33The first and most obvious thing that must be said about the Asian container trades is that they are a lot bigger and more important than they used to be. There are several principal reasons for this spectacular growth.<\/p>\n
Despite some setbacks, over the last decade the economic performance of the major Asian economies other than Japan has been impressive. Global trade liberalisation and specific initiatives taken by individual countries have meant that the relationship between economic growth and trade volumes has changed.<\/p>\n
The composition of Asian trades has changed, with manufactured goods increasingly dominating the trade mix, with the result that an increasing share of total trade is in containerisable cargoes.<\/p>\n
With container handling facilities proliferating throughout the region, and handling performances improving in many ports, cargoes that were previously moved in non-containerised form have converted to containerised form.<\/p>\n
Because we have come to take the rapid growth of the Asian container market for granted, it is easy to lose sight of just how much they have grown: between 1992 and 2003 the total volume of containers handled in Asian container ports grew from just over 41m to 142m TEUs – an increase of well over 200% in eleven years. What is more, although there are some good reasons to believe that this rate of increase cannot be sustained indefinitely, the slowdown is likely to be very gradual. East and SE Asian container port volumes increased by 13.8% per annum between 1990 and 1995 followed by an 11.5% per annum increase between 1995 and 2000. Growth over the last four years has continued at a very healthy rate of 10% per annum.<\/p>\n
This growth has been facilitated by enormous improvements in container terminal productivity in the region, driven largely by an extensive programme of privatisation and the internationalisation of the container terminal industry. But catering for this massive increase in demand has nevertheless required a great deal of investment in new container port facilities.<\/p>\n
There is no reliable data on precisely how much has been invested in new terminal developments in the region over the last decade but a conservative estimate is that a minimum of $12 billion has been invested in container berths and terminal facilities alone; the cost of dredging and other related works would add a great deal more to this total. In 2001, UN ESCAP estimated that an additional $27 billion would be needed by 2011. With recent robust growth and shortterm future expectations it is likely that this figure will turn out to be conservative.<\/p>\n
With investment requirements of this magnitude, the challenge for national governments and private investors alike is making sure that the right sort of investments are made in the right place. Two factors have made this quite difficult in the recent past, and are likely to make it increasingly difficult in the near future: the comparative rapidity with which the epicentre of container trade growth has shifted in Asia over the last decade; and the increasing complexity of the service patterns adopted by major shipping lines.<\/p>\n
The figure below illustrates just how hard it is to predict how the economic balance in the region will change, and how this will affect container shipping volumes. The forecast figures are interpolations, based on projections for 2000 and 2005 made by a major industry analyst in 1994. They reflect experienced professional judgement based on careful research and the application of sound forecasting techniques. They are, in short, high quality forecasts – in my judgement as good as anything available at the time – providing a remarkably accurate estimate of the total East Asian container trade volumes in 2003. But events that no-one predicted at the time, particularly the 1997 crisis, the staggering pace with which Chinese trade has grown, and the emergence of major new transhipment centres, have resulted in outcomes for individual countries that are very significantly different from expectations.<\/p>\n
The emergence of new transhipment centres is also implicated in the second of the factors that makes reliable prediction of future port container volumes in the region difficult. This is the increasingly complex service patterns adopted by shipping lines. The conventional wisdom is that increased concentration and alliance-building in the liner shipping industry has been driven by the pursuit of economies of scale – the need to deploy, and to fill, larger and more economical vessels. But this is only a part of the story. While the top-tier companies have deployed significantly larger ships, they have also diversified and extended their networks. Mergers and alliances have allowed each entity not only to use bigger ships, but also to use more of them.<\/p>\n
This is quite different from what was supposed to happen. When post-Panamax vessels first began to appear in large numbers in the early to mid 1990s, the expectation was that this would lead to a significant simplification of shipping routes: the mega-ships would operate greatly streamlined services calling at one or perhaps two hub ports at each end of the route, with feeder services or intermodal services consolidating cargoes at these hub ports. All ports other than the global hubs would as a result be relegated to tributary status, and service patterns would become standardised and look something like those show in Figure 2 above.<\/p>\n
As usual, what has happened has been a great deal more complicated. In the first place, the average number of ports of call on each individual route on the major East-West trades in 2002 was almost exactly the same as it was in 1992. But there were many more individual services, or ‘strings’, operating, and each of these covered overlapping but not identical sets of ports. As a result, the total number of ports receiving direct calls from top-tier liner services in the major global trades increased markedly. No less than 22 new ports were added to these services during the 1992-2002 period, 18 of them in Asia. By contrast, only two ports that were direct call ports in 1992 were not served by these services in 2002, and only one of these – Osaka – was in Asia.<\/p>\n
The service patterns that have in fact emerged from the changes of the last decade are vastly different from the clean, logically organised hub-and-spoke patterns dreamed of by analysts a decade ago. Each major line or alliance has developed a complex set of overlapping routes with multiple interchange points, the details of which are influenced by a whole host of factors: operating costs;<\/p>\n
cargo balance; container repositioning; transit times for cargoes;<\/p>\n
service frequency between principal centres; and retaining key customer accounts, are just a few of these. Some idea of just how complicated the solutions to this multi-faceted problem have become can be seen from Figure 3, which shows the East-West service network of the Grand Alliance as it was at the end of 2002 when the detailed research on which this article is based was undertaken. And remember – this is just one alliance: think what the picture would look like if we superimposed the service patterns for all of the other major lines and alliances.<\/p>\n
All of this has and will make more difficult – but I guess also more exciting – the vastly complicated port strategy game. Many ports in the Asian region at least will in the future play three different roles simultaneously. They will serve as feeder ports for some cargoes;<\/p>\n
direct ports of call serving local hinterlands for others; and in still others will serve as consolidation ports for intermodal or transhipment cargoes from remote origins. Port hierarchies are becoming and will increasingly become meaningless, and the meaning of the term ‘hub port’ increasingly elastic, covering everything from massive transhipment centres such as Singapore through national primate ports such as Manila to minor local consolidation nodes such as Muara.<\/p>\n
This would perhaps not matter if there was not so much money at stake. Without a single exception, all of the vessels of over 4,500 TEUs that are now in service, are regular callers at Asian ports. To be a mainline port of call in Asia, and to play that role efficiently, will mean providing approaches, berths, handling equipment, storage areas and land transport access to meet the demands of postPanamax vessels, and this will further intensify the demand for investment funds. Yet it is hard to imagine that many ports will decide to stay out of this game.<\/p>\n
Permanent relegation to the status of feeder port would have been difficult, but possible, for most ports to accept if the inexorable logic of the development of the international liner shipping system clearly showed that there was no realistic alternative. But this is not the case. The structural changes that we have seen in the liner shipping system in recent years point quite clearly in the other direction. For many ports, a role in the big league – inclusion on the routes of at least some of the premier international services – is not a pipe dream, but a realistic aspiration. To invest large sums of money in order to realise this aspiration may not always be wise from an economic or financial point of view, but it is a temptation that most of the port managers that I know – and most governments – are going to find dreadfully hard to resist.<\/p>\n
Steve Meyrick, managing director of Meyrick and Associates, is a maritime transport economist with particular interests in the analysis of ports policy and management; pricing and economic regulation;<\/p>\n
financial and economic evaluation of maritime projects; and global liner shipping. Meyrick and Associates website: www. meyrick. com. au<\/p>\n","protected":false},"excerpt":{"rendered":"
The growth in scale and complexity of Asias container terminals is providing the ports of the region with massive new challenges – and new opportunities. Steve Meyrick tells the story.<\/p>\n","protected":false},"author":8,"featured_media":1350,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[32],"tags":[],"sponsor":[],"class_list":["post-1349","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-asia"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/posts\/1349","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/comments?post=1349"}],"version-history":[{"count":0,"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/posts\/1349\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/media\/1350"}],"wp:attachment":[{"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/media?parent=1349"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/categories?post=1349"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/tags?post=1349"},{"taxonomy":"sponsor","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport-congress\/wp-json\/wp\/v2\/sponsor?post=1349"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}