cascade strategy of container terminals to maximize ...

IAME 2015 Conference Kuala Lumpur, Malaysia Paper ID 103

CASCADE STRATEGY OF CONTAINER TERMINALS TO MAXIMIZE THEIR QUANTITATIVE AND QUALITATIVE CAPACITY Masahiko Furuichi, Professor, Graduate School of Management, Kyoto University Yoshida-Honmachi, Sakyo-ku, Kyoto, 606-8501, Japan e-mail: [email protected] Ryuichi Shibasaki, Head of International Coordination Division, NILIM (Visiting Associate Professor, Graduate School of Management, Kyoto University) 1-12 Shimei-cho, Yokosuka, 239-0832, Japan e-mail: [email protected] Abstract Some seventy 20,000TEU-class container ships had been ordered and will be delivered on the main east-west liner services between East Asia and N.W. Europe by 2017. Port authorities as well as terminal operators have been making every effort to develop and renovate their infrastructure and superstructure to accommodate such enlarged container ships at earliest possible, whereas those investments inevitably require a long period of time as well as a huge amount of fund. Port strategy and planning issues, sometimes, have long focused on the deepest and largest terminals in each port to accommodate the largest container ships at the time. However, cascading phenomenon of enlarged container ships from the long-distance services to the short/mediumdistance services have generated various effects on the port administration and terminal operations. As the major shipping lines have accelerated to consolidate their alliances to a large extent due to enlarged container ships, the dedicated terminals seek for a larger terminal area than ever before to accommodate their alliance operations. More volume of containers loaded/discharged at a port call of enlarged container ships have generated port congestion at both land-side and water-side. Accordingly, container ships need to wait for port entry offshore, require higher sailing speed after delayed port entry and additional ships to maintain the liner shipping services, which impose additional costs to shipping lines as well as shippers, while economy of scale is achieved by enlarged ships. This paper aims at proposing “a cascade strategy” of container terminals to accommodate cascading container ships so as to maximize their quantitative and qualitative capacity. Keywords: Container Shipping, Economy of Scale, Cascading Effect, Port Congestion.

Cascade strategy of container terminals to maximize their quantitative and qualitative capacity Paper ID 103

1. Introduction The 20,000TEU Ultra Large Container Ships (ULCSs) will be delivered by 2017 (The Japan Maritime Daily, January 9, 2015). Four major shipping alliances, i.e. 2M, G6, O3 and CKYHE have entered into a new stage of fierce competition of container shipping, aiming at economy of scale advantages of ever-enlarging ships. The18,000TEU-plus club, equivalent to the 20,000TEU ULCVs community, was formed first by Maersk, then followed by CSCL, MSC, UASC, Evergreen, CMA-CGM, OOCL and MOL, whereas the remaining members of the major alliances remain in the 14,000TEU-club (Drewry, 2015). The newly-delivered largest container ships were deployed on the longest-distance services, i.e. the East Asia-N.W. Europe services at the time, because economy of scale advantage can be maximized for the longest-distance services. When some largest container ships were delivered several years later, however, the former largest container ships had stepped down to the second longest-distance services, i.e. the East Asia-US West Coast services. Similarly, the former second largest container ships had stepped down to the third longest-distance services, i.e. the East Asia-Middle East and/or N.W. Europe-South America services, and so on. This phenomenon have continued for the last 10-20 years, which is now called as “cascading phenomenon”. This paper explores the following empirical analyses. First, the authors examine the effect of loading capacity and bunker oil price on economy of scale advantage generated by enlarged container ships, taking the 20,000TEU ULCSs and lowered bunker oil price (USD300/ton, as of the first half of 2015) into account. Second, enlarging trends of container ships, i.e. loading capacity, service distance, ports of call and voyage period, as well as their cascading phenomenon are analysed, by gathering statistics of enlarged container ships deployed on the various services for the last ten years. Third, cascading quay-side gantry cranes (QGCs) to accommodate cascading container ships and port congestion at both land-side and water-side generated by cascading container ships are empirically analysed, due to the statistics and observations. Lastly, the cascade strategy of container terminals is proposed, by analysing above-mentioned various phenomena generated by cascading container ships. 2. Literature Review Kendall (1972) theoretically analysed the optimum ship size of grain and iron ore bulk carriers by minimizing the total transport costs, which should include ship costs comprising capital costs and IAME 2015 Conference, August 24-26, Kuala Lumpur, Malaysia

2


running costs as well as terminal costs comprising port costs, product handling costs and storage costs. Calibration results imply that trade volume, value and distance determine the best size of cargo vessels. Whereas in the past the volume of freight handled at individual ports have been influenced strongly by the available natural water depth, the trend will be towards the reverse effect in the future. Thus demand will cause tonnage, tonnage will determine ship size, and ship size will become a major influence upon water depth provided. Consequently, ports have to invest port infrastructure to accommodate the optimum ship size if they want to attract trade. Jansson et al (1982) pointed out that costs per ton at sea decrease with size, but costs per ton in port increase with size, while the optimal ship size is determined by minimizing the total costs per ton at sea and in port. The previous discussions did not also specify the type of cargo shipping services (liner shipping service or tramp shipping service), water depth available in ports and cargo handling characteristics. The estimated optimal size of coal bulk carrier was revealed, taking voyage distance, port productivity, trade balance and fuel cost into account. Sys et al (2008) attempted to explain the continuing growth in container ship size by quantifying economies of scale using the liner service cash flow model. Their implications are 1) ship size and operations are linked, 2) optimal ship size depends on transport segment (deep-sea vs. short-sea shipping), terminal type (transhipment terminals vs. other terminals), trade lane (East-West vs. North-South trades) and technology, 3) a ship optimal for one trade can be sub optimal for another. Excess capacity is blamed in large part for the poor financial performance and economic inefficiency over the long-term history of the linear shipping industry. Fusillo (2003) attempted to explain the dynamic capacity expansion problem in liner shipping. Excess capacity is caused by strategic behaviour among dominant carriers and emerged from the peculiarities of the industry, including its tendency towards natural monopoly. Consequently, this may accelerate a continued growth of container ship size, resulting in excess capacity of liner shipping market and cascading phenomenon of container ships around the world. The cascading phenomenon of container ships was first analysed statistically by using Lloyd’s Marine Intelligence Unit (LMIU) data by Akakura et al (2008). This paper unveiled that cascading container ship-sizes in loading capacity deployed on intra-East Asia, intra-S.E. Asia and JapanS.E. Asia routes. Average container ship sizes increased by 10-30% from 2000 to 2006, depending on the route distance, some of which were actually cascaded from the longer to shorter routes.

IAME 2015 Conference, August 24-26, Kuala Lumpur, Malaysia

3


However, very few studies were conducted to unveil the extent of cascading effects particularly on the land-side infrastructure and super-structure and propose the strategy toward the cascading phenomenon, while it has been widely known. 3. Scale economy of container transport The container ships with larger loading capacity may gain the lower shipping unit cost in liner shipping services. Economy of scale advantage may first come from relatively smaller additional ship building cost compared to the additional loading capacity. Furthermore, economy of scale advantage may largely come from the significantly lower additional fuel cost for the longerdistance services compared to the additional loading capacity. The shipping unit costs were estimated to grasp the magnitude of economy of scale advantage of the larger container ships. The estimations were conducted based on the previous studies which achieved the shipping cost analysis of the container transport between East Asia and N.W. Europe, by summing up item-wise shipping costs, i) capital cost, ii) Suez Canal fee, iii) crew cost, iv) maintenance cost, v) insurance cost, vi) fuel cost, and vii) port dues (Furuichi et al, 2013, 2014). To explore the effect of the container ship-size on the shipping unit cost, necessary dimensions and engineering characteristics were assumed for the target container ships of 4,000, 6,000, 9,000, 11,000, 14,000 and 20,000TEUs in loading capacity respectively (Table-1). Origin and destination of the long-distance service were set as Yokohama in Japan and Hamburg in Germany, of which navigation distance via. Suez Canal is 11,480N.M. Table – 1 Container ship dimensions and engineering characteristics assumed for estimation

Ship-size (TEU)

Crews (Person)

LOA (m)

Beam (m)

Draft (m)

GT (ton)

DWT (ton)

4,000TEU 6,000TEU 9,000TEU 11,000TEU 14,000TEU 20,000TEU

23 23 23 23 23 23

296 296 367 363 365 400

32 40 43 46 51 59

13.0 14.0 14.5 15.5 15.0 16.0

40,000 75,000 89,000 131,000 170,000 180,000

50,000 80,000 115,000 128,000 155,000 165,000

Building Speed cost (Kn) (Mi.$) 47.0 67.4 98.1 118.5 149.2 190.1

25.0 25.0 25.0 25.0 25.0 23.0

Engine Power (KW) 40,000 57,000 68,000 72,000 80,000 60,000

Source) re-arranged by the authors referring to Furuichi et al (2013, 2014).


4


3.1. Shipping unit cost Shipping unit cost of USD1,355/TEU was obtained for the Yokohama-Hamburg service by the 4,000TEU container ship, assuming bunker oil price of USD650/ton. Fuel cost accounts for 57% of the shipping unit cost, followed by port dues (19%), capital cost (10%) and Suez Canal fee (10%) (Figure 1). Figure 1 – Shipping unit cost breakdown of the Yokohama-Hamburg service

3.2. Effect of ship-size on shipping unit cost Shipping unit cost of USD715/TEU was also obtained for the 20,000TEU container ship, 53% less than that of the 4,000TEU ship (USD1,355/TEU) when assuming bunker oil price of USD650/ton, which proved significant economy of scale advantage. On the other hand, the shipping unit cost of USD592/TEU was similarly obtained for the 20,000TEU container ship, 37% less than that of the 4,000TEU ship (USD945/TEU) when assuming bunker oil price of USD300/ton, of which magnitude of economy of scale effect declined (Figure 2). 3.3. Effect of energy-efficient engine power on shipping unit cost More importantly, economy of scale advantage largely comes from the lower additional fuel cost, due to significantly energy-efficient engines (60MW) which were obtained through the latest technical innovation for the 20,000TEU ships (Maersk, 2015).


5


Economy of scale effect generally diminishes as the container ship size increases, as seen between 4,000TEU and 14,000TEU container ships. However, economy of scale advantage significantly increases as container ship size exceeds 14,000TEU, due to the effect of energy-efficient engines and latest twin-propeller unit installed in 20,000TEU ships. Energy-efficient engines and latest twin-propeller unit may significantly affect economy of scale advantage of 20,000TEU ULCSs on the shipping unit cost (Figure 2). This may be a latest technological source of economy of scale advantage of newly emerged 20,000TEU ULCSs. Figure 2 – Shipping unit cost of the Yokohama-Hamburg service by ship-size and its engine power

4. Evolution of container ship-size Container ship-size evolution has started since the 1970s, the beginning of containerisation. Navigation constraints at the Suez and Panama Canals and the Malacca Straits have been eased to stimulate the world maritime trades and maximize their geographical advantages.


6


4.1. Evolution of navigation constraints Since the Panama Canal utilises the lock chambers, the Panamax ships need to pass through the lock chambers which are 320.04 m in length, 33.53 m in width and 12.56 m in depth. Accordingly, the Panamax ship is defined, of which LOA is 294m, beam is 32.3m and draft is 12m. The Panama Canal expansion project to be completed in 2015 or 2016 will ease the navigation constraints up to the New-Panamax ship (LOA: 366m, beam: 49m, draft: 15.2m). For the Suez Canal, authorized dimensions of vessels to transit the canal are a little complicated, whereas no lock chamber exists in the canal. A combination of permissible draft and bream are determined between (draft: 12.2m and beam: 77.5m) and (draft: 20.1m and beam: 50.0m), without a limit of LOA, according to the navigation rules of the canal (The Suez Canal Authority, 2015). The Malaccamax ship can have a maximum LOA of 400m, beam of 59m, and draft of 14.5m, as per the current permissible limits to meet the stringent rules and regulations with regard to operational efficiency (Wijnolst et al, 1999). Since the largest ships to be deployed on the East Asian-N.W. Europe services need to pass through the Malacca Straits as well as the Suez Canal, they need to simultaneously satisfy both permissible limits, resulting in the ultimate ship-size (LOA: 400m, beam: 59m, draft: 16m) equivalent to the Maersk Triple E (18,000TEUs) for the time being. 4.2. Summary of container ship-size evolution in the history Container ship-size evolution in the history is summarized taking the navigation constraints into account. Handy-size container ships up to 2,000TEUs emerged in the early 1970s, followed by sub-Panamax up to 3,000TEUs in the late 1970s. Compact Panamax up to 3,500TEUs emerged in the late 1980s, followed by large Panamax up to 4,500TEUs in the late 1990s, both of which carries 13 containers in a row on-deck. Post-Panamax up to 5,000TEUs emerged in the early 1990s, of which containers on-deck were 16 rows, followed by the super post-Panamax up to 8,000TEUs in 1995, of which containers on-deck were 17 rows (Gilman, 1998). New-Panamax up to 14,000TEUs emerged in the 2000s, of which containers on-deck were 18-20 rows, and had been deployed on mainly the East Asia-N.W. Europe services. The Triple-E Maersk of 18,000TEUs was delivered in 2013, of which LOA is 400m, beam is 59m draft is 16m, as the Malaccamax/Suezmax, exceeding the New-Panamax-size. Since then, CSCL, MSC, UASC, Evergreen, CMA-CGM, OOCL, and MOL continued to follow the Triple-E Maersk by ordering ULCSs of 20,000TEUs (Drewry, 2015, The Japan Maritime Daily, January 9, 2015).


7


Figure 3 – Container ship-size evolution and their on-deck container width and height

4.3. Evolution of shipping alliances As container ships have enlarged significantly especially in the East Asia-N.W. Europe services, shipping companies needed to accommodate enlarged ships by loading/discharging a huge volume of containers at a port of call in the services. Accordingly, shipping companies had finally integrated into four major shipping alliances, i.e. 2M (Maersk and MSC), G6 (Hapag-Lloyd, OOCL, NYK, APL, Hyundai and MOL), O3 (CMS-CGM, CSCL and UASC) and CKYHE (COSCO, K-Line, Yang Ming, Hanjin and Evergreen). This is another outcome generated by the evolution of container ship-size (Figure 4).


8


Figure 4 – Recent evolution of shipping alliances due to enlarged container ships

5. Enlarging trend of container ships deployed on the shipping services 5.1. Container ship-size deployed on the East Asia-N.W. Europe services By collecting the shipping service schedule data from the literatures, maximum, average and minimum loading capacities of the container ships were analysed, of which were deployed on the East Asia-N.W. Europe services in 2003, 2008 and 2013 (Ocean Commerce Ltd., 2004, 2009 and 2014). The average loading capacity of the ships was 5,479TEUs in 2003, which had grown by 102% up to 11,092TEUs in 2013. The ports of call was 13.9 in a voyage in 2003, which had increased slightly up to 14.5 in 2013 (Table-2). Those data indicates that the peak of loading/discharging containers at a port call had increased approximately twice as many in 10 years, which may be excessive beyond the capacity of the existing terminals used for the East Asia-N.W. Europe services. Port congestion have been recently observed in fact in many container ports due to insufficient terminal capacity and productivity as well as gate capacity. On the other hand, the maximum ship-size in loading capacity had grown significantly, reflecting the newly delivered largest container ships which were deployed on the services, representing 8,000TEU ships in 2003, 12,500TEU ships in 2008 and 18,000TEU ships in 2013. Much to the surprise, the average ship-size of 7,612TEUs in 2008 is closely equivalent to the maximum ship-


9


size of 8,272TEUs in 2003, similarly the average ship-size of 11,092TEUs in 2013 is closely equivalent to the maximum ship-size of 12,508TEUs in 2008 (Table-2). Table – 2 Container ships deployed on the East Asia-N.W. Europe services in 2003, 2008 and 2013

year

2003

2008

2013

Ship-size (TEUs) Max. 8,272 Ave. 5,479 Min. 2,500 Max. 12,508 Ave. 7,612 Min. 2,732 Max. 18,270 Ave. 11,092 Min. 7,226

Navigation distance (N.M.)

# of services (services)

# of ships in a service (ships/service)

Round trip period (day)

# of port calls in a voyage (calls/trip)

Ave. 11,253

28

8.6

60.5

13.9

Ave. 11,047

31

9.8

68.4

13.0

Ave. 10,974

22

11.3

79.2

14.5

Source: International Transportation Handbook 2004, 2009 and 2014 (Ocean Commerce Ltd.) 5.2. Container ship-size deployed on the East Asia-U.S. West Coast services Looking at the schedule of the East Asia-U.S. West Coast services in 2003, 2008 and 2013, the average loading capacity of the ships was 4,031TEUs in 2003, which had grown by 55% up to 6,233TEUs in 2013. The ports of call was 9.7 in a voyage in 2003, which had increased slightly up to 10.5 in 2013 (Table-3). Table–3 Container ships deployed on the East Asia-U.S. West Coast services in 2003, 2008 and 2013

year

2003

2008

2013

Ship-size (TEUs) Max. 6,802 Ave. 4,031 Min. 895 Max. 8,750 Ave. 5,093 Min. 1,839 Max. 13,344 Ave. 6,233 Min. 1,404


# of services (services)




Ave. 6,338

61

6.9

46.8

9.7

Ave. 6,225

56

6.8

47.9

9.2

Ave. 6,123

48

8.1

57.0

10.5

Source: International Transportation Handbook 2004, 2009 and 2014 (Ocean Commerce Ltd.)


10


Much to the surprise, the maximum ship-size of 8,750TEUs on the East Asia-U.S. West Coast services in 2008 can be recognized as having been shifted from the maximum ship-size of 8,272TEUs on the East Asia-N.W. Europe services in 2003, similarly the maximum ship-size of 13,344TEUs on the East Asia-U.S. West Coast services in 2013 had been also shifted from the maximum ship-size of 12,508TEUs on the East Asia--N.W. Europe services in 2008. This may be an empirical evidence that the former-largest container ships in the East Asia-N.W. Europe services (the longest service) had cascaded to the East Asia-U.S. West Coast services (the second longest service) (Table-2 and Table-3). 5.3. Container ship size deployed on the Japan-ASEAN services Similarly, looking at the schedule of the Japan-ASEAN services in 2003, 2008 and 2013, the average loading capacity of the ships was 1,276TEUs in 2003, which had grown by 45% up to 1,845TEUs in 2013. The ports of call was 11.3 in a voyage in 2003, which had increased slightly up to 12.2 in 2013 (Table-4). The maximum ship-size had apparently increased from 3,467TEUs in 2003 to 4,578TEUs in 2013. However, cascading phenomenon of the Japan-ASEAN services may not directly linked with the East Asia-U.S. West Coast services. Table – 4 Container ships deployed on the Japan-ASEAN services in 2003, 2008 and 2013 year

2003

2008

2013

Ship-size (TEUs) Max. 3,467 Ave. 1,276 Min. 743 Max. 4,578 Ave. 1,366 Min. 550 Max. 4,578 Ave. 1,845 Min. 128


(services)




2,763

16

2.9

20.3

11.3

2,794

26

3.0

21.0

11.1

2,588

25

3.2

22.4

12.2

# of services

Source: The Japan Maritime Daily, January 6, 2003, January 7, 2008 and July 31, 2013. 5.4. Container ship size deployed on the Japan/Korea/China services Again, similarly looking at the schedule of the Japan/Korea/China services in 2003, 2008 and 2013, the average loading capacity of the ships was 444TEUs in 2003, which had grown by 48% up to 659TEUs in 2013. The ports of call was 5.5 in a voyage, which had increased slightly up to 6.5 in 2013, similarly as observed for the Japan-ASEAN services (Table-5). IAME 2015 Conference, August 24-26, Kuala Lumpur, Malaysia

11


The maximum ship-size had apparently increased from 901TEUs in 2003 to 2,578TEUs in 2013. However, cascading phenomenon to the Japan/Korea/China services may not directly linked with the Japan-ASEAN services as well. Table – 5 Container ships deployed on Japan/Korea/China-services in 2003, 2008 and 2013 year

2003

2008

2013

Ship-size (TEUs) Max. 901 Ave. 444 Min. 80 Max. 1,295 Ave. 535 Min. 80 Max. 2,578 Ave. 659 Min. 90


(services)




790

74

1.5

10.5

5.5

805

104

1.4

9.8

5.5

843

87

1.5

10.5

6.5

# of services

Source: The Japan Maritime Daily, January 6, 2003, January 7, 2008 and July 31, 2013. 5.5. Cascading container ships in the future Cascading speed of the container ships may depend on the number of deployed ships in the services. The East Asia-N.W. Europe services, on which 249 ships (249 = 22*11.3) were deployed in 2013, may cascade faster than the East Asia-N.W. Europe services, on which 389 ships (389 = 48*8.1) were deployed in 2013. The average container ship-size is anticipated to be 18,000-20,000TEUs on the East Asia-N.W. Europe services for the near future, possibly by 2018-2020, because some seventy 20,000TEU container ships will be delivered on the services. At the same time, the maximum container shipsize is anticipated to remain in 18,000-20,000TEUs, because this size has already approached to the ultimate ship-size which is able to pass through both the Suez Canal and the Malacca Straits for the time being (Figure 5). Similarly, the maximum container ship-size is anticipated to be 14,000TEUs on the East Asia-U.S. West Coast services for the future, because 14,000TEU container ships will be cascaded to the East Asia-U.S. West Coast services, many of which are deployed on the East Asia-N.W. Europe services. However, the average ship-size is not easily anticipated, because the Asia-U.S. West Coast service does not necessarily pass through the Panama Canal, except for the East Asia-U.S. East Cost service. (Figure 5). IAME 2015 Conference, August 24-26, Kuala Lumpur, Malaysia

12


Figure 5 – Container ship-size evolution on the long-distance services for the future

Figure 6 – Container ship-size evolution on the short/medium-distance services for the future


13


On the other hand, the maximum ship-size on the Japan-ASEAN services is anticipated to be 4,500TEUs for the future, whereas that on the Japan/Korea/China services is anticipated to be 2,700-2,800TEUs, taking the recent ship assignment trends on those services into account. However, the average ship-size cannot easily be anticipated, because the demand density of the small and medium sized ports may be insufficient to accommodate excessively enlarged ships in loading capacity. (Figure 6). 6. Cascading QGCs 6.1. Evolution of QGCs installed in Japan Super-structure e.g. QGCs have also continued enhancing their dimensions, i.e. especially outreach and lift-height, to accommodate the enlarged container ships. Total number of the Panamax-plus QGCs installed in the container terminals of Japan were 240 in 2003, 229 in 2009 and 242 in 2013. The number of Panamax QGCs installed was 98 in 2003, declined to 70 in 2013, which are able to accommodate the container ships of 13 on-deck container rows and 5 on-deck container tiers. Instead, New-Panamax QGCs increased up to 18 in 2013 from 5 in 2003, which are able to accommodate the container ships of 20-22 on-deck container rows and 7 on-deck container tiers. In fact, 28 Panamax QGCs (=98-70) had disappeared, which implies that those QGCs may have been exported as the second-hands to the relatively small container terminals out of Japan, whereas 13 additional New-Panamax QGCs (=18-5) came into the Japanese market. This may be an empirical evidence of cascading QGCs from the larger terminals to the small/medium terminals, generated by rapidly enlarged container ships. Table 6 – Panamax-plus QGCs installed in container terminals of Japan in 2003, 2009 and 2013

QGC capability Panamax Post-Panamax Super Post-Panamax New-Panamax Suezmax/Malaccamax Total

On-deck rows 12-13 14-16 17 20-22 23-24 ---

On-deck tiers 4-5 5-6 5-6 7 7-9 ---

2003

2009

2013

98 75 62 5 0 240

72 78 65 14 0 229

70 82 72 18 0 242

Source: compiled by the authors referring to Japan Association of Cargo-handling Machinery Systems, List of Container Cranes in Japan, 2004, 2010 and 2014.


14


6.2. Cascading QGCs together with cascading container ships As seen in Japanese experiences, QGCs which lose their functional capability to accommodate unexpectedly enlarged container ships need to be re-allocated to the smaller terminals, because they are perhaps in good conditions and their design life still continue to a certain extent. When expecting both Post-Panamax and Super Post-Panamax QGCs will be replaced by the newly-introduced New-Panamax QGCs, those to-be-replaced QGCs need to be re-allocated to the relatively smaller container terminals. ASEAN may be potential recipient countries, since ASEAN-related trade is expected to grow significantly due to the integrated ASEAN community in 2015 (Figure 7). Figure 7 – Container ship-size evolution and QGCs’ capability for the future

7. Cascading port congestion at both land-side and water-side As more volume of containers loaded/discharged at a port call of enlarged container ships have generated port congestion at both land-side and water-side, the container ships need to wait for port entry offshore, and require higher sailing speed after delayed port entry and additional ships IAME 2015 Conference, August 24-26, Kuala Lumpur, Malaysia

15


to maintain the liner services, which impose additional costs to the shipping lines as well as shippers. 7.1. Land-side port congestion Ship-owners’ Forum Shipping Economics Review Committee (2015) reported that persistent port congestions have been observed recently in ports of Manila, Ho Chi Minh, Hong Kong and Singapore. Those congestion are mainly caused by insufficient infrastructure at both land-side and water-side. At the same time, land-side traffic congestion were also observed in ports of Tokyo, Rotterdam, Antwerp, etc. This is an empirical evidence that the peak of loading/discharging containers at a port call on the East Asia-N.W. Europe services may be excessive beyond the capacities of the existing container terminals and hinterland traffic network. 7.2. Water-side port congestion Water-side port congestion were apparently observed in the U.S. West Coast ports, mainly due to the prolonged labour disagreement between the ILWU and PMA (ASFSERC, 2015). On the other hand, Barge Congestion Surcharge was introduced in 2014, so as to fully utilise the berth window at Rotterdam, which is another evidence that water-side congestion actually occurred in port of Rotterdam (MOL, 2015). Fragmented dedicated terminals for the former shipping alliances have been yet to be re-allocated to an integrated large dedicated terminals to accommodate newly-composed shipping alliances. This may be another reason why the significant congestion occurred at both land-side and waterside especially in the major ports on which the largest container ships call along the East AsiaN.W. Europe services. 7.3. Potential cost of port congestion Measuring cost of congestion or in other words time value of cargoes as well as ships themselves is a quite tough task that no one has successfully completed yet. Congestion Surcharge of USD50/TEU and Barge Congestion Surcharge of EUR15/container may provide the researchers with the empirical facts, which were imposed to the shippers of the cargoes to/from Hong Kong and Rotterdam respectively (MOL, 2015). 8. Cascade strategy of container terminals 8.1. Cascading port congestion Most significant causes of port congestion are insufficient infrastructure and super-structure to accommodate un-expectedly enlarged container ships. Port congestion is expected to cascade from IAME 2015 Conference, August 24-26, Kuala Lumpur, Malaysia

16


the large-scale ports to the small/medium ports, as un-expectedly enlarged container ships are to cascade from the longer-distance services to the short/medium-distance services. Since both infrastructure and super-structure investments inevitably require a long period of time as well as a huge amount of fund, land-side traffic control system may be the fast-acting and costeffective mitigation measures for the time being. Ports of LA/LB introduced peak pricing system, PierPASS, to mitigate heavy traffic congestion. Similarly, Port of Sydney introduced an advanceappointment system, Port Botany Landside Improvement Strategy (PBLIS), together with the state regulations. Those efforts should be more highlighted as cascading strategy of container terminals to cope with cascading port congestion. 8.2. Integration of fragmented terminals for the newly-composed huge shipping alliances Fragmented dedicated terminals for the former alliances may be another cause of the both landside and water-side port congestion, because the fragmented terminals generate unnecessary moves of containers/trailers and ships among the terminals. Integration of the fragmented terminals are essential to maximize the terminal capacity by eliminating unnecessary moves of containers/trailers and ships. For those ports which plan to build a new terminal, re-assignment of the fragmented terminals is the first priority, whereas it requires a long period of time as well as a huge amount of fund. 8.3. Cascading super-structure Both Post-Panamax and Super Post-Panamax QGCs will be replaced by the newly-introduced New-Panamax QGCs. Accordingly, those to-be-replaced QGCs may need to be sold as the secondhands to the relatively small container terminals, which require a new market of the second-handed QGCs. ASEAN may be potential market of those QGCs, since ASEAN-related trade is expected to grow significantly due to the integrated ASEAN community in 2015. 9. Conclusions First, the authors examined the effect of loading capacity on economy of scale advantage generated by enlarged container ships. The economy of scale advantage largely comes from the significantly lower additional fuel cost, due to significantly energy-efficient engines (60MW) and twin propeller units which were obtained through the latest technical innovation for the 20,000TEU ships. Second, enlarging trends of container ships were observed on the various shipping services for the last ten years. Furthermore, the largest ships to be deployed on the East Asian-N.W. Europe services need to satisfy both permissible limits of the Suez Canal and the Malacca Straits IAME 2015 Conference, August 24-26, Kuala Lumpur, Malaysia

17


simultaneously, resulting in the ultimate ship-size (LOA: 400m, beam: 59m, draft: 14.5m) equivalent to the 20,000TEU ships for the time being. Third, the existence of cascading to-be-replaced QGCs were suggested by statistics in Japan. Cascading port congestion at both land-side and water-side were observed mainly along the East Asia-N.W. Europe services, which had been generated by un-expectedly enlarged container ships. Lastly, a cascade strategy of container terminals were proposed, to accommodate cascading container ships so as to maximize their quantitative and qualitative capacity, by analysing various phenomena generated by enlarged container ships and their cascading effects. References Akakura, Y. and Watanabe, T., 2008, Research on the Trend of Ship Dimensions at Intra-East Asia Sea Route - Impact of Cascading Effect from Trunk Line –, Transport Policy Studies’ Review 11 (2): 37-44. ASFSERC, Note of Understanding, March 11, 2015, Kuala Lumpur, Asian Ship-owners’ Forum Shipping Economics Review Committee, 2015. Drewry, Herd mentality. Date of access: 10/04/2015. http://ciw.drewry.co.uk/release-week/201506/ Fusillo, M., 2003, Excess Capacity and Entry Deterrence: The Case of Ocean Liner Shipping Markets, Maritime Economics and Logistics 5: 100-115. Furuichi, M. and Otsuka N., 2013, Cost Analysis of the Northern Sea Route (NSR) and the Conventional Route Shipping, Proceedings of IAME 2014 Conference. Furuichi, M. and Otsuka N., 2014, Proposing a common platform of shipping cost analysis of the Northern Sea Route and the Suez Canal Route, Maritime Economics and Logistics advance online publication, 9 October 2014; doi:10.1057/mel.2014.29: 1-23. Gilman, S., 1999, The Size Economies and Network Efficiency of Large Containerships, International Journal of Maritime Economics: 39-59. Jansson, J.O. and Shneerson, D., 1982, The Optimal Ship Size, Journal of Transport Economics and Policy 16 (3): 217-238. Japan Association of Cargo-handling Machinery Systems, List of Container Cranes in Japan, 2004, Japan Association of Cargo-handling Machinery Systems. IAME 2015 Conference, August 24-26, Kuala Lumpur, Malaysia

18


Japan Association of Cargo-handling Machinery Systems, List of Container Cranes in Japan, 2010, Japan Association of Cargo-handling Machinery Systems. Japan Association of Cargo-handling Machinery Systems, List of Container Cranes in Japan, 2014, Japan Association of Cargo-handling Machinery Systems. Kendall, P.M.H., 1972, A Theory of Optimum Ship Size, Journal of Transport Economics and Policy 6 (2): 128-146. Maersk, Efficient propulsion - The Triple-E two propeller system, Date of access: 18/04/2015. http://www.maersk.com/en/hardware/triple-e/the-hard-facts/efficient-propulsion MOL, Barge Congestion Surcharge of the Port of Rotterdam, Date of access: 19/04/2015. http://cms.molpower.com/announcementdetail?id=276 MOL, Congestion Surcharge at Origin for Intra-Asia Shipment, http://www.molhk.com/files/uploads/file/news/AO-201436%20HK%20Congestion%20Surcharge%20at%20Origin%20for%20IntraAsia%20Shipment.pdf

19/04/2015.

Ocean Commerce Ltd., 2004, International Transportation Handbook 2004. Ocean Commerce Ltd., 2009, International Transportation Handbook 2009. Ocean Commerce Ltd., 2014, International Transportation Handbook 2014. Sys, C., et al., 2008, In Search of the Link between Ship size and Operations, Transportation Planning and Technology 31 (4): 435-463. The Japan Maritime Daily, 2003, Overseas Container Liner Shipping Service. January 6. The Japan Maritime Daily, 2008, Overseas Container Liner Shipping Service. January 7. The Japan Maritime Daily, 2013, Overseas Container Liner Shipping Service. July 31. The Japan Maritime Daily, 2015, Accelerating new order of Ultra Large Container Ships (20,000TEU-class). January 9. The Suez Canal Authority, Rules http://www.suezcanal.gov.eg/NR.aspx

of

Navigation,

Date


of

access:

19/04/2015.

19


Wijnolst, N., Scholtens, M., Waals, F., 1999, Malacca-Max; The Ultimate Container Carrier, Delft, The Netherlands, University Press.


20

cascade strategy of container terminals to maximize ...

cascade strategy of container terminals to maximize ...

Suggest Documents

Container Terminals In Europe

PLAN VALIDATION FOR CONTAINER TERMINALS

Operations Systems of Container Terminals: A Compendious ...

Operations Systems of Container Terminals: A ... - Springer

bottlenecks of inland container terminals - PSAM 12

Container Terminals: Scheduling Decisions, their ... - CiteSeerX

Energy consumption in container terminals

Optimizing automated container terminals to boost productivity - TBA

Port of Hamburg Container Terminals in the Port of Hamburg

method of assessing the impact of polish container terminals in

A Study on the Efficiency of Container Terminals in ...

Capacity analysis of container terminals using simulation techniques ...

cycloaddition strategy via intramolecular cascade

10 Essential Rules to Maximize the Effectiveness - Strategy Driven ...

A Risk Assessment Methodology in Container Terminals

Transnet Port Terminals Ngqura Container Terminal Document Title ...

10 Essential Rules to Maximize the Effectiveness - Strategy Driven ...

An Operating Room Scheduling Strategy to Maximize the ... - CiteSeerX

Optimizing protein intake as a foraging strategy to maximize mass ...

New Conceptual Handling Systems in Container Terminals - kisti

generic simulation for rail-road container terminals - Semantic Scholar

An analytical framework for managing container terminals ... - CiteSeerX

improving quay transport on automated container terminals - CiteSeerX

Simulation modelling in ports and container terminals