Reconciling Ship Size with Port Capabilities

Terminal productivity is under the spotlight as larger container vessels are deployed on all markets and trades. Shippers and carriers are looking to terminals for faster, more reliable turnaround times in order to ensure supply chain integrity.

On Day two of TOC Americas 2014, a panel of experts from lines, engineers and terminals will discuss how the growing stresses of ship size vs. port capabilities can be reconciled in the debate Latin American Terminal Productivity & the Supply Chain Impact.

What seems certain is that Latin America will outpace the world average in terms of economic growth over the next five years. In container shipping the impact of this is already evident, with vessel tonnage cascading faster than expected.

“Vessel cascading is a given in the shipping industry; the timing just depends on volume growth, which is based on market dynamics,” says Karlien Brolsma, General Manager Procurement, Maersk Line Central America, and one of the panelists in the debate.

Earlier this year at TOC Europe in London, Ocean Shipping Consultants noted that Latin America has seen the fastest increase in vessel cascading of all secondary deep sea markets, with average vessel size climbing from 3,000TEU to 8,000TEU in just four years to 2014.

That is a heavy lift for the region’s terminals to accommodate. Moreover, on certain east and west coast South America trades 9,000-plus TEU vessels are already being deployed.

Big ships may already be here; but they will only get bigger, placing yet more pressure on terminals to raise handling rates and vessel turnaround.

Ms. Brolsma says terminals in the LAC region have advanced significantly in recent years.

“Several large terminals are catching up with the productivity levels seen in Asia and Europe. However, there are still a number that are in need of significant improvement in terms of customer service, responsiveness to market demand, and asset and productivity improvement,” she says.

Another TOC panelist, Boris Leyton, VP Operations & Logistics WCSA, of deepsea carrier CSAV, notes: “There are still a lot of disparities in terminal productivity, not only among the countries of the region, but within each individual country. This is because terminal equipment and infrastructure are often at different stages of development.”

Raising the game

However, despite these varying levels of performance, Mr. Leyton says efforts aimed at raising productivity could still be concentrated in three particular areas.

“Firstly, port infrastructure. Resources should be devoted to deeper drafts, and improving cranes, container storage and handling areas. Secondly, logistics areas close to ports need upgrading. Finally, more electronic data interchange systems are called for to make the whole shipping process paperless.”

Ms. Brolsma agrees that the priority for development in Maersk’s view is growth in the number of professional terminals “with modern assets that can serve the next generation of vessels that will come to Latin America. It is also key that port and government authorities support this development, including lifting navigational restrictions,” she says.

But both executives stress that it is not just about investment in hardware and systems. At the end of the day collaboration between terminals and carriers could also do much to speed up handling and reduce turnaround times.

“If we could have an integrated system of information between all parties in real time, that would have a huge impact on planning operations and adapting berth times to the real situation, especially when one considers the impact of weather and long sea voyages have on this matter,” says Mr. Leyton.

“Definitely,” adds Ms. Brolsma. “Terminals and carriers can improve their respective performance through strong co-operation. Maersk Line would like to encourage further growth and professionalism of terminals and authorities in LAC by sharing our constructive feedback.”

Karlien Brolsma  added: “It is important to raise issues such as what do shipping lines expect from terminal operators, and how important is productivity, and in which context do we look at it?”

“I believe we need to shift thinking away from automatic annual increases (in terminal charges) when we can see no tangible service improvement. Ultimately, this will benefit the terminal operators, as it can drive efficiency and potentially strengthen earnings for them.”