Singapore's container port faces a productivity question

Singapore

SINGAPORE'S container port, among the busiest in the world and reputed to be one of the most competitive, has come up against recent statistics that suggest it is behind its regional rivals in efficiency - at least on the face of it.

Fresh data on berth productivity from the Organisation for Economic Co-operation and Development (OECD) International Transport Forum (ITF) appears to indicate that the country's terminals are lagging the major ports in Malaysia and China in productivity.

Singapore's container port moved an average of 66 containers per hour per ship in 2014, while its geographically closest rival, the port of Tanjung Pelepas in south-western Johor in Malaysia, racked up an average of 81.

The gap between Singapore and Shanghai was even wider. The Chinese city chalked up 167 container moves per hour per ship, the world's highest in 2014. Singapore was also trumped by other major ports in the region - Hong Kong (74), Shenzhen (133) and Malaysia's Port Klang (69), said the OECD ITF report.

The report comes as the Singapore port fights to maintain its appeal to shipping lines in an era of mega-sized vessels, powerful shipping alliances and intense regional competition, not forgetting the regularly raised possibility of Thailand developing the Kra canal, which would offer ships the option of bypassing Singapore.

Maritime analysts have, however, greeted the data with caution, saying that the numbers may not present the full picture, given the complexity of the local port's operations.

They also said Singapore's productivity figures will likely improve when the future terminal at Tuas is up and running.

Besides, factors such as service quality also play a part in determining a port's competitiveness, they added.

Still, the comparisons will draw attention. Productivity is becoming an increasingly crucial metric for ports as shipping lines deploy increasingly bigger ships in order to reap the benefits of economies of scale. The largest container ship now plying the oceans can carry about 19,200 containers or twenty-foot equivalent units (TEUs), making it around the size of New York's Empire State Building.

The OECD ITF report said ports may need a "productivity revolution" as ship sizes balloon.

This was the first time it has released raw figures for berth productivity for the six ports.

The last time it put out ship turnaround data was 2011.

A similar set of berth productivity data collected by trade publication Journal of Commerce (JOC), based in the United States, told a similar story.

JOC put Singapore's berth productivity at 77 container moves per hour per ship last year, below Tanjung Pelepas' 81 and Shanghai's 101.

The OECD ITF data covered average ship turnaround time as well, and in this too, Singapore appeared slower than its peers. Across its seven container terminals along the island's southern coastline, the local port took 1.38 days on average to handle a ship, longer than the averages of 1.09 days at Tanjung Pelepas and 0.85 days at Port Klang.

Although the Republic overtook Rotterdam in 1984 to become the world's busiest port, it was eclipsed by Shanghai in 2010; Shanghai, which is still the world No 1, handled 35.29 million TEUs in 2014, edging out Singapore's 33.55 million TEUs.

The container ports here are run by port operator PSA. When asked why Singapore seemed to be lagging its regional peers, its spokesman replied in an e-mail: "As a common-user port and a transhipment hub of an unparalleled scale globally, PSA Singapore provides best-in-class service to about 200 shipping lines from around the world, responding flexibly to and meeting their diverse needs individually. We are committed to working alongside our customers and partners to continue growing their business here and strengthening the status of Singapore as the largest container transhipment hub port in the world."

Analysts pointed out the mitigating factors for Singapore's apparently poorer container productivity count, one of which was the type of traffic it handles.

Singapore is a transhipment hub along the shipping lane from Asia to Europe, so cargo en route to other destinations is mostly in transit here and thus requires complex container transfers.

In contrast, Shanghai, Shenzhen and Hong Kong are mainly gateway ports used for imports and exports, so the flow of container traffic in those ports is simpler, which possibly boosts their productivity numbers.

Drewry senior analyst Neil Davidson said: "You have to be very careful when comparing berth productivity and ship turnaround time data, because more often than not, you're not comparing apples with apples."

He added that productivity depended on factors such as how containers are stowed and the size of ships.

On top of this, OECD ITF ports and shipping administrator Olaf Merk told The Business Times that the older city terminals - Tanjong Pagar, Keppel and Brani - are less automated than the newer ones in Pasir Panjang and might thus have dampened total productivity levels.

But precisely because of their "larger labour intensiveness, these terminals are more flexible and can thus provide the last-minute adaptations that some customers want", he said.

Ocean Shipping Consultants director Jason Chiang said the city terminals tend to serve smaller ships, which use fewer cranes, leading to a lower berth productivity; the future Tuas port is expected to be able to handle the largest ships, which would allow higher productivity, he said.

Another reason for Singapore's lower port productivity could lie in the number and diversity of its customers, making its operations more complex. Tanjung Pelepas and Port Klang are also transhipment ports but serve a narrower clientele than Singapore, analysts noted.

Tanjung Pelepas is mainly a terminal for the 2M shipping alliance made up of Maersk and MSC; Port Klang is the base for the Ocean 3 alliance formed by CMA CGM, China Shipping Container Lines and United Arab Shipping.

Mr Merk said: "Considering the more dedicated nature of these transshipment terminals, one would expect them to be more productive than Singapore, so it could actually be considered an accomplishment of Singapore that the gap is not larger."

In contrast, Singapore has a large variety of customers, he added; these include three of the four main (shipping) alliances and a lot of feeders and regional players, bringing together a lot of different "trade lanes".

"Customers seem to be going to Singapore because of the last-minute changes and connections that can be made there to maintain total network integrity. This could go at the cost of terminal productivity."

Analysts said that apart from productivity, port competitiveness also depends on factors such as service quality, reliability, connectivity and costs; they point out that Singapore performs well and is generally considered efficient.

"Singapore has always had a very good reputation in terms of efficiency and service levels," Mr Davidson said.

Mr Merk agreed that "the overall picture for Singapore is very positive", but said the country "could do more" for the environmental sustainability of its terminals.

"Some customers are increasingly interested in this and it will improve the quality of life of the local population.

"Some other world ports have shown large ambitions in this respect; Singapore has the potential to excel in this as well."

BT INFOGRAPHIC: Port-shots