Analysis: Port and Shipping Collaboration

By Michael King | Port Technology International | May 11, 2015

With the rapid evolution in mega-ship sizes and the pressures that are currently swamping many ports across the globe, there is a much more pressing issue that deserves attention in the port and shipping industry, which is collaboration; not only between ports and shipping lines but with the wider logistics chain, in a bid to handle the exponential growth in container shipping.

Many forces are driving growth in container shipping such as globalisation, technology and sustainability, but as ports struggle to keep up with rising volumes as a result of a deficiency in appropriate crane technologies and the decision made by mega-ship alliances to share vessels as a way of securing economies of scale, how important is it for ports to collaborate more with shipping lines in order to avoid congestion and other imminent operational problems?

Neil Davidson, Senior Port and Terminal Analyst with Drewry Shipping Consultants, said: “Ports and terminals are a key interface in the supply chain and can easily become bottlenecks. The capacity and capability of ports and terminals cannot be varied in the short term - and significant enhancements take many years to put in place.

“So it is vital that shipping lines work with ports and terminals to make the best use of facilities, and not put undue pressure on them. The more that shipping lines work to involve the wider supply chain (including ports) in their plans and operations, the better.

“However, being realistic, we have to remember that the various parties in the supply chain each have their own interests (and shareholders/stakeholders), and will always seek to address this first and foremost. Collaboration can only work if it is win-win.

The implication of lack of collaboration between ports and shipping lines has been seen recently, with increasing pressure on ports to handle unscheduled ship calls and the logistics industry questioning who benefits from mega-ships and alliances. Mega-ship size increases, as well as congestion, has also been an issue for ports, particularly in the US as a result of labour strikes, as well as mega-shipping alliances, which have put a strain on ports to deepen drafts and extend their berths, but what are some of the wider implications for ports and terminals if collaboration is ignored?

Oscar Pernia, Director of Product Management (Automation) at Navis, said: “The implications for ports if collaboration and business processes required changes are ignored will be around profitability, both for shipping lines and container terminals; and for the maritime supply chain the impact will be in freight costs, transit times…etc impacting the way economies are dealing with globalization, and finally the co-existence between competitors where only the ones implementing real value for supply chain quality of service will survive.”

Other implications in lack of carrier-operator collaboration have become apparent through inefficient data exchange and due to there being little communication between terminal operators and container lines. This seems to be a growing problem between both parties as they seek to achieve faster turn-around times for ships.

Commenting on the importance of communication between ports and shipping lines, Frank Tinschert, Business Unit Director of Logistics at Software-planning Company Quintiq, said: “Close collaboration begins and ends with good communication. To end up in a win-win situation, ports and shipping lines need visibility and close alignment of each other’s operations. One way to achieve this is to rely on joint planning – i.e. optimising cargo flows from end-to-end. Smart joint planning could improve reliability, on-time performance, and cut transportation costs.

“The container shipping market is saturated but so is the case for ports and terminal operators. While container liners squeeze out on profit margins and fiercely compete on price, the leading terminal operators also feel an increased pressure on performing better, faster and cheaper than their competitors.”

To maintain an edge over competition, especially as the Panama Canal edges nearer to completion in early 2016, ports in the US have been acting fiercely to upgrade their infrastructure, some spending billions of dollars on deeper waterways and additional cranes to service the new wave of mega-ships. Many other ports in the EMEA region have also acted with port and terminal expansions to increase capacity. But what are the cost-effective alternatives that ports and shipping lines can adopt to remain competitive and profitable in the future?

Oscar Pernia believes that the main solutions include stowage planning and berth management, saying: “The areas of focus are around stowage planning process, berth management, vessel visit management (end-to-end port operations) and container terminal productivity. Collaboration for stowage planning by carriers and vessel planning by terminals will enable both to take decisions together in order to achieve performing and profitable operations at both sides.

“Berth management will allow a most effective decision process around ‘berthing safety buffers’ and associated bunker costs due to vessel speed up/slow down, and a necessary control for gang assignment and crane utilisation.

“Container terminal productivity will be increased by better collaboration and engagement by taking operational decisions together as the ones related to crane split, yard allocations or crane multi-lift enablement.”

(Source: Navis-XVELA collaboration concept)

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