The Hindu Business Line : Vessels carrying more boxes give berth to port problems

Container traffic is essential to the future of India's ports, given the domination of containerisation in international trade. The container traffic at Indian ports registered a 14 per cent CAGR during 1992-2005, while the increase in total cargo volumes at half this rate, that is, 7 per cent.

The National Maritime Development Programme envisages Indian ports, major as well as intermediate, handling 17.98 million TEU by 2013-14.

Two global trends that significantly affect the future of shipping and port systems are: The steady growth in the size of vessels, and the formation of carrier alliances and mergers. Currently, the world fleet of container ships aggregates about 3,710 with 8.7 million TEU capacity. Ship sizes also continue to increase. By end-2008, vessels of 6,000 TEU or more will constitute about 25 per cent of the global container fleet capacity. Of the 5,000 container ships likely to be sailing by end-2008, some 1,250 of them will be of 6,000 TEU or higher capacity. In 2003-04, the average Dead Weight Tonne (DWT) of a container vessel was 79,758 and the carrying capacity 6,425 TEU. This is expected to increase to 99,000 dwt and 8,100 TEU in 2007-08. By 2010, there will be many Suezmax container vessels with 12,000 TEU capacity, while by 2015 the size could rise to 18,154 TEUs (Malaccamax), according to American Shipper, a US consultant.

Saving cost

It has been demonstrated that a vessel of 12,000 TEU on the Europe-Far East route would generate 11 per cent cost saving per container compared to a 8,000 TEU vessel. Drewry Shipping Consultants point to potential cost difference of as much as 50 per cent between a Panamax ship of about 4,000 TEU and a mega post-Panamax 10,000 vessel. The major carriers will attempt to exploit further economies of scale, and deploy vessels of 10,000-12,000 TEU on major trade lanes. These ships are likely to call at only one or two ports in Asia.

A wave of mergers and acquisitions between 1996 and 1998 resulted in the share of the top twenty lines leap to 70 per cent. Over 80 per cent of total global capacity is now controlled by the top twenty lines. The share of the top 20 liner operators increased by 12.1 per cent, to 6.6 million TEU — 71 per cent of world's total container carrying capacity. AP Moller Group and MSC together account for 18.4 per cent of world's total containership carrying capacity.

Mergers help cut costs by way of decrease in the number of containers used, fewer empty containers to be balanced, rationalisation of agency network, integrated computer systems and, of course, volume purchases. Alliance agreements likewise lead to aggregation of cargo, increased service frequencies, and improved asset utilisation. Today, like the shipping lines developing unprecedented critical mass and concentration of capacity, global terminal operators within the container transportation industry worldwide are assuming increasing role.

Drewry Shipping Consultants project these global terminal operators will account for 61per cent of total world capacity by 2011, compared to 58 per cent in 2005.

The emergence of large vessels has double impact on international shipping: the ship size determines the competitive power in the shipping industry; it also becomes a significant criterion in determining the size and character of a port. The time-sensitive operating practices of mega-ships require full loading capacity so that they can efficiently call at major hub ports with minimal dwell time.

It calls for a concerted strategy first to provide for adequate capacity on busy rail corridors as also at terminals for efficient intermodal business, catering to both international and domestic requirements.

Challenges for ports

For ports to meet the challenges stemming from bigger vessels, they must invest a great deal in the improvement of terminal facilities and landside intermodal access. Accommodating mega vessels would imply some technical challenges to be met, such as 15,000 TEU vessels may require special berths that would allow them to be worked from both sides. In addition, mega hubs need to increase their depths so as to be able to handle vessels drawing 16 metre of draught and more.

The post-Panamax vessels now tend to be designated in such a way that most of the increased capacity is provided by increasing the beam rather than the length or draught of the vessels: the first post-Panamax vessels were actually shorter than the first Panamax vessels, and required less draught. Larger ships with faster discharge rates place increased stress on land transport interface, requiring better intermodal connections.

Diversion of distribution

Constraints on the business may well encourage direct services to local ports. In Europe and North America, roads are clogged with lorries carrying containers. There will be mounting pressure to divert distribution of containers from land to a waterborne option, and, of course, from road to rail. Well-established feeder operations in some areas will shrink, as volumes grow to the extent that large-scale direct services become viable, that the new ports of Gwangyang in Republic of Korea and Tanjung Pelepas in Malaysia and the trans-shipment hub emerging in Shanghai will all capture substantial transshipment volumes.

Provision of adequate rail-road connectivity of ports to hinterland locations further makes it imperative for port planning to be an integrated exercise, so that adequate cargo handling capacity is generated not only at the water front but also for the land-side evacuation of cargo.

(The author is a former Managing Director of Concor.)

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