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ASEAN Ports Buck Global Trend with Wave of Expansion and Refitting

Suppliers in the ASEAN ports sector are riding a wave of opportunities as the industry upgrades to handle bigger ship sizes, while substantial investment is now being made in ports, transport infrastructure and logistics hubs across the region.

Photo: ASEAN shipping: Staying afloat while other regions look like going under.
ASEAN shipping: Staying afloat while other regions look like going under.
Photo: ASEAN shipping: Staying afloat while other regions look like going under.
ASEAN shipping: Staying afloat while other regions look like going under.

Global shipping may be in the doldrums, but attendees at the 14th ASEAN Ports & Shipping 2016 tradeshow and conference were notably bullish about the future. This particularly rosy outlook centred around the widely-acknowledged need for the region's ports to upgrade their infrastructure in order to handle ever-increasing ship sizes. It was further bolstered by the demand for new and upgraded ports across the ASEAN bloc, most notably in Vietnam, Cambodia, Indonesia, Myanmar and the Philippines.

Assessing the mood of the industry, Yosuke Agari, a Director of ShibataFenderTeam, a Hamburg-based supplier of marine fender systems, said: "The fact that container ships are getting bigger has certainly benefitted us. The standard size fender for a container port used to be a 14 or 15 cell fender. Now, though, a 1,700 or 2,000 cell fender is more typical."

Aanderaa Data Instruments is a Norwegian firm, now owned by Xylem, the New York-headquartered water solution company, which manufactures instruments for monitoring tidal activity and gathering other essential maritime metrics. Stig Bjørgen Øen, Aanderaa's Business Development Manager for Marine Transport, also sees increased ship size as a positive business driver.

He says: "Many of the bigger ports don't have a great deal in the way of monitoring equipment. As ship sizes increases, though, ports will need more and more data before bringing them in quickly. It's all about maximising time usage."

Holger Schauer is Regional Sales Manager for Terex Port Solutions, a US company offering a wide range of port cranes and lifting equipment. Illustrating how his own company is benefitting from the changes the industry is going through, he said: "As our equipment is built for use in harsh environments and designed to last for 15 to 20 years, repeat sales of our cranes happen over long time spans.

"Luckily for us, the movement towards larger ship sizes has made it necessary for operators to invest in new and bigger cranes, despite having ones that are still perfectly operational. That's been great for us."

Another major contributing factor to the increased optimism of many exhibitors is the steady relocation of manufacturing operations from China to Vietnam, Cambodia and Myanmar. Consequently, these destination countries are upgrading and expanding their ports at all levels, as well as looking to develop new facilities, while demonstrating a willingness to spend in order to secure premium equipment.

Highlighting this, Agari said: "The days of customers buying the cheapest Chinese unbranded products available, with no thought of technical support, have gone. Many specifies have learned that this often a false economy and are now opting for higher quality suppliers."

One of the knock-on effects of the development of new ports has been that existing facilities need to work harder in order to hold onto their business. This has often meant investing in new equipment and systems in order to drive cost efficiencies. A prime example of this has been Laem Chabang, Thailand's largest port.

Chai Naganidhi is the President of the Thai International Cargo and Container Terminals Association (TICTA), the trade body that represents terminal operators at the port. He said: "Despite last year's slowdown in Thailand's economy, the port still delivered growth of 3%, not a bad result considering.

"One of the key issues we've been raising with the authorities, though, is the infrastructure access to the port. Road access, for instance, has proved something of a bottleneck and is now a problem we have to deal with on a daily basis. On behalf of our members, we are also pushing for improvements across a broad range of other issues, including purchasing, policy, customs and marine regulations."

Photo: The port of Manila: A future bright spot.
The port of Manila: A future bright spot.
Photo: The port of Manila: A future bright spot.
The port of Manila: A future bright spot.
Photo: Uplifting: Konecrane has high hopes.
Uplifting: Konecrane has high hopes.
Photo: Uplifting: Konecrane has high hopes.
Uplifting: Konecrane has high hopes.

Jeffrey Foo, the Regional Manager of Konecranes, a Finnish specialist in lifting equipment and modernisation services for industrial cranes, is in broad agreement. He said: "Changes to Thailand's administration have meant that a number of long-postponed development projects are now back on track. The country is proactively expanding its port facilities and upgrading the standards of its services on both a domestic and international scale.

"For well-established companies such as ourselves – we've been operating in Thailand for 23 years - we stand to benefit from many of these new projects."

Arno Longman is the Projects and Services Manager for Bema Rail, a Dutch company specialising in rail technology and shunting systems. He also believes that Thai demand for maintenance and upgrade is holding up well, saying: "The Port Authority of Thailand has plans for new ports and logistic hubs, all of which will need rail connections. We expect a lot of new job opportunities from these inland port projects.

"In the near future, though, we are expecting less demand for constructing new ports and an increased focus on replacement or repair, especially with regard to trolley rails. We have now developed a platform that can do the maintenance on the trolley rail level without scaffolding, which inevitably means less downtime."

Another welcome business driver is that Indonesia and the Philippines, two of the fastest-growing ASEAN countries, are both archipelagos and require substantial investment in domestic shipping infrastructure in order to connect their component islands. According to the World Bank, about 90% of Indonesia's external trade is transported via its 300 or so seaports, with inter-island shipping still the primary means of moving goods through these ports, rather than rail or road freight.

Foo said: "The Philippines has been a good market, partly because of the increase in domestic consumption. There is also the fact that a number of big companies – such as Nestlé and Coca-Cola – are constantly moving goods around the smaller islands.

"Indonesia is also trending upwards. Last year, despite the global economic slowdown, our sales were far better than those for the previous five years in the region. This year, I expect to exceed last year's sales figures in the lift trucks' category."

Longman also sees Indonesia as future bright spot, saying: "We've been doing projects in Indonesia since the 1980s and it's a country we are still focussing on."

As the established ports in several countries, notably Thailand and Malaysia, battle falling throughput and rising labour costs, the need to invest in automated equipment to create more efficient and reliable infrastructure has also provided opportunities. In line with this, Øen said: "The move towards greater automation is definitely on the rise. More unmanned cranes and containers are now in use.

"Understandably, keeping the cost down while keeping reliability up is key to remaining competitive in the long run. More automation means that more sensors are needed to be able to operate safely and effectively, which is good news for us."

Schauer agreed, saying: "Remote access to managing cranes and the growing importance of data aggregation are the developing trends that are now impacting positively on our business."

Although in its early stages, concerns over the need for more environmentally friendly and greener port services are also starting taking hold in the region. A clear indication of this came with the recent opening of the Teluk Lamong port in Surabaya, Indonesia's first comprehensively 'green' freight handling facility.

Schauer said: "One of the developing trends is an increasing concern over any potential environmental impact. Nowadays, every single drop of spilled oil is viewed badly. Before, nobody really cared much.

"This concern is extending to awareness of the impact of noise and even light pollution. This has seen us start to offer systems with more of a green factor".

With the increasing green focus comes the need for greater monitoring, something that Aanderaa is keen to capitalise on. Øen said: "Coastal monitoring programmes are now becoming more important, with steps now being taken towards more sustainable and environmental monitoring. All in all, it's looking bright for us.

"Most of the wrecks that go down have oil on board in the form of fuel or cargo and that will eventually leak into the ocean. It's just a question of time. So these wrecks need to be monitored to see how fast they are corroding. In the long run, cleaning up disastrous oil spills is far more expensive than providing adequate monitoring."

Photo: Laem Chabang: Expansion under way at Thailand’s largest port.
Laem Chabang: Expansion under way at Thailand's largest port.
Photo: Laem Chabang: Expansion under way at Thailand’s largest port.
Laem Chabang: Expansion under way at Thailand's largest port.

The 14th ASEAN Ports and Shipping Exhibition and Conference took place at Bangkok's Landmark Hotel from 14-15 July 2016.

Geoff de Freitas, Special Correspondent, Bangkok

Content provided by Picture: HKTDC Research
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