Pressure on transhipment ports

In Port News 04/08/2016

The rationale of economies of scale is to reduce the slot cost of moving a container from A to B and the experts suggest that in order to achieve the lowest costs with the highest utilisation carriers choose a few major hub ports and use regional feeders to bring the cargo to the ships.

However, the experts overlooked a number of things. Firstly, they did not factor in the slow growth rates that we have experienced over the last few years combined with the excess supply. Freight rates aside, with too many ships chasing too little cargo, the network departments are looking for other options.

Secondly, big ships are fine for the carriers, but the terminal operators are struggling to handle the number of boxes being moved. It is not an issue of getting them off or onto the ship – seven or eight gantry cranes – will see to that, but then there is congestion on the quay and the problem is moving the boxes to or from the stacks. Enough efficiency is not there, so what’s to be done?

Carriers have gone for the option of using the ultra large ships at more ports than the experts had envisaged. There are some interesting examples of this: in Southeast Asia main line services are calling at Ho Chi Minh City whose cargo usually moves to Singapore. Now we are seeing direct services to the east and west coasts of the US, with Maersk announcing a service to the East Coast and K-Line, Wan Hai and PIL with a service to Long Beach, by-passing Singapore altogether. This of course puts pressure on the traditional hub ports such as Singapore and PTP in Malaysia.

At the other end of the trade, the big ships are sailing into the Baltic, acting as both a deep-sea service as well as a transhipment carrier in the Rotterdam-Hamburg range while the envisaged hub port of Wilhelmshaven continues to struggle to get the traction that it needs.

The question is will this continue or will we see a return to the hub and spoke concept once supply and demand balance out – which it must at some point purely for financial stability reasons, or will globalisation have reversed enough to create new mega ports?

Source: Port Strategy