British Maritime Technology 1
British Maritime Technology
Leader in Port & Logistics Business Intelligence & Advisory
Services
Richard Szuflak – Director of European Operations, BMT Maritime Consultants
Russell Smith – Managing Director, BMT Maritime Consultants
British Maritime Technology 2
Ports Under Pressure
What is driving port congestion?
The key pressure points.
Where to from here?
BMT’s contribution to helping solve the
problem.
British Maritime Technology 3
What is driving port congestion?
Increased demand for product coupled with available
supply means that the logistics chain is a key limiting factor
in driving the market.
Ports are a key element in this logistic chain, as are
landward connections and shipping routes.
However land based infrastructure has a longer lead time
than shipping and thus is looming as the key bottleneck in
allowing product supply to meet demand.
This is particularly critical at certain pressure points
worldwide including China, Europe, US west coast,
Australia and South Africa.
British Maritime Technology 4
Seaborne Trade Growing Faster than World
Economy: Example of Container Trade
0
20
40
60
80
100
120
140
1980 1990 1995 2000 2002 2004 2006 2008 2010
MT
EU
sh
ipp
ed
Average growth per Annum of World Economy 2004 to 2010: +2%
Average growth per Annum of Container Trade 2004 to 2010: +8%
British Maritime Technology 5
The Markets - Containers
Container market booming with strong underlying
fundamentals.
The containerisation of goods still has a long way to travel,
indicating that container growth should continue to be well
above world trade growth for some time yet.
Containerisation one of the drivers behind the migration of
manufacturing to the Far East.
British Maritime Technology 6
The Markets – Dry Bulk Products
Bulk demand increasing steadily,
especially for coal and iron ore, as
well as agri-bulk commodities.
This creates congestion at world
export ports – particularly in
Australia, Brazil, South-Africa and
India.
China’s port and railway
infrastructure cannot cope with the
country’s needs for raw materials.
British Maritime Technology 7
The Markets – Oil and Gas
Oil supply to decline after a peak between 2010 and 2020.
LNG is the key growth product worldwide.
LNG demand to rise 100% by 2010 on the back of strong
demand from Europe, USA and now China.
Supply will lag demand without significant investment in
sourcing new product and logistics infrastructure.
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120
140
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240
2003 2004F 2005F 2006F 2007F 2008F 2009F 2010F
millio
n t
on
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Forecast Demand
Identified Supply
Forecast LNG Supply-Demand Balance 2003-2010
British Maritime Technology 8
Shipping Industry Quick to React
With the acceleration of global growth earlier this decade, the
shipping industry was quick to react.
New build orders soared and older vessel retirement was
delayed.
Freight prices boomed and are still extremely high.
With a two year lag time on new vessel builds, the demand
pressures in the shipping industry will soon ease and charter
rates will drop – particularly in 2006.
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20
40
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TankersBulk
ContainersLNG
% of New Orders to 2008 vs. Existing Fleet
676 new vessels 3.7 Million additional
vessel slots, approx 1,200
vessels80 new vessels
980 new vessels
British Maritime Technology 9
Shipping Industry Quick to React
The market moving forward will be changed.
Container ship sizes will continue to increase whilst bulk
vessel sizes will be dominated by the cape and panamax
class of vessel until Chinese and Indian ports deepen.
British Maritime Technology 10
Not so for Ports and Logistics…
With the pressure off shipping the spotlight will transfer
specifically to the port and landside logistics operations as
the main bottleneck.
Whilst recognising the problem at the same time as the
shipping industry, the port industry has much longer lead
times, particularly in developed countries where
government requirements for new projects are stricter.
Expansion of ports in the booming Far East is occurring
much faster than in the developed world → imbalance.
Therefore, whilst pursuing infrastructure and equipment
upgrades at key ports, equally important to the capacity
development of the overall logistics system are efficiency
improvements and alternative logistics route development.
British Maritime Technology 11
… Despite Rapid Growth
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5
10
15
20
25
Millions TEU
Hong-K
ong
Singapore
Shanghai
Shenze
n
LA/LB
R'dam
Selected Container Port Traffic
1999-2001-2003
In 1995, only 5 ports
were above the 3
Million TEU mark
More than 20 ports
nowadays pass this
mark
Of which 11 are in Asia
Extra Rapid Growth
registered in Shenzen,
Shangai, Tanjung
Pelapas and Quingdao
Also in Dubai
British Maritime Technology 12
The Pressure Points
Europe
• Russian trade growth is causing problems on east-
west ports, road and rail networks
• Western European container port capacity is a
problem – congestion surcharge being applied at
Rotterdam and Antwerp
• Established French ports (Le Havre-Marseilles) not
able to cope with extra flow → deviation to secondary
container ports - Dunkirk, Antwerp, Genoa, Barcelona
United Kingdom
• Trade actually declining through the large UK ports
• Container port congestion in the south the main issue
British Maritime Technology 13
The Pressure Points
Asia
• Chinese container ports
expanding at 50% yr on yr
• Shipping queues in
Australian bulk ports over
50 long
• Coal rail networks running
at 110% traditional
capacity and unable to
expand quickly
• Indian ports are a mess
and are constraining
economic development
British Maritime Technology 14
The Pressure Points
Middle East
• Keeping up with demand through massive government expenditure centered around Dubai
• Need strong competitors
Africa
• Long ship queues off the coal ports of South Africa
• Port of Mombassa stagnating East African growth
• LNG port development urgently required in Nigeria
British Maritime Technology 15
The Pressure Points
North America
• West coast container ports in crisis – 94 container vessels waiting off LA/Long Beach in October 2004
• Poor productivity and labour shortages are limiting capacity
• Mexican and South-American ports chosen by shippers to escape congestion
• Consideration to deliver to Eastern Ports via Panama Canal and then overland west
South America
• Bulk ports upgrading to meet demand but still under developed
• Exports more competitive due to currency devaluation thereby boosting trade
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What does this mean?
Growing port throughput throughout the world:
Port industry under strain from sustained throughput demand growth of customers
CAPEX expansion and operational efficiency improvements too slow
Millions of pounds in lost revenue to port owners, transport providers, manufacturers, mines and the worldwide economy from bottlenecks
British Maritime Technology 17
Need Flexibility to Meet the Market
CAPEX expansion takes time:
Typical period between firstly
identifying a physical capacity
limitation through to commissioning
of a completed facility is usually of
the order of 4 years
Whilst planning physical expansion,
ports are now understanding the
importance of improving operational
efficiency and logistics route choice
as a means to overall improvement
of throughput.
British Maritime Technology 18
Three Key Requirements
Therefore three things must happen:
1. Firstly port companies must
improve business intelligence to
be able to accurately forecast
throughput demand and hence
plan to bring new facilities on line
as a when required by the market.
2. Secondly ports must focus on
improved operational efficiency.
3. Thirdly ports must focus on acting
as an efficient link in a much
longer logistics chain to capture
additional market share.
British Maritime Technology 19
Port Business Intelligence - Examples
Currently 1.2 million TEU per annum which is either generated in
or being delivered to locations north of the M62 moves through
the southern UK ports and is trucked north Opportunity clearly
exists for north-eastern ports to capture a significant share of this
1.2 million TEU per annum through implementing short sea
logistics solutions with the European hub port operators.
Trans-Siberian volumes booming to avoid St-Petersburg
congestion.
Australia’s Dalrymple Bay Coal Terminal set to double its coal
export capacity to cope with demand increases by customers.
Development of container barging on the Rhine and Maas rivers
to avoid road traffic congestion in Belgium/Holland/Germany.
Shanghai expansion and mega-projects are planned on the back
of strong growth forecasts.
British Maritime Technology 20
Port Business Intelligence - Examples
BMT Relevant Projects - 2004
Western Shenzhen Ports (China)
Capacity constraint analysis for the worlds
fastest growing container port region.
Dalrymple Bay Coal Terminal (Australia)
Full commercial planning for worlds 3rd
largest coal terminal.
Gdynia Container Terminal (Poland)
Full business planning and sales advice for
Poland’s second container terminal –
sold to HIT in October.
Singapore LNG Terminal (Singapore)
Feasibility analysis for new LNG terminal.
British Maritime Technology 21
Improvement of Port Operations - Examples
Improved product tracking and assignment
Improved equipment usage
Improved labour productivity
Terminals open 7/24 for loading trucks and barges
Improvement of handling techniques and nautical access
EDI and E-Business Solutions
BMT Relevant Projects - 2004
Hong-Kong Marine Congestion Improvement
and Traffic Modelling
PROMIS Integrated Port Management
System for Dubai Ports Authority
British Maritime Technology 22
Logistics Chain Development - Examples
Increased port involvement in global logistics, shipping, trucking
and forwarding: PD Ports in UK, Northern Manuport in Belgium…
Feeder services developed by ports to capture traffic: Dunkirk
Ports involved in railway development: Antwerp, Rotterdam
Ports create “back-yard” terminals: Amsterdam/Duisburg
BMT Relevant Projects - 2004
Goonyella coal logistics chain
improvement
Logistics Chain Modelling in North
Sea and Baltic
Major investment in Logistics Chain
modelling for South-East Asia
British Maritime Technology 23
BMT Transportation Market Advisory Services
Recognising the growing requirements of the port and logistics
industry BMT is focusing on enhancing its transportation sector
capabilities to assist its customers in:
• Operational Improvements
• Reducing and Optimising Transport Costs
• Increasing Overall Efficiency
• Improving Financial Performance
• Business Planning for Optimal Returns
British Maritime Technology 24
BMT Maritime Consultants
A member of the BMT Group of companies
Leader in Port & Logistics Business Intelligence & Advisory
Services