Haiphong Dragon Container Port - Group 1 - GMA 03.02

VIETNAM MARITIME UNIVERSITY INTERNATIONAL SCHOOL OF EDUCATION SPECIAL TOPICS IN MARITIME BUSINESS ANALYSING KEY TRENDS IN PORT INDUSTRY AND RECOMMENDATIONS TO IMPROVE COMPETITIVENESS A

VIETNAM MARITIME UNIVERSITY INTERNATIONAL SCHOOL OF EDUCATION

SPECIAL TOPICS IN MARITIME BUSINESS

ANALYSING KEY TRENDS IN PORT INDUSTRY

AND RECOMMENDATIONS TO IMPROVE

COMPETITIVENESS AT HAIPHONG DRAGON

CONTAINER PORT

Haiphong, July 13 th , 2016

MAIN BODY 1

1 Trends in Port Industry 1

1.1 Growth of Container trade 1

1.2 Higher productivity required 1

1.3 Terminal Automation 2

2 Activities to attract more shipping lines 3

2.1 Continuous improving of port level and terminal level 3

2.2 Ensuring environmental factors and security implications 3

2.3 Increasing cooperation within the supply chain 4

CONCLUSION 4

REFERENCES 5

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Analysing Key Trends in Port Industry and Recommendations to Improve Competitiveness at

Haiphong Dragon Container Port

INTRODUCTION

There is no doubt that shipping is by far the most important transportation mode as 90% of world trade is carried by the international shipping industry A part from that, shipping industry is the only reason for the existence and development of port industry Therefore, ports must continuously transform in order to catch up with the growing shipping industry There are several trends that are expected to be followed in port industry shipping, three most concrete of which are the growth of container ports and terminals, high productivity required and terminal automation

Besides, in this era of fierce competition, ports do not only have to struggle with the others in the same industry but also with aggressive outsiders such as air transport and inland transport As a result, port operators have to carry out a series of activities to enhance the port’s competitiveness and attract more customers In this context, ensuring environmental factors and security implications and increasing cooperation with the supply chain, along with progressive improving of port level and terminal level, are emerging as indispensable activities

MAIN BODY

1 Trends in Port Industry

1.1 Growth of Container trade

Growth in the container trade is ultimately driven by economic growth An underlying assumption

of this study is that, for the next decade at least, the structural relationships between the growth in container trade and economic growth will remain basically unchanged The starting point for our analysis was therefore expectations of future economic growth 10 years from now – and it is impossible to predict the timing of economic cycles which will inevitably occur during that period The economic growth assumptions underlying the present study may therefore be interpreted as hypothesizing that growth will continue along a path similar to that of the recent past, and that, although there may be good years and bad years within the forecast period, there will not be a major, prolonged economic slowdown on the scale of that of the early 1990s In fact, the baseline projection for container volumes in 2030 is less than estimated terminal capacity in 17 of the world’s 18 major regions touched by seas or oceans, with South Asia the lone exception In the U.S., there are expectations that container terminal capacity to be more than sufficient on all three coasts in 2030: On the West Coast, volume is expected to reach 36.8 million TEUs versus terminal capacity of 65.5 million The East Coast expects 29.1 million TEUs of traffic through terminals capable of handling 51.7 million TEUs Volume of 13.2 million TEUs is expected on the Gulf Coast versus terminal capacity of 33.1 million

It’s easy to conclude that ports are well-positioned to handle the container volumes coming their way over the next decade and beyond The same can’t be said for the congested roads, rails and other surface connectors in and around ports, where capacity will need to grow 10 percent by 2030

in North America and a staggering 68 percent in Asia

1.2 Higher productivity required

Higher productivity means not only faster turnaround times for ships butalso cargo moving quicker through ports, which benefits shippers’ supply chains and improves the overall flow of trade

Improving terminal productivity is becoming more urgent because vessels are getting ever larger Big ships require taller cranes with longer reaches, and the vessels create a surge in cargo volume in

a short time that stresses the yard, gate and inland infrastructure As vessel sizes and container volumes increase, and ports make the investments to accommodate bigger ships, increases in vessel productivity A further increase in gantry crane productivity only makes sense when this productivity can be used effectively Once the large cranes are positioned over the large vessels, cranes can lift much greater volumes of containers without having to be moved until the ship leaves port Terminal operators must work closely with vessel operators to pre-file cargo-stowage plans for their ships Terminals must have sufficient yard equipment available and located strategically The terminals also must work closely with cargo interests, customs brokers, trucking companies and railroads

1.3 Terminal Automation

In our contemporary life, international trade is growing at a starling pace and the volume of trade has been rising at a compound annual rate The Terminal Automation System (TAS) was a mission-critical initiative to automate and standardize operating at port, especially at terminals TAS provides a mechanism to enhance the flow of data between the major functional areas of terminals TAS is envisioned as a complete and integrated operating system linking mission-critical functional areas of the marine terminal with interactive tools and information processing Timely information

is a key element of TAS for successful management decision making and ongoing analysis for continuous productivity improvement

Terminal Automatic System has contributed significantly to the efficiency of handling the increased throughput associated with larger ships without significantly increasing call duration and decreasing the shipper’s and customer’s flexibility, while maintaining vigilance in security Therefore, there is

an increasing numbers of ports worldwide has set up the TAS to enhance the ports productivity and efficiency

To find out the pros and cons of Terminal Automatic System (TAS), firstly, it is necessary to understand about its definition and the way it process Automated container terminals are defined as those that use container handling equipment without human interaction It is more relied on automated rather than human triggers Automated terminals are combinations of various subsystems from different vendors (shuttle carriers, automated stacking cranes, automated gate facilities, terminal operating systems…) There is more than a dozen semi or fully automated terminals in use throughout the world at this time As of 2012, there is one automated terminal in the US located in Portsmouth, and the two planned in POLA

The Terminal Automation Systems bring a wide range of advantages to the ports using its Use of automation around the world is steadily increasing due to benefits such as improved data accuracy, control, predictability, analysis, and ultimately reduced operating costsIncrease in safety in PCTs given the reduction of risks to human resources, incorporation of security systems To be more precise, a terminal automation system can help reducing operation expenses by 3$ million annually compared with the traditional operation It also reduces the time of handling cargoes and trucker turning time by 45 percent Moreover, the TAS cuts the queue time at gate as well as the trucker’s receipt preparation cost, and eliminate paper at gate Another benefit of using TAS is that it

Analysing Key Trends in Port Industry and Recommendations to Improve Competitiveness at

Haiphong Dragon Container Port

improves customer container availability and free arrangement time to focus on efforts to improve operations… Automated

Although the TAS is worth for investing and existing for a developing port, there is many of the challenges terminals face when switches to use automated terminals The Terminal Automation Systems require a large amount of different modern equipment, use software from a number of different system providers In addition, to efficiently use TAS, there must be a connection and coherent among sub-systems Besides that, it is less flexibility for operational planning, more difficulty to react when exceptions occurs, may generate labor conflicts (loss of job positions) and require a (higher) capital outlay

In the beginning of using terminal automation systems, there are a lot of challenges that a port needs

to face In planning stage, the port sector is traditional and reluctant to risk, which translates into resistance when facing investments in innovation Trade unions are especially powerful in ports, meaning that automation can only be introduced after reaching agreements with them or when job positions are not at risk When turning to operational stage, the TAS may cause the lack of information and incorrect or untimely information The ports may loss of flexibility and increase the probability of making errors

Automation is a global trend in port container terminal Although it still has difficulties as well as the challenges, the terminal automation systems is one of the best method to enhance the efficiency

of the port operation as well as minimizing the cost and handling time along with maximize the benefit of ports in the world

2 Activities to attract more shipping lines

2.1 Continuous improving of port level and terminal level

Improving the port and terminal level In the first place, the investment in building seaports need to

be accelerated by major investments in these locations with favorable conditions and the need to build ports, in order to exploit the natural advantages, leverage the shipping ability to meet the needs of economic development of the country At the same time as the basis for building and developing Vietnam's seaport system according to a master plan and agreed on a national scale Besides, we have to form the connection center infrastructure in the transport sector, especially in the key economic regions, economic zones, industrial parks and large; development of major international entrepot and international gateway ports in the appropriate areas to strengthen its position and economic advantages of the sea, creating clues important economic exchanges between Vietnam and other countries in addition to well implement the objectives of the marine strategy Last but not least, boosting investment in modern equipment as well as synchronous application of science and technology, especially information technology on management and port operators continue reforming administrative procedures of seaports and creating favorable conditions for shippers, ship owners to save time, freeing the ship quickly, reduce transport costs and increase the efficiency of investment

2.2 Ensuring environmental factors and security implications

Environmental factors Environmental factors have an important role in the shipping and port

operations Based on the geomorphic, morphodynamic, sedimentary and hydrodynamic environments of the port, the authorities will assess their risk factors and the methods in order

reduce the threats In more detail, the main environmental factors consist of some problems which related to wind, tide The wind factor which affects on the movement of the ship and wave, will be recorded by the anemometer system that mounted within or adjacent to the port By this way, the port can limit the effect of wind in order to arrange the schedule of ship Another factor is a tide which influences on the ship’s movement and current The method is our port will use a software to measure continuously and recorded statistics for future analysis

Security implications Ensuring the security and safety is one of significant issues that need to be

noted in order to attract shipping lines Port's security forces should coordinate with border police to protect regional security of seaports, prevent fraudulent acts, smuggling to assist business processes take place smoothly and coordinate with local police to ensure the port's security Besides, the collaboration with pilot company is also necessary to ensure ships arrive and leave safely, avoid collisions causing property damage, environmental pollution To increase the confidence of customers, port should increase the security in warehouse and yard, avoid theft and fires Port should be installed more modern cameras, as well as trains and strengthens security forces Moreover, it should also be equipped with effective fire alarms, fire fighting equipments and had rehearsals about fire protection to minimize the loss of life and property In addition, employees need to be trained carefully to comply with the loading and unloading process in order to ensure occupational safety

2.3 Increasing cooperation within the supply chain

In the age of globalization, it is essential that companies within an industrial chain work together in order to achieve the best performance From the perspective of Vietnam, where medium and small companies play the largest portion, synchronic performances become even more essential.To complicate the matter further, companies within a supply chain should provide a comprehensive service at a reasonable price for customers In a supply chain, shippers, ports/ terminals and shipping liners are three fundamental elements, making up a chain Then they should enhance their cooperation in order to create an effective and smoothly flowing chain Cooperation within the supply chain does not only help to eliminate non-valued activities, increase the transparency among steps but also reduce lead time as well as boost the competitive capacity in the market battlefield and maximize the profit

CONCLUSION

In the era of global integration, ports have to continuously improve their productivity and quality of the service to meet the growing demand of shipping lines Besides, cooperation within the supply chain, which involves three main players namely shippers, shipping lines and ports, is emerging as

an indispensable trend order to enhance productivity and maximizing profits Last but not least, port operators should deploy long-term policies such as protecting the environment and port security in order to achieve long-term growth

Analysing Key Trends in Port Industry and Recommendations to Improve Competitiveness at

Haiphong Dragon Container Port

REFERENCES

1 Tina Liu (2015), Industry Trends: Challenges and Opportunities

2 Retrieved (July 9 th , 2016) from:

www.porttechnology.org