Changing dynamics in the global container shipping line industry, notably the recent advent of several new mega-alliances, are ramping up the pressure on traditional international port transhipment hubs in Asia and worldwide to further improve the efficiency of their operations.

That additional pressure comes at a time when those centres were already having to deal with ever-increasing competition for transhipment business as newer rivals continue to grow their market share and other new hubs are planned. In Asia, prominent examples of the former include Tanjung Pelepas in Malaysia, while, globally, one of the latest illustrations of the latter is a planned new terminal at the Pacific entrance of the Panama Canal whose stated target markets will include vessels arriving from Asia.

The significance of recent shipping sector developments on the port container transhipment scene was highlighted by a leading maritime industry research organization in an assessment which concluded that having fewer but larger alliances posed a risk to all “transhipment-heavy” ports as that business would in future be won or lost in much larger segments.

On the other side of the coin, though, the same organization also suggested the emergence of the new mega-alliances could present expanded business development opportunities for larger transhipment hubs which had the capacity to handle the growing container volumes transported by those groups.

Several of those trends were highlighted in an announcement in December by two leading port container terminal organizations, Hutchison Port Holdings Trust and COSCO Shipping Ports, which announced that Hongkong International Terminals Limited (HIT), COSCO-HIT Terminals (Hong Kong) Limited (CHT) and Asia Container Terminals Limited (ACT) had agreed a formal collaboration covering the co-management and operation of their overall 16 berths across five terminals in Kwai Tsing, Hong Kong.

In that statement, HPH and COSCO confirmed that development was a response to “the changing dynamics of the global shipping industry, which are reflected by the emergence of new strategic alliances between shipping lines” and claimed the new collaboration would “help sustain Hong Kong’s position as a leading transhipment hub in the region.”

Less positively for Hong Kong, a few months earlier it was one of two traditional major Asian container transhipment ports, the other being Singapore, singled out by Drewry Maritime Research, a UK-based provider of research and consulting services to the maritime industry which also has offices in China, Singapore and India, as hubs which had seen a decline in such business.

“Throughput at Singapore after the first six months of 2016 was down by 5%, while Hong Kong fared even worse with a half-year decline of 10%,” reported Drewry. Those results, it said, had compounded “miserable figures” for the full-year 2015 when Singapore’s volumes had fallen by nearly 9%, equivalent to 2.9 million TEUs, and Hong Kong’s by 10%, or 2.2 million TEUs (although subsequent to the publication of Drewry’s assessment, both ports saw volumes start to pick up again in the latter months of 2016).

To highlight the relevance of those throughput figures to the container transhipment market, Drewry pointed out that transhipment volumes accounted for around 85% of Singapore’s container handling and a “sizeable proportion” of Hong Kong’s.

It went on to explain that while some of the contraction in container throughput at those two ports in 2015 and the first half of 2016 was due to the industry as a whole having to contend with much slower underlying growth than previously, other factors at play included market share shifts to nearby hubs.

“Annual growth at Singapore and Hong Kong since 2010 has lagged well below the world average, while other hubs such as Tanjung Pelepas and Port Kelang (both in Malaysia) have grown above trend as more carriers and alliances have moved some transhipment activity there,” stated Drewry.

Elsewhere in the world, the significance of global shipping industry developments for port transhipment activities was further highlighted by the Belgian port of Antwerp, Europe’s second largest container gateway, in a recent statement confirming that the regional Flemish government was currently considering which location in the port area was most suitable to meet its need for additional capacity.

The Antwerp port authority claimed such a development was necessary as an increasing number of container ships were now too large to pass through the locks which had to be navigated to reach some of its existing handling facilities.

“The trend around the world is towards fewer players with larger ships offering services in a worldwide network on several routes. At the same time, this means that transhipment is becoming more and more important. As a result of this progressive increase in scale, a larger number of vessels operated by deepsea shipping lines are no longer able to pass through the locks safely,” explained the port authority.

“For both these reasons it is crucial for the port to further expand in such a way that it remains accessible to the deepsea shipping lines. Failure to do so will result in companies being forced to seek alternatives and turning to competitor ports.”

Summing up the overall global picture, Drewry suggested that having fewer but larger container shipping line alliances would in fact pose a risk to all transhipment-heavy ports as it would reduce the client pool for terminal operators and see business won and lost in much bigger “chunks.”

On the plus side, though, continued Drewry, larger transhipment ports which had ample capacity to cater for increasing alliance-level volumes could actually benefit from the rise of the mega-alliances. “Alliances will also be lured by their greater connectivity and lower risk of congestion during peaks. The transhipment ports that appear most at risk are those that are smaller or more fragmented. In the world of the mega alliance, the mega hubs are best able to compete.”

Meanwhile, further new transhipment centres are being planned in various parts of the world. In Central America, for example, the Panama Canal Authority is looking to develop a new facility, the Corozal Container Terminal, on the Pacific side of that waterway, as a common-user container transhipment facility “serving all interested carriers and all routes, particularly vessels coming from Asia and North-South America services, as well as regional feeders.”

In that context, the Panama Canal Authority last year announced a list of four pre-qualified bidders for the project – APM Terminals (The Netherlands), PSA International (Singapore), Terminal Link (France) and Terminal Investment Limited (the Netherlands). Those companies were given until February 3 this year to submit the required specifications and economic proposals for a 20-year concession.

By Phil Hastings

Correspondent | London