2009 05 Apac Container Ports Frost & Sullivan

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%


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%


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%


0.1%

8.8%9.6%13.7%

7.4%

-1.60%

-2.7%

-7.3% -6.0%-14.1%

-8.6% -0.3%


$190.53 Billion$190.53 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.

Alvin Chua

Account Manager

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DID: +65 6890 0997

Mob: +65 9199 4566

eMail: [email protected]

2009 05 Apac Container Ports Frost & Sullivan

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