Ports as Nodes in Logistics Chains

State of the Port and Maritime Sector

Gylfi PalssonLead Transport Sector Specialist, World Bank

Presentation draws on material developed byC. Bert Kruk - Port Consultant

11

State of the Port and Maritime Sector

Global businessGlobal business–– Temporarily hit by the financial crisisTemporarily hit by the financial crisis

It matters how the ports are run It matters how the ports are run Ports to large extent are results of trade flows and Ports to large extent are results of trade flows and Ports to large extent are results of trade flows and Ports to large extent are results of trade flows and corresponding demands of shipping industrycorresponding demands of shipping industryPorts that meet demand of the industry can flourishPorts that meet demand of the industry can flourish

ISPS and Supply Chain SecurityISPS and Supply Chain Security

State of the Port and Maritime SectorState of the Port and Maritime Sector 22

ØØ A team has reconstructed a year's worth of travel A team has reconstructed a year's worth of travel itineraries from 16,693 cargo ships using data from itineraries from 16,693 cargo ships using data from LLoyd'sLLoyd's Register Register FairplayFairplay and the Automatic and the Automatic Identification system which tracks vessels using VHF Identification system which tracks vessels using VHF and GPSand GPS

The World’s Major Shipping Routes(Source unknown)

State of the Port and Maritime SectorState of the Port and Maritime Sector 33

World Major Shipping Routes

State of the Port and Maritime SectorState of the Port and Maritime Sector 44

World Merchant Fleet Development(in million DWT)(Source: UNCTAD)

800

1000

1200

1400

DWT

All Vessels

Oil Tankers

Bulk Carriers

0

200

400

600

Million

General Cargo VesselsContainer Vessels

Other Vessels

State of the Port and Maritime SectorState of the Port and Maritime Sector 55

Container vessel capacity development(Maximum Capacity built each Year (Clarkson 2004 and others)

10000

12000

14000

16000

State of the Port and Maritime SectorState of the Port and Maritime Sector 66

0

2000

4000

6000

8000 TEU capacity

Container vessels dimensions(Sources: Fairplay and various other data)

10.00

12.00

14.00

16.00

18.00

Design draft (m)

State of the Port and Maritime SectorState of the Port and Maritime Sector 77

0.00

2.00

4.00

6.00

8.00

0 2000 4000 6000 8000 10000 12000

Design draft (m)

TEU Capacity (TEU)

Top 10 Container Shipping Lines August 2010 – Fleet Capacity (TEU) (Source: Containerisation International)

Hapag-Lloyd

Cosco

CSCL

Hanjin

Mitsui OSK Total World Fleet In Service 13.9 million TEU

0 1000000 2000000 3000000

Maersk Line

MSC

CMA CGM

Evergreen

APL

Hapag-Lloyd Present Fleet Capacity (TEU)

88State of the Port and Maritime SectorState of the Port and Maritime Sector

World port container traffic (mio TEU)(Source: Containerisation International and other publications)

300

400

500

600

mio TEU

State of the Port and Maritime SectorState of the Port and Maritime Sector 99

0

100

200

300

1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009

mio TEU

Year

Vessels laid up near Singapore (March 2009)

State of the Port and Maritime SectorState of the Port and Maritime Sector 1010

Container Throughput and Flows Comparison Q1 2008 and Q1 2009

1111State of the Port and Maritime SectorState of the Port and Maritime Sector

Approximate regional share of world port container traffic (mio TEU)

11%5% 7%2% 2% 3% 1%

North America

Western Europe

Far East

South East Asia

The State of the Port and Maritime The State of the Port and Maritime SectorSector 1212

20%

35%

14% Mid-East

Latin America

Oceania

South Asia

Africa

Eastern Europe

Port Management Models and Private Sector Involvement in Port Involvement in Port

1313State of the Port and Maritime SectorState of the Port and Maritime Sector

Ø Region by region, there has been a shift from public/service port models to private sector participation both for capital and operational experience

Ø To date, developing economy countries entered into 299 projects totalling more than US$ 33 billion of investment in 16 years

Private sector involvement

State of the Port and Maritime SectorState of the Port and Maritime Sector 1414

of investment in 16 years Ø In Africa some 70% of the (container) port

operations are still run by the public sectorØ Past 5 years have seen a number of reforms taking place

Ø What are the developments in Latin America?

Port Management Models

Type Infra-structure

Super-structure

Stevedoring labor

Other functions

Public Service Port

Public Public Public Mainly public

Tool Port Public Public Private Mainly

State of the Port and Maritime SectorState of the Port and Maritime Sector 1515

Tool Port Public Public Private Mainly public

Landlord Port

Public Private Private Mainly private

Private Service Port

Private Private Private Mainly private

Ø The WB Port Reform Toolkit (Second Edition 2006) provides extensive details since not one solution fits all

Ø The Landlord Port Management Model is the World Bank’s “preferred” option

Ø Private sector involvement will grow but Governments will continue to be the landlord, regulator and provider of basic infrastructure

Private sector involvement (contd.)

State of the Port and Maritime SectorState of the Port and Maritime Sector 1616

basic infrastructureØ Sometimes need for accompanying institutional, legal and

labor reform

Private participation in transport projects in developing countries 1990-2007

(Source: World Bank and PPIAF, PPI Project database)

80

100

120

140

20

25

30

352007 US$ billions Projects

State of the Port and Maritime SectorState of the Port and Maritime Sector 1717

0

20

40

60

0

5

10

15

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Airports Railroads Roads Seaports Projects

Container terminal operationsSource: Annual review of global container terminal operators –2005 (Drewry)

Public Sector 23%

Public Sector 21%

State of the Port and Maritime SectorState of the Port and Maritime Sector 1818

Private Sector77%

2004 Global Capacity455 mil TEU

2010 Global Capacity610 mil TEU

Private Sector79%

Port and Supply Chain Security

1919State of the Port and Maritime SectorState of the Port and Maritime Sector

Ø International Ship and Port (Facility) Security Code of the IMO was introduced in July 2004

Ø Implementation of ISPS resulted in relatively small increase of port/terminal handling costs (conclusion of recently published WB study)

Port and Supply Chain SecurityISPS

State of the Port and Maritime SectorState of the Port and Maritime Sector 2020

of recently published WB study)Ø 2007: IMO Statement that there still is much

confusion about the actual ISPS requirements

Port and Supply Chain Security (contd.)Supply Chain Security (SCS)

ØØ Supply Chain Security (SCS) is the concept which Supply Chain Security (SCS) is the concept which encompasses the programs, systems, procedures, encompasses the programs, systems, procedures, technologies and solutions applied to address threats to technologies and solutions applied to address threats to the supply chain and the consequent threats to the the supply chain and the consequent threats to the economic, social and physical welleconomic, social and physical well--being of citizens and being of citizens and economic, social and physical welleconomic, social and physical well--being of citizens and being of citizens and organized society organized society

ØØ In the context of globalization, a supply chain also refers In the context of globalization, a supply chain also refers to the network of supply chains that form today’s global to the network of supply chains that form today’s global commercecommerce

State of the Port and Maritime SectorState of the Port and Maritime Sector 2121

ØØ Threats to the supply chain can come from Threats to the supply chain can come from •• Outside the supply chain, threatening to disrupt the chain Outside the supply chain, threatening to disrupt the chain •• Inside the supply chain, when it is used to perform and Inside the supply chain, when it is used to perform and

cover illegal activities, like contraband, terrorism, or piracycover illegal activities, like contraband, terrorism, or piracy

ØØ SCS concentrates on security issues in the entire SCS concentrates on security issues in the entire

Port and Supply Chain Security (contd.)Supply Chain Security (SCS)

State of the Port and Maritime SectorState of the Port and Maritime Sector 2222

chain from producer to consumer chain from producer to consumer ØØ The World Bank published the Supply Chain Security The World Bank published the Supply Chain Security

Guide in July 2009 Guide in July 2009

Tunnel and mobile radiation scanners

State of the Port and Maritime SectorState of the Port and Maritime Sector 2323

Case Study Automated Container Inspection Lane(Source: Port of Rotterdam)

State of the Port and Maritime SectorState of the Port and Maritime Sector 2424

Thank you for your attention

State of the Port and Maritime SectorState of the Port and Maritime Sector 2525