Other than last week’s stunning collapse of the P3 Network, there’s arguably no hotter issue in the container shipping world than port productivity. As mega-container ships replace smaller vessels in major east-west and north-south trades, terminals are struggling to turn the ships around and move containers through their facilities in a timely manner.
This is, and isn’t, a new problem. Ports have long struggled to adjust to the ever-larger ships that container lines have deployed over the years. It’s a lot easier for a carrier CEO to sign an order for a new ship than for a port to deepen its draft so that ships can enter or leave fully loaded. One takes 10 minutes, the other 10 years.
But the dynamic has changed. Ships are growing at an accelerating, some would say alarming, rate as carriers become fixated on reducing operating costs as the key to profitability. That’s ratcheting up pressure on terminals to perform, because carriers can’t realize the potential cost savings of their mega-ships if they’re always playing catch-up to stay on schedule because of port delays, which raise fuel costs.
The consequences of being late are growing because, as mega-ships take up more time at port, berth windows are harder to find, particularly if the ship arrives late, putting the already tardy vessel even further off its schedule.
Indeed, there is evidence that on turnaround times and throughput time for containers, the bigger ships are exacting a toll. In an analysis of ship calls at major North Europe ports between
April 15 and May 15, logistics software firm CargoSmart found that more than half of arrivals of ships of 10,000 TEUs or more were delayed longer than 12 hours, and nearly a quarter were delayed more than 24 hours.
But a larger set of ship calls at those ports, most of which involved smaller ships, experienced shorter delays, pointing clearly to higher delays associated with larger ships. In many discussions with shippers, my JOC colleagues and I have never heard more complaints about the time it’s taking for containers to move through terminals.
That’s why the productivity rankings of ports and terminals we release today are relevant. Productivity at the berth, which is what the JOC Group Inc. Port Productivity Data measures, is the metric most closely tied to ship turnaround times. It shows which ports and terminals are the best at working ships and getting them back to sea quickly.
This dataset, based on information provided by most of the major container lines, is the first to compare ports and terminals globally on a measurement other than volume. The database isn’t complete in the sense that not all carriers are participating — there are hundreds of small carriers from which we don’t receive data — but carriers representing more than 75 percent of global capacity, according to Alphaliner rankings, have provided details of their ship calls to populate the database.
And the database is growing. The number of port calls reflected in the database increased to more than 150,000 in 2013 from 87,000 in 2012, reflecting some additional, larger carriers joining the project.
Although we’ll introduce additional data elements later, the measurement we’re starting with — gross berth productivity between a ship’s arrival and departure from berth, with no adjustments for labor or equipment down time regardless of the reason — is among the broadest definitions of productivity. It’s a metric that reflects carrier priorities specifically around getting ships in and out of port quickly.
Terminals look at many other metrics, but we haven’t collected them, indeed no one has, essentially because terminals have historically been reluctant to share operating data for benchmarking purposes, and have done so only in limited scenarios such as one-time academic studies.
Carriers, however, are motivated to have productivity quantified, increasingly so as ships get larger. Going to them instead of the terminals provided the opening needed to develop this new dataset. The rankings published in this issue have other limitations, suggesting that productivity performance is entirely the responsibility of the terminal to improve, considering it’s the vendor and the carrier is the customer.
As any carrier will tell you, improving productivity is a shared goal between the carrier and the terminal. Carriers that experience poor productivity look inward to improve their own operations in addition to seeking improvements from the terminal.
Higher productivity is something the entire industry should be striving for. It doesn’t just mean faster turnaround times for ships. It also means cargo moving quicker through ports, which benefits shippers’ supply chains and improves the overall flow of trade.