Pakistani Ports ie Karachi has two container terminals viz, KICT (HPH) at West Wharf and PICT at East Wharves, whereas Port Qasim has DP world terminal QICT, and our third commercial Port Gwadur Terminal will be managed by PSAI, who are bringing two refurbished Gantries which were due mid January 08 by JHEN HUA a special Gantry carrier vessel.
The Keamari Groyne deep water terminal also being awarded to HPH of Hong Kong has virtually made them key player as KICT is also owned by them and with completion of third phase KICT may be in position to handle 750/1 mill TEUS.
Both Pakistani ports have handled 1.8 mill TEUS all captive cargo thanks to sustained economic growth and GDP 7% , however no efforts were made to secure CAS cargoes, which are largely routed through Bander Abbas (Iran) due to good logistics facility and marketing by Bander Abbas Port.
Pakistani container terminal industry is largely controlled by HPH and DP world, whereas PICT is working hard to enter 0.5 mill TEU Club PICT is only Pakistani player.
It is not only in Pakistan, but half of the world's terminal capacity, and almost 60% of through-put is managed by small group of companies, that can be defined as Global terminal operators a new name to stevedores of past Era. These companies having presence in more than one geographical region handled around 300 mill TEU an increase of 24.6% on the previous year.
The buoyant world economy in particular strong containerised export growth in China and India helped global operators to grow organically. Most of the market leaders saw additional new capacity come on stream in 2004. It is expected that global terminal operators will increase their share from 57% in 2004 to 59% in 2010.
Three out of four leading global operators HPH, PSA and DP are stevedore based together with Hydrid APM terminals, they handled about 150 mill TEU. The top four thus accounted for over half of the global terminal operator, through put and over 1/3rd of total world container terminal volumes.
HPH is; the leading global terminal operator handling 47.8 mill TEUS, the company has strengthened its position in China, Thailand and Pakistan and Eastern Europe. HPH may achieve 72 mill TEU capacity by 2010. PSA, the second biggest operator has also experienced double digit growth. PSA is handling 40 mill TEU and planning to add 25 mill TEU by investing 4 bill USA in Singapore, Antwerp, Hong Kong and Gwadur.
APM terminals have grown by 49% and likely to handle 61.6 mill TEU in 2010, by investing in India, China, USA, Brazil etc. CASCO the 5th biggest is striving for 4th position. Dubai port with acquisition is also trying hard to gain 4th position. It is assumed that new century will see a shift and carrier based terminal operators will play major role by 2010 with MSC, Hangin, Neddloyd, APM, CMA and CGM.
The world container through-out is expected to increase by 9% upto 2010. HPH and PSA derive 70% of container business from S. Asia and Far East. By contrast APM, DPA/DPI have more balanced portfolio. The emerging new trends amongst global operators is to cooperate, as APH, CASCO and PSA are working together in Dalian Ports.
By leveraging on various factors, including their generally greater financial resources, ability to spread risk, greater purchasing power, and ability to offer shipping lines a multi-regional network, the global operators have a competitive edgeover other private operators. There is also some data to suggest that they are more efficient. However, analysis of productivity data in terms of TEU per hectare and TEU per ship to shore gantry crane, reflects a slight detoriation in global terminal operator average performance in several regions.
Most global operators showed a significant improvement in financial performance, thus HPH's / PSA profit margins were 30% + and PSA + DPI achieved a 15.5% return.
TAILPEICE: Given the high entry cost and the requirement within most BOT and privatisation tenders that established international operators should only apply. The recent example that PICT could not qualify for Keamari Groyne deep water port, thus it may be food of thought for small private players who may have to succumbed to pressure of 4 leading operators, leading to acquisition of small players. The hybrid terminal operators like APM, Hanjin and MSC may be dictating in next 20 years and may cause problem to four leading global players too.
There is a limited scope for new entrants to break into the global operators "CLUB" but china merchants and China Shipping container lines are the most likely future new comers.
In Pakistani Ports HPH with KICT and Keamari Groyne deep ports will have the initial capacity of handling plus 2 mill TEU and QICT of DP world may handle 1 mill TEU by 2010. PICT a Pakistani company may find tough to face these two giants, so will be PSA at Gwadar will be at dis-advantage with monopoly of HPH at Karachi and DP at QICT. Gwadar has no hinterland connectivity other than Makran coastal highway to Karachi.
The only solution is sustained economic growth of 7% plus to feed these captive cargo players. Pakistani ports will have to look for trans-shipment business to meet the need of increased capacity or else our economy may remain steady to support the development in Port and avoid surplus build up capacity.
Some idealist without looking at patterns and data make claims of turning our ports as MEGA HUBS, it is hard to turn to REGIONAL HUB EVEN, as India having 6 mill TEU against ours of 1.8 mill TEU has not been able to turn its Pipavav port as regional hub, what to talk about mega hubs, a fantasy/fiction.
The ground reality and the pattern of shipping trade data and geographical position can only give the correct picture, thus we must wake up to realities and not blazon on dreams. Let us learn from the experience of Colombo, Singapore and Jebel Ali etc which are professionally managed ports handling 70 to 75% trans-shipment cargo.
12 Major Indian Ports are also thriving on captive cargo, however due to expected increase to 1 Billion ton mark of volume due to sustained economic growth of 9% plus. The Indians beaten by congestion and not allowing HPH to build Bombay gateway Port with J.V. of Larson Turbo on mere suspicion of China connection are now out to invest 15 Billion USD in ports and 12 Billion USD in developing rail tracks/roads to make quadruple triangle connecting all major cities of India.
Colombo port has tendered South Port project of 2.4 mill TEU additional capacity, but HPH and PSA are vying hard and contesting, however as per latest report in world cargo news, Sri Lanka Port authority has awarded 400 mill USD project to HPH of Hong Kong creating a controversy that SPLA Chairman has misled the SPLA Board against joint venture of PSA and local Aticken spencer group. Bombay off shore deep water Port has also been awarded to Draravados of Spain and local partner Gammon India.
Bandar Abbas thriving on CAS cargo has completed 2nd container Terminal at Shahid Rajai Port adding 1.5 mil TEU and boosting total capacity to 3.5 million tons. Port of Juibail is set to improve its capacity to 14 mil tons by June, 2008 from 11 mil tons.
With above changing scenario, KPT has to be alert with its deep water Port project as now HPH may opt to concentrate on Colombo. It appears that Keamari Groyne project may suffer set back, unless pursued. KPT must go full speed ahead resolving issues, ensuring no cost escalation, as new developments do shift interest of terminal operators. Gwadar Port must also keep an eye on regional developments, thus GPA and PSAI has to offer incentives to induce ship-owners to Gwadar.
Gwadar had been given on a clear note that PSAI will turn it as transshipment hub. All eyes are set since last 15 months to see the future of our new 3rd commercial port. One can only guess that Ministry of Ports and Shipping has taken due cognisance of changing scenario.
Sunday, March 30, 2008
Monday, March 3, 2008
The need for national port authority
Pakistan is blessed with three commercial ports - Karachi, Port Qasim and Gwadar. However there exists no national port plan or even national port authority to oversee the development of these ports. All the three ports are autonomous in nature and efforts to streamline have been blocked by the vested interests.
These ports make their own development plans at times duplicating/complimenting each other. The last decade has seen technological improvements making imperative to plan the transportation system of the developing country as a whole, in order to achieve a balance between the capacities of the various ports.
In maritime transport it is some time possible - particularly for bulk and unitised cargo movements - to include the shipping, port and inland transport facilities in one co-ordinated plan. In other cases the ship traffic is not under the control of planners and it is only possible to co-ordinate the port facilities with those of inland transport and distribution.
Planning a seaport without considering the connecting road, rail and barge facilities may lead to serious fault in national communication. This is particularly true in case of developing countries in many of which the freight traffic is rapidly growing and changing.
Port of Gwadar is a classic case of faulty planning as port was completed, whilst there exists no hinterland connectivity except coastal highway to Karachi, which too gets awashed with torrents and the passage of boze pass restricts trucks to carry heavy load and climbing due to difficult terrains.
The port has been further dredged to 14 m depth but civil structure can accommodate vessels of max 50,000 DWT, not panamax vessels, another design fault.
Due to the ignorance of planners Tugs/Pilot boats were ordered which are under power and not appropriate for tugging purposes as the design capacity of tug at max efficiency is 30 tons bollard pull and pilot boat is under power so is the cargo handling equipment.
According to international IMO guidelines the port needs two 60 tons bollard pull tugs to swing the vessel in the designed turning basin of the port within 1.50 times of the length of the vessel.
I have learnt from market sources that a panamax vessel is said to be due at Gwadar with 72000 tons cargo, thus I find it prudent to create awareness that the designed capacity is only 50,000 tons DWT, not 75000 tons DWT. Moreover the present tugs will not be able to handle a panamax. The searching question is that are we going for adventure or we are prepared for the consequences, this could be anybody's guess.
Within the port sector a balance plan is needed for each class of maritime traffic. The number of ports, their specialisation and their locations have to be considered.
We in Pakistan still permit competition between our ports, but this is no longer seen as acceptable norm where national resources are limited. The trend towards handling bulk commodities is specialised high, through puts terminals, where national traffic flow of a particular product may be handled at one terminal, irrespective of geographical requirements.
If these terminals mushroom up in each port, they may remain under utilised and will not allow the country to take advantage of economy of scale, obtainable through usage of large bulk carriers.
The specialised terminals can load/unload 10,000 tons per hour and freight for large bulk carriers are also low. Needless to mention that for all classes of freight, there is growing need to avoid over investment. Due to non-existent of national port plan, Karachi and Port Qasim both are offering bulk cargo terminals on BOT basis to entrepreneurs, a duplication which can lead to overinvestment and under utilisation as is the case of building new OP II whilst all white oil imports were shifted to Port Qasim due to Pepco line.
Thus Karachi port handling liquid cargo capacity of about 5 millions tons have been shifted which is ultimate under utilisation, due to non connectivity to Pepco line from Karachi Port. KPT is competing with PQA to establish LPG and LNG terminals. The present installed capacity of oil terminals at Karachi and Port Qasim is about 33 mill tons, but only 18 mill tons is handled, thus underutilisation of capacity and if SBMS are allowed, then both ports will suffer further capacity loss.
All the three ports in Pakistan submit their new projects to the newly formed Ministry of Ports and Shipping which is devoid of any port planners and projects are examined by the generalists having no track of maritime business. The amount of work involved in a country with several ports justifies the maintenance of a small permanent nucleus of professional planners, to be augmented by an additional professional team, when a full revision of national plan is needed.
National port planning leads to several policy decisions to define the role of each port and usage of national resources in most economical manner.
A further requirement would be which ports or the port infrastructure will be paid by Federal Government and which by individual port. It is strongly recommended that a national port authority be made to oversee the functioning of the ports.
These recommendations fully or partly have been in practice even in our neighbouring country, thus there is strong case for setting up a specialist government agency with the overall responsibility for coordinating port policies at national level.
To build up and maintain the capability needed, and to allow a free interchange of ideas with the many interests involved, it may be more appropriate for the agency to be separated from the central government ministry concerned and to take the form of a national ports authority with defined statutory powers, such as those listed below.
There is a close parallel to the move in a number of countries towards national airport authorities, national oil authorities and so on. A small permanent secretariat would be appropriate.
For efficient management of port activity, the operational decisions should be taken locally; it would normally be wrong to give a national ports authority any operational responsibilities. Its main function should be one of co-ordination and regulation, the principal aim being to prevent the undesirable duplication of investments.
THE STATUTORY POWERS WHICH IT MAY BE APPROPRIATE TO GIVE A NATIONAL PORTS AUTHORITY ARE AS FOLLOWS:
a) Investment: Power to approve proposals for port investments in amounts above a certain figure, for example, $5 million.
The criterion for approval would be that the proposal was broadly in accordance with a national ports plan, which the authority would maintain.
b) Financial policy: power to set common financial objectives for ports (for example, required return on investment defined on a common basis) with a common policy on what infrastructure will be funded centrally and what locally; advising the government on loan applications.
c) Tariff policy: power to set a common tariff structure (local conditions will determine to what extent the authority should also regulate tariff levels.)
d) Labour policy: power to set up common recruitment standards, a common wage structure and common qualifications for promotion; power to approve common labour union procedures.
e) Licensing: where appropriate, power to establish principles for the licensing of port employers, agents, etc.
f) Information and research: power to collect, collate, analyse and disseminate statistical information on port activity for general use, and to sponsor research into port matters as required.
g) Legal: power to act as legal adviser to port authorities.
It would be advisable for such an authority to set up a method of obtaining advice from persons with wide experience in the matters of harbours, shipping and inland transport, in industrial, commercial, financial and economic matters, in applied science and in the organisation of labour.
An appropriate method would be to co-opt such persons on to the Board of the authority or on to its subsidiary committees. Liaison would also take place, with national bodies representing shippers, ship-owners etc.
The risk involved in giving such an authority powers over port investments and tariff policy is that additional delays may occur.
It would be essential, therefore, to institute in addition an emergency procedure to speed up or even bypass the normal decision process when, for example, there were sudden changes in traffic or rapid increases in congestion.
The only fear which creeps in mind, when suggesting pragmatic ideas is the appointment of right people at right places and strict adherence to laid down qualifications of commercial port management.
These ports make their own development plans at times duplicating/complimenting each other. The last decade has seen technological improvements making imperative to plan the transportation system of the developing country as a whole, in order to achieve a balance between the capacities of the various ports.
In maritime transport it is some time possible - particularly for bulk and unitised cargo movements - to include the shipping, port and inland transport facilities in one co-ordinated plan. In other cases the ship traffic is not under the control of planners and it is only possible to co-ordinate the port facilities with those of inland transport and distribution.
Planning a seaport without considering the connecting road, rail and barge facilities may lead to serious fault in national communication. This is particularly true in case of developing countries in many of which the freight traffic is rapidly growing and changing.
Port of Gwadar is a classic case of faulty planning as port was completed, whilst there exists no hinterland connectivity except coastal highway to Karachi, which too gets awashed with torrents and the passage of boze pass restricts trucks to carry heavy load and climbing due to difficult terrains.
The port has been further dredged to 14 m depth but civil structure can accommodate vessels of max 50,000 DWT, not panamax vessels, another design fault.
Due to the ignorance of planners Tugs/Pilot boats were ordered which are under power and not appropriate for tugging purposes as the design capacity of tug at max efficiency is 30 tons bollard pull and pilot boat is under power so is the cargo handling equipment.
According to international IMO guidelines the port needs two 60 tons bollard pull tugs to swing the vessel in the designed turning basin of the port within 1.50 times of the length of the vessel.
I have learnt from market sources that a panamax vessel is said to be due at Gwadar with 72000 tons cargo, thus I find it prudent to create awareness that the designed capacity is only 50,000 tons DWT, not 75000 tons DWT. Moreover the present tugs will not be able to handle a panamax. The searching question is that are we going for adventure or we are prepared for the consequences, this could be anybody's guess.
Within the port sector a balance plan is needed for each class of maritime traffic. The number of ports, their specialisation and their locations have to be considered.
We in Pakistan still permit competition between our ports, but this is no longer seen as acceptable norm where national resources are limited. The trend towards handling bulk commodities is specialised high, through puts terminals, where national traffic flow of a particular product may be handled at one terminal, irrespective of geographical requirements.
If these terminals mushroom up in each port, they may remain under utilised and will not allow the country to take advantage of economy of scale, obtainable through usage of large bulk carriers.
The specialised terminals can load/unload 10,000 tons per hour and freight for large bulk carriers are also low. Needless to mention that for all classes of freight, there is growing need to avoid over investment. Due to non-existent of national port plan, Karachi and Port Qasim both are offering bulk cargo terminals on BOT basis to entrepreneurs, a duplication which can lead to overinvestment and under utilisation as is the case of building new OP II whilst all white oil imports were shifted to Port Qasim due to Pepco line.
Thus Karachi port handling liquid cargo capacity of about 5 millions tons have been shifted which is ultimate under utilisation, due to non connectivity to Pepco line from Karachi Port. KPT is competing with PQA to establish LPG and LNG terminals. The present installed capacity of oil terminals at Karachi and Port Qasim is about 33 mill tons, but only 18 mill tons is handled, thus underutilisation of capacity and if SBMS are allowed, then both ports will suffer further capacity loss.
All the three ports in Pakistan submit their new projects to the newly formed Ministry of Ports and Shipping which is devoid of any port planners and projects are examined by the generalists having no track of maritime business. The amount of work involved in a country with several ports justifies the maintenance of a small permanent nucleus of professional planners, to be augmented by an additional professional team, when a full revision of national plan is needed.
National port planning leads to several policy decisions to define the role of each port and usage of national resources in most economical manner.
A further requirement would be which ports or the port infrastructure will be paid by Federal Government and which by individual port. It is strongly recommended that a national port authority be made to oversee the functioning of the ports.
These recommendations fully or partly have been in practice even in our neighbouring country, thus there is strong case for setting up a specialist government agency with the overall responsibility for coordinating port policies at national level.
To build up and maintain the capability needed, and to allow a free interchange of ideas with the many interests involved, it may be more appropriate for the agency to be separated from the central government ministry concerned and to take the form of a national ports authority with defined statutory powers, such as those listed below.
There is a close parallel to the move in a number of countries towards national airport authorities, national oil authorities and so on. A small permanent secretariat would be appropriate.
For efficient management of port activity, the operational decisions should be taken locally; it would normally be wrong to give a national ports authority any operational responsibilities. Its main function should be one of co-ordination and regulation, the principal aim being to prevent the undesirable duplication of investments.
THE STATUTORY POWERS WHICH IT MAY BE APPROPRIATE TO GIVE A NATIONAL PORTS AUTHORITY ARE AS FOLLOWS:
a) Investment: Power to approve proposals for port investments in amounts above a certain figure, for example, $5 million.
The criterion for approval would be that the proposal was broadly in accordance with a national ports plan, which the authority would maintain.
b) Financial policy: power to set common financial objectives for ports (for example, required return on investment defined on a common basis) with a common policy on what infrastructure will be funded centrally and what locally; advising the government on loan applications.
c) Tariff policy: power to set a common tariff structure (local conditions will determine to what extent the authority should also regulate tariff levels.)
d) Labour policy: power to set up common recruitment standards, a common wage structure and common qualifications for promotion; power to approve common labour union procedures.
e) Licensing: where appropriate, power to establish principles for the licensing of port employers, agents, etc.
f) Information and research: power to collect, collate, analyse and disseminate statistical information on port activity for general use, and to sponsor research into port matters as required.
g) Legal: power to act as legal adviser to port authorities.
It would be advisable for such an authority to set up a method of obtaining advice from persons with wide experience in the matters of harbours, shipping and inland transport, in industrial, commercial, financial and economic matters, in applied science and in the organisation of labour.
An appropriate method would be to co-opt such persons on to the Board of the authority or on to its subsidiary committees. Liaison would also take place, with national bodies representing shippers, ship-owners etc.
The risk involved in giving such an authority powers over port investments and tariff policy is that additional delays may occur.
It would be essential, therefore, to institute in addition an emergency procedure to speed up or even bypass the normal decision process when, for example, there were sudden changes in traffic or rapid increases in congestion.
The only fear which creeps in mind, when suggesting pragmatic ideas is the appointment of right people at right places and strict adherence to laid down qualifications of commercial port management.
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