In Port News 04/08/2016
Source: Port Strategy
Make no mistake the desperate state of the container shipping industry in terms of its ability to consistently make a profit is forcing fundamental changes, writes Mike Mundy.
The port sector is in the eye of this hurricane and a winners and losers scenario looms.
Mega alliances reflect the pursuit of economies of scale with this factor further heightened by the fast upscaling in recent times of ship size. Lines have introduced bigger and bigger vessels in capacity terms in pursuit of a lower, more competitive, slot cost but this, in turn, has developed into a race creating a wash of new capacity and placing overall available capacity well ahead of demand.
The pace of this change has caught out a number of port authorities and terminal operators, particularly on the secondary trade routes, where cascading has the most pronounced effect. Relatively few active on secondary trade routes have anticipated and prepared for this change. There are a lot now playing catch up, the recognition having dawned that to not do so could result in a downgrade in status from major player to minnow. There are other ports and terminals that are still trying to grasp the reality of the situation – these are the parties in the danger zone with limited time left to act before the market leaves them behind.
In effect, those that do not follow the upscale of ship sizes will see a less prosperous future. Equally, it is a matter of timing: if you come late to the party there may only be a limited amount of ‘cake’ left.
Technically, there is also more than the traditional challenge of accommodating deeper draft vessels. Even in the secondary ports consideration also needs to be given to factors such as vessel length – particularly when it comes to accommodating two large ships simultaneously – the ability of two large vessels to pass each other, turning circle size and the aspect of air draft.
In the Americas, Kingston, Jamaica is an example of a port that must address the issue of upscaling on an urgent basis if it is not to lose the advantage of its central position in the Caribbean. Likewise, Melbourne, Australia is likely to lose its No. 1 status in container volume terms if it does not enlarge its preparations to accommodate bigger vessels and in Europe, Hamburg and Gdynia are two ports that face similar challenges.
Source: Port Strategy
