WCN Dec Front page - WorldCargo News Online

WorldCargonewsPORT NEWSHong Kong does notneed more terminalsInstead of building ContainerTerminal 10 (CT10), Hong Kongcould save billions of dollars byincreasing productivity at existingfacilities, according to a reportby McKinsey & Co.Commissioned by the BetterHong Kong Foundation, thereport says further terminal constructionshould wait until constraintson the flow of cargo fromfactories in southern China toterminals at Kwai Chung containerport have been eased.The report - StrengtheningHong Kong’s Port and Trade Sector- recommends that capacity expansionshould be postponedunless and until Hong Kong caneliminate its structural disadvantagesvis-à-vis southern China.Instead of building a fourberthCT10, which is expectedto cost HK$8 bill (US$1.03 bill),McKinsey recommends thatHK$2.5 bill be spent to expandthe Kwai Chung quayline andback up land and enhance the terminaloperators’ information technologycapabilities.It said productivity improvementscould create 5.5 mill TEU/year of handling capacity, morethan the 4 mill TEU that wouldbe added by CT10. “In otherwords, for a quarter of the cost, asimilar gain in capacity can beachieved through productivityimprovements, freeing up capitalfor investment in other projects,”the report says.The McKinsey report comesahead of the Hong Kong PortMaster Plan 2020, being preparedfor the government by consultantsGHK, which will be released earlynext year.Critics says the high cost ofmoving containers through HongKong because of the high terminalhandling charges (THCs) at KwaiChung is diverting an increasingnumber of boxes to Shenzhen terminalsin south China, but theMcKinsey report dismisses that asone of several “myths.”“Lower terminal charges arenot the solution because they arenot the main reason for thehigher costs of shipping out ofHong Kong,” it says.“Instead, structural factors,such as inefficiencies in crossingthe border and higher truckingcosts, drive the cost differential.”THCs, the report says, makeup about 8 per cent of the totaltransportation cost of moving acontainer from South Chinathrough Kwai Chung, downfrom 10 per cent six years ago.McKinsey suggests HongKong can recover its marketshare if it addresses structural issues,such as its high inlandtrucking costs; exporters pay upto US$260 more per TEU toship through Hong Kong thanvia Shekou or Chiwan terminalsin western Shenzhen.Furthermore, due to the customsinefficiencies at bordercrossings, Hong Kong truckerscan make only one trip a day,instead of two or three managedby their counterparts deliveringboxes to Shenzhen terminals.VisakhaadditionsVisakha Container Terminal(VCT) at Visakhapatnam port insouth India, which started operationsin June this year, is planningto import more handling equipmentto allow larger vessels to behandled.The private terminal, operatedby a joint venture formed byUnited Liner Agencies of Indiaand Dubai Ports Authority (DPA)plans to order two ship-to-shorecranes and four RTGs from anunnamed Japanese manufacturerto add to the two quay cranes andtwo RTGs already in operation.The new quay cranes will allowthe terminal to handle vesselswith a capacity of up to 4,500 TEU.At present it is limited to vesselswith a capacity of 3,000 TEUs.The acquisition of new handlingequipment has become urgentbecause more importers innorthern India are using Visakhabecause of congestion at JawaharlalNehru Port.Tollerort expansionHHLA’s Tollerort Container Terminal(TCT) has been enlarged by4 hectares and storage capacity hasbeen increased by 950 TEU. Thequay wall has also been extendedby 45m. The changes will reportedlyprovide for an 80,000 TEUincrease in annual throughput.TCT has experienced doubledigitgrowth in recent years andhandled 623,000 TEU in 2002,with a further increase expected thisyear. The terminal is equipped withseven cranes, including five post-Panamax units (49.5m outreach).It is also planned to switchfrom 1 over 2 to 1 over 3 highHHLA is keen to continue expansionat its Tollerort facilitystraddle carriers. As previously reported,HHLA is already introducing4-high straddle carriers atBurchardkai and is currently assessingboth Kalmar e-drive andNoell ESW designs.It is planned to double TCT’ssize (currently 30.8 hectares) by2008, by filling in the adjacentKohlenschiffhafen basin. The 920mquay wall will be extended to1,525m, with up to 12 cranes anda draft of 15.6m alongside. Capacitywill reach 1.9 mill TEU/year.JNP moves goalpostsJawaharlal Nehru Port (JNP) onIndia’s west coast, which has invitedbids for converting an unusedbulk terminal into a containerterminal, has again madesome changes to the terms andconditions of financial offers.When bids were first invited,they were solely on the basis of revenue-sharingwhich meant the bidderwho offers the highest revenueshare would get the contract. Butnearly all the likely bidders suggestedthat the financial bids shouldbe on the basis of minimum guaranteedthroughput (MGT).The JNP Trust liked the ideaand put it forward to the Ministryof Shipping, but the latter wasnot willing to take the responsibilityfor changing the paymentterms and said JNPT should takeits own decision in this regard. Inthe event, the JNPT decided tostay with the original paymentterms (see WorldCargo News October2003, p6).Now there is further change.Although the contract will beawarded to the party offering thehighest share of revenue to JNPT,there will be a penalty clause forbreaching the MGT requirement,but it will not exceed 50 per centof the revenue share.The terminal operator will berequired to handle 130,000 TEUin the first year and 1.3 mill TEUin the seventh year. The operatorwill have to pay 50 per cent ofany revenue gap as a penalty.Among the potential biddersare Maersk Sealand, CSX WorldTer minals, Skanska of Sweden,PSA Corporation, West Port ofMalaysia, SSA Marine, NYK Lineand Marubeni Corporation of Japan,as well as Sea King Infrastructure,Larsen & Toubro and UnitedLiner Agencies of India.Maersk Sealand has brought inContainer Corporation of India(Concor) as a partner for the bidand set up a joint venture companyin which Maersk will be the dominantpartner. The two companiesfeel they are ideally suited for runningthe terminal although forConcor, which has a virtual monopolyon carrying containers byrail in India, it will be its first forayinto running a port terminal.PSA Corporation, which willbid in partnership with ABG HeavyIndustries, is also looking for a thirdcompany to join the consortium.PSA officials are visiting Mumbaito look for a partner who will bewilling to take an equity stake.The terminal is being offeredon a build-operate-transfer basisfor 30 years. The last date for thereceipt of financial bids has beenextended to December 1.Call to halt UK boxport developmentsPortswatch, an umbrella organisationfor eight environmental organisationsin the UK, has calledon the government to halt majornew port developments pendinga detailed investigation of supplyand demand trends and ways ofincreasing throughput capacity atexisting sites.The statement was timed tocoincide with the publication ofa report on UK ports by theHouse of Commons’ TransportSelect Committee. The MPs’ reportfaces two ways in that it callsfor more container port capacitybut also for a national port strategyto provide a framework fordevelopment.This implies that the governmentshould be selective about thefour projects which are of particularconcern: Dibden Bay (ABP);London Gateway (P&O Ports/Shell); Bathside Bay; and FelixstoweSouth (both Hutchison).The Dibden Bay public inquiryhas finished and the Inspector’sreport is with the Secretaryof State for Transport for a decision.The London Gateway publicinquiry has also finished andthe Inspector’s report is expected.Hutchison Ports (UK) Ltd(HPUK) applied for planningconsent for Bathside Bay in Aprilbut no date has been set for thepublic inquiry. It has just appliedfor planning consent to reconfigureFelixstowe South.8December 2003