Fierce competition, capitalising on Belt and Road and expanding capacity are the dominant trends for ports in Asia
Chinese ports dominate the global top 20 largest container ports and are focused on boosting their intermodal links and upgrading facilities.
Shanghai scooped top spot for the box port with the greatest volumes in 2017 – and for the first six months of 2018 achieved 24M TEU, up 4.4% compared to the same period last year.
Boosting its position is its Yangshan phase four terminal, opened at the end of 2016. It is an automated facility capable of handling 4M TEU per year. The yard cranes are driverless, as are battery-powered automatically guided vehicles that transfer containers between quay cranes and yard stacks. The port has also built up its links along the Yangtze River as part of its strategy to increase inland waterways traffic.
Ningbo is at second place in the top 10 largest container ports in China. It won a clutch of new services last year, including a new central and south China-Australia Express sling to be launched in August by Evergreen, Hyundai Merchant Marine and APL. In the same month, APL announced it was adding Eagle GO Guaranteed to its Asia-Europe service network that also includes Ningbo.
Shenzhen managed to retain third spot, but volumes only climbed by 1.1% for H1 2018. Plans to make it a free trade port by the end of 2020 will further boost its throughput. The port plans to cut its customs clearance time for cargo by one-third by 2020 through streamlining procedures and lifting some trade restrictions.
Behind Nansha’s fast growth
Its competitor Nansha was the fastest growing Chinese top 10 port in H1 last year, as volumes soared by 8.5% to 12.36M TEU.
Nansha is boosting its fast growth through tapping into the Belt and Road initiative and growing its rail infrastructure.
Nansha is part of the Guangzhou Port complex in South China, in the Pearl River Delta. As well as Nansha, the international container terminal, the complex consists of three river terminals.
Nansha’s Europe chief executive Johannes Nanninga told Container Shipping & Trade “Nansha was only opened in 2004 and in the last 10 years it has grown tremendously. We have added value by opening a free trade zone.”
The port directly competes with Shenzhen port, on the opposite side of the Pearl River Data. “The big difference is that when the port of Shenzhen was built, it was not such a big city but nowadays the city consists of 15M people.” Therefore, due to space restrictions the port will struggle to grow further. But Mr Nanninga said that by contrast, Nansha is built on partially reclaimed land and away from the city centre, so has space to expand.
Guangzhou port has risen to the sixth largest container port in the world for volumes, overtaking Hong Kong and Busan. Nansha’s volumes comprise 65% of Guangzhou’s total volumes. It has capacity for 20M TEU and last year handled 14M TEU, up by 12% compared to 2017. It can also handle 20,000 TEU box ships.
Mr Nanninga emphasised rail developments as being crucial to the port’s growth. “Nansha is in the very final stages of being connected to rail. This means that Nansha will be the only deepsea port in China that has an ondock railway station – all the other ports shunt between station and port. The trains will roll right into terminal.”
The port started work on the ondock railway in 2015, with work slated to be finished by mid-2020.
Mr Nanninga added “We will be connected to the national grid and connected to the Belt and Road programme. It is so important for ports in China to have this connectivity, as in the past a lot of manufacturing and production took place in the coastal areas, therefore the system was driven by loading trucks and bringing them to port. But lot of economic activity is countrywide now as manufacturers have moved to cheaper locations inland and in the west.” Rail is needed to access these manufacturing locations.
Furthermore, China is also becoming more of a consumer market so “better distribution channels are needed on the import side. We think a rail, barge and good road network is of paramount importance.” Indeed, Nansha is also connected to 50 barge/feeder networks.
As well as focusing on boosting connectivity in China, the port is concentrating on increasing its trade lane growth. As part of this, it appointed a managing director in the US and Mr Nanninga as managing director for its Europe trade in 2016.
He said “The Europe trade has grown very fast, especially to north Europe but to the Mediterranean as well, and there is also a very healthy export growth from Europe. We think there is room to add a new service between the Far East and Europe as our existing services have grown by up to 40% in volumes annually.”
While Nansha is trying to boost trade with the US, its exposure is more limited than other trades it is involved with – but this works to its advantage as it is less exposed than other ports in China to the US/China trade war. However, Mr Nanninga said that trade was “up and coming” in the transpacific.
He singled out the trade between Asia and the Middle East, India and Pakistan as being fast growing for Nansha.
Many other Chinese ports are also hoping to capitalise on the Belt and Road initiative. In March this year, Qingdao Port International and COSCO Shipping Ports established a joint venture – Ocean Bridge International Ports Management – to boost co-operation with the Belt and Road Initiative. A statement said “The two sides will make full integration of project development and management to realise the complementary advantages, raise the level of the operation and management of the terminal and achieve win-win development, to integrate into the Belt and Road Initiative.”
Fellow Bohai Bay port Tianjin is another Chinese port hoping to capitalise on the Belt and Road initiative: calling itself an “important hub” in the initiative, as well as in the China-Mongolia-Russia economic corridor and a strategic point of the Maritime Silk Road.
Port and carrier partnerships
Over in southeast Asia, the world’s second largest container terminal Singapore Port has concentrated on boosting its use of big data and building partnerships with container shipping lines. PSA Singapore (PSA) and Ocean Network Express (ONE) will form a joint venture company based at Pasir Panjang Terminal in Singapore.
Subject to regulatory approvals, the joint venture terminal is scheduled to commence operations in H1 2019 and operate four mega container berths with a combined annual handling capacity of 4M TEU.
ONE chief executive Jeremy Nixon said “Through this joint venture in Singapore, ONE will further enhance its terminal and vessel planning operations in an even closer co-operation with PSA. This will improve our service reliability and benefit our customers through better service levels.”
CMA CGM’s Ze Box and PSA unboXed have signed a memorandum of understanding to work on digitalisation projects.
Ze Box is CMA CGM’s corporate venture capital arm that invests in start-ups with innovations that bring strategic value to the CMA CGM Group, while PSA unboXed is PSA International’s external innovation and corporate venture capital arm.
A statement said the collaboration between CMA CGM’s Ze Box and PSA unboXed builds on the commercial partnership between CMA CGM Group and PSA International, such as the CMA CGM-PSA Lion Terminal in Singapore. Ze Box and PSA unboXed will collaborate through their corporate innovation programmes to address industry problems. They will leverage each other’s industry knowledge and experience in shipping and supply chain management to provide problem statements and real-life solutioning capabilities, to test ideas and to achieve better customer experience and operational efficiency.
PSA International group chief executive Tan Chong Meng said “Logistics is a team sport, and PSA and CMA CGM have different and yet complementary strengths in the global supply chain. This technological collaboration will add depth and diversity to our respective innovation efforts, as we seek to co-create meaningful and impactful solutions in the face of technological disruptions and changing customer needs.”
Singapore’s relationship with CMA CGM has affected Port Kelang in Malaysia. The port’s main container terminal operator Westports lost out after CMA CGM acquired Singapore-headquartered APL in 2016. One of the stipulations of the sale of state-owned APL was that CMA CGM also take on APL’s Singapore terminals, resulting in the line adopting a dual-hub strategy for southeast Asia and transferring a large number of Ocean Alliance volumes from Kelang to Singapore. But it is not all bad news for Kelang – its largest trade is now intra-Asia, which saw growth of 8% and accounted for 57% of its traffic in terms of trade mix in 2017. Its CT8 and CT9 terminal expansion programmes mean the port has future long-term capacity secured.
Other ports in southeast Asia are now capable of handling bigger vessels. Laem Chabang can now handle 14,000-TEU vessels after Ocean Network Express started phasing in its 14,000 TEU newbuilds into its FE5 service, which calls at Laem Chabang. There has been a 15% increase in vessel size to 16,000 TEU in Cai Mep. Drewry explained that there were now more direct calls at southeast Asia rather than feeders.
Why Australia needs a new container terminal
Australia’s Port of Newcastle has recently embarked on an ambitious diversification strategy to expand and grow its trade. One component of this diversification is developing a container terminal.
Container throughput at the port is currently limited. Most containers from within Port of Newcastle’s catchment area ship through ports in Sydney or Brisbane, adding to supply chain costs and reducing efficiency, said Port of Newcastle executive manager customer and strategic development Ian Doherty.
Mr Doherty said “The port is developing the most productive, fully-automated and low-carbon container terminal in Australia, growing to manage 2M TEU a year within 20 years. The port already has the land, a deep channel and rail connections able to bring 1.5 km trains right to the berth to load and unload containers. That is more than twice the length of the trains servicing Port Botany in Sydney.”
There is strong interest in this opportunity from a number of globally-significant port operators, demonstrating the economic viability of the port’s plans to diversify in this area. Australia must remain a genuine player in global trade.
Mr Doherty pointed out why the port wants to build the container terminal. “International shipping lines are increasingly… building ultra-large container vessels that carry 14,000 to 18,000 TEU. These ships cannot be accommodated at the existing east coast ports.” However, Port of Newcastle has the channel depth and landside capacity to handle these larger ships through its planned container terminal.
He added “Exporting and importing businesses across New South Wales rely on a congested and unpredictable transport network when shipping their goods through Port Botany in Sydney. Some freight moves through more distant ports in Brisbane, Adelaide or Melbourne. All of these routes are inefficient and not cost-effective for businesses competing in price-sensitive markets. A new container facility at the Port of Newcastle could not just lower transport costs but also improve efficiency and enhance reliability of delivery.”