By Peter de Langen
A study on better co-operation between terminals in Hong Kong by Hong Kong’s Hang Seng Management College has rightfully received industry attention of late.
The study focuses on inter-terminal transfers (ITTs) between the five terminal operating companies in Hong Kong. The terminals charge for these ITTs, thus adding costs to already-high terminal rates in comparison with competing ports.
Inter-terminal moves arise when a container arrives at, for example, terminal A, but needs to be moved to terminal B for the onward (feeder) transport. Given the rise of consortia and the increase in ship sizes, the issue of ITTs is increasingly relevant for all ports with competing terminal operators and onward feeder or intermodal connections. The study mentions that around 15% of total volume is transferred between terminals.
With the use of simulation, the study found that the number of ITTs can be significantly reduced (around 50%) if the different terminals are managed as one facility, so facilities such as quays and cranes are shared. Competing ports such as Singapore and Shanghai are already managed as one facility as they are operated by one operator.
However, the suggestion of joint planning of ships across facilities of competing terminal operators is problematic. There are clear advantages from an operations perspective, but such an initiative is hard to reconcile with competition between terminal operators. Under the suggested ‘centralised planning’ it is hard to see how the terminals could compete effectively on price and service levels, and this competition also brings clear benefits to Hong Kong’s port.
In contrast with the Hong Kong study, in my view the most pragmatic starting point is to focus on solutions that leave the competitive dynamics between terminal operators intact, and optimise the efficiency and sustainability of ITT movements.
A collective ‘container exchange service’ to optimise ITT movements could combine competition between the terminal operators for handling ships with collective efficiency for ITT movements. Given the more than 2,000 daily ITT moves reported in the study and the close proximity of Hong Kong’s terminals, such a container exchange service may not need to rely on individual trucks as is currently the case. Alternatively, transport by barge or truck platoons may also be (or become) relevant options.
In conclusion, for ports with intra-port competition, ITT is an increasingly relevant issue. A collaborative process to develop one port-wide ITT service may be the pragmatic approach. It may be a less bold move than sharing all terminal assets but would still be a major step forward compared with the current uncoordinated ITT moves. This applies not just in Hong Kong but also to most, if not all, ports with competing terminal operators.
First published @Port Strategy
