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Focus: Global Supply Chain and Logistics

Our Weekly Feature Article on Topics Related to Global SupplyChain Logistics

From SCDigest's On-Target e-Magazine

May 2, 2012


Global Logistics: Port Efficiency Must Keep Pace with Growth in Megaships, APM Executive Says

Containers will be Stuck in Ports for Extra Days Unless Productivity Significant Improves


SCDigest Editorial Staff


As “post Panamax” megaships come to dominate the container shipping landscape, it is essential that port and terminal operations take their own productivity to new levels.

That according to Soren Sjostrand Jakobsen, head of project implementation for APM terminals, during a speech to attendees at the Future Ports conference this week in Stockholm. APM, which operates some 65 container terminals worldwide, is a division of AP Moller-Maersk Group, which also owns Maersk Lines, the world’s largest ocean carrier.

SCDigest Says:


Jakobsen says that that key metrics at the ports such as crane productivity have flatlined in recent years.

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Despite some flattish trends lately, Jakobsen said he expects growth in world trade and container volumes to continue to expand sharply, well above overall world growth in GDP. Containerized global trade volumes reached about 530 million TEU in 2010, versus just 250 million TEU in 2000.

That growth in volumes obviously put pressure on world ports to handle them, especially considering each container is handled at least twice in being loaded onto and off of a ship, and sometimes more if there are any transfers along the way.

While container handling volumes dipped 9.1% in 2009 as a result of the recession, they grew again in 2010 by 14.8% in 2009, and are expected to increase by 50% between 2009 and 2015.

Jakobsen noted that some of this growth is coming increased containerization of goods such as grains that used to be moved in bulk ships, due to better handling efficiencies.

The carriers are largely addressing the volume challenges by rapidly moving to so-called megaships. As recently as 2006, the largest ocean ship could carry just 7100 TEU. When Maersk Lines begins operating its new Triple-E vessels in 2013, that figure will have jumped to 18,000 TEU. The two drivers are greater productivity of the larger ships (lower cost per container shipped) and the completion of the Panama Canal expansion project, which will enable much larger ships to pass through the Canal and significantly affect current shipping routes.

How the profile of the ocean shipping industry’s collective fleet will change from 2010 to 2014 is shown in the graphic below.

Despite the continued growth in volumes, ocean carriers are not in a good financial place. Collectively, the industry lost $6-8 billion in 2011, depending on the source. While container shipping lines made $20 billion on 2010, 2009 was also a big loss year, and the industry is expected to again be strongly in the red again for 2012. In addition to these financial losses, returns on capital invested is also very poor at the carriers, in part because so many of them are bringing these megaships on line at the same time, causing capacity to grow even faster than demand.



Jakobsen says that if world ports don’t get their acts together this scenario will get even worse, often in ways that won’t be any good for shippers or importers either.

"Our customers are building bigger and bigger ships and it is imperative that we are able to increase our delivered productivity at minimum the same pace as the ships grow — but preferably much more," Jakobsen was quoted as saying at the conference. “"Productivity will be the battleground for terminal operators, and those who are able to meet our customers’ requirements will be the winners.”

(Global Supply Chain Article Continued Below)




He noted, for example, that key metrics at the ports such as crane productivity have flatlined in recent years, as shown in the chart below. Jakobsen said this flat productivity growth will be exacerbated because many of the new ships, such as the Triple E’s, are putting substantially more containers in the same length of ships.


Port Productivity Metrics Have Stalled




Source: APM


“This means that crane intensity, and therefore berth productivity, will remain the same on these larger vessels unless we change the game,” Jakobsen says. With the status quo, ships will take longer to unload. That means more days a shipper’s containers don’t move, and more days a carrier has its valuable asset tied up in port.

He says that both bigger and smarter cranes will keys components of the answer.

AMP itself is rolling out a concept it calls “FastNet” cranes, which Jacobsen says can double unloading productivity.

FastNet puts more quay cranes over a vessel than is possible today. Today’s cranes are 27m wide buffer-to-buffer, so one bay is always “locked out” between two cranes.

It uses the concept of cranes running on elevated girders, with the boom structure “underhung” from the waterside girder, so containers do not pass between a crane portal. The crane booms are effectively hanging without legs, so two alongside bays can be accessed at the same time.

Jakobsen says APM is also developing concepts like automated guided vehicles for container movements within the ports, just the way AGVs in distribution move pallet loads. With this approach, containers would be stores in racking systems in the yard, again similar to how a distribution center often works. He cited an array of other technologies that could or are being put to bear.

Still, there are environmental and other factors that lead to big differences in productivity rates across APM terminal operations.

Its terminal in Yokohoma Japan completes about 48 moves per hour, Jakobsen said, versus just 25 or so for APM’s terminal at Port Elizabeth in Ne Jersey.


Do world ports need to increase productivity, especially in the face of these new megaships? Let us know your thougths at the Feedback section below.

Recent Feedback

It certainly seems inevitable, but I really find the state of affairs quite conflicted.

In particular, this terminal demand to turn around a vessel faster yet shipping lines continue to slow steam.

In my opinion, from a global logistics standpoint, there is far more benefit to the supply chain should shipping lines get moving back to faster speeds than to a terminal offloading a vessel faster.

All that being said, the real question for a terminal is not how to increase the productivity from a pure throughput model, because typically that simply involves more cost.  Are shipping lines willing to pay more money to a terminal for faster service?  From what I've seen the answer seems to be no.

Consequently cost has to factor into this productivity model.  Cost broken down both in the intitial captial expenses and the longer term operating costs.

FastNet looks like a great design, but what are the up front captial costs?  And what are the longer term maintenance and operating costs for the terminal wish such a system?  I would think it is safe to assume that the costs on both counts are higher than with standard ship to shore cranes.  And if shipping lines are not willing to pay higher rates, this begs the final question, is that really a good financial decision for a terminal?

Eric Klein
VP Business Development
NOW Solutions
Jul, 20 2012