway between the port in Djibouti and the Ethiopian capital of Addis Ababa – reported to

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

MULTIMODAL: EMERGING MARKETS

8 African countries need co-ordinated planning for freight activities

have cost between US$2.5 billion and US$4 billion â&#x20AC;&#x201C; has succeeded in significantly reducing this journey time from three days down to just 12 hours.

However, serious issues surfaced in development of the completed project in early 2018, with media describing it as â&#x20AC;&#x153;poorly executedâ&#x20AC;? and rampant with expensive planning mistakes.

To date, it appears the railway is not yet operating at a cost that is sufficient to enable land-locked Ethiopia to gain competitiveness in international trade. The position no doubt being exacerbated by the fact that, as a major source of revenue for Djibouti, the port is arguably highly priced.

Highlighting the point, it is understood that transporting a 20-

IADC SEMINAR

foot container of garments from Ethiopia to Germany costs 247% more than it would from Vietnam and 72% more than from Bangladesh. No doubt Ethiopia will be seeking to streamline its internal logistics systems and eyeing other potential external port gateways as a means of developing more competitive trading opportunities.

Ultimately, fellow Africa countries are advised to look carefully into, and learn from, the experiences to date with these and other multimodal developments throughout the Continent. It would appear success is dependent on detailed and co-ordinated planning, with patient consideration of full financial implications and the cost to a country versus the potential benefits.

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PORT PROFILE: MEDPORT TANGIER

NEW APMT FACILITY IS MORE THAN A TRANSHIPMENT HUB Morocco is rapidly establishing itself as one of the most important transhipment terminals in the world, according to APM Terminals (APMT), which opened its MedPort Tangier terminal in June 2019.

The US$800m development, APMT’s second terminal at Tanger Med, has opened with annual capacity of 3.3 million TEU per annum – a figure that is planned to reach 5 million TEU per annum when all phases are complete.

MedPort Tangier will use both conventional and advanced technology operations, according to operator, APMT. The terminal provides 1,200 metres of quay, with potential to increase this to 2,000 metres. The present three berths have depth alongside of 16 to 18 metres and are served by 12 remote-controlled super-post-panamax ship-to-shore cranes - the world’s largest double trolley STS cranes, they each weigh 2,500 tonnes, have a height of 144 metres when boomed up, and have an outreach of 72 metres, with twin-lift capability.

“The remote-controlled cranes will provide the fastest, safest and most efficient loading and unloading services to the newest ULCS with capacities of more than 22,000 TEU,” says APMT, which means that Maersk Line ships of this size will become regular callers at the APMT terminal.

The terminal is accessed by automated gate lanes – three in, two out – and has a 60-hectare container yard. A total of 42 automated RMGs are deployed across 21 container yard blocks and there are 30 shuttle carriers. APMT says MedPort Tangier will operate as a transhipment hub dedicated to Maersk Line and its partners. “The new facility will support Tanger Med Port to increase its annual throughput capacity to 9 million TEU per annum, helping to improve Moroccan connectivity and further support global trade,” says a spokesman for APMT/Maersk.

Currently, APM Terminals Tangier, MedPort Tangier and Algeciras operations form APMT’s ‘WestMed Hub Terminals’.

Eurogate is the other major operator at Tanger Med and it is also poised for expansion. The present Eurogate Tanger Container Terminal, the most southern facility in its network, provides 812 metres of quay with depth alongside of up to 18 metres and a terminal area of 400,000m2. In 2018, the terminal handled 1.38 million TEU, which was just 0.5% lower than in 2017.

“The excellent geographical location of the port directly on the Strait of Gibraltar, and thus serving the major east-west container shipping trade lanes, has prompted Eurogate to continue investing in the location by participating in a joint venture for the construction and operation of Container Terminal 3 (TC3),” says Eurogate.

TC3 is located to the west of Eurogate Tanger’s present location. Eurogate is partnering with Moroccan port operator Marsa Maroc and Contship Italia to deliver this terminal, which is due to start operations in the middle of next year.

Tanger Med Port Authority is responsible for the management and infrastructure development of the Tanger Med port complex, including the construction and maintenance of breakwaters, dredging and berthing facilities. It is also in charge of coordination of the port community and ensuring the reliability and performance of services provided.

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

Picture: APM Terminals

APM Terminal’s new MedPort Tangier terminal sits within the expanding Tanger Med port.

As Felicity Landon reports, Tanger Med’s role is about more than just transhipment

“Tanger Med is a world-class port with excellence in connectivity – we provide a highly efficient gateway to and from Morocco, with our unique and strategic location on the Mediterranean providing easy access to markets. We also manage some Free Zones in Morocco and are developing ‘logistics corridors’ between these and the port, says Ridouan Boulaich, Digital and IT Director at TMPA. Tanger Med is Africa’s number one port and one of the region’s major container transhipment hubs, says Mr Boulaich – but it is not only about containers. The port handles vehicles, ro-ro cargo, hydrocarbons and general cargo, as well as being a major ferry passenger facility. Offering the first Free Zone in Africa, Tanger Med also constitutes an industrial hub for more than 900 companies with a total annual export turnover in excess of €7,300 million in various sectors, including automotive, aeronautics, logistics, textile and trade. It is perhaps no surprise that international manufacturers are starting to utilise the facility, with Renault, Siemens, Lear, Valeo, Furukawa and Hands Corporation now undertaking operations at the Tanger Med industrial hub.

TMPA operates its own Port Community System (PCS), which provides paperless, centralised transactions, integrated with Customs, for imports, exports and freight management, with modules covering e-payments, track-and-trace, reservation of transport and other functions. Earlier this year, TMPA joined the International Port Community Systems Association (IPCSA).

TMPA’s Port Community System has been designed to improve the administrative and operational efficiency and enhance the competitiveness of the whole Tanger Med port complex, says Ridouan Boulaich. “We have set ourselves the challenge of expanding our PCS to provide services across the port logistics sector and beyond. This includes expanding the reach of our platform beyond the geographical scope of the port – into areas such as the automotive and agricultural industries, and to provide links between the port and the Free Zones.”

The expansion beyond core container transhipment activities looks set to increase at Tanger Med.

8 MedPort Tangier can facilitate the largest vessels

SEPTEMBER 2019 | 31

REGIONAL SURVEY: NORTH AFRICA

NORTH AFRICA: BREAKING DOWN THE BARRIERS TO TRADE The contrasting fortunes of North Africa’s states are reflected in their port and trade operations, as Felicity Landon reports

8 Situation at Libya’s ports remains extremely volatile

The removal of barriers, increased connectivity between nations and further infrastructure development are key to Africa’s economic emergence, said DP World’s group chairman and CEO, Sultan Ahmed Bin Sulayem, earlier this year.

Speaking at the Africa Emergence Conference in Dakar, Senegal, he said: “We do believe in the viability of Africa and we believe in investing in the continent; during our investment in Senegal, we improved efficiency and volumes 135% in ten years.”

Mr Bin Sulayem described the removal of trade barriers as being particularly important. “In Africa, tariffs are 50% higher than in Latin America and Asia. Intra-regional trade in Africa is only 12%, while in Europe, Asia and Latin America it is over 50%.”

The African Continental Free Trade Area could be a vital step.

As well as boosting intra-Africa trade substantially, it is expected to set the scene for a customs union within a few years. The AfCFTA entered into force in May 2019 and its operational phase was launched in July this year. It will be governed by five operational instruments: rules of origin; an online negotiating forum; monitoring and elimination of non-tariff barriers; a digital payments system; and the African Trade Observatory.

The FTA has been described by African Union chairman Moussa Faki Mahamat as one of the instruments for continental integration in line with the objectives of the Abuja Treaty and the aspirations of Agenda 2063. “The speedy entry into force of the AfCFTA is a source of pride for all of us,” he stated.

It is worthwhile to put this massive free trade area into perspective. It could establish a market of more than 1.2 billion people, with combined gross product of more than $3 trillion.

The agreement commits countries to removing tariffs on 90% of

32 | SEPTEMBER 2019

goods, with more sensitive items to follow and economic trade experts say it could increase intra-African trade by 52% by 2022.

North Africa, of course, is a region of huge contrasts when it comes to trade aspirations and trade realities – ranging from Morocco, home to the vast Tanger Med complex and the sophisticated PortNet Single Window/port community system, to Libya, where continuing civil war means that safety and security advice to port users can change dramatically on a daily basis.

At the end of July 2019, the Libyan ports of Sirte and Derna both remained closed, but others – including Tripoli, Ras Lanuf, Benghazi and Zawiya – are open for business.

“The situation in Libya remains extremely volatile and vessel operators should contact local ship’s agents and P&I correspondents for the most up-to-date information on Libyan ports,” North P&I Club reported. “Our local correspondent reports that the violence in Tripoli remains on the outskirts of the city and that the port remains open.”

It advised that vessels calling at Tripoli should make arrangements with agents well in advance, due to the unrest.

Meanwhile, there have been reports of Turkish nationals being detained by the Libyan army in the east of the country.

“Correspondents recommend that Turkish flagged vessels or vessels with Turkish crew do not call at eastern Libyan ports without advising the local agent of the situation prior to arrival.”

Gard P&I Club also advised ships that ‘as the security situation is unstable’, they should stay in close contact with their local agent to obtain the most up to date and reliable information.

“According to the correspondent, all working ports are currently considered safe for ships and crew. The situation is,

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REGIONAL SURVEY: NORTH AFRICA

however, subject to change and ship operators are advised to warn their ships’ crew of the volatility of the situation and to carry out an assessment of the risks involved prior to entering or transiting Libyan waters.”

Gard also warned ships to avoid navigating in the coastal waters of the closed ports and to declare the intended voyage and type of cargo to be discharged or loaded to the local agent well in advance of arrival at any Libyan port.

The US Coast Guard has determined that ports in Libya are not maintaining effective anti-terrorism measures and has advised ships to “proceed with extreme caution when approaching all Libyan oil terminals, particularly in eastern Libya, due to potential violent and criminal activity based upon recent attempts by armed, non-state actors to engage in illicit export of oil.”

Also at the end of July 2019, Libya’s National Oil Corporation declared force majeure on crude loadings at the Port of Zawiya, due to a ‘valve closure halting crude oil supply’ from the Sharara oilfield to the port. This was the second outage at the field in ten days, reported oilprice.com – staff from NOC subsidiary Akakus Oil Corporation had ‘attempted to reopen the valve but were prevented from doing so by a local armed group’.

The contrast between the chaotic situation in Libya and the trade facilitation systems in Morocco could not be greater.

PortNet is a sophisticated National Single Window/port community system which has transformed Morocco’s import/ export activities and continues to expand its influence.

First deployed at Casablanca by the National Ports Agency eight years ago, PortNet has more than 31,000 customers and provides paperless services to around 36,000 users throughout Morocco.

In January this year, the NPA and PortNet launched a series of new services designed to ‘make the import/export supply chain practical, integrated and digital’. They include paperless heavy packages declarations, waste declarations, berthing requests and import/export manifests. Meanwhile, there have been updates to position assignment requests, and to dangerous goods, special goods and export manifest declarations.

“These practical services are part of the digital transformation of the ports’ approach piloted by the National Ports Agency in partnership with PortNet and the port community serving exporters and importers,” says PortNet general manager Jalal Benhayoun. “In doing so, every effort will be made to support economic operators in the adoption of these new paperless services,” he concluded.

In Algeria, recent weeks have seen port congestion at the Port of Bejaia, resulting in CMA CGM giving notice of a port congestion surcharge of US$200 per TEU, effective from August 1st, 2019, to cover extra operational costs incurred from service disruptions.

Elsewhere, Bejaia Mediterranean Terminal is operated by Portek, which holds the concession in a joint-venture with the Port Company of Bejaia and the Algerian Port Authority. The terminal has maximum capacity of 300,000 TEU per annum and has 500 metres of quay with 12 metres depth, equipped with two quay cranes. It also has a dedicated installation for refrigerated containers, with electrical supply and monitoring services for up to 500 reefer boxes.

In early July 2019, BMT issued a statement saying that in order to cope with ‘the exceptional situation of the extension of the waiting stays in the harbour’ for container ships, it had proceeded jointly with the port company to implement an action plan comprising ‘a series of urgent and operational measures’ to reduce the number of ships waiting.

Just over a week later ‘as part of the continuous improvement of the quality of service at the container terminal’ and to cope with the long waiting periods, it announced: “We would like to inform our valued customers and partners of our commitment to ensure full container removal operations on Fridays starting Friday, July 19, 2019.”

8 Sultan Ahmed Bin Sulayem: “In Africa, tariffs are 50% higher than in Latin America and Asia”

Melilla’s Expansion Hope The Spanish autonomous city of Melilla, on Africa’s north coast, is pinning its economic hopes on a massive expansion of its port.

Central government funding is confirmed for the €300 million development, which involves a 25-hectare reclamation project and will effectively create a whole new harbour, but the port authority is awaiting some very specific environmental approvals. This is because the port area provides a home to thousands of Mediterranean ribbed limpets

34 | SEPTEMBER 2019

(Patella ferruginea), a species in danger of extinction and specifically named in the EU’s Habitats Directive.

The limpet population is mainly on the port’s present outer breakwater and this habitat would be destroyed if the breakwater was simply absorbed into the new area that would be reclaimed from the sea. The solution is to create the extension as a standalone ‘island’, separated from the present port by a wide channel,

with old and new ports connected by a bridge. The new berths will provide 18 metres depth alongside.

As well as cargo handling operations, the new space will accommodate industrial, logistics and added-value activities, all of which can benefit from Melilla’s unique tax status. Melilla’s authorities predict that the development will provide a significant boost to the economy and create more than 3,000 direct and indirect jobs.

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

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CONTAINER HANDLING: ADRIATIC

ADRIATIC EXISTING PLAYERS STRENGTHEN THEIR HAND Established container handling centres in the northern Adriatic – Koper, Trieste and Rijeka – are all busy adding new capacity while Venice also has an ambitious plan

8 Work on raising the annual capacity of AGCT’s intermodal rail yard to 360,000TEU/yr is well underway

The port of Koper has commenced work on a near 100 metre berth extension which will raise the length of the container handling quay to just under 700 metres and lift annual capacity from around the million TEU mark to 1.5 million TEU/yr. Yard area will also be expanded by 24,830 square metres. Matching quay and landside container handling equipment will be installed. The project is part of a planned €235 million port upgrade project which has to-date included dredging and railway construction works. €6 million has been provided by the EU as part of its NAPA4CORE project (the connecting Europe Facility funding instrument). Project completion is scheduled for early 2021.

Also integral to Koper building its capacity is the construction of a second rail track along the Divaca – Koper railway line. This is a central part of a scheme also intended to deliver 20 kilometres of new access roads with the overall cost put at in excess of a billion euros. The project is now in the implementation stage with the financing approved in January this year. Getting the financing in place has, however, not been an easy journey. It has been the source of some considerable debate between Slovenian politicians and has seen some setbacks. At one stage the Hungarian government committed to contribute €200 million to the new rail track but with the change of government in Slovenia last year Hungary had a

36 | SEPTEMBER 2019

change of heart and turned its attention instead to firming up arrangements with the port of Trieste as a main gateway for its maritime trade.

Construction works on the new rail track, which combined with the existing track will give the port of Koper a double track connection, are scheduled to take place in the period 2019 – 2025.

TRIESTE – SCALING UP The port of Trieste is also moving on expansion plans. The Trieste Marine Terminal (TMT), in which MSC has a 45 per cent stake, has an approved plan to raise terminal capacity from the current level of 900,000TEU to 1.2 million TEU/yr. This will involve a 100m quay extension and the addition of new quay cranes, also with the objective in mind of catering for larger vessel sizes than the 14,000TEU maximum that can currently be handled.

In 2018 TMT achieved a throughput of 626,767TEU, up 14.7% on the previous year. The terminal reports increasing traffic to central and eastern Europe as a major driver of volume with traffic to Germany and Hungary particularly notable with 70 per cent and 130 per cent increases respectively.

In the background there is also the agreement signed by the Port of Trieste with the China Communications Construction Company (CCCC) which a number of parties have speculated

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

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CONTAINER HANDLING: ADRIATIC

may lead to port development. Presently the agreement provides for small and medium sized Italian companies to sell products in China and to “facilitate infrastructure development in central Europe.” This agreement has, however, attracted criticism from western European interests and will no doubt be subject to the vagaries of the ever-changing Italian political scene.

RIJEKA – AGCT EXPANSION TRIGGERED AGCT, in close cooperation with the Rijeka Port Authority, has drawn up plans for a two-phase dredging scheme. The first phase is fully approved and involves dredging 130m of quay to extend 15-meter depth to a continuous 438 meters of quay, thus enabling the berthing of vessels with a LOA of up to 400m.

The work will be completed by mid-2020. Financing for the infrastructure works has been provided by the EU and PRA with ICTSI undertaking all the associated necessary investment in quayside and landside handling systems as well as the increased coverage of terminal I.T. systems.

The second phase development at AGCT will see additional dredging alongside the 438 metres of quay to a depth of 16,5

New Super Post-Panamax cranes will be installed, with an outreach of at least 24 rows, as part of the berth upgrade and complementing this new rubber tyred gantries and prime movers introduced on the landside

metres. This project, when implemented, will make AGCT the first terminal in the northern Adriatic able to berth vessels of up to 20,000TEU capacity with a LOA up to 400 metres and beam of 59 metres.

New Super Post-Panamax cranes will be installed, with an outreach of at least 24 rows, as part of the berth upgrade and complementing this new rubber tyred gantries and prime movers introduced on the landside. Work is also now advanced

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8 System upgrade is a big driver of the current round of capacity expansion in established northern Adriatic container terminals

CONTAINER HANDLING: ADRIATIC

on upgrading AGCT’s on-dock rail terminal to offer an annual capacity of 360,000TEU/yr. This upgrade will include two new rail mounted gantries over four rail lines and will be completed in the last quarter of 2019.

Total yard capacity will rise to 600,000TEU/yr.

Rijeka, like Koper achieved a single digit increase in container volume in 2018- AGCT as part of ICTSI, a listed entity, does not release throughput statistics but it is known that the terminal upgrade will provide ample surplus capacity to cater for longterm growth. Koper achieved a total volume of 988,499TEU in 2018, an eight per cent increase, and clearly its expansion plans also provide adequate capacity into the medium term at least.

VENICE – AMBITIOUS Container traffic at VECON, the PSA subsidiary company operating in the commercial port of Venice, is estimated to be running at around the 350,000TEU mark with available capacity at this terminal put at 420,000TEU. Upping annual capacity could be achieved via further equipment installation.

There is also the ambitious project launched by VGate Srl for a multi-purpose terminal, with a significant container handling capacity, to be located 2.3km offshore of the port of Chioggia and possessing a direct connection to land. The scheme is ambitious to say the least – many parties believe the economics are simply not workable and the scheme will never see the light of day.

ENOUGH FOR NOW As Table 1 confirms total annual throughput capacity at established container handling platforms in the northern

Table 1: Current and Projected Annual Capacity (TEU/yr) at Established Container Handling Terminals, North Adriatic Facility AGCT Rijeka Koper

Current

Planned

% Increase

400,00

600,000

50%

1,000,000

1,500,000

50%

Trieste (TMT)

900,000

1,200,000

33.3%

VECON

420,000

420-500,000

19%

TOTAL

2,720,000

3,800,000

40%

Adriatic will rise by in the order of 40 per cent within the near term – by end 2025. This is a significant uplift in capacity but interestingly is as much about system upgrade – to accommodate larger vessels and increased rail utilisation – as catering for traffic increases.

Trieste stands out as the star performer in terms of achieving positive traffic growth – double digit for two years running. The majority of players, however, consistently register more modest volume increases and it is apparent that the planned capacity increases at established load centres will be sufficient to cater for demand to end 2025 at least.

The traditional history of the northern Adriatic is that big numbers have been forecast but the reality of these is that they have never been achieved. There remain good reasons to be conservative in volume forecasting and certainly there is plenty of ‘food for thought’ when it comes to the proposition of launching entirely new container platforms in the region as mooted with the Zagreb Pier project in Rijeka and the scheme for the new Venice offshore terminal.

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SEPTEMBER 2019 | 39

HEALTH & SAFETY: CRANE KNOCKDOWNS

MITIGATION STEPS NEEDED AGAINST CRANE KNOCKDOWNS Dave MacIntyre investigates the impact and procedures when a crane is knocked down and considers common causes, plus the consequences that may follow

8 Equipment replacement costs and berths out of action are just the immediate results of a crane knock-down

Port cranes crumpling after being hit by ships are spectacular examples of berthing procedures that have clearly gone wrong – and there are regular examples of such incidents occurring on a global basis. For example, a ferry crashing into a crane in Barcelona, a crane collapsing after being nudged in Vancouver, a crane being knocked over at Jebel Ali Port and three cranes being hit by a ship at Semarang, Indonesia, after the ship’s engine failed, have all occurred recently.

The subsequent impact of such an incident can include equipment replacement costs, berths out of action and prolonged insurance and legal ramifications. So, what can be done to prevent them from occurring?

Vector Port and Transport Solutions is a UK based consultancy and its principal, master mariner Andreas Nigulis, says that for any berthing procedure it is critical all parties are fully co-ordinated, including harbourmaster and/or port authority, pilots, tugboats and mooring staff. The position of ship-to-shore cranes should be defined, including ‘no-go’ positions such as the ends of the intended berth where the flare or stern of ships may impact cranes.

“In consequence, cranes can be moved out of the intended berth or placed at the centre of it,” says Capt. Nigulis. His experience confirms that a lack of communication between the stakeholders and insufficient training is often a cause of accidents, along with engine failure.

“It is the onus of each individual party to make sure that procedures are established to mitigate risks. For example, it is in the terminal operator’s interest that equipment is ‘protected’ against collision and that management is aware of the measurements to be applied. This comprises the positioning of the equipment, bollards to be assigned to the vessel and the communication with pilots and harbourmaster. According to the port’s organisation – private or public – we may have a

40 | SEPTEMBER 2019

marine department or, in the latter case the harbourmaster, to establish berthing and unberthing rules which may include the position of the cranes,” he explains.

EXPENSIVE INCIDENTS John Gibbons, senior consultant with Specialist Crane Services, says cranes knockdowns are very expensive and the role of tugs is crucial.

“Tugs are an issue because there is no insistence for them to tie-on. This should not be discretionary. If a tug is called in to ‘push’ they should still tie-on in case circumstances change, but often this does not happen. Often, one tug is called to save money when two are required even when it is ruled to be a twotug-per-vessel port.”

Mr. Gibbons says there are fundamental rules regarding parking cranes when berthing and unberthing: “If possible, park the cranes completely out of the way. If a vessel is being introduced or removed from between two other vessels, cranes should be parked in the shadow of the vessels on the neighbouring berths. If it is not possible to park the cranes completely out of the way, then they should be parked in the middle where the hull is parallel away from the flared bow or overhanging stern. The boom should be in the parked position in the latches, the trolley should be parked, the crane should be powered down and there should be no personnel on the crane.”

Nevertheless, accidents can still occur when vessels have been impacted by the wind, especially for

8 It is the onus of each individual party to make sure that procedures are established to mitigate risks, says Andreas Nigulis

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

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HEALTH & SAFETY: CRANE KNOCKDOWNS

lightly-loaded and high-sided car carriers. Mr. Gibbons says rule changes instigated for good reasons have unexpected consequences, such as those discharging ballast in port. To save their owners cost, vessels discharge in deep water and come into port light, and can then be suddenly caught by a gust of wind.

“Claims, of course, are the eventual result of incidents and everyone on both sides are encouraged to say nothing. There is no common-good consideration regarding what is learned or could be learned,” he adds.

The legal ramifications can be complicated and lengthy.

Matthew Wilmshurst, senior associate of maritime law specialists HFW (Holman Fenwick Willan), says that although the main legal issue relates to who is going to pay, the immediate concern is making any impacted crane safe, minimising disruption to operations and keeping the terminal working, plus, of course, the repair or replacement of any damaged infrastructure.

While liability is clear it is still no guarantee that quick settlements will be achieved, as Wilmshurst confirms. “If a party responsible to a terminal operator has someone else it can make a recourse claim against (e.g. a vessel owner against a charterer), then it might not want to admit liability until it has an admission down the chain.”

Claims, of course, are the eventual result of incidents and everyone on both sides are encouraged to say nothing. There is no common-good consideration regarding what is learned or could be learned “Equally, claims are large, some parties will refuse to admit liability to give themselves additional arguments to deploy in any eventual settlement,“ he adds, before qualifying that from a legal perspective the “biggest battleground tends to be quantum rather than liability. The terminal operators will be attacked by vessel interests claiming that they have not taken steps to mitigate their losses or (with the benefit of hindsight) should have made other decisions.”

For this reason, he advises that “terminals need to document every recovery step and thought process very well to help with recoveries.”

INSURANCE VIEWPOINT From the insurance viewpoint, Laurence Jones, risk assessment director for the TT Club, agrees many incidents have their root cause in human interaction.

“Damage to the ship itself, the berth and quay cranes often occurs, as well as potential for pollution and, of greater concern, bodily injuries to ship crew and port personnel. The advent of larger tonnage and the consequent ‘cascading’ affect to smaller ports mean that the risk is real in most locations,” he states, although he also feels that there are some parts of the ship’s arrival and departure that generate a greater cause for concern.

“The two key areas of heightened risk are ship manoeuvring in the port and the process of mooring. Manoeuvring exposes the ship to collisions, while mooring can result in injuries or fatalities to crew or mooring line personnel. All the factors contributing to such incidents can be classified as either ship issues or port/terminal issues.”

Mr. Jones says good communication between the master and the pilot is essential for safe berthing and the entire bridge management team bear responsibility to ensure that all actions

42 | SEPTEMBER 2019

are consistent with the passage plan and the safety of the ship.

He confirms: “There has been evidence of incidents occurring because the master was new to the port and/or the pilot not previously experiencing the size or type of ship call at the port.”

Another factor is engine and/or propulsion equipment failure because it is a common cause of collisions, meaning that maintenance systems and procedures should be established and followed, including strict adherence to the ship’s Safety Management System.

In more detail, all ropes, wires and links used for mooring should have a certificate and these need to be clearly labelled and kept in an easily-accessible file ready for inspection. Plus, all winches should be included in a ship’s Planned Maintenance System.

It is important to have sufficiently trained personnel to be able to moor the ship safely. Certain ports are installing vacuum and magnetic mooring systems that can improve safety by removing personnel from mooring lines.

Mr. Jones says in many ports bollards may have been in place and potentially unchecked for decades: “There is currently no international standard to ensure that bollards are sufficient in number, quality and capacity, as well as suitablylocated for the tonnage likely to call at each berth. Ships need to have appropriate dialogues with the ports.”

While most port authorities have procedures to only allow berthing and unberthing in certain wind conditions, recent experience suggests that unfamiliar and erratic weather conditions are becoming more prevalent. “All ports should implement emergency procedures to send ships to sea in advance of severe weather, do not wait for an incident before developing an emergency plan. The risks of ships’ mooring lines breaking during severe weather conditions are substantial and only partially mitigated by the availability of additional mooring lines or tugs on standby, albeit these should form part of the emergency response plan,” warns Mr. Jones.

8 Legal ramifications can be complicated and lengthy. Ports must document every step

8 Matthew Wilmshurst, senior associate of maritime law specialists HFW (Holman Fenwick Willan)

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

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CARGO HANDLING: HEAVY LIFT VESSELS

KNOCK-DOWN OR FULLY ERECT – A TERMINAL VIEW There are two main methods of delivering quay and yard cranes, either fully-assembled or in knock-down form. Barry Cross investigates which option terminal operators prefer and why

8 ICTSI prefers fully-erect delivery so as to minimise disruption to operations

Colombian port operator, SPR Buenaventura received all of its new quayside gantry cranes fully assembled, explains Gustavo Florez, VP for Strategy and Infrastructure. “We simply don’t have enough space to erect cranes on site,” he says.

When a delivery is scheduled, Buenaventura only has to set aside a 150-metre area on the quay into which the crane can be positioned. “That’s the only disruption we face,” he stresses, pointing out that the crane is effectively already in position and can commence operations from the very spot it came ashore once commissioning is complete.

All of Finnish terminal operator Steveco’s cranes have been delivered fully-assembled. Heikki Jääskeläinen, who is the head of Steveco’s repair shop, Suomen Satamatekniikka Oy, says there are several reasons for preferring this method of delivery, but like Buenaventura, confirms that there is no need to set aside a special area in the terminal where crane parts will be stored, or for the crane to be assembled. “It is also a much faster way of subsequently getting cranes into service,” he agrees.

One major international terminal operator contacted by Port Strategy said that it generally prefers to receive new cranes not only already assembled but also fully tested at the manufacturing site prior to shipment. “This helps us ensure quality,” said a spokesperson. “Furthermore, receiving cranes and assembling them on-site safely requires the terminal to have the space to do so and may require an area to be set aside as a “factory”, which implies additional regulations.”

One UK-based container terminal operator confirmed that

44 | SEPTEMBER 2019

that, “Receipt fully-assembled reduces the overall time of delivery and commissioning. However, there is not a lot of difference in price between fully-assembled or knock-down formats, but the former involves less preparation, particularly in respect of planning and site supervision.”

Significantly, since 2008, ICTSI has only received one shipto-shore crane in knock-down or semi-erect form. This involved two out of a batch of four cranes acquired for CMSA (Mexico), which were shipped thus for purposes of vessel stability. “The crane manufacturer didn’t have its own vessels and had to use a third party,” recalls Johan Swart, ICTSI’s VP Global Engineering Equipment Maintenance. “In this case, once the cranes were discharged, the boom and girder were strand jacked into their final position.”

In terms of RTGs, ICTSI, has never received knock-down or semi-erect units, although in some instances, RTGs are shipped in what is called “leg-shift configuration”. This is where RTG legs (engine-side) are shifted and bolted to the middle of the girder, on specially fabricated flanges. This configuration is used for reducing the RTG footprint when the company is taking delivery of a large shipment of ship-to-shore and RTG cranes, with TecPlata, in Argentina, being a good example. Here, there was the simultaneous movement of four gantry cranes and nine RTGs on a single vessel.

“Some crane manufacturers offer a discount for knock-down or semi-erect delivery as the vessel used for shipment is often significantly smaller,” explains Mr Swart. “However, in my opinion

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CARGO HANDLING: HEAVY LIFT VESSELS

Crane manufacturers, such as ZPMC, use their own fleet of specially modified vessels and have been shipping fully-erect cranes for over 20 years. As a consequence, they are extremely competent it is never easier to receive semi-erect cranes as on-site erection and commissioning is more complicated and significantly longer than that of fully erect cranes. Furthermore, there are many items to consider prior to on-site erection, including sufficient paved area or hard-standing for the duration of works, a reputable mobile equipment supplier being available in the region, as well as reliable and competent sub-contractor availability.”

According to Mr Swart, preparation work starts very early on in the crane manufacture process (which can be a 14-16-month project) as the crane design is dependent on which format the cranes will be shipped as. If it is to be semi-erect, the design often utilises bolted flanges, while for fully-erect welded flanges are used.

ICTSI reviews and approves the crane manufacturers design typically within the first 6-8 weeks of the project. “We maintain a presence at the crane manufacturer’s facility from the cutting of the steel plate right up until shipment,” says Mr Swart. “In addition, we review and approve sea-fastening calculations and drawings, as well as the discharge method to be used, which involves approving the jacking and wheel loads. We typically assist the crane manufacture with local approved sub-contractors and mobile equipment companies for required discharge, removal of sea-fastenings and the commissioning works.”

In terms of how quickly cranes then enter service, he says this would be four to six weeks for a ship-to-shore crane and 10 to 14 days for an RTG, although for RTGs shipped in leg shift mode a further 10 days are necessary.

Mr Swart is adamant that fully-erect units will always be preferred by ICTSI, albeit with four caveats. If the price differential was significant then knock-down would be considered, as it would be if ample space to erect the cranes was available. Time for completion would also not have to be a limiting factor and there would have to be no or minimal interruption to commercial operations. “Crane manufacturers, such as ZPMC, use their own fleet of specially modified vessels and have been shipping fully-erect cranes for over 20 years,” he says. “As a consequence, they are extremely competent.”

Over the past 20 years, the loading and discharge method of the equipment from ships has not changed significantly.

Although there are various techniques, the principle is the same when discharging, namely sliding, skidding or rolling gantry cranes off the vessel onto the quay. On very rare occasions, floating cranes can also be deployed.

According to Mr Swart, advances in technology have not had a significant impact on the crane loading and discharge method because the operation itself is very simple. “Receiving new cranes can be disruptive to terminals as berthing space has to be blocked for approximately 7-10 days for discharge, or longer if more cranes are to be delivered. This prevents customers from berthing and being serviced,” he states.

In addition, a certain amount of quay space is required for gantry crane commissioning, with four units needing more than 100 metres plus a further 50 metres of safety exclusion zone.

While fully-erect RTGs take up less space and are less disruptive, they still occupy yard space that could otherwise be potentially used for operations. “Air-draft must be considered prior to delivery of any crane (especially gantry cranes).

However, to date, this has not been an issue for ICTSI, and we have not had to modify crane design or delivery method because of such restrictions,” he adds.

Interestingly, ICTSI will always consider shipping equipment fully-erect, regardless of the type of project (refurbished, relocation or new). The company has shipped MHCs for relocation in knockdown form, but Mr Swart says it is unlikely it would consider this for refurbishment or relocation of gantry cranes.

8 Continuing good capacity exists to transport yard cranes fully assembled

8 Ilkka Annala

What do manufacturers think?

Ilkka Annala, who is VP Intelligent Cranes Solutions at Kalmar, says that for sea ports, shipping cranes fully-assembled is a convenient way to deliver them, whereas at intermodal terminals knocked-down delivery is a must. He points out that Kalmar’s Chinese Operation has its own port/jetty that can be used for direct international shipping and therefore the company is happy to undertake either knocked-down or fully-assembled crane deliveries based on individual customer requests.

“Typically, delivering fully assembled cranes is slightly more expensive than it

46 | SEPTEMBER 2019

would be in knock-down form, but that rule does not apply in all cases,” he says.

Furthermore, Mr Annala confirms that when delivering fully assembled cranes, the time spent at the customer’s site is shorter but the factory time is respectively longer. So, there isn’t a big difference in total delivery time between the delivery types. “When delivering fully assembled cranes certain part of the testing can also be done at the factory, if the customer is willing to accept that.”

In answer to the question about whether more customers are now asking for fully assembled delivery of cranes, he says that

Kalmar is not seeing any big difference compared to previous years.

As for shipping line capacity, there are differences, he says. “There seems to be very good capacity to transport yard cranes fully assembled, but when delivering fully assembled ship-to-shore cranes we sometimes see a shortage of equipment.”

Irrespective of the way in which a Kalmar crane is delivered to a terminal, Mr Annala says that, in terms of pre-delivery work that must take place at the terminal, there is no big difference between delivering cranes fully assembled or knocked-down.

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

CARGO HANDLING: HEAVY LIFT VESSELS

Although some manufacturers and terminal operators believe that fully-erect crane deliveries are the way forward, others remain more cautious.

Trevor O'Donoghue of Liebherr Container Cranes Ltd takes a quite distinct view, pointing out that, “On-site erection or knocked down delivery can be considered an advantage in some customer locations.

This is especially true in countries where they are trying to promote employment for local communities, so the local spend on hotels, car hire and local labour is seen as a big advantage.”

Furthermore, in cases where contracts specify fully-erect delivery, Liebherr typically ships the cranes in knock-down form and erects them at remote sites nearer to the final operational site.

“This delivery method minimises stresses associated with long sea voyages and eliminates any ambiguity with respect to the remaining operational life of the crane,” he says.

Academic studies undertaken following long sea journeys involving fully-erect crane deliveries seem to reinforce Liebherr’s delivery philosophy.

“What has been discovered is that, once some cranes have been put into service, they

ELIMINATING AMBIGUITY

8 Delivery method can minimise stresses

have developed unexpected cracks in both booms and girders. Attempts have been made to explain this away by claiming the cranes had been deployed in handling materials they were not designed for, but strain gauge measurements have ruled that out as the cause.”

Worryingly, the cracks may well be

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

caused by the extended ocean transit element of the delivery.

“During the sea voyage, cranes are tension-lashed, braced and strut supported, which means they effectively use up part of their fatigue life prior to being put into operation. In other words, they can’t be considered to be entirely brand new,” explains Mr O'Donoghue.

“To date, there has been very little discussion in the industry about this potential problem.

However, by delivering our own ship-to-shore cranes in knock-down form and then erecting them as close as possible to the operational area, Liebherr can justifiably claim that the cranes it delivers are definitely and unambigiously “new”,” he says.

During the sea voyage, cranes are tension-lashed, braced and strut supported, which means they effectively use up part of their fatigue life prior to being put into operation

SEPTEMBER 2019 | 47

CONTAINER TRANSPORT: MULTI-TRAILER SYSTEMS

TRICKS OF THE TRAILERS SHOWS BENEFITS OF MULTIPLE BOX MOVES John Bensalhia investigates how multi trailers and multi trailer systems can benefit ports in terms of cost, safety and efficiency

8 Multi Trailer systems offer economies of scale – increased efficiency and lower cost

When it comes to moving cargo at ports, time is money.

Increasingly multiple container handling systems are being deployed with multi trailer systems at the forefront of this growth.

Multi trailers are the answer. With manufacturers continuing to push the scope and capability of the multi trailer, new systems and innovations continue to reduce transportation times, while boosting safety and efficiency levels by some margin.

Aptly, for the sector, there is more than one type of multi trailer. Martin Clive-Smith, BLOK Container Systems Ltd, explains that the range of multi trailers includes single double stack, single road and rail trains and now BLOK Trailers (which are double width double stack trailers).

“Multiple container handling is the obvious step away from the single container operations which have grown naturally from road and rail width limitations,” says Mr Clive-Smith. “To get the full benefit of multiple container trailers, you also need to look at multiple container spreaders. This combination promises very substantial benefits, both commercially and sustainably.

Multiple trailer operations enable a port to use tandem spreaders from RAM, Bromma, Stinis etc. and BLOK Spreaders.”

The BLOK Trailer comes with a spreader adaptor called BLOK Spreader that instantly clips on (or off) any spreader to allow two or four empty containers to be handled at once.

Mr Clive-Smith does, however, add that large trailer moves need to be balanced with ship-to-shore cranes and processing of the containers on the land side. “If a port wants to turn ships around faster and increase its productivity and turnover, then multiple container handling on cranes, quayside and marshalling will do it and at low cost.”

The BLOK Trailer can carry 4 laden TEU or 8 empty TEU with one driver, and one tractor within a 5-metre wide vehicle – the same as a straddle carrier. “The BLOK Trailer jigs or locates

48 | SEPTEMBER 2019

containers in the perfect location so speed of pick up and put down with a tandem lift, twin lift or BLOK Spreader saves 15% of crane time per move,” explains Martin Clive-Smith. “With a BLOK Trailer, you can lift and lower four containers at a time with the BLOK Spreader very rapidly handling at 120 containers per hour straight from ship to BLOK Trailer and reverse.”

He further states, “Substantial gains are likewise achieved with laden containers in Tandem and Twin with the BLOK Trailer.”

Automation is one of the most important watchwords of today's port technology, and this applies to the multi trailer concept. Gaussin's AMTS Automotive Multi Trailer System, for example, provides solid reliability and powerful performance for fast, efficient port operations.

Capable of carrying between two and four containers, the AMTS has been designed with short turn radius areas in mind – for U-turns, the distance required is a mere 12 metres. There is no risk of deviation, as the principle of the AMTS works with steering axles. This means that the passage of the final trailer in the run is exactly the same as the first. The Gaussin system is available in two options. One, with a tractor and one without a unit (MTS), which can be linked with a regular terminal tractor.

Buiscar offers a reliable, easily accessible Multi Trailer System, which is an effective method of transporting cargo. Comprising a trail-like formation of up to five trailers, Buiscar's system can be pulled by a lone terminal tractor. Each of the trailer trains offers an accurate, mechanical steering mechanism, as well as a braking system.

The steering system ensures that each of the trailers follows the route of the terminal tractor, ensuring an accurate solution that can be used at nearly every port. As well as accuracy, the MTS system offers a flexibility for different ports because it can work for different lay-outs. With a reduction of movements, the system can handle longer journeys.

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

CONTAINER TRANSPORT: MULTI-TRAILER SYSTEMS

In terms of efficiencies, the Buiscar system helps ensure lower operating costs at ports, as less personnel and equipment are required. Furthermore, the risk of possible holdups from cranes and handling equipment is eliminated, thanks to the system's efficiency.

One of the main operational benefits of port multi trailers is the lower cost of operation. Martin Clive-Smith explains that 20% empty containers handled in just a horizontal tandem lift onto the BLOK Trailers saves 10% of STS crane time, with 60% saving 20% of STS crane. “If that is translated into extra port business, then the gains are $200,000 per year per crane.”

Mr Clive-Smith adds that higher utilisation of STS cranes means increased ROC, lower overheads and better business potential.

Plus, multi trailer usage results in substantially reduced traffic on the quayside. “The ships are turned around much more quickly, allowing more slow sailing while still maintaining sailing schedules, saving over $2billion per year in fuel cost and 3% pollution for the container industry with no cost to the shipping lines.”

One of the largest areas of improvement that any port operator can make is the effective utilisation of equipment and labour assets and this is clear to see with the ship to shore operation.

“Over the years, various studies and reported statistics have concluded that the greatest potential for improving container crane performance lies in reducing the time it takes in container positioning,” explains Richard Lambert, Managing Director, International Terminal Solutions Ltd. “In fact, some have concluded that as much as half of a crane's cycle time is spent - or wasted - on load positioning. When it comes to positioning the spreader over the truck chassis, ITS take a slightly more conservative view than some, but still conclude that by shaving a mere six seconds from each ship load movement cycle means the average gross moves will move from 35 to over 37 moves per hour – an immediate productivity improvement of 6%.”

Mr Lambert explains that trailer positioning systems (also known as chassis alignment systems) can provide substantial reductions in non-productive cycle time. “ITS engineers have been implementing these types of systems since 1986 and to meet the demands of the next generation of larger and faster STS cranes, ITS is pleased to announce a major new upgrade to TPS, the ITS Truck Positioning System.”

The ITS system has been proven in the working terminal

Reduced overheads, relocating labour from quayside to landside, more sociable working hours, a safer environment, happier shipping lines due to faster turnaround – all advantages that can be delivered by multiple container handling and transport systems environment and provides a strategic advantage by consistently positioning the truck at the right place at the right time, before the spreader arrives. “The system prevents time wasting through shuffling the tractor while the STS crane operator waits for the correct trailer alignment.”

The Trailer Positioning System provides a simple, inexpensive, solution to the problem of container / trailer positioning. Richard Lambert comments: “Our TPS system provided under our PortAutomation.com brand is a result of a study of various system offered in the current TPS market. We were initially surprised to find that some of the systems were not actively used because their sophistication meant they were too difficult to set up and then maintain operational accuracy in the harsh conditions of a busy terminal. Some of the systems also

50 | SEPTEMBER 2019

distracted the truck driver or required the crane operator to input, set and re-set metrics to allow the system to function correctly.”

“Our view is different, we believe the operators should be free to concentrate on the business of moving containers and that the system should be simple, reliable, maintainable by the on-site staff, and automatic in every way,” he concludes.

Allan Jones, ITS’ Head of Business Development adds: “With ever increasing vessel sizes, productivity of moves over the quay is of greater concern for terminal operators, which is driving a growing need for this type of system. Increasing pressures on the terminal staff to improve productivity means you do not have the luxury of tweaking and constantly adjusting the systems. They should just work, and continue to work reliably with minimal intervention.”

“As part of our upgrade, we decided to continue with the well proven reliability our system offers, and ensure the system was easy to maintain and simple to use. Our focus was to modernise the functionality for dual container handling and the utilisation of green low energy technology. This allows us to provide TPS at a much lower cost than most other systems in the market and make it very easy to justify the ROI business case.”

With regards to safety, Martin Clive-Smith says that port multi trailers mean that fewer men are in the danger zone of the quayside and there are also fewer damage incidents.

Looking ahead, Mr Clive-Smith sums up what the future holds for ports using multi trailers. “Reduced overheads, relocating labour from quayside to landside, more sociable working hours, a safer environment, happier shipping lines due to faster turnaround, help meet IMO pollution targets, growth of multiple container handling.”

8 BLOK Container Systems moves multiple boxes

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

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INSIGHT FOR MARINE TECHNOLOGY PROFESSIONALS

MULTI-TRAILER SYSTEMS

THE ROUTE AHEAD - MULTI-TRAILER DEMAND CONTINUING How are multi trailer tractors and trucks putting ports in the driving seat?

John Bensalhia looks at some of the more notable developments in this sector

8 Multi-trailer tractors commercialising fully-electric drive-trains

Findings from a recent Transparency Market Research report backs up the continuing demand for multi trailer tractors. The 'Global Trailer Terminal Tractor Market - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast, 2019– 2027' report makes for interesting reading with regards to the current and future status of this sector.

One of the main headlines of the report is a projected figure of more than $650 million attributable to the global trailer terminal tractor market by 2027. In fact, there is an expansion rate during the 2019 to 2027 period that is forecast to be above 3% per annum, with continued orders from specific regions, such as North America which has an expected growth rate of more than 2% per annum between the specified time-frame.

Another area is ability to constantly innovate the equipment by the major manufacturers, such as Kalmar, Mol CY and Terberg, while the development of the electric trailer terminal tractor is also crucially important because it is a trend that is firmly in line with the burgeoning growth in alternative solutions over traditional fuels.

The Transparency Market Research report highlights two important advantages of electric trailer terminal tractors, low emission levels and easy maintenance (due to fewer moving parts). As a result, not only is the electric trailer tractor expected to see continuing demand growth in the 2019 to 2027 period, it is also expected to further ensure interest in this type of product increases.

A notable case in point is Kalmar's recent fully electric version of the Kalmar Ottawa T2 terminal tractor. Utilising modern lithium-ion battery technology and a fully electric power train, this electric terminal tractor is a vehicle that is proven to be easy and cheap to maintain – while of course, producing zero emissions. For periods in between use, the machine can be charged by an on-board inverter unit, plus the tractor driver can

52 | SEPTEMBER 2019

tell when the battery needs to be charged, thanks to a battery monitoring system that shows the exact status of the battery charge.

Gina Lopez, Kalmar's Vice President, Terminal Tractors, offered further insight. “With the regulations relating to vehicle emissions becoming increasingly strict, more and more businesses are seeking alternatives to diesel-powered container and trailerhandling equipment,” she confirmed.

The most notable technological innovations and developments of multi trailer tractors have, according to Ms Lopez, been: “The commercialisation of the fully electric drive-trains, demonstrations of advanced charging technologies like DC fast-charge and inductive charging and demonstrations of automated tractors.”

Terberg multi trailer tractor engines also carefully consider impact on the environment, with the current implementation of the Stage V engine range, as Frank Oerlemans, Terberg's Export Manager, confirms. “As we build our multi trailer tractors (based on our normal range of tractors), they always profit immediately from the continuous improvement in our product range. At this moment we are implementing the Stage V range of engines, which we believe is the best solution for our environment.”

In more detail, Terberg uses the Buiscar heavy duty draw bar coupling to connect the trailers with an automatic connection for the brake system and the electrics. The driver can stay in the cabin when he connects to a MTS train. “This connection has been renewed recently,” explains Mr Oerlemans. “The renewal can be found in the way the coupling is mounted to the tractor chassis. This allows for a better alignment with the trailer drawbar for a problem-free connection and disconnection of the trailers at all times. Furthermore, the electric part is now connected to the Canbus technology in the tractors.”

The multi trailer tractor offers a wide choice of benefits for ports. The Transparency Market Research report notes that trailer

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

MULTI-TRAILER SYSTEMS

terminal tractors have a number of advantages, including good visibility, drive-line layout and manoeuvrability. With benefits like these, ports can gain considerably during daily operations of cargo transportation.

The Mol CY Multi Trailer Truck, for example, affords greater levels of efficiency. Designed to pull up to five trailers, the Mol CY Multi Trailer Truck can accommodate a maximum weight of 350 tonnes, saving port operators extra time when transporting cargo. The truck also benefits from automatic coupling, which allows for mechanical, pneumatic electrical coupling with trailer trains.

Gina Lopez of Kalmar says that the main port-related benefits of multi trailer and trailer train tractors are flexibility and cost savings, especially “in use of the equipment and cost of a tractor relative to more expensive Over-the-Road vehicles and mobile cranes.”

Frank Oerlemans explains that the more trailers there are connected to the tractor, the more containers one driver can transport – meaning that the same job can be achieved but with less people. As well as this, Mr Oerlemans observes that MTS trains become more interesting when the distances are longer.

“There is always an optimum in the amount of TEUs to be handled per location. There are MTS trains from four up to 10 TEU available. In the Rail Service Centre in Rotterdam, they have used these MTS trains with four trailers (8 TEU) since 1993. They uncouple the trailers under the crane, so the driver does not have to wait for his MTS train to be loaded. This results in the best efficiency of the tractors and the drivers.”

With respect to safety benefits, multi trailer and trailer train tractors mean that there is no need for interaction with cranes.

“The main benefit is that inland transportation modes do not need to interface with the cranes which keeps non-port operated equipment outside of the quay,” says Gina Lopez.

Frank Oerlemans adds that the main safety benefits of today's multi trailer tractors are that there are a lot less people then working in the terminal. “With less people, the risks of accidents or injuries are also smaller. Driving with an MTS train does not allow for fast accelerations, thus making the job safer. This means that the job is always done with more care, especially because rushing and fast cornering is not possible. The steering system of our tractors is automatically limited when an MTS train is connected. The driver cannot steer by mistake into a corner that's too tight. All trailers have brakes, so emergency stops do not require more distance, compared to a normal short tractor trailer combination.”

With the Transparency Market Research report forecasting a positive future for the trailer tractor, it is unsurprising that these units continue to be popular. Electrical power and low-emission

solutions, along with high pulling weight capabilities and extra comfort and space for the driver, all contribute to continuing popularity. The potential for further development such as automation (see Box: Automatic Responses) affords further interest, as Gina Lopez concludes. “Commercialisation of advanced charging technologies and automation are very clearly coming in our industry in the near future.”

“For sure, in the case of Terberg, ports will keep on benefiting from the latest developments in the normal tractor range,” adds Frank Oerlemans. “Furthermore, it is likely that automated solutions will also find their way to the MTS tractors.”

8 Multi-trailers bring flexibility and cost savings

8 Ports benefit from latest truck developments

Automatic Responses Interest in automated trailer vehicles is growing. Several ports around the world have trialled driver-less trucks and tractors.

For example, Chinese robotics company, TuSimple, is planning to have 20 self-driving vehicles in operation at the Chinese Port of Caofeidian, home to a 300,000 TEU container terminal.

TuSimple is developing self-driving software and equipment which can be used with other manufacturers' trailer tractors and trucks, with the system capable of managing

54 | SEPTEMBER 2019

most driving tasks both independently and on a controlled-access freeway.

Meanwhile, Volvo's autonomous vehicle, a fully electric tractor unit called 'Vera', has been used to transport cargo from the DFDS logistics centre to the APM Terminals’ facility at the Port of Gothenburg in Sweden.

The ‘Vera’ vehicle operates via a central control centre, with links to a Cloud interface that can monitor important aspects of location, battery power levels and load content. The vehicle is designed to be

compatible with other trailers.However, the ‘Vera’ unit is only capable of driving at a speed of around 25 mph, and has been designated to handle more repetitive tasks over a shorter distance.

Clearly, automation continues to help drive the trailer vehicle sector forward. Driver-less vehicles can offer advantages for ports, such as higher safety levels, convenience and flexibility and with online access to the Cloud, a port’s operational team can monitor the vehicle's progress from a remote, safe, location.

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

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SEPTEMBER 2019 | 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.

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56 | SEPTEMBER 2019

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SEPTEMBER 2019 | 57

POSTSCRIPT

ANAKLIA PORT – END OF THE LINE?

The Anaklia new port project in the Republic of Georgia appears to be unravelling. Its commercial underpinnings have long been questioned by industry experts and now one of the main partners in the development consortium, Conti Group, has exited the project. Other problems are bubbling too, not least the accusations of Crony Capitalism

58 | SEPTEMBER 2019

The Republic of Georgia’s Anaklia port project looks to be foundering – one of the main partners in the development consortium, US-based Conti Group, has just announced its decision to exit the project while simultaneously the development appears to be threatening Georgia’s reputation as one of the world’s best investment environments (with a top 10 ranking in the World Bank’s annual “Doing Business” survey).

Allegations of crony capitalism surround the project, largely triggered by the Anaklia Development Consortium’s call for deep, and what many parties say is clearly undue, public sector involvement in what is supposed to be a private sector project.

The root of the current problems is, informed sources suggest, the original tender process for the project with questions raised about transparency and undue influence, and overall widely viewed as flawed by sector experts.

The Anaklia Port tender started in 2014. There were only two bidders – the Anaklia Development Consortium (made up of TCB, a Georgian bank, and Conti Group, a US engineering company) and a Chinese consortium (two Chinese engineering companies). This should have been a clear red flag. No established investors/operator active in the international portssector viewed this opportunity to be a viable project. So perhaps the Government of Georgia should have shelved the project at this stage and focus edits limited funds elsewhere?

Instead, in early 2016 the Georgian-US consortium of TCB Bank and Conti Group was awarded the tender – without any port experience and without the financial ability to carry out the project themselves. This was very surprising. Worldwide, large scale port tenders always require bidders to meet minimum sector experience and “financial strength” requirements to ensure they can handle a given project. This did not happen in conjunction with Anaklia port – for reasons still not clear. Down the track the negative effects of this are now obvious.

There were other tell-tale signs – notably, in the period since the award of the tender, TCB and ContiGroup missed all substantial deadlines to move the project forward. Conti Group’s overall faith in the project is perhaps signposted by its recent decision to

8 The exit of the US-based Conti Group from the Anaklia Port Project suggests the end of the line for a project which in its short history has done little for Georgia’s reputation as a centre of excellence for investment

exit it entirely? The problem TCB and Conti have faced throughout is not investing any major funds in the project themselves. Instead, they have looked to others to finance the project, but they have been unsuccessful in this quest.

RISK OF UNDUE STATE INVOLVEMENT To overcome what seems like intractable problems for a purely private sector initiative, the Consortium has attempted to increase the involvement of the Government of Georgia, to a point where the specter of crony capitalism raises its head. This approach has involved three key objectives each of which has a clear association with crony capitalism. They are: 5 Government to guarantee the financing of the project: TCB and Conti approached the Government to guarantee the loans made to TCB and Conti Group to build the port. So, in case TCB and Conticannot repay its loans, the Government of Georgia would step in and repay for them. The Government, rightly, refused this highly inappropriate demand.

5 Exclusivity: The Consortium asked the Government for an exclusivity period for Anaklia Port during which neither Poti nor Batumi ports would be allowed to construct deep-water quays. This would be clear and undue government intervention to favour one private party over others.

5 A “strategic” project: TCB and Conti initiated a process to lobby politicians in Georgia and the US, arguing that the project is “strategic”. Practically speaking, this is shorthand for “not commercially viable” and requiring government subsidies for “geo-political” reasons. It remains unclear, however, why Anaklia Port is geo-politically important given that Georgia already has a major international port only 30 kilometres away.

The short history of the Anaklia port project has been a chequered one. The chain of events to-date, and ultimately the questionable demand for the project, suggest it is time the Georgian authorities re-evaluated its worth.

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