AECEF NEWSLETTER 1/2002

Introduction

During the past decade, ports around the world faced major challenges as marine technology and logistics evolved. Two major thrusts that impacted ports were the increased specialization of ships (such as, purpose built, cellular container vessels), and the growth of ship size. In each case, ports improved their cargo-handling technology, operations, and expanded facilities to meet these new demands. In the container trade, specialization meant ports invested in new and larger ship-to-shore quay-side gantry cranes, expanded land-side container storage yards, improved and automated container handling equipment, and developed on-dock rail transfer systems. The current trend of deploying ever-larger container ships continues to force ports to upgrade to longer out-reach post-Panamax sized gantry cranes and other container handling equipment and, at even greater cost, dredging access channels and increasing water depth at berths. Panamax limits refer to the maximum ship size that can traverse the Panama Canal.

A third related thrust affecting ports is the development of integrated logistics, reflected by an expanding network of improved inter-modal links based on the ‘hub and spoke' system. As container ships increase in size, there is a growing trend to service a limited number of major hub transhipment ports rather than many smaller ports.

Containership Evolution

Major commercial ports have been dealing with the container revolution for many years. Containerization has gone through two phases. The first phase to the mid-1980s found ports dealing with four distinct generations of ship size until the Panamax limit of 13 containers across a 32.2 m wide deck was reached. Since the mid-1980s, a second phase emerged involving an organizational and logistical reorientation to an integrated inland distribution system coupled with rapid growth in ship size beyond the Panamax limit.

By 1993, other major shipping lines had followed APL's earlier lead and began introducing larger and wider post-Panamax vessels. In 1997, Maersk introduced its ‘S' class of container ships of more than (7060 TEU) (twenty-foot equivalent containers) with 17 containers across the deck. Recently COSCO reported it had on order a fleet of more than (9000 TEU) ships. These larger ships sizes are by no means at the limit of future growth. Various industry authorities suggest the next generation of mega-size container ships to be built in five to ten years will be more than 12000 to 16000 TEU capacity with 22 to 24 containers across a 60 m wide deck and drafts of 15 to 21 m.

Many ports are already gearing up to meet the challenge of handling these mega-size container ships. Charleston has ordered two post-Panamax cranes with an out-reach sufficient to handle 21 containers across the deck, while Halifax Nova Scotia, Felixstowe United Kingdom, Bremerhaven Germany and Rotterdam Netherlands have ordered post-Panamax cranes with out-reaches capable of handling 22 containers. In its bid to handle such mega-ships, Hong Kong is constructing six deep-water berths with a depth of 15.5 m at its new container terminal. Halifax recently announced a three-year dredging program to deepen water at its container berths to 16 m.

Larger ships offer economies of scale (increased capacity at higher speeds with lower costs per TEU), greater ship stability, better flexibility in handling containers, and improved reliability. One study of such mega-ships found that the economies of scale justified the deployment of 15,000 TEU vessels on the round-the-world pendulum route serving both the east and west coasts of North America from Southeast Asia. Essentially this means these mega-container ships will serve Singapore - New York on the western route and Hong Kong - Los Angeles on the eastern pendulum. A recent Delft Technical University analysis suggests the maximum size for future container ships will be 18,000 TEU with a draft of 21 m, given depth restrictions in the Malacca Strait between Indonesia and Malaysia - the major shipping route between Europe and Asia.

Container Trade Growth

The use of ISO standard sized containers to handle higher value general cargo and other commodities continues to grow. A recent forecast projects world port container throughput growth to reach 505 to 611 million TEU in 2015 (2.4 times the 1999 throughput of 210 million TEU). As the container trade grows, the ships serving it will be larger. Larger ships require container consolidation at designated hub ports.

Tomorrow's mega-size container ships will likely be used on the main east-west global pendulum routes (ending on either coast of North America) calling only at a limited number of on-shore and offshore, deep-water ports. Containers at the offshore terminals would then be transhipped by feeder vessels to other regional ports. Another more radical suggestion involves a fleet of 15,000 TEU vessels providing a two way equatorial round-the-world service through an enlarged Panama Canal. This fleet would serve seven strategically located transhipment hub ports, some floating in deeper water.

More recently, a major European transhipment hub has been proposed at Scapa Flow in the Orkney Islands. This proposal calls for the deployment of large container ships on three major container routes originating in Scapa Flow for European commodities: a North Atlantic route to serve the north-east of North America through Halifax, a South Atlantic route to serve the south-east of North America and Latin America through a new major container terminal being developed at Freeport in the Bahamas, and a Europe/Asia route to Singapore. A fleet of smaller container ships would feed containers to and from Scapa Flow from northern European and Baltic ports.

Ports on the Black Sea are presently restricted by inadequate water depths for mega-container ships. Odessa has 13 m at the present, but Constanza is expected to have by 2010, a terminal with a depth of 14.5 m.

Implications for Ports

Serving mega-size container ships presents problems for ports such as ensuring deep water (including dealing with the many environmental concerns generated as a result of dredging), wider channels, and deeper berths. To maintain rapid ship turnaround time for these large vessels, ports will need to invest in high-speed cargo-handling equipment, including longer out-reach post-Panamax sized, quayside gantry cranes. Many of these newer gantry cranes come equipped with dual container lift capacity, dual handling platforms (from ship to elevated platform and then a second lift from the platform to the quay). These high-speed gantry cranes can handle up to 50 container lifts per hour - a must in loading and unloading mega-sized container ships. To ensure productivity, transhipment hub ports require a highly productive and reasonably priced labour supply, available 24 hour per day, seven days per week. The large volume of containers being handled per ship call requires considerable expansion of the port's landside storage area. Hub ports will also need suitable berths for coastal feeder vessels, and good road and rail intermodal connections to inland destinations.

Although longer out-reach post-Panamax cranes are being built and delivered to various ports, their longer crane arm could create significant static and dynamic loads on the terminal's marginal wharf's carrying capacity and its pile bearings. These increased loads on the wharf structure might lead to either expensive retrofits or the development of new deep water terminals designed to handle the imposed loadings.

Handling massive number of containers in a short period of time may mean radically different berth designs than today's marginal wharf. Currently, ships are served from one side only along a marginal wharf. This necessitates the use of longer out-reach gantry cranes to handle containers on the outward side of the ship. An alternative arrangement involves a slot berth for mega-size container ships to enable gantry cranes to serve both sides of the ship simultaneously. Such a slot berth, 50 m wide, is currently being constructed in Amsterdam at the Ceres Paragon Terminal.

Two of Canada's current major container ports, Halifax and Vancouver, could be considered to serve as transhipment hub ports for the next generation of mega-sized container ships. Montreal will likely continue to serve a specific niche providing a short water route from central Canada and the US mid-west to Europe. Depth restrictions in the St. Lawrence River will limit Montreal's accessibility for mega-sized container ships. Another possible contender as potential deep water transhipment hub port is Prince Rupert on the west coast of British Columbia. Each of these Canadian ports could provide on-shore major transhipment terminals for mega-size container ships as opposed to the offshore facilities being proposed by others.

Halifax on Canada's east coast offers an ideal terminus for the westbound pendulum route from Asia traveling through the Suez Canal and the Mediterranean to Eastern North America. Currently, post-Panamax ships serve this route to New York (with a stop in Halifax). On the west coast, Vancouver and Prince Rupert both offer good sites to serve as the terminus of the eastbound pendulum route from Asia to North America.

Canadian Container Port Contenders

Recently, Halifax was a contender in competition with New York and Baltimore to secure a Maersk/Sea-Land contract to develop a large container terminal to serve their post-Panamax fleet. In the end, Maersk/Sea-Land chose to remain in New York. However, Halifax's bid served to raise the port's profile within the shipping community as a site with the potential of being a major transhipment hub.

Halifax has ice-free, deep-water berths (14 m) that are being dredged to 16 m, and a main channel depth of 18 m. Canadian National Railway (CN) provides trunk rail service to the port, serving its two current container terminals (Halterm and Fairview). CN provides intermodal rail links to central Canada, the US mid-west, and Gulf states. The majority of Halifax' container throughput is shipped by rail to inland destinations. Halifax does not have an efficient rail routing to major eastern US markets centered around Boston and New York. However, a costal feeder service from Halifax to Boston and New York would offset this difficulty.

The Maersk/Sea-Land proposal call caused Halifax to plan a new major container terminal. Many potential sites were evaluated. The optimal site selected involved harbour infill along the CN mainline in the Bedford Basin. This project entailed extending the foreshore into the Bedford Basin by 300 m and a further 1000 m along the shore from the Fairview Container Terminal. This site would have allowed CN to readily provide spur lines to facilitate on-dock transfer. To meet the bid requirements, the new container terminal would have had to handle 750,000 TEU per year by providing 1800 m of berth face, up to 16 post-Panamax gantry cranes, container storage for 24,000 TEU, on-dock rail service, and 15 m of water depth.

Vancouver has become Canada's largest container port, handling over 1 million TEUs. Its success came from developing a new container terminal in deep water (15.8 m) at Roberts Bank in the Strait of Georgia outside the densely populated urban area. Roberts Bank deep-sea terminal is a 105 hectare man-made island linked by causeway with road and rail connections to the mainland. In 1997, Deltaport Container Terminal was commissioned as a two berth, 600,000 TEU facilitys on a 40-hectare site served by four post-Panamax quayside gantry cranes. The facility is served by road and by both of Canada's main railways - Canadian Pacific and Canadian National - offering double-stack container rail service throughout the North American continent.

Vancouver has two additional deep water container terminals: Centerm and Vanterm (both having water depths of 15.5 m). These two terminals have six post-Panamax cranes and other container handling facilities. However, both are located within the inner harbour (Burrard Inlet) and surrounded by the City's urban core. This inner harbour location limits the potential for significant growth of these terminals for handling tomorrow's mega-size container ships.

Prince Rupert Port Authority is located some 500 nautical miles north west of Vancouver, placing it relatively closer than other North American ports to Asian markets on the great circle North Pacific shipping route. Prince Rupert is about 30 hours sailing time closer to Asia than Vancouver, and far more closer than US west coast ports. Prince Rupert is served by road and CN rail with good connections to the North American continent. Currently, the CN line operates at about 20% capacity; hence it can readily handle additional containers on dedicated trains. Prince Rupert has North America's deepest harbour with a depth of almost 40 m. Thus, it is more than capable of handling mega-sized container ships. The likely location for a major container terminal is Ridley Island, located in Prince Rupert's outer harbour. This site offers over 400 hectares of industrial land for potential development. It is connected to the mainland by causeway and served by both road and rail.

Serving Tomorrow's Mega-Container Ships

Serving the container trade has inherent risks. Shipping lines are relatively mobile and can move their operations to another competing port, leaving a port's major capital investment in fixed facilities and container handling equipment under-used. In today's dynamic and uncertain economic environment, care must then be taken to ensure that any facility being developed meets the needs of its primary customers - the shipping lines. Key factors used by shipping lines to select among competing ports include handling costs, quay-side gantry crane performance (number of lifts per hour), ship turn-around time (reducing idle ship time in port to a minimum), berthing windows (ensuring a dedicated berth is available upon ship arrival), deviation times to access the port from the main shipping lanes, and good linkages to an effective inter-modal network. Major transhipment terminals for tomorrow's mega-size container ships in Halifax, Vancouver or Prince Rupert would likely satisfy most, if not all, of these key factors.

Three Canadian ports - Halifax, Vancouver, and Prince Rupert are suitable contenders for an on-shore container handling facility to meet the demands of tomorrow's 12,000 - 16,000 TEU container ships. Each port offers sufficient deep water, manoeuvring room, ice free berths, and access to a continental rail service to satisfy the needs of mega-size container ships. Two of the sites, Vancouver and Halifax, are established major container ports located within larger urban settings. Although the larger urban areas offer a good source of labour and an attractive local market for some of the imports and exports, traffic congestion, competing waterfront development demands, and environmental concerns may limit their potential for significant future growth. The other ‘green field' site, Prince Rupert, offers space advantages but suffers from the lack of skilled labour.

Seizing the opportunity to provide the terminal hub for the proposed global pendulum services requires the effective and skilful coordination of key elements in the marine logistics chain. There is a need to provide highly productive container terminals capable of rapidly handling and turning around tomorrow's mega-size container ships.

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