Terminal build-up as traffic increases

The surge in intra-Asia trade this year has given impetus to Asian ports to expand terminals and improve infrastructure to cope with the cargo flows, Associate Editor Ken Gangwani reports from Shenzhen Massive terminal expansion and dredging is underway at major ports in the Asian region as intra-Asia trade explodes, racking up growth of 17 percent in the first half of this year and surpassing the 12-14 percent recorded in the two major East-West trade lanes - Asia-US and Asia-Europe. "Intra-Asia trade will be the focal point of the container shipping industry in the future," said Bronson Hsieh, chairman of Evergreen Marine Corporation, Taiwan's biggest container line, at the recent TPM Asia conference in Shenzhen. "We anticipate the intra-Asia market will continue to benefit from further liberalisation of regional trade and the recovery of the global economy and its market size will be able to keep pace with the transpacific and Asia-Europe trades," he said. Many of the planned Asian port expansion projects, which were put on the backburner during the recession, have been revived. South Korea's Pusan port added 12 new berths in July and expects to build 30 more by 2015 while Singapore plans to add 16 new berths. Taiwan is building a berth in Kaohsiung 6hat will be able to handle 10,000 TEU vessels. It will be ready by 2013. Three more berths will be ready in Taipei by 2014. In Malaysia, Port Kelang Westport will get a new berth next year and Tanjung Pelepas will add two more by 2013. Other Asian countries on the port expansion trail are Vietnam, Cambodia, Myanmar, Indonesia and Thailand. Port expansion in China is more subdued as the authorities, concerned about the proliferation of ports, are trying to merge some facilities to avoid duplication in cargo handling and to cut costs. The unexpected cargo growth and capacity increases in intra-Asia trades this year was responsible for port congestion in Vietnam, the Philippines and Indonesia. It highlighted the shortage of terminal capacity in those countries. To secure the benefits of free trade agreements, many Asian nations are prioritising the improvement of port facilities and expansion of terminal capacity, noted Hsieh. "Modern ports are more than gateways for marine transport. They are also an important link in the global supply chain. If terminal capacity does not keep up with increased vessel tonnage, it will negatively impact the efficiency of cargo movements, increase storage costs and raise the uncertainty of logistics management," said Hsieh. "If a country wants to promote foreign trade, therefore, it is imperative that the efficiency of terminal operations be a priority." Intra-Asia trade will be the lynchpin for the global shipping industry in the near term as the West slowly recovers from the financial crisis, maritime executives told the conference. Intra-Asia trade has more balanced cargo flows than the other major trade lanes, noted Randy Chen, special assistant to the president of Taiwan's Wan Hai Lines. He attributed the recovery in the trade to one key factor. "Due to the China stimulus and regional consumption, intra-Asia trade was the first to recover. Demand was quickly met by increased supply through the activation of idle capacity and new services,'' he said. Hsieh of Evergreen was of the same opinion. "Boosted by the expansion of China's domestic market, intra-Asia trade was able to reduce the impact of an economic recession," he said. Asia's economies are in now the driving seat, with the International Monetary Fund expecting China's economy to grow by 9.6 percent next year. The IMF forecasts economic growth in Asia at 6.7 percent in 2011, compared with 1.8 percent in Europe and 2.3 percent in the United States. The driving forces behind the growth in intra-Asia trade has been China and the six original members of the Association of South East Asian Nations (ASEAN) - Singapore, Thailand, Malaysia, Brunei, Indonesia and the Philippines - which signed a free trade agreement called CAFTA on January 1, 2010, said Hsieh. The deal led to the explosion in regional trade. A reduction in import tariffs between China and ASEAN there was a backlog of 10,000 containers in the last two months in Hong Kong, waiting to be shipped to Haiphong. The situation has improved since but Dafni sees trade picking up again and the problem repeating itself. Dafni was unfazed by the growing competition in the region with lines adding more loops or starting new intra-Asia services. He said there was more than sufficient cargo for all. He remained confident of the line staying above the water line. "If we get 30 refills per voyage we are already in the black,'' he said. "The rates for the refills are quite good, although they do fluctuate a lot. For COC, it is over US$2,000 but sometimes it comes down to $1,500. "Our total expenses per three-day voyage is $60,000, that includes charter hire, bunker and port costs, with bunker costs being the main expense at $30,000 for the 60 tonnes consumed per shuttle service. Charter for the 700 TEU ship is $5,200. Thirty refills bring in around $40,000 covering more than half our cost, and the balance is from other general cargo and slot arrangement with other shippers.'' Dafni said all the cargo was transhipment consumer goods cargo from the US and Europe, which is dumped in Hong Kong by the shipping lines. The shipper then dedicates the refills business to a trader in Hong Kong, who then passes it on to a line to move it to Vietnam. What is unique about this trade, he added, was that the final destination of the cargo was not Vietnam but China's Guanzi province. It goes overland through the border with Vietnam. Regarding direct shipments by the main lines hurting the intra-Asia trade operators, Dafni admitted there were many lines doing direct shipments to Vietnam, with six transpacific main lines calling at Ho Chi Minh's new port Cai Mep and three from Europe - Zim Line, Hanjin and CMA CGM. But he added there was enough cargo to go around. Using Cai Mep for direct service has hurt Singapore as well as Hong Kong, said Dafni. He said last month Singapore lost 100,000 containers that used to be transhipment cargo as it all went to Cai Mep. The same thing is happening with transhipment cargo to Hong Kong, he added. It is very difficult to get equipment from the leasing companies as most of it is already leased out and newbuildings at this stage are too expensive, said Dafni. However, the company is now in the process of buying its own containers. "We are talking with some investors for purchase of about 15,000 units. Once we get the containers, we will start other services, such as China to Thailand and Singapore,'' he said. Regarding berthing, Dafni said he had no problems in Hong Kong or Vietnam as Great Eagle operated mid-stream. The Great Eagle boss sees no slowdown in intra-Asia trade in the fourth quarter. "I believe the only trade that will continue to be robust is intra-Asia. Supply is growing but the demand is still there.''
(Source:www.cargonewsasia.com)