British Maritime Technology 1 British Maritime Technology Leader in Port & Logistics Business Intelligence & Advisory Services Richard Szuflak – Director of European Operations, BMT Maritime Consultants Russell Smith – Managing Director, BMT Maritime Consultants
This paper outlines issues around port congestion.
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British Maritime Technology 1
British Maritime Technology
Leader in Port & Logistics Business Intelligence & Advisory
Services
Richard Szuflak – Director of European Operations, BMT Maritime Consultants
Russell Smith – Managing Director, BMT Maritime Consultants
British Maritime Technology 2
Ports Under Pressure
What is driving port congestion?
The key pressure points.
Where to from here?
BMT’s contribution to helping solve the
problem.
British Maritime Technology 3
What is driving port congestion?
Increased demand for product coupled with available
supply means that the logistics chain is a key limiting factor
in driving the market.
Ports are a key element in this logistic chain, as are
landward connections and shipping routes.
However land based infrastructure has a longer lead time
than shipping and thus is looming as the key bottleneck in
allowing product supply to meet demand.
This is particularly critical at certain pressure points
worldwide including China, Europe, US west coast,
Australia and South Africa.
British Maritime Technology 4
Seaborne Trade Growing Faster than World
Economy: Example of Container Trade
0
20
40
60
80
100
120
140
1980 1990 1995 2000 2002 2004 2006 2008 2010
MT
EU
sh
ipp
ed
Average growth per Annum of World Economy 2004 to 2010: +2%
Average growth per Annum of Container Trade 2004 to 2010: +8%
British Maritime Technology 5
The Markets - Containers
Container market booming with strong underlying
fundamentals.
The containerisation of goods still has a long way to travel,
indicating that container growth should continue to be well
above world trade growth for some time yet.
Containerisation one of the drivers behind the migration of
manufacturing to the Far East.
British Maritime Technology 6
The Markets – Dry Bulk Products
Bulk demand increasing steadily,
especially for coal and iron ore, as
well as agri-bulk commodities.
This creates congestion at world
export ports – particularly in
Australia, Brazil, South-Africa and
India.
China’s port and railway
infrastructure cannot cope with the
country’s needs for raw materials.
British Maritime Technology 7
The Markets – Oil and Gas
Oil supply to decline after a peak between 2010 and 2020.
LNG is the key growth product worldwide.
LNG demand to rise 100% by 2010 on the back of strong
demand from Europe, USA and now China.
Supply will lag demand without significant investment in
sourcing new product and logistics infrastructure.
100
120
140
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200
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240
2003 2004F 2005F 2006F 2007F 2008F 2009F 2010F
millio
n t
on
nes
Forecast Demand
Identified Supply
Forecast LNG Supply-Demand Balance 2003-2010
British Maritime Technology 8
Shipping Industry Quick to React
With the acceleration of global growth earlier this decade, the
shipping industry was quick to react.
New build orders soared and older vessel retirement was
delayed.
Freight prices boomed and are still extremely high.
With a two year lag time on new vessel builds, the demand
pressures in the shipping industry will soon ease and charter
rates will drop – particularly in 2006.
0
20
40
60
80
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TankersBulk
ContainersLNG
% of New Orders to 2008 vs. Existing Fleet
676 new vessels 3.7 Million additional
vessel slots, approx 1,200
vessels80 new vessels
980 new vessels
British Maritime Technology 9
Shipping Industry Quick to React
The market moving forward will be changed.
Container ship sizes will continue to increase whilst bulk
vessel sizes will be dominated by the cape and panamax
class of vessel until Chinese and Indian ports deepen.
British Maritime Technology 10
Not so for Ports and Logistics…
With the pressure off shipping the spotlight will transfer
specifically to the port and landside logistics operations as
the main bottleneck.
Whilst recognising the problem at the same time as the
shipping industry, the port industry has much longer lead
times, particularly in developed countries where
government requirements for new projects are stricter.
Expansion of ports in the booming Far East is occurring
much faster than in the developed world → imbalance.
Therefore, whilst pursuing infrastructure and equipment
upgrades at key ports, equally important to the capacity
development of the overall logistics system are efficiency
improvements and alternative logistics route development.
British Maritime Technology 11
… Despite Rapid Growth
0
5
10
15
20
25
Millions TEU
Hong-K
ong
Singapore
Shanghai
Shenze
n
LA/LB
R'dam
Selected Container Port Traffic
1999-2001-2003
In 1995, only 5 ports
were above the 3
Million TEU mark
More than 20 ports
nowadays pass this
mark
Of which 11 are in Asia
Extra Rapid Growth
registered in Shenzen,
Shangai, Tanjung
Pelapas and Quingdao
Also in Dubai
British Maritime Technology 12
The Pressure Points
Europe
• Russian trade growth is causing problems on east-
west ports, road and rail networks
• Western European container port capacity is a
problem – congestion surcharge being applied at
Rotterdam and Antwerp
• Established French ports (Le Havre-Marseilles) not
able to cope with extra flow → deviation to secondary
container ports - Dunkirk, Antwerp, Genoa, Barcelona
United Kingdom
• Trade actually declining through the large UK ports
• Container port congestion in the south the main issue