Rules reviews can boost efficiency
Any text that underscores operations at ports shouldn’t be left to gather dust, finds Dave MacIntyre.
Rules, regulations and bylaws – they may be the unseen framework under which ports work, but rather than being seen as a chore to compile and then being packed away in a dusty file never to be viewed again, regular strategic reviews of these documents can lead to significant improvements in efficiency, productivity and safety.
Bylaws or regulations may control anything from operational controls and berth occupancy to pollution, pricing and safety and while different ports – and different regulatory authorities – approach the subject in varying ways, there are some striking examples of how reviews can bear fruit.
The Port of Duqm in Oman has deep draft, lengthy quay walls and an expansive basin, and as the principal anchor of a planned huge Special Economic Zone, could develop into one of the Middle East's largest ports.
It is drafting port rules for its liquid jetties and has selected Netherlands-based Systems Navigator to analyse the impact of its rules from a logistics perspective, to maximise port capacity.
Systems Navigator specialises in advanced and predictive decision-support technology, using simulation modelling to demonstrate the impact of change. It analysed and compared multiple port scenarios. By quantifying the impact of different rules, the project team developed performance indicators, such as berth occupancy and waiting times.
It identified risks for waiting times and recommended preferred rules which would have the lowest impact on them. Additionally, the team drafted berthing procedures and queuing priority rules.
Joost Smits of Systems Navigator says that port rules, such as vessel priority or the maximum allowed time at berth, have a major impact on berth utilisation and waiting times – and therefore on customer satisfaction and return on investment.
“We analysed future port scenarios based on various port rules. The scenarios included, among others, fleet mix, planned product throughput and vessel priority settings. Port rules showing a low impact on vessel waiting time while being able to facilitate a large port throughput were recommended.”
Mr Smits says other ports could benefit from regularly reviewing their bylaws and rules: “Ports should check if their own (commercial/logistical) port rules are not a bottleneck for improving port performance. Fleets change (megaships, cruise ships, LNG bunkering etc.) and ports should understand how this affects their performance.
“A quick check of the port performance doesn't require a large investment if the proper simulation company is asked to do this.”
Pricing is the main focus of a review of rules being undertaken in India, where different rules apply to the major Government-owned ports which have been run as trusts and the smaller ports under state jurisdiction.
The major ports argue that tariff rules have led to difficulties for them in adjusting pricing in line with changing market conditions. The state ports however, are free to develop their ports and new locations with private players without any control or restriction on tariffs.
The Major Port Trusts Act 1963 governs the central government-owned ports and the rules and regulations are part of the legacy framework under which major ports are run as trusts and not as corporate bodies.
Government restriction on tariffs was introduced in 1997 through the Tariff Authority of Major Ports (TAMP) covering major central government port services, land leasing, PPP projects and expansion.
“These major ports cannot be compared to new greenfield projects where the risks are higher and returns delayed [and where] the investor has to develop everything and may or may not succeed,” says Indian ports consultant Surendra Sharma. “Such non-major greenfield ports have no tariff restriction.
“The government view was that investment in major ports comes as a package deal with existing developed infrastructure and cargo support, hence it cannot be exploited for profit by private companies who are there only for a limited period.”
When major ports like Jawaharlal Nehru Port (JNP) transformed to a landlord model and started inviting private players to develop additional berths and run the terminals it was a known fact that ports are run under a trust model.
“Private companies who have developed terminals at JNP have got the benefit of the developed support system and have generated good volumes in a short period to recover their investment. Hence the tariff ceiling is not on making profits but on higher profits.”
Mr Sharma adds that the central government understands the limitations in this trust model and has been trying unsuccessfully to corporatise ports for the last two decades – albeit the present government is committed to reforms.
Weighing up benefits
The current system offers pros and cons for both major and minor ports.
“Private terminals in the major ports have an advantage in the short- and medium-term as they get a plug-and-play model while new greenfield non-major ports under the state government benefit in the long run with free tariffs as supporting infrastructure develops and cargo volumes gradually increase.
“While major ports and terminals have tariff restrictions as a dampener, the non-major ports have to make large investments in supporting infrastructure and developing a logistics ecosystem.”
Now, the Indian Government has set the ball rolling with the Major Port Authorities Act 2016 (MPAA) which is set to replace the Port Trust Act of 1963. This will give the major ports more freedom and power to work out fresh terms for new projects and ensure migration for TAMP-regulated terminals to market-driven tariffs.
Under the new MPAA an independent Review Board is to cover TAMP cases, resolve disputes between ports and PPP concessionaires, review stressed PPP projects and suggest remedial measures.
In PPP projects, the concessionaire will be free to fix the tariff based on market conditions.
Where rules governing safety are concerned, New Zealand is one of the few countries to operate a Port and Harbour Marine Safety Code.
The code was first issued in 2004, using the UK's Code as a model to set a common approach to safety management within ports. In 2014 a review was undertaken and the code was revised in 2016.
It established a new governance structure with expert panels to assess performance against agreed national standards. A total of 16 regional councils, 14 port companies and Maritime NZ are party to the code, and all three parties are represented in the governance body.
The voluntary code covers all activity associated with the movement of vessels entering, leaving and navigating within ports and harbours. It promotes a systems approach to safety management, based on risk assessment and ongoing monitoring of safety performance.
Stephanie Winson, general manager legal and policy at Maritime NZ, says the 2016 revision was the first major consultation since 2004 but in that time there were updates to the Maritime Transport Act, which would have been enacted at the ports as they were introduced.
“The 2016 code has resulted in a national voluntary standard which has buy-in and commitment from ports and councils across New Zealand.
“Maritime NZ is confident that this collaborative approach supported by a systems focus on safety is a very effective way to manage risks in ports and harbours,” she says.
TAKE TIME TO REVISIT RULES
Port professionals on both sides of the world agree that rules and bylaws benefit from regular reviews.
Ben Van Scherpenzeel, director nautical developments, policies and plans at the Port of Rotterdam and chair of the International Taskforce Port Call Optimisation project, says the Duqm rules are more aptly described as “admission policies”.
“Normally admission policies are not published as they are berth- and ship-specific and therefore very detailed. Admission policies to berths may require simulations, which normally requires outside advice.
“It is good practice to review admission policies together with all stakeholders, as traffic or infrastructure might change over time,” he says.
New Zealand port executive and former shipping line general manager Sean Bolt says that in New Zealand, bylaws are set by the harbourmaster on behalf of the regulator (regional councils), in conjunction with other stakeholders including the port marine team.
“Safety is the overriding factor. Ports will have operating SOPs [standard operating procedures]. The commercial team will set 'rules' in terms of berthing priority and access to other infrastructure when there is conflict. Bylaws would need to be reviewed at least annually under the new Port and Harbour Safety Code.”
However, because bylaws are hard to change (as they require full council sign off) many things get done more efficiently under harbourmaster's directions.
Capt Bolt says rules are generally about balancing port efficiency with fairness in terms of ships' access to berths.
“A port may have some rules about how to decide berth allocation – for example first come, first served – but also access to infrastructure, for example cranes and so on. Probably the key here is that the rules are transparent to stakeholders.”
He concludes that such rules can be a living document and as they are implemented, feedback from users as to how they are disadvantaged can be used to refine them for the future.
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