Making the calculations

“If they are outsourcing, the ports don’t have to do any creative accounting,” he says. “More and more equipment isn’t bought, but leased. And if they don’t own the machines any more, the balance sheet looks completely different. They pay per hour, so it is mainly fixed costs. We do the depreciation and we take the risk over the re-sale value of a machine when the time comes.”

This formula switches the risks back on to the manufacturer and Mr van Hove says that estimating the costs in each new proposal “isn’t an easy calculation.

“But we have learned to do that over time, so it is normal business for us. In the late 1990s we didn’t have so much experience in this and did sometimes underestimate the costs – but now we can normally predict it quite closely. And because we have so many contracts, they can balance each other out.”

Meanwhile, customers simply buying equipment are increasingly asking for overall costs, not just purchase price.

“For us at Kalmar, that is a very positive development, because maybe we are not always the cheapest in the initial investment but we know we have very good machines over time – so we can show what they can expect in the operational lifetime.

“But at the end it always remains dependent on the drivers – are they trained or not? How is the pavement or surface of the terminal, because that will affect tyre costs and vibration of equipment. In our models, we can actually select three types of surface in order to do our calculations.”

There is also the question of just how intensively the equipment is going to be used – clearly, the maintenance costs will be higher on a piece of kit operating near its capacity, but there might also be implications if the equipment is in so much demand that it is difficult to fit in the necessary routine maintenance.

“Bigger ships imply bigger intervals between ships in which to maintain the equipment,” says Robin McLeod. “Also, the amount of time you can full employ, say, six cranes on a ship (necessary to attract the ship in the first place) can be 50% of the ship alongside time, and it will be quite normal to end up with two or three cranes idle waiting for the others to finish. With feeders, the cranes can go from ship to ship and intervals can be too short to do any serious maintenance.”

However, port operators are getting wiser all the time, Rob van Hove points out. As the large operators expand their networks around the world, they can gather data from their different terminals to see and compare exactly how their equipment is performing.