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THE LOGISTICS INSTITUTE

- ASIA PACIFIC A partnership between the National University of Singapore and Georgia Institute of Technology for research and education in global logistics and operations

The Asia Pacific Sea Cargo SystemResearch Paper No: TLI-AP/01/02

Team members: National University of Singapore Assoc. Prof. Roland Yap Hock Chuan (Group Coordinator) Asst. Prof. Chew Ek Peng Asst. Prof. Lee Loo Hay Ms. Puvaneswari Manikam Georgia Institute of Technology Asst. Prof. Anton Kleywegt Assoc. Prof. Paul Griffin

The Logistics Institute - Asia Pacific National University of Singapore 10 Kent Ridge Crescent, Singapore 119260 Tel: (65) 874 8984 F a x: ( 6 5 ) 7 7 5 3 3 9 1 W ebsite: www.eng.nus.edu.sg/tliap

Abstract This report gives an overview of sea cargo focusing on Singapore, interactions within Asia-Pacific and other regions. The focus of the report is to survey the industry, processes and important issues facing the sea cargo industry. We begin with an overview of the top 10 ports and major carriers. This is followed by a study of trade flows, volumes and trends with emphasis on container traffic in Singapore Port. A comparative study with Hong Kong Port and Port of Long Beach is also presented. Next is a survey of the major shipping lines and developments in the container shipping industry. This is followed by the processes involved with importing and exporting sea cargo with details of the process flow in Singapore for containers. We then give an overview of developments in sea cargo technologies focusing on the use of Information Technology by ports and carriers. Next, important current issues facing the shipping industry is discussed. Finally, we conclude with some potential research projects to address the challenges described in the previous section.

Table of Contents

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Page Introduction.. 1 1.1 A Definition of Sea Cargo......1 1.2 The Importance of Sea Cargo.... 1 1.2.1 The Importance of Sea Cargo to Singapore... 1 1.3 Major Sea Routes in Asia-Pacific...... 1 1.4 The Position of Asian Ports in Global Ranking. 2 1.5 Major Carriers3 1.6 Sea Cargo Volumes and Trends. ... 3 1.7 Some Remarks about Statistics.. 6 1.8 Organisation of Report... 6 References...7 Flow and Trade Volumes.... 8 2.1 Sea Cargo (Containerised) Flow and Trade Volumes by Region.... 8 2.2 World Port Sea Cargo (Containerised) Flow and Trade Volumes.... 9 2.2.1 Worlds Major Ports by Total Cargo Throughput (metric ton)..... 9 2.2.2 WorldsTop10 Container Ports by Container Throughput(TEU). 10 2.2.3 Some World Ports Comparison: Hong Kong Port, Port of Long Beach and Singapore Port.... 12 2.3 Global Sea Cargo Transhipment.... 15 2.4 Singapore Port Sea Cargo (Containerised) Flow and Trade Volumes.... 16 2.4.1 Singapore Port Yearly based Statistics...... 16 2.4.1.1 Total Container Throughput (1987-1999)...16 2.4.1.2 Total Container Throughput by Type (Loaded or Empty) (1990-1997)... 17 2.4.1.3 Total Cargo by Type (1987 - 1999)...... 18 2.4.1.4 Inward and Outward Containerised Cargo by Country (1989-1997)....... 21 2.4.2 Singapore Port Monthly based Statistics... 24 2.4.2.1 Total Container Throughput (Jan`95-Dec`97).... 24 2.4.2.2 Total Cargo by Type (Jan`95-Dec`97).... 26 2.4.2.3 Inward and Outward Containerised Cargo by Country (Jan`96-Dec`97).... 28 2.5 Singapore as a Global Marine Hub.... 32 References33

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Major Sea Cargo Players.... 34 3.1 Introduction to Ocean Carriers... 34 3.2 Conference Lines and Non-Conference Lines... 34 3.3 Asian Carriers.... 34 3.4 Mergers and Acquisitions...... 35 3.5 Carrier Statistics..... 36 References...38 Sea Cargo Export and Import Processes.......39 4.1 Sea Cargo Export Process..39 4.2 Sea Cargo Import Process.. 42 References.. 44 Sea Cargo Technologies... 45 5.1 Importance of IT in Sea Cargo System...... 45 5.2 IT Systems in Ports.45 5.2.1 Port of Rotterdam... 46 5.2.1.1 Cargo Card.... 46 5.2.1.2 EDI-LAND....47 5.2.1.3 PROTECT..... 47 5.2.1.4 ELO... 47 5.2.1.5 BICS...... 47 5.2.1.6 RODOS. 47 5.2.1.7 MISTER.... 48 5.2.1.8 Port on the Internet....48 5.2.2 Hong Kong Port..... 48 5.2.3 Singapore Port.... 49 5.2.3.1 CITOS... 49 5.2.3.2 CICOS....... 50 5.2.3.3 Gate System...50 5.2.3.4 PortNet...51 5.2.3.5 TradeNet....52 5.2.3.6 BoxNet...52 5.2.3.7 CEDEX...52 5.2.3.8 EZShip...52 5.2.3.9 SlotMax..... 52 5.2.3.10 BoXchange... 53 5.2.3.11 GEMS....53 5.3 Use of IT in Shipping Lines....53 5.3.1 E-Booking...54 5.3.2 Cargo Tracking...54 5.3.3 Vessel Sailing Schedule.....55 5.3.4 Bill of Lading..... 55 5.3.5 Notices and Reports... 55 5.3.6 Tariff Rate Request.... 56 5.3.7 Finance... 56 5.3.8 Other Services.... 56 5.4 Online Information Services...57

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5.5

5.6 5.7

5.4.1 Interbox.......57 5.4.2 Trade Compass...57 5.4.3 Other Online Information Services.58 Electronic Documentation Management 59 5.5.1 Bolero. 59 5.5.2 TradeCard...60 5.5.3 E-Transport60 Global Positioning System. 61 Electronic Container Seal...61 Reference........62

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Sea Cargo Issues... 63 6.1 Ocean Shipping Reform Act of 1998 (OSRA)...63 6.2 Container Imbalance on US Trade. 64 6.3 Shortage of Container Chassis in US Ports....65 6.4 Equipment Imbalance Surcharges (EIS)....66 6.5 Megaships..66 References......67 Proposed Research Projects....68 7.1 Contract Planning and Load Allocation for Ocean Carriers..68 7.2 Empty Container Allocation and Distribution Planning........68 References......69 Appendix 1-Profiles of the Top 10 World Ports. ...... i Appendix 2-Profiles of the Selected Major Carriers......v Appendix 3-Singapore Examples of Importation, Exportation and Transhipment Processes.ix Glossary..xxi References..xxvi

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Introduction

Water is said to be the cheapest, safest and cleanest transportation mode and the ocean is the water highway to the world. The oceans occupy 70% of the earth and the Pacific Ocean occupies 50% of the worlds ocean surface. Ports in Asia-Pacific are gateways to domestic and international trade, connecting the region as well as intra-region to the world. Asias history has been shaped by its ports on the seacoasts and rivers. 1.1 A Definition of Sea Cargo

Cargo is merchandise conveyed on a ship other than mail or other property, carried under the terms of international postal convention or baggage [1]. Therefore sea cargo can be defined as anything travelling by sea other than mail, persons and personal baggage. 1.2 The Importance of Sea Cargo

There are more than 2,000 ports around the world. A ship loaded with one metric ton of goods sails farther and causes less air pollution on one gallon of fuel than an airplane with the same tonnage flies, or a truck drives, or a train travels [2]. Container shipping is much cheaper than airfreight. Present airfreight rates are about ten times or more the rates of sea cargo transportation. Compared to other modes of transportations, ships and barges are save and have the fewest accidental spills or collisions. The Review of Maritime Transport 2000 reported that the world container port traffic grew 6.7% within a year; from 154.6 million in 1997 to 165.0 million in 1998. Note that this figure depicts continued growth despite the financial crisis experienced in parts of the Far East and South East Asia. The Drewry Shipping Consultants also forecasted that some additional quay length of 100 to 200 km and 900 to 1,200 new quay cranes would be required to handle the increasing amount of container movements, especially in Western Europe, Far East and South East Asia by the year of 2005. 1.2.1 The Importance of Sea Cargo to Singapore One out of every 10 people in Singapore is said to be dependent in some way on Singapore Port. The PSA Corporation generated a net profit of S$838.4 million in 2000, an 11.7% increase from S$ 750.3 million in 1999 [4]. Singapore Port ranked second among the ports of the world in both terms of TEU and metric tons handled. Compared to the top 10 container ports in the world, Singapore Port has a dominant position with approximately 22.3% from the total container throughput handled. As an Asian transshipment hub, Singapore has built a large regional feeder trade to carry Intra-Regional cargo. 1.3 Major Sea Routes in Asia-Pacific

Many countries in Asia-Pacific have an export-dominated economy and are thus more dependent on the passage of goods across the seas than other parts of the world. In AsiaPacific there are basically two major sea routes of communication, one passing through the

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South China Sea to the Indian Ocean and the Middle East; the other passing through the East China Sea and the Sea of Japan to the Pacific Ocean and the Pacific coast of the US and Canada. Four out of the seven worlds major sea routes (the Eurasia, North Pacific, South Pacific and the Cape of Good Hope routes) are connected to the Asia-Pacific. The remaining three are the North Atlantic, South Atlantic and the North American-South American routes. In terms of ship movement, the seas in Asia-Pacific are among the busiest in the world. 1.4 The Position of Asian Ports in Global Ranking

Table 1.1 depicts total throughput in metric tons of the top 10 worlds major ports in 1999. Table 1.2 shows the worlds major container ports (top 10) ranked by TEUs. Half of the top 10 ports in Table 1.2 are located in Asia. The remaining three ports are from Europe and two from North America. Although Port Kelang is 15th ranked and thus not in the table, it should be pointed out since its rate of growth is high, as much as 40.1% in 1999 and it may soon join the top 10. Singapore Port has captured second placing in both the tables. Profiles of the top 10 container ports (ranked based on TEU) are given in Appendix 1. Rank Port Total Throughput 1999 (1999) (in million metric tons) Port of Rotterdam, Netherlands 303.4 1 Singapore Port, Singapore 251.9 2 Shanghai Port, China 1