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There are many challenges ahead for container port operators. The biggest challenge of all is the economic downturn that took a dramatic turn for the worst in the last quarter of 2008. The declining throughput has dramatically reduced the revenues of port operators. This scenario, coupled with increasing costs from the security and green initiatives, make 2009 a very challenging environment for port operators. To meet this challenge, port operators are exploring new revenue opportunities through new services and expanding their hinterland reach. Frost & Sullivan\'s Consultant, Michael Lee, will share his findings on: - Insights on container ports industry structure across major Asia Pacific countries - Container ports’ growth opportunities & future prospects - Insights on container ports driver, restraints and challenges - Implication of security and emission trading have on container ports across the region.
Citation preview
Growth Opportunities in Container Ports: Are the Boxes Flowing or Just Floating?
Mike Lee, Consultant
Transportation & Logistics Practice
Research by
Transportation & Logistics PracticeFrost & Sullivan Asia Pacific
May 19, 2009
2
Focus Points
Container Ports Opportunities in Asia Pacific6
Definition of Container Ports and its Microenvironment1
Review of 2008 Asia Pacific Container Ports2
7
5
4
3
Challenges and Issues for the Container Ports
Questions and Answers
Market Restraint and 2009 Container Ports Outlook
Long Term Drivers and Container Ports Outlook
3
Frost & Sullivan: Transportation & Logistics Consulting Competencies
Supply Chain Services
Supply Chain Services
Freight MarketsFreight Markets
Rail Transportation
Rail Transportation
Urban Transportation
Urban Transportation
PortsPorts
Intelligent Transportation
Systems
Intelligent Transportation
Systems
Contract Logistics Services
Contract Logistics Services
TransportationTransportation Supply Chain Technologies
Supply Chain Technologies
Forwarding, Express and Support Services
Forwarding, Express and Support Services
InfrastructureInfrastructure EquipmentEquipment ServicesServices
SystemsSystems AftermarketAftermarket
SystemsSystems Support Services
Support Services
SystemsSystems
AirAir OceanOcean LandLand
Strategy Development
Business Planning
M&A Analysis
Market Opportunity Analysis
B2B Branding
Addressing Trends & Issues
Competitive Benchmarking
Technology Benchmarking
Product/ Service Concept
Customer Assessment
Customer Satisfaction Surveys
Growth Coaching, Workshops & Training
1
4
Container ports industry structure across major Asia Pacific countries1
ContainerContainer
PortsPorts
Economy
ShippingLiners
Equipments
Competitors
Emission Trading
Hinterlands Connection
Security Needs
Containerization
Repositioning
GatewayGateway
PortsPorts
GatewayGateway
PortsPorts
Ocea
n S
hip
pin
gO
cea
n S
hip
pin
g
Transshipment Transshipment
PortsPorts
FeederFeeder
PortsPorts
River
Road / Rail
ICDICD
FeederFeeder
PortsPorts
Trade
Ports Classification Ports Operating Environment
5
Scope of the Study1
Container Ports: Container Ports Throughput, 2000 - 2008
0
20
40
60
80
100
120
140
Millio
ns o
f T
EU
20082006200420022000
China
Southeast Asia
East Asia
South Asia
Oceania
China is split from East Asia to illustrate its significant contribution to Asia Pacific Container Throughput
6
Review of 2008 Asia Pacific Container Ports2
2007 and 2008 Ports Throughput review (in ‘000 TEU)
Top 40 Asia Pacific Ports has grown 6% on average between 2007 aTop 40 Asia Pacific Ports has grown 6% on average between 2007 and 2008nd 2008
7
5. Ports of Qingdao
(10,320,000 TEU)
6. Ports of Tianjin
(8,503,000 TEU)
8. Ports of Dalian
(4,503,000 TEU)
1. Ports of Shanghai(28,006,000 TEU)
3. Ports of Ningbo
(11,226,000 TEU)
9. Ports of Lianyungang
(3,001,000 TEU)
2. Ports of Shenzen(21,400,000 TEU)
4. Ports of Guangzhou
(11,001,000 TEU)
7. Ports of Xiamen
(5,035,000 TEU)
Key Ports Regions in China
Bohai Rim (23,326,000 TEU)
Yangtze River Delta (42,048,000 TEU)Pearl River Delta (61,930,000 TEU)
Guangdong
Ningxia
Jiangsu
Beijing
Tianjin
Shanghai
China’s Major Ports Regions
2
Include Hong Kong
8
The new 2008 Shipping Law will strip the regulatory power from the current Ports corporations and create new opportunities
Pelindo I
Pelindo II
Pelindo III
Pelindo IV
Under the 1992 Shipping law currently under
implementation in Indonesia, the Indonesian commercial and strategic ports are controlled by
the four state owned Indonesian Ports Corporations (IPCs) that have a monopoly over the region they control. The IPCs function and act
as both sole operator and Ports authority controlling the supply of all major Ports services
such as vessel traffic movement, anchoring and berthing, pilotage and towage and Ports facilities
for stevedoring, warehouses and stacking container and bulk terminals
The new Ports law draws a clear distinction between Ports operator and Ports
regulator. The new Ports Authority will have the most regulatory authority at
the Ports level. Their primary responsibility will be to regulate, price and
supervise access to basic Ports infrastructure and services including Ports
land and waters, navigation tools, pilotage, breakwaters, Ports basins, Sea
channels (dredging) and Ports road networks.
The Ports authority will also be responsible for developing and implementing
the Ports master-plan. The new master plan is to implement restricting the
number of ports with direct international links to the 25 Strategic Ports
(commercial ports) As per the new law these special terminals can apply to
become general cargo terminals if approved by the relevant Ports authority
and ‘consistent’ with the local Ports master-plan, amongst other requirements.
The new Ports law transfers the role of Ports Operator to IPCs. The law
removes the IPC’s legislated monopoly and opens the Ports sector up for
participation by private operators and including foreign investors. The new law
offers a clear demarcation in the role and functions of the new Ports Authority
and Ports operator.
The IPCs (Ports Operators) would participate in providing cargo handling,
passenger facilities, mooring services, refuelling and water supply, towage as
well as storage and other Superstructure. They would also be responsible for
determining Ports service tariffs based on tariff types, structure and categories
as determined by the government.
Ports Authority Ports Operator
2
9
Major investments are flowing into Vietnam to support its trade growth
Group 8
Group 1
Group 2
Group 3
Group 4
Group 5
Group 6Group 7
2
Hiep Phuoc Ports(under construction)
Long An Ports(planned))
Go Dau Ports (planned))
Baria Serece (Phu My) Ports(existing)
Thi Vai Ports Complex(under construction)
Cai Mep Ports Complex(under construction)
Vung Tau Ports
(planned)
VICT
Cat Lai Ports
Ben Nghe Ports
Saigon Ports
New Ports
Ho Chi Minh City
Ports
Cai Mep – Thi Vai
Ports
Vung Tau
Ports
Existing Channel
Source: APL
10
27.2%
3.4%
8.9%
29.0%
21.0%20.3%21.6%
23.6%
16.5% 16.7%
-23.9%
-6.0%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
6.5%
11.2%
1%
23%
30.9%
18.5%
10.9%12.5%11.5%16%
4.5%
-3.9%Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
5.5%3.1%
9.1%
5.1%3.5%
6.2%6.4%3.2%
6.6%
-6.5%-7.0%-0.5%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Market Restraints and 2009 Container Ports Outlook
• Compared to land and air, trade by sea
remained relatively stable.
• Exports from EU-27 to U.S declined by
0.3% in 2008 compared to the previous
year.
• The imports from Asia to EU-27 grew by
a modest 5.9%, while the exports
showed a comparatively healthy growth
of 9% compared to 2007.
10.4%
3%
6.8%
14%
8.1%7.3%
11.7%11.3%10%
0.1%
-7.8%-2.3%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
U.S to AsiaU.S to Asia
Year on Year growth by Month (2007 and 2008)
7.9%
3.0%
16.2%16.1%15.6%
26.5%20.5%
3.0%
18.7%
-0.7% -1.3%
-9.6%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
0.1%
8.8%9.6%13.7%
7.4%
-1.60%
-2.7%
-7.3% -6.0%-14.1%
-8.6% -0.3%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
$190.53 Billion$190.53 Billion
$614.26 Billion$614.26 Billion
$213.14 Billion$213.14 Billion
$392.38 Billion$392.38 Billion
$180.11 Billion$180.11 Billion
$87.094 Billion$87.094 Billion
EUEU--27 to Asia27 to AsiaEUEU--27 to U.S27 to U.S
U.S to EUU.S to EU--2727Asia to EUAsia to EU--2727 Asia to U.SAsia to U.S
3
11
Short Term Outlook for Asia Pacific Container Ports3
0
20
40
60
80
100
120
140
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Mill
ions o
f T
EU
20092008Country
3,0433,043Philippines
3,2533,253Vietnam
5,3986,169Indonesia
5,7396,503Thailand
11,80412,971Taiwan
27,22529,918Singapore
15,16916,939South Korea
14,36615,714Japan
4,7735,060Australia
1,3961,450New Zealand
5,231
14,371
21,918
107,079
15,448Malaysia
24,494Hong Kong
115,946China
5,535India
China
Southeast Asia
East Asia
South Asia Oceania
In ‘000 TEU
12
The government of APAC countries are implementing short-term as well as long-term initiatives to counteract the effects of the current slowdown.
Policies • Delay or provide concession on emission
restrictions• Export incentives for specific goods
APACAPAC
PP
RR
Rebates • Waiving of taxes and fees• Reduced Ports fees
• Fuel price discounts• Rental rebates for office
and warehouse spaces• Ports dues cuts
• Incentives for Ports services
Trade Agreements • Free trade agreement between
ASEAN and Australia and New
Zealand• Creation of free trade and free
investment region accelerated• India-ASEAN free trade
agreement • Plans for a multi-lateral and
multi-national financial co-operation to boost companies
from liquidity,
TT
Effects of Recession on Ports:- Lower trade volumes- Lesser investment opportunities
- Delayed infrastructure projects
Initiatives taken by countries:- Industry-friendly policies- Rebates- Trade agreements with other countries
- Allocation of funds for infrastructure development
4
13
Challenges with the Hinterland Connections4
Container Ports and its Hinterland
33
22
22
19
17
16
7
15
15
13
8
99
87
7
6
44
4
4
4
24
6
2
3
1
3
3
2
2
ManilaManilaPhilippines
South VietnamSaigonVietnam
Jakarta, Banten, JavaTanjung PriokIndonesia
BangkokLaem ChabangThailand
TaiwanKaoshiongTaiwan
Johor, Singapore, RiauSingaporeSingapore
South KoreaBusanSouth Korea
Greater TokyoTokyo, YokohamaJapan
VictoriaMelbourneAustralia
New ZealandAucklandNew Zealand
West, Central, North India
Selangor, Kuala Lumpur
Pearl River Delta
Yangtze River Delta
Ports KlangMalaysia
Hong KongHong Kong
ShanghaiChina
Jawaharlal NehruIndia
Gateway Ports and its HinterlandCountry
Expanding Hinterland Reach
Ports Hinterland Congestion
Moving Ports to address congestions
Rail to address Hinterland
14
Implication of emission trading have on container ports4
Power Generation ShippingPorts Operation & Development
Hinterland Transport
94%
108%
100%
The percentage is the quota of
the country relative to the 1990
GHG emission level
• The Kyoto Protocol legally bind the countries classified under “Annex I” (industrialized) to
reduce Greenhouse Gases (GHG), hydrofluorocarbons and perfluorocarbons.
• The GHG include carbon dioxide, methane, nitrous oxide and sulphur hexafluoride
• The Annex I countries are obligated to reduce their GHG emission relative to their 1990
emission by 2012. For instance, Japan is required to reduce to 94% of their 1990 GHG
emission
• Promote co-siting and shared
utilities to capture energy
efficiencies and use waste
energy.
• Develop sustainable nautical
services, such as those
represented by tugs and other
harbor craft.
• Encourage shore-side supply of
(renewable) electricity for inland
navigation
• Improve the energy efficiency of
buildings, cargo handling and
transportation
• Support the development of clean
shipping
• Consider speed reductions were
effective and possible with regard
to nautical safety.
• Develop transparent incentives
based on a shared system of
environmental indexing of ships.
• Urge the IMO to accelerate
incorporating best practices in
reducing CO2 in IMO treaties and
to accelerate adoption of the
current proposals to amend
MARPOL Annex VI.
• Use efficient and innovative
logistics to reduce the need for
hinterland transport.
• Institute, facilitate and program
the modal shift towards clean and
energy efficient modes of
transport.
• Stimulate the environmental
performance of all transport
modes (e.g. by environmental
zoning).
• Promote and enable generation of
renewable energy (e.g. wind,
solar, geo-thermal) in public and
private domains.
• Use renewable energy where
possible for Ports authority
operations and advocate the use
of renewable energy for
Ports operations more broadly.
• Promote the transport and
processing of certified biomass for
the production of renewable
energy.
15
Implication of security have on container ports4
Major Ports Security Regulatory Initiatives
Secure Freight Initiative
• Combine threat intelligence
• 100% security scan of containers
Container Security Initiative
• Identify and target high risk containers
• Pre-screen the containers at Ports of departure
• Use of detection technology
• Use temper-evident containers
Mega-ports
• Radiation detection technology
Authorized Economic Operator
• Part of the World Customs Organization (WCO) Framework of Standards to Secure and Facilitate global trade (SAFE)
• Certification program for supply chain industry participant including terminal operators
• Similar to program such as C-TPAT in U.S., Secure Trade Partnership in Singapore, Secure Export Scheme in New Zealand
IMO’s ISPS Code
• Special measures to ensure security of ships and Ports facilities.
• The Ports is required to conduct an security assessment identify the critical asset, assess the threats to the assets and identify and address weakness.
• Functional requirement includes
• Ports Facility Security Plan
• Ports Facility Security Officer
• Security Equipment
Share of U.S. Container Origin, 2007
Ports Klang, Tanjung PelepasThailand
SingaporeMalaysia
Laem ChabangSingapore
Southeast Asia
Kaohsiung, KeelungTaiwan
Hong KongHong Kong
Shanghai, ShenzhenChina
BusanSouth Korea
Yokohama, Tokyo, Nagoya, KobeJapan
North Asia
CSI Ports in AsiaCountryRegion
CSI Operational
Ports Coverage
86%14%
16
Understanding the Uncertainty and Impact is essential
ProjectedImpact on the
LogisticsIndustry
High Impact
Low Impact
Uncertainty
Low High
Fuel Price Increase
Containerization and inland transportation
Green Logistics
Future Trade Movement
Ongoing Infrastructure
Financing
Security Initiatives
Cold Supply Chain in emerging markets
On-Demand Supply Chain
Inter-modal Transportation
Hinterland Connection Improvements
4
17
Long Term Outlook for Asia Pacific Container Ports5
in ‘000 of TEU
0 50,000 100,000 150,000 200,000 250,000
South Asia
Oceania
Southeast Asia
East Asia
Greater China
2008 2015
6%
5.2%
2.6%
9.8%
5%
Greater China
0
50
100
150
200
250
2006 2009 2012 2015
East Asia
0
10
20
30
40
50
60
2006 2009 2012 2015
Southeast Asia
0
20
40
60
80
100
2006 2009 2012 2015
South Asia
0
2
4
6
8
10
12
2006 2009 2012 2015
Oceania
0
2
4
6
8
10
2006 2009 2012 2015
Regional Growth Outlook (in Millions of TEU)
18
Long Term Drivers of Container Ports Throughput5
262,443
56,840
24,360
23,432
11,368
378,442
2008 Vol Trade Growth Repositioning Transshipment Containerization 2015 Vol
Asia Pacific’s Container Ports Market Drivers, in ‘000 TEU
Increasing share of cargo are
containerized
Increasing Trade volume
2008 Volume Trade Imbalance
(Empty Container)
Transshipment of Containers
2015 Volume
Containerization is growing at a rate of approximately 1.4% a year
Trade imbalance will continue to be a problem for the liners
19
Container Ports Opportunities in Asia Pacific: Transshipment
America
Europe
South Asia
Southeast
Asia
North Asia
Region
71.3%
81.0%
96.0%
40.9%
44.9%
50.9%
43.7%
’05 Share of Transshipment
PIL, COSCO, APL,
MSC, Swire, NYK,
Maersk, MISC,
Evergreen
CMA CGM, CSCL
Hanjin
Evergreen,
Hanjin
Major Container Lines
Tanjung
Pelepas
Klang
Busan
Ports
Colombo
Singapore
Hong Kong
Kaoshiung
6
• Consolidation and privatization of Ports
• Indonesia’s reform of the ports and rail market
• Inland Rail Corridor• Transshipment Ports
investment in India
• New operator for major Australia ports
20
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7 Contact Us
If you have questions or would like further information about anything we discussed, please send your query to the email provided below and we will get back to you shortly.
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Account Manager
Automotive, Transportation & Logistics
DID: +65 6890 0997
Mob: +65 9199 4566
eMail: [email protected]