At the mercy of carriers

COMMENT: Ports and terminals are being forced into major infrastructure investments at the behest of carriers. The reason being that carriers are obsessed in achieving the maximum economies of scale possible, often without fully considering the consequences on themselves or the industry that services them, writes Ben Hackett.

It is not just the large East-West trades that are being impacted but also many of the smaller North-South trades that “benefit” from the cascading of ships that in many cases are far too large for the trade volumes. This successive process of shifting ships downward to smaller trades can be likened to a succession of waterfalls which end must ultimately with the destruction of the smaller ships that have no further place to go.

Ports are being pushed into expensive dredging - which faces the full brunt of environmental pressures - and raising of bridges to allow ever-larger ships to pass under in order to reach terminals that were built along river stretches that had more than enough clearance for ships of the time. Think only of Bayonne Bridge or the bridge in Hamburg as two examples.

Who pays for this massive infrastructure work? The taxpayer, of course, but the benefit goes to the carrier and the terminal operators. The latter, mostly operated privately, are also being forced into spending large amounts of money to cater for the ultra large container ships. New cranes are needed in order to have the outreach to reach the farthest row of containers. 

The size of the ships and the pressure from the carriers to shift the maximum number of boxes in the shortest time - again for the benefit of the carrier - is causing a whole new industry of automation to be invented, but to little avail as the number of cycles per crane hour remains stubbornly in the 28-35 range. The problem is the speed of moving the boxes from the quay side to the stack. This is an issue that has yet to be resolved. 

Fortunately, carriers ultimately pay for the terminals investments, something that we can see in the healthy financial results of the big five terminal operators. However, the pressure on ports is unlikely to be nearing the end as the full economies of scale have yet to be achieved.

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