Keeping pace

26 Mar 2016
Head down: Long Beach took the decision to expand its Middle Habor to cater for increasing demand. Credit: Port of Long Beach

Head down: Long Beach took the decision to expand its Middle Habor to cater for increasing demand. Credit: Port of Long Beach

Dean Davison examines how existing ports can plan to keep pace with the swelling demand

Without doubt the ability to be able to show future expansion potential in an existing location remains a major factor that can help a port remain a competitive call option for shipping. If an existing facility has invested in improved efficiencies and intensified operations through automation or maximised performance measures, only two options remains: increase and enlarge existing facilities at the current location or build a new terminal or port elsewhere.

Both options represent a significant level of investment but both will cover long-term options to meet projected future growth levels, irrespective of the type of cargo.

A key driving factor in the planning process will be continued development of the industry itself. A good example in the container business has been the move towards ever-larger ships. While there will be a ceiling relating to how big the ships can go, the fact is that this tonnage has continued to increase in size quite substantially over the past 10-15 years and this has placed tremendous pressure on the port or terminal link in the logistics network.

That said, while a terminal needs to be planning for longer quays, bigger cranes, deeper water, and high container exchanges on and off the ship, there can also be an impact on the surrounding infrastructure. For example, the raising of the Bayonne Bridge to allow access to key container terminals in the Port of New York/New Jersey and the Gerald Desmond Bridge replacement project in Southern California are just two noted and well-publicised projects that will allow bigger ships to access key terminals in the US.

Another significant infrastructure project worthy of mention is the Panama Canal expansion and the soon-to-be ability of the canal to allow maximum ships in the 12,500 teu-13,000 teu size range to transit, compared with the current largest of around 5,000 teu-5,500 teu.

So the issue of port and terminal expansion and the choices available involve a number of other factors that must be considered in the planning and execution process, some of which do take a long time to resolve.

Planning options

Looking at some specific examples of how ports and terminals plan in the expansion process, the availability of suitable land, the need to successfully navigate the environmental requirements and the capability to continue to serve the same key hinterlands are likely to be uppermost in the forward-planning thought process.

On this basis, the ability to expand an existing port or terminal is often the preferred option – and there are numerous examples of this. For example, in the Hamburg-Le Havre area, there are a number of very-well established ports, including both Antwerp and Rotterdam, and each continues to expand the size and quality of facilities on offer (such as the massive Maasvlakte development in Rotterdam and the Deurganck Dock project in Antwerp).

Based on strong ongoing support from major terminal operators and shipping lines, including PSA Antwerp and Terminal Investment Ltd at Deurganck Dock, Antwerp, these projects have carefully planned and developed a facility able to meet projected demand of key customers, such as Mediterranean Shipping Co, for the longer-term future at this port and the hinterlands it serves in northern Europe.

The continued increase in ship sizes in the Asia-Europe trades and the need for more terminal capacity is the driving force behind the switch from the older Delwaide Dock to the new Deurganck Dock for Mediterranean Shipping Co at Antwerp.

The need for more cranes, a bigger terminal and larger annual capacity are all being fulfilled by the new facility, although the key driving matter which has taken a central role throughout the planning process has been the ability (and need) to facilitate the successful handling of larger container ships. Antwerp's Deurganck Dock expansion represents a good example of an existing port that has looked to increase the facilities in an established location as it plans to keep pace with industry demands.

American choice

Of course, the trend is not limited to just the well-established port range in North Europe. Looking specifically in the Americas, the current expansion by PSA Panama of its facility, PSA Panama International Terminal (PPIT) on the Pacific Coast of Panama, opposite to the Port of Balboa and almost adjacent to the entrance/exit of the Panama Canal is another good example of a facility now expanding to keep pace with industry developments. The terminal only opened in December 2010 but by the second half of 2016 it will be substantially larger, with the ability to handle bigger vessels and meet growing potential cargo demand in the region.

By way of comparison, the other ongoing option in the same competitive Pacific Coast of Panama region will be the proposed new transhipment hub at Corozal. With somewhat limited expansion potential at the Port of Balboa, the authorities in Panama need to develop a Greenfield site to deliver the needed, longer-term container terminal capacity – this is in addition to the existing traffic at Balboa and the extra capacity that will be provided by PPIT.

However, with Balboa already operating and PPIT due to be offering extra space by the end of the current year, it is proof that planning does indeed have to factor in much longer time horizons in the future and also undertake a Greenfield development option when, perhaps, it remains the only real alternative if existing ports are unable to expand.

Another key location for meeting cargo demand is San Pedro in southern California and here there are two different options. The $2.1bn Middle Harbor project at the Port of Long Beach will combine Piers D, E and F into a single, larger terminal, capable of handling larger containerships, such as the current containerships of up to 18,000 teu that are now calling to the US West Coast.

This project commenced in spring 2011 and Phase I is expected to see operations commencing this year, before work starts on Phase II with a target completion date of 2019. When fully built the 123 hectare terminal will have capacity to handle 3.3m teu (around 2.2m teu per annum more than provided by the individual terminals prior to the amalgamation).

By way of comparison, a longer-term project for the adjacent Port of Los Angeles is the construction of Pier 500 to provide a new 200-acre container terminal. Likely to take up to 10 years to come to fruition it represents a highly-significant cost to undertake as it is primarily a landfill project not using any existing land-based infrastructure, albeit that it is within existing port boundaries. In this case, it represents the most feasible choice to maintain the port’s competitiveness for its customers.

As these notable selected examples highlight, the ability to keep pace with key trends such as larger ships means a need to increase the size and quality of infrastructure. An existing port has the track record of already serving customer needs, so it is a logical choice to expand the current terminals first and wherever possible.

Dean Davison is principal consultant at Ocean Shipping Consultants, part of Royal HaskongingDHV.

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