Port development: Container port planning faces increasing challenges

Port of Lobito Container Terminal, Angola

Larger vessel sizes and fewer, longer ship calls put increasing pressure on container terminals. Plans for future developments must address slowing growth and be flexible enough to accommodate a variety of scenarios
The most competitive box ports of the future will be those that accommodate developments in container shipping effectively, while successfully adapting to developments in the hinterland, according to a new report.

The Container Port Strategy report, from the International Transport Forum (ITF) at the Organisation for Economic Cooperation and Development (OECD), found that effective port planning required a thorough understanding of the way the needs of shippers were likely to develop in the future. “This sounds self-evident, but all too often port planners and policy makers have little knowledge of the main exporters and importers using the port, and the related cargo flows,” the report said.

Port planning has often been mainly a question of timing when to phase in expansions, with projections based on the extrapolation of past trends, but this model’s time has ended, according to the report, which is based on a round-table held in Buenos Aires, Argentina, in 2017. “Some ports have already developed long-term planning frameworks that include scenarios in which cargo volumes decline. Conversely, structural reforms can drive a step-change increase in the volume of trade.”

The increasing size of containerships and the volumes of cargo that need handling has put huge stress on equipment and labour and led to high idling rates between ship arrivals. This in turn increases the need for flexibility in port labour forces and for pooling arrangements between terminals. Larger ships also require deeper and larger access channels, longer and stronger quay walls and bigger cranes. Larger yard capacity is required to deal with peak traffic and to provide buffer capacity in the connection with hinterland transport.

“This requires a lot of space,” the report said. “Terminal operators, port authorities and hinterland transport companies have to respond and often taxpayers cover the cost. Shipping companies reap benefits from the larger ships but are not responsible for many of the associated costs. Consequently, the total supply chain costs of larger ships may surpass the cost savings for shipping companies.”

Increasing ship size has accelerated the trend for concentration among shipping lines, with a combination of horizontal and vertical integration that could lead to a freight transport system with very limited choice for shippers, the report warned. “This challenges the regulatory capacity of even the largest economies to address potential issues of abuse of market power. A review of the legal frameworks that provide antitrust exemption for conferences and alliances appears due.”

In its recommendations, the ITF port planning should be driven by demand and flexible. “Port planning should consider a full range of potential scenarios for trade and containerisation,” it said. “Uncertainty implies that capacity expansion should be designed to be as modular and flexible as possible.”

Public policy tended to focus on developing large hub ports, often seeking to expand transhipment. A thorough assessment of costs and benefits for transhipment ports was warranted, considering the small transhipment margins and the large costs of transhipment ports that are covered, usually, by the public purse.

“Not all ports can be hubs and feedering is often more efficient,” the ITF said. “As shipping becomes increasingly concentrated around a smaller number of hubs, feedering will become more prevalent worldwide. Relocation of container ports to non-urban areas can be a viable option, but optimal decisions are very much case-specific and require a solid analysis of market prospects and the costs and benefits involved.”

Source: Lloyd’s Loading List