The container terminal industry is facing challenges that include slowing global trade, larger ships, liner industry consolidation and extreme cost pressure, according to Kim Fejfer, chief executive officer of APM Terminals.
Kim Fejfer, the chief executive officer of APM Terminals, says there is a “need for a port shake-up” in the container terminal industry, citing slower trade, larger ships, liner industry consolidation and extreme cost pressure.
Speaking in London at the 18th Annual Global Liner Shipping Conference, Fejfer said, “The need for change has been more pronounced in the past two years than in the past 20 years.”
This is happening, he noted, at a time when trade is growing more slowly — at an annual rate of 2 to 3 percent compared with 10 to 11 percent before the 2008 great recession.
In addition, the entry of ultra-large vessels into major trade lanes and cascading of large vessels into smaller trade lanes, is requiring new investment and changes to terminals.
“In the past we handled 13,000-TEU vessels. Now we handle vessels 50 percent larger – and you need to be ready to handle these 20,000-TEU ships in all your ports or watch the business move elsewhere,” he said. “Trade will always find the most efficient way to flow.”
A decade ago, a large terminal with 900 meters of quay could handle three or more vessels simultaneously. Today, with vessels reaching lengths of 400 meters in length, the same terminal “can only accommodate two ultra-large vessels at once to handle the same number of container moves,” even with reinforced quayside, larger ship-to-shore cranes and deeper depth, said Fejfer.
Those changes mean “considerably less flexibility for terminal operations,” he said. “Now there is a need for more yard space, larger gates and more manning to handle the volume peaks in the terminal infrastructure. These result in additional costs to the terminal operator which the shipping lines are not ready to pay for.”
“At the individual port complex level, there is a need for a port shakeup,” added Fejfer. “At the ports of Los Angeles and Long Beach, there are 15 different container terminals with the various alliances wanting to call on their respective terminals, creating cost and waste in intra-terminal transfers. If port operators are to contribute to the efficiency of shipping lines we have to drive rationalization, consolidation and segmentation to serve the larger vessels and smaller vessels, more investment is needed in port infrastructure.”
APMT’s Pier 400 facility is one of the largest in the Ports of Los Angeles and Long Beach.
Fejfer also said liner industry consolidation is reshaping port call selection and frequency – with more changes expected in the structure of alliance members.
“On a global level, ocean carriers are consolidating port calls to achieve network efficiency and tailor their networks to bigger import/export gateways and super large hub terminals,” he said. “This trend will create winners and losers in the terminal business. Successful ports will offer strategic locations, ideal navigational access and deep water.”
APM Terminals sees need for port ‘shake-up’
