PSA Singapore striving to meet future demand-

Given the geographical location of Southeast Asia, it is not surprising that the port sector has been one of the key drivers of growth in the region. And  Singapore is no exception. Its geographical location at the crossroads of the East and West has contributed to its success as a trading port. Singapore is the world’s largest transshipment hub, operated by PSA Singapore Terminals (PSA ST), the flagship company of PSA International. It handles about one-seventh of the world’s total container transshipment throughput and 5 per cent of the global container throughput. Overall, Singapore’s maritime industry today contributes about 7 per cent to the country’s gross domestic product.

Functioning as one integrated facility, PSA ST’s seven container terminals at Tanjong Pagar, Keppel, Brani, and Pasir Panjang Terminals 1, 2, 3 and 5 provide connections to 600 ports globally. In addition to its container facilities, PSA ST also operates a multi-purpose terminal (MPT), comprising Pasir Panjang Automobile Terminal and the Sembawang Wharves, for general cargo and vehicles.

Steady performance

PSA ST has been faring well, both in terms of operational and financial performance. It accounted for 51 per cent of the total traffic of PSA International in 2014. Overall, PSA ST handled 33.6 million twenty-foot equivalent units (TEUs) of container traffic in 2014, which constituted a growth of 5 per cent over the traffic handled in 2013. The share of PSA ST in the total container traffic handled by PSA International stood at 51 per cent in 2014, almost the same level as in 2010.

In the five years 2010-14, PSA ST’s container traffic increased at a compound annual growth rate of around 5 per cent. In 2014, its MPT handled 0.96 million tonnes of general cargo and 1.29 million vehicles. In 2014, over 1,200 mega vessels called at PSA ST, representing a 13 per cent increase over 2013. Southeast Asia, including Singapore, accounted for a significant share of 60 per cent of the total revenues of PSA international.

Expanding capacity, improving performance

PSA ST started operations on two new berths at its Pasir Panjang Terminal (PPT), part of Phases 3 and 4 development in 2014, and saw a port call by the world’s first 19,000 TEU ship, CSCL Globe, in December 2014. The decision to develop Phases 3 and 4 of the PPT in order to meet future growth in container volumes was mooted in 2004. The project will add 15 new berths and about 6 km in quay length, an automated container yard with proprietary intelligent planning and operation systems, and unmanned rail-mounted gantry cranes. Moreover, it will deepen PSA Singapore’s maximum draught to 18 metres from the current 16 metres. When the expansion is fully operational by the end of 2017, Singapore will be able to handle a total of 50 million TEUs of containers annually. This will further strengthen Singapore’s position as the world’s largest transshipment hub.

Recently, in June 2015, it installed Solar Frontier’s prototype ultra light and bendable copper-indium-diselenide thin-film modules. The modules, designed in Japan, were installed at the Pasir Panjang Terminal Building 3, PSA’s newest terminal in Singapore. These solar modules are expected to reduce PSA’s carbon footprint.

Earlier, in April 2014, the Maritime and Port Authority of Singapore (MPA) and PSA ST extended their existing MoU to continue developing next-generation technologies for future container terminal operations such as automation initiatives, intelligent planning and control systems, and environmentally sustainable solutions. One project is the automated guided vehicle (AGV) system. PSA ST has begun live operational trials of four AGVs, and they will be joined by another four in 2015.

Future consolidation

Singapore, one of the world’s busiest container ports, is working towards consolidating the activities at its current terminals into a single mega port at Tuas from the next decade. When Tuas port is ready, Singapore’s container handling capacity will be almost double the current 35 million TEUs. The port will use advanced technology such as data analytics and automated vehicles to sharpen Singapore’s efficiency, reliability and competitive edge.

The development of the Tuas mega port will free up prime land, which the city terminals at Tanjong Pagar, Keppel and Pulau Brani currently occupy, for future redevelopment. The leases for the terminals at Brani, Keppel and Tanjong Pagar will end in 2027. In the long run, not only the city terminals, but also the Pasir Panjang terminals will be merged at Tuas.

At present, operators are sometimes required to move containers between different terminals using roadways to support the transshipment operations. The consolidation will eliminate the need for inter-terminal movement of containers and ease congestion on the roads. This will mean faster movement of cargo and reduced operational costs.

The project’s prospects have been brightened by expanding industrial activity in Tuas. Among the new developments are Sembcorp Marine’s plans to relocate its shipyards at Tuas by 2024, the recent commissioning of the Hyflux desalination plant, the proposed development of a Lube Park at the Tuas industrial complex and the setting up of import, export and storage facilities for other industrial plants in Tuas.

The way forward

According to Fock Siew Wah, group chairman, PSA International, “The year 2015 will likely prove as challenging, if not more so, as the previous year. More mega container ships will come into service. Some shipping lines, which previously operated independently, have begun to work in alliance arrangements which are unprecedented in scale. There is also continuing concern over surplus shipping capacity, putting pressure on freight rates.” The shipping industry in general has yet to recover from overcapacity in tonnage and the downward trend in international trade since the 2008 global financial crisis.

Although PSA ST recognises the difficulties ahead, it is bullish about its future. The confidence is not misplaced, given the company’s strong operational performance, capacity augmentation plans, and the group company’s (PSA International) strong past experience and expertise. However, it still cannot consider itself immune to the difficult trade environment that will continue to put a downward pressure on its future performance. Going ahead, it will be interesting to see how the company navigates its way through the challenging global environment.