Massive capacity augmentation on the anvil-
Maritime transport is crucial for the economic growth of the Association of Southeast Asian Nations (ASEAN). For a region, which includes 24,000 islands spread across 5,200 km east to west and 3,400 km from north to south, a modern and well-managed maritime sector is crucial to economic progress.
The world’s seaborne trade is becoming increasingly containerised. Containerisation is the heart of multimodal transportation and international logistics. In 2016, Asia accounted for 64 per cent of world container port throughput, with East and Southeast Asia being the major contributors. In 2016, Southeast Asia’s import and export merchandise trade increased by 4.4 per cent and 3.9 per cent, compared to a figure of around 2 per cent for the world.
Given the geographical location of the Southeast Asian countries, they are considered to be an important gateway for maritime containerised trade. Singapore enjoys a dominant position as the leading container transhipment hub, while Malaysia is emerging as a major competitor. However, increasing the existing port capacity is essential if the Southeast Asian countries are to make the best use of their dominant location.
Performance
Singapore port serves as the second busiest container port in the world after China’s Shanghai port. Indeed, the Port of Singapore used to be the top container handling port until 2009, only to be surpassed by Shanghai port in 2010. In terms of volume, container volume at Singapore port decreased from 30.96 million twenty-foot equivalent units (TEUs) in 2015 to 30.93 million TEUs in 2016, registering a negative year-on-year (y-o-y) growth of 0.1 per cent.
Port Kelang in Malaysia, which ranked 11th among the top 40 container terminals in the world (Review of Maritime Transport 2016, United Nations Conference on Trade and Development), registered high growth in terms of container volumes handled. The container volume at the port increased from 11.89 million TEUs in 2015 to 13.17 million TEUs in 2016, registering y-o-y growth of 10.7 per cent. However, container volumes at Tanjung Pelepas port in Malaysia registered a negative y-o-y growth of 8.8 per cent in 2016 over 2015.
Another primary port in the region is Tanjung priok in Indonesia. Container throughput at the port increased from 5.2 million TEUs in 2015 to 5.52 million TEUs in 2016, registering a y-o-y increase of 6 per cent.
Other countries like Vietnam and the Philippines also featured in the list of top 40 container terminals. Cat Lai port (Vietnam) ranked 20th and Port of Manila (Philippines) ranked 34th in the list (see Table).
Container capacity augmentation plans
The ports in Southeast Asia are largely focusing on the development of container handling facilities. For instance, PSA Singapore Terminals has undertaken construction of the third and fourth phases of the Pasir Panjang port expansion project. The project involves the expansion of port facilities on a 250 hectare area. It includes the construction of 15 berths with a 6,000 metre quay and water depth of up to 18 metres, an automated container yard and related infrastructure and the installation of rail-mounted gantry cranes, safety and security systems. PSA has awarded the construction contract for the berth building and the container stacking yard to the joint venture of Koon Construction & Transport, Penta-Ocean Construction and Hyundai Engineering & Construction. At present, construction work on the project, which is scheduled to be completed by 2020, is in progress.
The Maritime and Port Authority of Singapore (MPA) is also making efforts to revamp several port terminals. It has undertaken the development of the mega terminal at Tuas port. The terminal is expected to add an overall capacity of 65 million TEUs. At present, works are on in full swing for the project. The reclamation work is under way for two out of four phases and more than 3 km of caisson has already been installed to form the wharf. The MPA is studying new technologies and automations for the project, including the use of robotics and drones at the port that will make port operations more effective and efficient.
Indonesia is also undertaking projects to expand its container handling capacity. PT Pelabuhan Indonesia II (Pelindo II) is undertaking the Kalibaru port project (New Priok Container Terminal One [NPCT1]), which is considered to be one of the biggest public projects in the country. Kalibaru port is an extension of the existing Tanjung Priok port. The entire project is being divided into three phases. The first phase includes installation of container terminal infrastructure and equipment ($1.38 billion) and construction of a new petroleum product terminal ($730 million) on 195 hectares of land in North Jakarta. Construction work on this phase commenced in 2012 and the phase was inaugurated on September 13, 2016. The entire project is expected to add a capacity of 19.5 million TEUs per year (1.5 million TEUs per year for NPCT1) and is expected to be completed by 2023.
Another important project in Indonesia is the development of a seaport in the northern part of Java island with a container terminal (Patimban port project). Pelindo II is implementing the project at an investment of $1,480 million. The project is being developed in phases with Phase I involving the construction of car and container terminals. On November 13, 2017, the Japanese government signed a 118.9 billion yen ($1 billion) loan for project implementation. The loan has a grace period of 12 years and an interest rate of 0.1 per cent per year. It is expected to fund 83 per cent of the cost of construction of Phase I of the project.
Issues and challenges
One of the challenges faced by Southeast Asian ports is the huge investment and capital expenditure required to build, maintain, upgrade and expand ports. High capacity utilisation levels are another primary cause for concern. For instance, the average dwell time at Tanjung Priok was between 3.7 and 4.2 days at the end of 2016. Although the time has improved from more than one week a year ago, it is still significantly high.
Competition among Southeast Asian nations themselves is another major challenge. For instance, the activities of the Port of Singapore revolve around connecting oil and cargo markets in Europe, Africa, the Middle East, and South Asia with that of East Asia. However, the port has been facing stiff competition from Shanghai port to grab container traffic from Asian countries. Some shipping lines have started direct port-to-port service (bypassing Singapore) due to lower bunker prices. To reverse the decline in container traffic, Singapore provided an additional 10 per cent concession on port dues for containers calling at the port with effect from January 15, 2016.
The lack of transport options and a monopolised shipping industry is another cause for concern. It has led to consumers having to pay the price of a cabotage policy that from the onset sought only to benefit the domestic shipping industry.
Maritime logistics and connectivity issues have been a huge challenge for Southeast Asian countries. The shortcomings in maritime logistics and infrastructure have resulted in a high turnaround time at the ports, undermining their trade and competitiveness. The disparity in interregional port infrastructure is another area that requires action.
The way forward
ASEAN has designated 47 ports as the main ports in the trans-ASEAN transport network. Maritime transport is the most important mode of transportation in terms of the traffic volume in international trade. According to the Global Competitive Index Report, 2017-18, World Economic Forum, the ranks of Southeast Asian countries in terms of the quality of port infrastructure vary from as high as 2 with a score of 6.7/7 (Singapore) to as low as 74 with a score of 3.9/7 (Brunei) amongst a total of 138 countries.
The planned capacity augmentation is expected to resolve most of the problems and will lead to higher containerisation of commodities. However, completion of projects in a time-bound manner without cost overruns will test the real-time efficiency of maritime boards in project implementation.
