Rail & Intermodal
Can Ports Keep Up With the Changing Needs of Container Lines?

Those idle cranes in the Port of Oakland's Outer Harbor stand as mute testimony to the changes that are roiling container ports and terminals today.

Can Ports Keep Up With the Changing Needs of Container Lines?

Chief among them are the ever-shifting alliances and mergers among the top 20 container lines. Recent weeks have seen efforts to combine two Chinese carriers, China Ocean Shipping Co. (Cosco) and China Shipping Group Co. France’s CMA CGM SA announced the acquisition of Neptune Orient Lines, Ltd. (NOL), parent company of APL. Meanwhile, Mitsui O.S.K. Lines, Ltd.; Nippon Yusen Kaisha (NYK Line); Hanjin Shipping Co.; Hapag-Lloyd AG and Yang Ming Marine Transport Corp. have disclosed plans to form a new space-sharing partnership known provocatively as THE Alliance, operating in all east-west trade lanes. They’ll be vying for cargo with two other big agreements, the 2M Alliance and the Ocean Alliance.

This never-ending game of musical ships is having a heavy impact on ports, whose container terminals are being forced to consolidate calls or even shut down due to loss of business. No longer does one terminal match up with just one or two carriers, who in the past might have operated the facility through a stevedoring subsidiary.

On top of that, the ballooning size of modern-day containerships, many topping 18,000 twenty-foot equivalent units (TEUs), is requiring ports and marine terminals to dredge their channels, lengthen berths, add cranes, expand yard space and beef up intermodal connections. (Some major U.S. ports are reconfiguring their yards to stack containers instead of placing them directly onto chassis at dockside, a move that calls for big investments in new equipment and a complete restructuring of yard operations.) The winners will be those with the deepest harbors – and the deepest pockets. And ports like Oakland will have to adjust when a major tenant – in this case, Ports America – walks away from its long-term lease to operate the Outer Harbor terminal, leaving no one to fill the void.

Turnaround time for the big ships continues to be another major issue. Andy Barrons, chief marketing officer and senior vice president of terminal-operating system vendor Navis, likens the challenge to that of a race car making a pit stop. The speed with which the pit crew services the vehicle is key to winning the race. But the bigger the ship, the longer it must remain in port to complete discharge and loading.

About two thirds of a vessel’s visit is spent at berthside, says Barrons, with the remaining third taken up with bringing it into dock. Just waiting for berth space on a busy day can eat up precious time -- witness the massive backup of ships that struck West Coast ports in early 2015 due to a work slowdown by dockworkers. Even during normal levels of activity, there’s likely to be one or more ships moored in the bay or channel, waiting their turn.

The dilemma – which will only get worse if containerships continue to grow in size – is driving port and terminals to automate and optimize operations wherever possible. Improving the flow of information becomes an increasingly important means of achieving that goal, says Barrons. A ship’s arrival triggers huge amounts of data on such activities as pilot scheduling, vessel maintenance and crane manning. In addition, terminals need to be able to share information freely with carriers, dockworkers and other transportation partners about ship stowage plans. That last element is especially well suited to modern-day cloud technology, says Barrons.

(As if all that weren’t enough, add to the task list of terminals and shippers the newly enforced requirement to weigh each loaded container and certify its verified gross mass (VGM) prior to loading aboard ship.)

The probable scenario for major container ports is fewer but bigger terminals, with a higher degree of automation. (When it comes to productivity, U.S. dockworkers will have to play catch-up with industry leaders such as Hong Kong, Singapore and Rotterdam.) A handful of hub operations will dominate entire regions, but their size will give rise to a daunting set of challenges. Just getting the ships worked in a timely fashion is one. Another is the need to move containers between modes expeditiously, without jamming up local communities and highways or overtaxing rail systems. The latter problem is far from solved, despite efforts to build new container transfer yards both adjacent to the berths and far inland. Such facilities are intended to relieve the natural bottlenecks that occur when a box moves between ship, rail or truck, but they carry their own set of problems, not least of which is the impact on local businesses and residents.

In the end, the changes in carrier alliances are likely to result in more efficient terminal operations, since each facility will be more fully utilized. (Berths today are accustomed to standing empty for the good part of a week, until the arrival of a megaship sets off a flurry of activity.) Key to that outcome will be heavy investments in equipment and information systems that can handle the larger volume of data, says Barrons. In theory, two or three adjacent terminals could be sharing the same operating system, making possible the last-minute shifting of a vessel from one berth to another during peak periods.

Even ports that can’t handle the biggest ships will be affected. Smaller vessels will “cascade” to facilities of commensurate size and capacity, says Barrons, “forcing a pretty broad range of terminals to upgrade their cranes and dredge their channels deeper.” As a result, “we’re going to continue to see investment around the world.”

Money alone won’t solve the problem. Ports will have keep pace with shifting patterns of trade, economic ups and downs and the unpredictable behavior of container lines. Failure to do so will result in more than a handful of empty terminals.

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Chief among them are the ever-shifting alliances and mergers among the top 20 container lines. Recent weeks have seen efforts to combine two Chinese carriers, China Ocean Shipping Co. (Cosco) and China Shipping Group Co. France’s CMA CGM SA announced the acquisition of Neptune Orient Lines, Ltd. (NOL), parent company of APL. Meanwhile, Mitsui O.S.K. Lines, Ltd.; Nippon Yusen Kaisha (NYK Line); Hanjin Shipping Co.; Hapag-Lloyd AG and Yang Ming Marine Transport Corp. have disclosed plans to form a new space-sharing partnership known provocatively as THE Alliance, operating in all east-west trade lanes. They’ll be vying for cargo with two other big agreements, the 2M Alliance and the Ocean Alliance.

This never-ending game of musical ships is having a heavy impact on ports, whose container terminals are being forced to consolidate calls or even shut down due to loss of business. No longer does one terminal match up with just one or two carriers, who in the past might have operated the facility through a stevedoring subsidiary.

On top of that, the ballooning size of modern-day containerships, many topping 18,000 twenty-foot equivalent units (TEUs), is requiring ports and marine terminals to dredge their channels, lengthen berths, add cranes, expand yard space and beef up intermodal connections. (Some major U.S. ports are reconfiguring their yards to stack containers instead of placing them directly onto chassis at dockside, a move that calls for big investments in new equipment and a complete restructuring of yard operations.) The winners will be those with the deepest harbors – and the deepest pockets. And ports like Oakland will have to adjust when a major tenant – in this case, Ports America – walks away from its long-term lease to operate the Outer Harbor terminal, leaving no one to fill the void.

Turnaround time for the big ships continues to be another major issue. Andy Barrons, chief marketing officer and senior vice president of terminal-operating system vendor Navis, likens the challenge to that of a race car making a pit stop. The speed with which the pit crew services the vehicle is key to winning the race. But the bigger the ship, the longer it must remain in port to complete discharge and loading.

About two thirds of a vessel’s visit is spent at berthside, says Barrons, with the remaining third taken up with bringing it into dock. Just waiting for berth space on a busy day can eat up precious time -- witness the massive backup of ships that struck West Coast ports in early 2015 due to a work slowdown by dockworkers. Even during normal levels of activity, there’s likely to be one or more ships moored in the bay or channel, waiting their turn.

The dilemma – which will only get worse if containerships continue to grow in size – is driving port and terminals to automate and optimize operations wherever possible. Improving the flow of information becomes an increasingly important means of achieving that goal, says Barrons. A ship’s arrival triggers huge amounts of data on such activities as pilot scheduling, vessel maintenance and crane manning. In addition, terminals need to be able to share information freely with carriers, dockworkers and other transportation partners about ship stowage plans. That last element is especially well suited to modern-day cloud technology, says Barrons.

(As if all that weren’t enough, add to the task list of terminals and shippers the newly enforced requirement to weigh each loaded container and certify its verified gross mass (VGM) prior to loading aboard ship.)

The probable scenario for major container ports is fewer but bigger terminals, with a higher degree of automation. (When it comes to productivity, U.S. dockworkers will have to play catch-up with industry leaders such as Hong Kong, Singapore and Rotterdam.) A handful of hub operations will dominate entire regions, but their size will give rise to a daunting set of challenges. Just getting the ships worked in a timely fashion is one. Another is the need to move containers between modes expeditiously, without jamming up local communities and highways or overtaxing rail systems. The latter problem is far from solved, despite efforts to build new container transfer yards both adjacent to the berths and far inland. Such facilities are intended to relieve the natural bottlenecks that occur when a box moves between ship, rail or truck, but they carry their own set of problems, not least of which is the impact on local businesses and residents.

In the end, the changes in carrier alliances are likely to result in more efficient terminal operations, since each facility will be more fully utilized. (Berths today are accustomed to standing empty for the good part of a week, until the arrival of a megaship sets off a flurry of activity.) Key to that outcome will be heavy investments in equipment and information systems that can handle the larger volume of data, says Barrons. In theory, two or three adjacent terminals could be sharing the same operating system, making possible the last-minute shifting of a vessel from one berth to another during peak periods.

Even ports that can’t handle the biggest ships will be affected. Smaller vessels will “cascade” to facilities of commensurate size and capacity, says Barrons, “forcing a pretty broad range of terminals to upgrade their cranes and dredge their channels deeper.” As a result, “we’re going to continue to see investment around the world.”

Money alone won’t solve the problem. Ports will have keep pace with shifting patterns of trade, economic ups and downs and the unpredictable behavior of container lines. Failure to do so will result in more than a handful of empty terminals.

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Can Ports Keep Up With the Changing Needs of Container Lines?