2018 APEC Port Development Reoort 2018
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2018 APEC Port Development Report www.apecpsn.org APEC Port Services Network (APSN) is an international organization established in response to the directives of the 14th APEC Economic Leaders’ Meeting in 2006 and with the support of all leaders from APEC member economies to promote exchanges and cooperation among ports and port-related industries in the Asia-Pacific region. The mandate of the APSN is to facilitate trade and investment and enhance supply chain security by strengthening economic cooperation, capacity building, information and personnel exchanges among port and port-related industries and services in the region, so as to achieve the common prosperity of the APEC member economies as a whole.
Ever since establishment of APSN, as a complimentary service for port-related industries in the Asia-Pacific region, APEC Port Development Report has published 8 issues. This report focuses on the development of Asia-Pacific ports in 2018, covering trade, ocean shipping, port infrastructure and operation, laws and regulations, intelligent and sustainable development. With its detailed statistics, and in-depth analyses, APEC Port Development Report has become an important reference for those engaging in port-related industries.
The APSN secretariat sincerely welcomes your advice, and we hope that ports and organizations can contribute variously valuable information so that we can follow the development of the industry even closer, and provide our readers with more accurate information in a more timely fashion.
Fei Weijun Secretary General APEC Port Services Network May 2019
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2018 APEC Port Development Report www.apecpsn.org 3 4
2018 APEC Port Development Report www.apecpsn.org 4 Table of Contents
Chapter 1 Review of Global and Asia-Pacific Economic and Trade Development in 2018 1.1 Review of Global Economic and Trade Development...... 6 1.2 Review of Asia-Pacific Economic and Trade Development...... 11 Chapter 2 Review of Global and Asia-Pacific Shipping Industry Development in 2018 2.1 Review of Global Shipping Industry Development...... 20 2.2 Review of Asia-Pacific Shipping Industry Development...... 28 2.3 Shipping Costs Showed Overall Downtrend...... 40 2.4 New Changes in Shipping Laws and Regulations...... 44 2.5 Development Trends of Shipping Organizations in the Asia-Pacific Region...... 48 Chapter 3 Review of Port Development in the Asia-Pacific Region in 2018 3.1 Route Density and Major Hub Ports Distribution in the Asia-Pacific Region...... 50 3.2 Review of Port Production...... 57 3.3 Business Performance of Port Enterprises...... 85 3.4 Review of Multimodal Transport Development of Ports...... 99 3.5 Review of Port Infrastructure Construction...... 108 3.6 Review of Intelligent, Green and Safe Port Construction and Development...... 115 3.7 Development Trends of International Port Organizations...... 120 Chapter 4 Review and Comment on Major Shipping and Port Events in the Asia-Pacific Region in 2018 4.1 Review and Comment on Ten Major Shipping Events in the Asia-Pacific Region in 2018...... 124 4.2 Review and Comment on Ten Major Port Events in the Asia-Pacific Region in 2018...... 129 2 References...... 137
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Chapter 1 Review of Global and Asia-Pacific Economic and Trade Development in 2018
1.1 Review of Global Economic and Trade Development
1.1.1 Global economic growth slowed down, regional economic disparities continued to rise
In 2018, the world economy failed to maintain a robust growing trend from the previous year and presented a weaker momentum and emerging signs of economic slowdown due to multiple factors including the high-level debts globally, the financial market volatility, the sluggish cross-border investment, and the intensifying international trade tensions. According to a report released by the International Monetary Fund (IMF) in January 2019, the outlook for global GDP growth in 2018 was downgraded to 3.7 percent from 3.9 percent. The global economic growth remained high in 2018, but at a lower rate. As the global trade frictions spread, and geopolitical risks and turbulences in some parts of the world rose, the global economy's ability to maintain stable growth was undermined.
Table 1-1 Global GDP Growth Rates in 2017-2020 (Unit: %)
Historical Estimated Forecast Value Item Value Value 2017 2018 2019* 2020* Global GDP 3.8 3.7 3.5 3.6 Developed Economies 2.4 2.3 2 1.7 United States 2.2 2.9 2.5 1.8 Euro Zone 2.4 1.8 1.6 1.7 Japan 1.9 0.9 1.1 0.5 United Kingdom 1.8 1.4 1.5 1.6 Canada 3 2.1 1.9 1.9 Emerging Markets and 4.7 4.6 4.5 4.9 Developing Economies Russia 1.5 1.7 1.6 1.7 China 6.9 6.6 6.2 6.2 India 6.7 7.3 7.5 7.7 ASEAN 5.3 5.2 5.1 5.2 Brazil 1.1 1.3 2.5 2.2 Middle East, North Africa, 2.2 2.4 2.4 3 Afghanistan and Pakistan South Africa 1.3 0.8 1.4 1.7
Note: * indicates projections. Data source: IMF
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2018 APEC Port Development Report www.apecpsn.org 6 The level of equilibrium in global economic growth dropped significantly in 2018, making it harder for the world to maintain the extensive economic growth as in 2017. Growth disparities started to rise among major economies. The U.S. economy seemed to be the only exception which delivered sound performance in 2018, while other developed economies, such as the Euro Zone and Japan, all reported less- than-satisfactory performance, and the emerging markets and developing economies moved downward overall in economic growth. The IMF's latest record shows that growth rates of developed economies and of emerging markets and developing economies both declined by 0.1 percentage points year-on-year, at 2.3 percent and 4.6 percent, respectively.
Among developed economies, the U.S. outperformed everyone else in terms of economic growth by recording 2.9 percent of annual growth for 2018, up by 0.7 percentage points over the previous year. Driven by tax reduction and returning overseas investment, the U.S. enjoyed a record-low unemployment rate and a high- level consumer confidence index. The U.S. economy was among the few of the developed group to score an increasing growth rate. The Euro Zone once again suffered weak economic growth, as evidenced by its 1.8 percent growth rate in 2018, down by 0.6 percentage points year-on-year. It is worth noting that German economy started to shrink. Germany’s introduction of new fuel emission standards disrupted domestic automobile production in the first three quarters of 2018 and consequently led to declining exports, and a lower economic growth rate at 1.5 percent as a result. In the year, the economic growth of U.K. went down by 0.4 percentage points, as the nation was stuck with the Brexit deal that has hurt consumer and investment sentiments and crushed the economic growth momentum. The economy of the Euro Zone was also hit by outbreaks of social and economic crises, such as the "Yellow Vests Movement" in France and the political crisis in Italy. Though Japan managed to maintain steady growth for the first half of 2018, the Japanese economy was hurt by natural disasters such as earthquakes and tsunami in the second half of the year, with its annual growth rate declining to 0.9 percent.
The increasing global trade frictions, interest rate hikes by the U.S. Fed, capital outflow, and oil price volatility among others jointly led to lower growth and more distinct differentiation of emerging markets and developing economies. In 2018, main emerging markets including Russia, India, and Brazil managed to keep inflation afloat and basically stay free from high inflation pressure and their economic growth recovered to a certain extent as a result. China managed to maintain overall stable growth, but with slower economic growth, namely at 6.6 percent annually, down by 0.3 percentage points year-on-year, due to sluggish internal demands and the Sino-U.S. trade frictions. The ASEAN states sustained flat growth, while the situation of South Africa was worsening with high unemployment. In view of the currency devaluation, which is the biggest of its kind in history, and the prevailing capital outflow, emerging economies faced increasing risks of a large-scale financial crisis.
Looking into 2019, as uncertainty and instability prevail, the global economic growth will further slow down. As global debts remain high, geopolitical tension may
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intensify in the Middle East and East Asia, and the U.S. Fed will continue to raise interest rates, emerging economies are expected to face significant pressures on financial sectors, and global economies may perhaps further skid into recession.
Data source: IMF
Figure 1-1 GDP Growth Rates of Global Economies in 2018
1.1.2 Global trade growth slowed, trade landscape to be overhauled
In 2018, global trade, the main driver of economic growth, showed trends of slowdown. Specifically, as investment confidence was shaken by significant tariff rises and as Purchasing Managers' Index (PMI) was approaching entrepreneurs' confidence threshold, foreign trade was under dual pressures. The world imports and exports growth has dipped since the first half of 2018. The IMF data shows that the world trade volume grew by 4 percent in 2018, at a much slower pace than the 5.3 percent in 2017. Since the middle of 2018, the U.S. has implemented new tariff sanctions, triggering countermeasures among the sanctioned economies and elevating global trade barriers. Although the Sino-U.S. trade frictions seemed to ceasefire by the end of 2018, the implications had spread to global trade relations, leaving the global trade confronted with the need of an overhaul in landscape. On the one hand, the WTO reform aggravated tensions among key economies. On the other hand, key economies were seeking alliance through new bilateral/multilateral trade cooperation. A reshuffled trade landscape, when completed, will have a profound imprint on the new global trade orders.
According to the World Economic Outlook by IMF, under the backdrop of global economic slowdown in 2018, developed economies' trade grew by 3.2 percent, down by 1.1 percentage points over the previous year. Emerging markets and developing economies, subject to implications of global trade tensions and tightened financial
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2018 APEC Port Development Report www.apecpsn.org 8 conditions, took a greater hit in trade performance by recording a 5.4 percent growth rate, 1.7 percentage points lower than the previous year.
Table 1-2 Global Trade Growth Rates and Projections in 2017-2020 (Unit: %)
Historical Estimated Item Forecast Value Value Value
2017 2018 2019* 2020*
World Trade Volume (Cargo and 5.3 4 4 4 Service)
Developed Economies 4.3 3.2 3.5 3.3
Emerging Markets and 7.1 5.4 4.8 5.2 Developing Economies
Note: * indicates projections. Data source: IMF
Data source: WTO and UNCTAD
Figure 1-2 Global Trade Imports and Exports Growth in 2013-2018
1. WTOI plunged after a seemingly promising start
According to the latest World Trade Outlook Indicator (WTOI) by WTO, the world trade outlook rose briefly in the first quarter of 2018, before it took a downside in the second quarter and deeper in a plummet in the fourth quarter. Simultaneous declines were observed across several indicators, including the export order index, the automobile production and sales index, and the electronic components, and agricultural raw materials index. The international air freight (IATA) and container throughput also fell to close to the prosperity demarcation.
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Table 1-3 WTOI and Trend in 2018
Q1 Q2 Q3 Q4 Trend Trend Trend Trend 2018 2018 2018 2018
WTOI 102.3 ↑ 101.8 ↓ 100.3 ↓ 98.6 ↓
Export Order 102.8 ↑ 98.1 ↓ 97.2 ↓ 96.6 ↓ Index
Aviation Transport 103.2 ↓ 102.5 ↓ 100.9 ↓ 100 ↓ Index
Container Throughput 104.3 ↑ 105.8 ↑ 102.2 ↓ 101.2 ↓ Index
Note: ↑ indicates growth while ↓ indicates decline.
Data source: WTO
2. Growth of global trade volume of cargoes slowed by a great margin
According to WTO, the global trade volume of cargoes grew by 4.2 percent in 2018, down by 0.5 percentage points from the 4.7 percent in 2017. Global trade weakness was mostly caused by the declining growth of import volumes in developing economies, which has dropped to 4.7 percent in 2018, down by 2.5 percentage points year-on-year. However, global cargo exports and the cargo imports to developed countries sustained steady growth in 2018.
Table 1-4 Global Cargo Trade Volume Growth in 2014-2018
Year-on-year 2014 2015 2016 2017 2018* Growth(percentage points) World Cargo 2.7% 2.5% 1.8% 4.7% 4.2% -0.5 Trade Volume Exports: Developed 2.1% 2.3% 1.1% 3.5% 3.7% +0.2 Economies
Developing 2.7% 2.4% 2.3% 5.7% 6.0% +0.3 Economies
North America 4.6% 0.8% 0.6% 4.2% — —
Asia 4.5% 1.5% 2.3% 6.7% — —
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2018 APEC Port Development Report www.apecpsn.org 10 Imports: Developed 3.4% 4.3% 2.0% 3.1% 3.4% +0.3 Economies Developing 2.4% 0.6% 1.9% 7.2% 4.7% -2.5 Economies North America 4.3% 5,4% 0.1% 4.0% — — Asia 3.7% 4.0% 3.5% 9.6% — —
Note: * indicates projections. Data source: WTO 1.2 Review of Asia-Pacific Economic and Trade Development
1.2.1 Asia-Pacific economies maintained moderate economic growth but faced greater downturn risks
In 2018, Asia-Pacific economies sustained a growing momentum from 2017 and continued to serve as an important engine driving global economy forward. According to IMF, the Asia-Pacific economic aggregate reached US$51.13 trillion in 2018, accounting for 60.3 percent of the world’s total, at a growth rate of 5.6 percent. The region's share in the world’s economic aggregate grew by 0.3 percentage points over 2017, with a moderately higher growth rate than the previous year. However, amid intensified trade protectionism and lower global demands, the global economy presented a downward trend. The Asia-Pacific economies experienced lower trade openness, decreasing regional investment and higher downward pressure. In terms of outlook, Asia-Pacific economy is facing higher downside risks in 2019 amid aggravating trade tensions and financial markets volatility.
Data source: IMF
Figure 1-3 APEC Members' Contribution to APEC's Total GDP in 2018
In 2018, driven by strong domestic demands, most of the Asia-Pacific economies maintained robust growth, with China and India continuing to take a lead in economic performance. According to the supplementary report to the updated Asian
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Development Outlook Report 2018 by the Asian Development Bank (ADB), South Asia continued to lead the world in economic growth, recording a 7.1 percent growth rate region-wide. India was the best-performing economy with an annual growth rate of 7.3 percent. The second on the best-performing economies list was East Asia, with a growth rate of 5.3 percent. The regional growth was mostly driven by Chinese economy which recorded 6.6 percent of growth. Southeast Asia scored a similar growth rate to East Asia, namely at 5.2 percent, and Viet Nam and the Philippines were the fastest growing economies, both posting growth rates of higher than 6.5 percent.
Looking closer, India, China, and ASEAN were engines behind the regional and even global economic growth. Specifically, India has overtaken China as the fastest growing economy in the world, creditable to the robust increase of investment and consumer consumption and fading implications of demonetization and tax reform. Though faced with strong downward pressures by fixed asset investment slowdown, continued financial deleverage, and increasing trade frictions with the U.S., China maintained high economic growth. ASEAN economies, such as Indonesia, Malaysia, Cambodia, and Myanmar, sustained high growth as well, owing to higher consumer consumption, infrastructure investment, and foreign-funded manufacturing boom. However, ASEAN economic performance was overall undermined to a certain extent by a series of natural disasters. Additionally, as Asia-Pacific economies are faced with stronger tensions from the Sino-U.S. trade frictions and global trade uncertainty, the regional economy may go down further.
Note: The size of bubbles represents the GDP (the prices of the respective years) scale. The horizontal ordinates show economies in an alphabetic order of English names. Data source: IMF
Figure 1-4 GDP Growth Rates of APEC Economies in 2018
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2018 APEC Port Development Report www.apecpsn.org 12 In 2018, the U.S. demonstrated robust economic performance, stronger endogenous dynamics, lower inflation, and a balanced employment market, as evidenced by the lowest unemployment rate since 1969. The IMF projected that the U.S. will continue to top the world in 2018 by GDP, at an aggregate of US$20.51 trillion, to become the first economy in the world to exceed a GDP aggregate of US$20 trillion, even higher than the GDP of China, Japan and Korea totaled. Backed by Trump Administration's new policies, the U.S. consumer spending surged due to tax reduction, income increase and bullish stock markets, which constituted a main factor driving up the U.S. economy. Tax reform by the Trump Administration lowered corporate income tax rate from 35 percent to 21 percent. On the one hand, corporate cost reduction and manufacturing inflow boosted investments to the U.S. manufacturing sector and the U.S. manufacturing PMI maintained at a high level of around 60 as a result. On the other hand, the U.S. businesses provided employees with cash bonuses and remunerations from their tax cut, benefiting over 80 percent of the U.S. population, and the U.S. workers' salary rose by 3.1 percent on average in 2018. The Michigan Consumer Sentiment Index (MCSI) remained at high levels since 2000. In the long run, the tax reform may lead to higher national debts from the expanding fiscal deficits and impose pressures on the U.S. economic growth consequently. In addition, the global economic slowdown, the increasing trade uncertainty, and threats from political issues in the United Kingdom and Italy will continue to generate negative impacts on the U.S. economy.
Data source: The University of Michigan
Figure 1-5 University of Michigan Consumer Sentiment Index (MCSI) and Unemployment Rate
In 2018, the sluggish domestic and foreign investment and consumption demands added to the downward pressure on the Japanese economy. As Japan’s domestic production was hit by multiple natural disasters, the nation’s economy was deep into stagnation in the third quarter, and its annual growth rate turned out to be even lower than expected. Although Japan’s domestic unemployment rate remained low and price level recovered, its economy was still miles apart from Bank of Japan's 2 percent inflation target. As overseas demands for Japanese products remained
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weak, and production was delayed because of raw material shortage such as electronic components and steel, manufacturers' confidence hit a new low in the past two-plus years. Manufacturing PMI in Japan dropped to 52 points by the year end from 54 at the year beginning and the low export orders contributed to a manufacturing slowdown in Japan. Additionally, due to the lingering economic recession and substantive level of debts, the Japanese government had a debt to GDP ratio of 238 percent, only next to the U.S. by debt size. Besides, the soon-to- be-implemented 10 percent consumption tax policy will be a major uncertainty for the economic growth and the outlook for the Japanese economy is therefore not promising.
In 2018, the Chinese GDP exceeded US$13 trillion for the first time, but the economic growth has slowed down, with its GDP growth rate dropping for three consecutive quarters since Q2. The economic slowdown was attributable to the lower domestic demands in investment and consumption. The total consumer goods retail sales in China increased by 9.2 percent year-on-year, the first single-digit growth rate in the past 15 years. The underlying reason was the significant slowdown of automobile and housing spending. In the investment arena, infrastructure investment topped out and slowed down growth, recording 5.7 percent of growth year-on-year, the lowest since 2000. Manufacturing markets faced increasing pressures of demand declines from intensified global trade frictions and global economic slowdown. Since August 2018, the Chinese manufacturing PMI has dropped for four consecutive times to below the prosperity threshold of 50 points, indicating weak prospects for manufacturing industries.
Data source: IMF
Figure 1-6 GDP Growth Rates of Major APEC Economies (2000-2018)
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2018 APEC Port Development Report www.apecpsn.org 14 Data source: Wind Information
Figure 1-7 Trend of Manufacturing PMIs for Main APEC Economies
In 2018, the Indonesia economy maintained a consistent economic growth rate as in the previous year, namely at 5.17 percent, which failed to meet the 7 percent target set out in Indonesia's National Medium Term Development Plan 2015-2019, nor the 5.4 percent target set by the government at the beginning of the year. The economic under-performance was a result of Indonesia's over-reliance on family spending which took up over 50 percent of the national GDP. Other contributors included insufficient exports in global trade and higher growth in imports than in exports, which has resulted in greater fiscal deficits. In 2018, the Viet Nam GDP grew by 7.08 percent, a record-high in the recent decade. Its strong economic performance was driven by the fast development of the manufacturing industry and the continued foreign investment. In recent years, many companies have transferred the labor- intensive processing business to Viet Nam in wake of increasing tariffs and labor costs, including high-end manufacturing of integrated circuits and chip-making (e.g., Intel, and Samsung), and low-end shoe- and garments-making businesses (e.g., Nike, Adidas, and Uniqlo), which has significantly driven up the Viet Nam economy.
1.2.2 Trade growth of Asia-Pacific economies stable yet with signs of potential risks
The Asia-Pacific region was an important global center of production and consumption in 2018, and Asia-Pacific economies maintained a stable growth momentum. As China deepened its initiative to facilitate free and easy trade investment and promoted trade and commercial ties with emerging markets and developing economies, trade in the Asia-Pacific region flourished. In contrast, the U.S. was on a fast-track for trade unilateralism. However, instead of addressing trade deficits, the U.S. trade protectionism has hurt market confidence and
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depressed global trade and investment. The increasingly introverted trade policies will only hold back development in the Asia-Pacific region. Coupled with other risks, the prospect of trade development in the region is under threat.
Below are some features of the import and export landscape of major Asia-Pacific economies in 2018:
1. China maintained stale foreign trade growth, but trade volumes of certain commodities dropped
In 2018, China managed to maintain stability in foreign trade overall in the face of trade frictions with the U.S., registering a record-high export-import volume from early shipment. According to China's General Administration of Customs, China's cargo trade import and export values exceeded RMB 30 trillion in 2018, up by 9.7 percent year-on-year. China’s import and export values with the U.S. also maintained a 6 percent growth rate. Trade frictions did impair certain commodities in terms of trade volume and value, including grain and steel products, as evidenced by a sharp decline in grain imports such as soybeans and cereals. In 2018, China imported 88.03 million tons of soybeans, down by 7.9 percent year-on-year, and 20.47 million tons of cereals and cereals flour, down by 20.0 percent year-on-year. In the meantime, China's steel export in 2018 was 69.34 million tons, down by 8.1 percent year-on-year, subject to implications of anti-dumping measures on China- made steel products by developed economies such as the Euro Zone and the U.S. It is worth noting that the U.S. trade barriers aim to correct trade deficits with China, but data by China's General Administration of Customs shows that the China-U.S. trade deficit climbed further up to US$323.32 billion, soaring by 17.2 percent year- on-year to record the highest deficit since 2006.
In 2018, China's imports from and exports to major trading partners increased across the board, and new markets were tapped. China's trade with its three biggest partners, namely the Euro Zone, the U.S., and ASEAN, went up, by 7.9 percent, 5.7 percent and 11.2 percent, respectively, accounting for 41.2 percent of China's total import and export value. The continued release of trade cooperation potential with economies along the "Belt and Road" route enabled China's import and export volumes with these economies to increase by 13.3 percent year-on- year, constituting a new driving force for China's foreign trade development. Among "Belt-and-Road" areas, Southeast Asia witnessed the greatest increases in trade volume with China. In 2018, China-ASEAN trade value again exceeded a threshold of US$500 billion, reaching US$587.87 billion, up by 14.1 percent year-on-year, and ASEAN has become the third largest trading partner of China. Malaysia, Singapore, Indonesia and other major Southeast Asian economies all enjoyed growth at a rate of more than 10 percent in terms of trade volume in goods. The release of China- ASEAN Trade and Investment Index, the China-ASEAN Strategic Partnership Vision in 2030 and the upcoming China-ASEAN Business and Investment Summit in 2019, will further deepen the trade cooperation between China and ASEAN, which has unlimited potential in the future.
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2018 APEC Port Development Report www.apecpsn.org 16 Note: The left coordinate axis represents the import and export values, and the right coordinate axis stands for the trade gap. Data source: China's National Bureau of Statistics
Figure 1-8 China's Import and Export Values and Trade Gap in 2007-2018
2. The U.S. trade expanded with increasing trade deficit
In 2018, boosted by the favorable economic growth and the government’s fiscal stimulus plan, the U.S.' total retail sales of consumer goods picked up, and its import and export trade maintained stable growth. To be specific, the recovered domestic consumer demands in the U.S. contributed to an increase in the import value. The increased demand from major trading partners such as China, Mexico and Canada has also boosted the export of goods and services in the U.S., with the country’s total import and export volume on a rise. In 2018, the U.S. trade value climbed to US$5.62 trillion, with the export value jumping to US$3.12 trillion at a year-on-year rate of 7.5 percent, with crude oil, petroleum products, and aviation engines being key drivers of the export growth. The U.S.' import value, totaling US$2.5 trillion, was 6.3 percent higher year-on-year, which was creditable to the increased expenditures on consumer goods, industrial products, and capital goods.
According to the U.S. Department of Commerce, the trade deficit in 2018 increased to US$621 billion at a 12.5 percent rate year-on-year. Its trade deficit with China soared to US$419.2 billion, another historical high. The deficit rise was fueled by Trump Administration's Tax Cuts and Jobs Act. The act, on the one hand, stimulated internal demands for imported products as the U.S. residents' income increased, and on the other hand, depressed external demands for U.S. products as U.S. dollars appreciated. Trade frictions initiated by the Trump Administration triggered multiple nations to impose retaliatory tariffs on the U.S. products, dealing a heavy blow to exports of key U.S. agricultural products.
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Note: The left coordinate axis represents the import and export values, and the right coordinate axis stands for the trade gap. Data source: Bureau of Economic Analysis of U.S. Department of Commerce
Figure 1-9 The U.S. Import and Export Values and Trade Gap in 2007-2018
3. Robust trade growth in Japan, trade deficit recurred
The Japanese foreign trade welcomed robust growth in 2018. According to the Japanese customs authority, Japan’s import and export values in 2018 totaled US$1,486.57 billion, up by 8.5 percent year-on-year, to be specific, by 5.7 percent year-on-year to US$738.2 billion for export, and by 11.3 percent year-on-year to US$748.37 billion for import. The far higher growth in import value than in export value was primarily as a result of the increasing imports of crude oil and liquidized natural gas (LNG). In a breakdown, the import values of crude oil, LNG and petroleum products grew by 24.5 percent, 20.8 percent, and 34.3 percent, respectively. Due to the high energy prices, Japan experienced a recurred trade deficit for the first time since 2015, with the deficit amount hitting US$10.17 billion.
Japan achieved primary surplus in trade for the first half of 2018. On the one hand, Japan’s automobile exports to Saudi Arabia secured a favorable growing momentum, along with exuberant exports of semiconductors and other production facilities to China, and on the other hand, Japan’s imports of crude oil and LNG from the Middle East and Australia were on a rise. Japan's exports have declined since Q3 because of the following factors: (1) its exports of smart phone components to Asian markets slowed down; (2) the typhoon Feiyan left Kansai International Airport flooded, causing delays in electronic component deliveries; (3) the rainstorm in western Japan forced factories to shut down, hence delivery delays. In addition to natural disasters, the intensified trade frictions globally also played a part. The U.S., Hong Kong， China, and Korea were three main contributors to Japan's trade surplus. The Japan-U.S. trade surplus dropped by 8.1 percent year-on-year due to the U.S.-imposed tariffs on Japanese automobiles amid Japan-U.S. relationship
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2018 APEC Port Development Report www.apecpsn.org 18 tensions. Though an agreement has been reached between the two governments, Japanese Yen will be under greater appreciation pressure from global trade frictions, which will further hit Japan's exports.
4. Indonesia trade grew fast, Viet Nam scored record-high growth
Indonesia’s foreign trade value in 2018 amounted to US$368.68 billion, 13.1 percent higher than 2017, primarily driven by the 22.5-percent high growth in non-oil-and-gas products trade with China. Specifically, Indonesia’s export value reached US$180.06 billion, up by 6.65 percent year-on-year, and its import value reached US$188.62 billion, up by 20.1 percent year-on-year, with the accumulative trade deficit hitting a record high at US$8.57 billion. China is now the largest export and import partner of Indonesia. Indonesia-to-China exports grew by 14.4 percent year-on-year, and amounted to 15 percent of Indonesia’s total exports, while Indonesia-from-China imports also grew by 27.4 percent year-on-year, amounting to 28.49 percent of Indonesia’s total imports.
In 2018, Viet Nam's export value hit US$244.72 billion, up by 13.8 percent year- on-year, setting a new record. As Viet Nam's investments on green agriculture, mechanics and electronics started to pay off, its exports of aqua products, rice, vegetables and other products were on sharp rises. Benefiting from the increased quota of Viet Nam-imported textile products, the textile and shoe categories among other major exported products of Viet Nam exhibited a sound growing momentum. Viet Nam has entered into a dozen free-trade agreements (FTA) with EU members, Japan and Korea, which have started to release relatively positive signals. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that entered into effect at the end of 2018, and the EU-Viet Nam Trade and Investment Agreement, which was adopted in 2019, will further spur import demands for mechanic equipment and raw materials for production, which will in turn help Viet Nam products penetrate the EU markets.
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Chapter 2 Review of Global and Asia-Pacific Shipping Industry Development in 2018
2.1 Review of Global Shipping Industry Development
2.1.1 Review of international container market development
The international container market posted steady development in 2018. On the demand side, the container shipping volume in the world grew a little slower in the year, where Asia-Europe routes had lower shipping volumes against the strong growth in shipping volume on intra-regional and South-North routes. On the supply side, the global container shipping capacity increased on the 2017 basis, and idle capacity started to go up. The global container market experienced a general oversupply in 2018, but the supply-demand balance was still at a reasonable position in a long term. In this backdrop, freight rates in the container shipping market remained stable.
1. Growth of container shipping volume in the world slowed down
According to Clarksons, the container shipping volume in the world in 2018 was 201 million TEUs, up by 4.5 percent year-on-year, slightly lower than the 5.1 percent in 2017. The trade shipment on the Far East-Europe routes was impacted by the unsatisfactory economic positions of the United Kingdom, Germany, and other Euro Zone states, resulting in a negative growth rate of -1.26 percent for container shipping volume on the Far East-Europe routes in 2018. The other routes achieved robust growth in container shipping volume.
Note: * indicates projections. Data source: Clarksons
Figure 2-1 Global Container Shipping Volumes in 2000-2018
2. Orders for large ships fulfilled in succession, and average single-vessel size continued to grow
Ultra-large container ships ordered by ship enterprises were delivered in succession in 2018. Newly-signed orders showed that ship enterprises were increasingly favoring larger ships. The global container shipping capacity grew by a larger margin
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2018 APEC Port Development Report www.apecpsn.org 20 compared with 2017, and the idle shipping capacity began to rise again. As of Q4 2018, the total container shipping capacity around the world hit 21.8 million TEUs, increasing by a remarkable margin of 5.6 percent year-on-year. The year 2018 also recorded a supply-demand balance index at 83.4 points, down by 1.4 percent year- on-year. Large container ships enjoyed significant growth in the container shipping capacity structure, as evidenced by a capacity surge of 18.9 percent attributable to container ships of 12,000 TEUs and above.
Note: * indicates projections. Data source: Clarksons
Figure 2-2 Supply-demand Balance Index of Global Container Market in 2012-2018
3. International container shipping freights in recovery and adjustment
The international container liner shipping freights fell to a historical low in 2016, followed by a stabilizing trend of global economic recovery which drove up the container trade demand and led to stable growth of the container shipping market. The global economy continued the recovery in 2018, but the accelerated launches of larger ships cast a negative impact on improvement of supply-demand fundamentals. Benefitted from the exuberant demand and lines' additional fuel surcharges resulting from rising gasoline prices, the container freight still trended upward.
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Data source: Clarksons
Figure 2-3 Container Shipping Freight Trend in 2010-2018 (CCFI)
4. Chartering market saw weaker demand growth and charter rate increase
As of the end of December 2018, global idle container capacity stood at 628,000 TEUs, a significant rise from the end of 2017, and the idle rate increased to 2.8 percent. Trade frictions interrupted the transport market recovery, and the increasing capacity from new ship deliveries made things even worse for the chartering market. Charter rates in 2018 were generally higher than in 2017, but the charter rates for most of the container ships started to dip in the middle of the year, indicating a downward trend in the market.
Data source: Alphaliner
Figure 2-4 Global Idle Container Shipping Capacity in 2016-2018
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2018 APEC Port Development Report www.apecpsn.org 22 2.1.2 Review of international dry bulk market development
1. Demand for dry bulk shipping fell slightly
Global dry bulk shipping volume totaled 5.24 billion tons in 2018, up by 2.6 percent year-on-year, the rate being slightly lower than the 4.1 percent in 2017. Specifically, iron ores amounted to 1.47 billion tons, or 28.2 percent of the total; coal, 1.26 billion tons, 24.1 percent of the total; grain, 470 million tons, 9.0 percent of the total; and minor bulks, 2.02 billion tons, 38.6 percent of the total.
Data source: Clarksons
Figure 2-5 Growth Rates of International Dry Bulk Shipping Demand in 1986-2018
2. Dry bulk fleets' total capacity grew by a narrow margin
The shipping capacity grew by a narrow margin in 2018, with Capesize carriers welcoming much faster growth of capacity. As of the beginning of December 2018, there were 11,337 fleet vessels globally, with their capacity adding up to 840 million DWT, up by 2.8 percent year-on-year, the growth rate being consistent with the 2.9 percent in 2017. Capesize carriers amounted to 1,726 in number with a capacity of 33.46 million DWT, Panamax carriers amounted to 2,566 with 20.65 million DWT, Handymax carriers totaled 20.05 million DWT with 3,622 carriers, and Handysize carriers totaled 9.81 million DWT with 3,423 carriers. Capesize carriers recorded faster growth among all ship types at 3.43 percent.
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Data source: Clarksons
Figure 2-6 Growth Structure of Global Dry Bulk Shipping Capacity (DWT) in 2007-2018
3. BDI fluctuated throughout the year with a peak in Quarter 3
In 2018, the Baltic Dry Index (BDI) fluctuated throughout the year amid a generalized trend of rises after declines. Early April witnessed the year's low of 948 points and early August, the year's high of 1,776 points, both of which appeared earlier than those for 2017. The BDI value for the year was averaged at 1,353 points, up by 18 percent year-on-year. From a long-term perspective, the average BDI value was recovering slowly, and the freight rates in the market remained in modulating recovery and growth.
Data source: Baltic Exchange
Figure 2-7 Fluctuations of Baltic Indexes for Dry Bulk Freights in 2018
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2018 APEC Port Development Report www.apecpsn.org 24 2.1.3 Review of international oil tanker market development
1. International demand for petroleum transport maintained stable growth overall
According to International Energy Agency (IEA), the global petroleum demand in 2018 stood at 98.72 million barrels/day, up by 1.47 percent year-on-year, the growth rate being in line with the 2017 level. The oil demand of OECD economies totaled 47.42 million barrels/day, up by 0.86 percent year-on-year, and that of developing economies was 32.61 million barrels/day, up by 1.49 percent year-on-year. According to Clarksons, the global oil shipping volume in 2018 was 3.09 billion tons, up by 1.2 percent year-on-year. Specifically, the crude oil shipping volume was 2.03 billion tons, up by 1.1 percent year-on-year, and the product oil shipping volume was 1.07 billion tons, up by 1.2 percent year-on-year.
Table 2-1 Global Economies' Crude Oil Demands (Unit: million barrels/day)
Year 2018 2018 2018 2018 2017 2018 Economy Q1 Q2 Q3 Q4
OECD-Americas 25.06 25.20 25.40 25.78 25.74 25.53
OECD-Europe 14.30 13.95 14.19 14.68 14.32 14.29
OECD-Asia Pacific 8.06 8.54 7.65 7.70 8.16 8.01
OECD Total 47.42 47.69 47.24 48.16 48.22 47.83
China 12.32 12.28 12.84 12.65 13.07 12.71
Developing 32.13 32.44 32.60 32.86 32.56 32.61 Economies
Global Total 97.29 97.80 98.02 99.35 99.68 98.72
Data source: OPEC
Data source: Clarksons
Figure 2-8 International Oil Tanker Transport Demands in 1990-2018
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2. Global oil tanker fleets in stable upsizing trend
According to Clarksons, active tanker fleets (of 10,000 DWT and above) in 2018 totaled 580 million DWT globally, up by 4.82 percent year-on-year, slightly slower than in 2017. Specifically, the very large crude carriers (VLCCs) registered 230 million DWT, up by 5.3 percent, the Suezmax tankers had 90 million DWT, up by 8.7 percent, the Aframax tankers had 110 million DWT, up by 3.3 percent, and the Panamax and Handysize capacities grew by 3.3 percent and 3.2 percent, respectively. Oil tankers of varied types all sustained stable growth in shipping capacity, with Suezmax tanker fleets demonstrating the greatest growth. In the year, crude oil tankers for trade had a capacity of 400 million DWT. The market was oversupplied with an oil tanker utilization rate of 89 percent, which is an improvement compared with 2017.
Table 2-2 Capacities of International Oil Tanker Fleets
Year Year- Type 2017 2018 on-year Increase
International Oil Tanker Fleets (Carriers of 10,000 million DWT 555.15 581.92 4.82% DWT or Above)
VLCC million DWT 214.66 226.03 5.30%
Suezmax million DWT 80.01 86.96 8.69%
Aframax million DWT 104.86 108.33 3.31%
Panamax million DWT 31.88 32.93 3.29%
Handysize million DWT 123.74 127.67 3.18%
Data source: Clarksons
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2018 APEC Port Development Report www.apecpsn.org 26 Table 2-3 Crude Oil Tanker Supply and Demand (Unit: million DWT, unless otherwise stated)
Oil Capacity Capacity Capacity Capacity Tanker Contributed Supply Demand Oil Tanker Year for Crude Fleet by Other (million ton- (million Utilization Oil Trade Capacity Fields miles) ton-miles) 2014 340.3 12.9 353.2 10207000 8777000 86% 2015 346.4 14.7 361.2 10785000 9799000 90% 2016 366.6 18 384.6 11501000 10389000 89% 2017 384.1 16.9 400.9 12323000 10908000 87% 2018 384.7 17.3 402 12773000 11315000 89%
Data source: Drewry
3. Crude oil tanker freight rate on the rise
In 2018, global crude oil demands and oil tanker fleet size were both on steady rises, indicating a prosper market. Implicated by fuel price increases, freight rates charged by crude oil tankers also rose, as evidenced by a sharp rise in Q4. The year 2018 saw a minor increase of crude oil freight rate year-on-year, which peaked at 1,266 points and averaged at 798.15 points, 1.4 percent higher year-on-year.
Data source: Baltic Exchange
Figure 2-9 Baltic Dirty Tanker Index (BDTI) in 2017-2018
4. Freight rates on product oil rose with fluctuations
In 2018, product oil demands sustained steady growth. Product oil freight rates rose with fluctuations since January of the year and peaked at 1,266 points in December, but the annual average was lower than 2017. The 2018 Baltic Clean Tanker Index (BCTI) averaged at 578.91 points, slightly lower than the 605.9 points in 2017, down by 0.44 percent year-on-year. Product oil prices fluctuated at low levels in the first
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half of 2018 but shot up in the fourth quarter with the peak value higher than that in 2017.
Data source: Baltic Exchange
Figure 2-10 Baltic Clean Tanker Index (BCTI) in 2017-2018
2.2 Review of Asia-Pacific Shipping Industry Development
2.2.1 Review of container shipping market in the Asia-Pacific region
1. Container shipping market in Asia-Pacific economies
In 2018, the Asia-Pacific region enjoyed steady growth in the container shipping business and seized a greater share in the global market at 29.55 percent, up by 0.55 percentage points over that in 2017.
(1) Container shipping capacity grew steadily in Asia
In 2018, the intra-regional container shipping volume in Asia was 59.4 million TEUs, up by 6.5 percent year-on-year. The rate, though presenting a moderate decline from the 7.1 percent in 2017, remained high and outperformed the global level (4.5 percent). The intra-regional container shipping volume in Asia was on a steady rise in the recent decade and was taking up a greater share in the world.
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2018 APEC Port Development Report www.apecpsn.org 28 Note: * indicates projections. Data source: Clarksons
Figure 2-11 Container Shipping Volumes in Asia in 2008-2018
(2) Container shipping capacity expanded in Asia
According to Alphaliner, the world's top 20 lines allocated 11.4 percent of their shipping capacities - totaling 1.94 million TEUs - on Asian routes, up by 8.5 percent year-on-year and improving against the 9.5 percent in 2017. To be specific, COSCO Container Lines devoted 20 percent (557,000 TEUs) of its total capacity in Asia, the highest among the top 20 lines. Maersk further augmented its container capacity on Asian routes, with the region's share rising to 5 percent from last year's 4 percent, totaling 203,000 TEUs, making the company the second highest among the top 20 lines.
Data source: Clarksons
Figure 2-12 Input of Container Ship Capacity in Asia by Major Liner Companies in 2018
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(3) Freight rates on major Asian routes continued to pick up
In 2018, Japan, Korea and Southeast Asia maintained stable CCFIs with narrow volatility and no significant changes compared with that in 2017. Freight rates on Japanese routes continued the rise from 2017 and further rebounded moderately, reaching 700 points in January 2018 and averaging at 716.88 points, up by 7.6 percent year-on-year. Freight rates on Korean routes maintained growth in 2018, averaging at 590.85 points, posting a growth rate of 3.5 percent year-on-year which was slightly lower than the 4.8 percent in 2017. The freight rate growth on Southeast Asian routes also slowed down, namely at 0.2 percent in 2018 against the high growth of 8.5 percent in 2017. Generally speaking, freight rates on the three major Asian routes continued to pick up.
Data source: Shanghai Shipping Exchange
Figure 2-13 Trend of Freight Rates (CCFI) of Major Shipping Routes in Asia in 2002-2018
2. Container transport markets in Far East/North America remained stable
(1) Far East/North America shipping volume continued to grow
Given the sound performance of the U.S. economy and trade in 2018, the Far East/ North American shipping activities continued to grow, with the annual container shipping volume hitting 25.61 million TEUs, up by 2.3 percent year-on-year.
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2018 APEC Port Development Report www.apecpsn.org 30 Data source: Clarksons
Figure 2-14 Annual Container Shipping Volume in the Far East/North America in 2007-2018
(2) Total shipping capacity of Pacific routes grew steadily
The container shipping capacity on Far East/North American routes sustained stable growth, with a total capacity of 16.07 million TEUs in 2018, up by 8.3 percent year- on-year, exhibiting a stronger growth momentum than the 4 percent in 2017. By quarter, the growth of total capacity devoted to Pacific routes declined in the first two quarters, then presented a steep spike in the third quarter to 15 percent and continued into the fourth quarter with modest slowdown.
Data source: Alphaliner
Figure 2-15 Total Shipping Capacity of the Far East/North America by Quarter in 2016-2018
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(3) Container shipping freight rates increased on Far East/North American routes
In 2018, the container shipping capacity allocated on Far East/North American routes further rose, along with continued stable growth of shipping volume. The supply-demand relation was balanced overall. But driven by soaring fuel prices, freight rates on these routes went up. The CCFI on Far East/U.S. West Coast routes averaged at 697.12 points, declining by 7.4 percent year-on-year. The CCFI on Far East/U.S. East Coast routes averaged at 902.08 points, rising by 5.4 percent year- on-year. Over the year, freight rates on Far East/North American routes remained stable and increased to some extent compared with the 2017 level.
Data source: Shanghai Shipping Exchange
Figure 2-16 Freight Index (CCFI) of China's Exports to North America in 2018
2.2.2 Review of dry bulk shipping market in the Asia-Pacific region
1. Asia-Pacific dry bulk cargo import shipping further increased market share
In 2018, the Asia-Pacific economies maintained stable growth in terms of demand for iron ore, coal and grain. The shipping volumes of imported iron ore, coal and grain in the Asia-Pacific region added up to 78.7 percent of the total shipping import volume globally, against the 77.7 percent in 2017. This indicates that the Asia-Pacific region had grabbed a greater share in the global dry bulk shipping market.
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2018 APEC Port Development Report www.apecpsn.org 32 Data source: Clarksons
Figure 2-17 Share of Dry Bulk Shipping Volume of Asia-Pacific Economies in Global Shipping Volume in 2018
The seaborne imports of iron ores by Asia-Pacific economies in 2018 decreased to 1.31 billion tons from the 1.36 billion tons in 2017, at a rate of 4.2 percent year- on-year. The region’s share in the world's iron ore shipping volume declined to 88 percent from the 93 percent in 2017. China, as the world's largest importer of iron ores, reduced its imports from Australia due to the Australia’s rise of its iron ore prices in 2018. The growth of China's seaborne imports of iron ore fell by 1 percent to 1.05 billion tons. A similar case was observed in Japan whose seaborne imports of iron ores reduced by 2.1 percent, while Korea and Chinese Taipei maintained small-margin growth. Export-wise, Australia, as the world's main iron ore exporter, witnessed a slowdown in its export growth, from the 2.5 percent in 2017 to 0.9 percent in 2018. Canada continued a strong momentum and recorded an 11 percent growth rate year-on-year to 47 million tons of iron ores exported. India recorded a slump of -35 percent in iron ore export growth, with the exports falling to 19 million tons from last year's 29 million tons. Due to the surging demand from domestic infrastructure projects and iron ore production limits, India became an iron ore importer from an exporter previously.
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Data source: Clarksons
Figure 2-18 Seaborne Iron Ore Trade in Asia-Pacific Economies in 2018
Coal imports did not increase among thermal coal importers, such as Japan and Korea, due to the boom of clean energies. Developing economies, however, still had high demands for coal. China, for example, imported 235 million tons of coal in 2018, up by 4.1 percent. Indonesia sustained stable growth of coal exports, namely at 9.6 percent to 380 million tons of exports, after overtaking Australia as the world's largest coal exporter. Supported by the strong global demand, the U.S. coal companies enjoyed increased profits and rising exports. With India's demand stimulated by its import ban on petroleum coke, the U.S. coal exports to India rose. Therefore, the U.S. seaborne coal exports maintained strong growth, at a rate of 20.3 percent.
Data source: Clarksons
Figure 2-19 Seaborne Coal Trade in Asia-Pacific Economies in 2018
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2018 APEC Port Development Report www.apecpsn.org 34 As the global environment policies tighten and energy consumption embraces upgrading and transformation, the growth of coal-related consumption around the globe will further slow down. Among major Asia-Pacific economies such as China, Japan, Australia, Singapore, and the U.S., the growth of coal demands decelerated significantly. But for economies that are currently undergoing industrialization, such as India, Viet Nam, Indonesia, and Pakistan, the coal demands further increased.
Data source: BP Global
Figure 2-20 Global Coal Consumption in 2017
Grain exporters in the Asia-Pacific region saw declines in export volume overall in 2018. In the aftermath of the Sino-U.S. trade frictions, the U.S. grain exports continued the decline from 2017, with its soybean exports standing at 47 million tons, down by 12 percent year-on-year. In the meantime, Australia’s grain exports fell by 39.1 percent to 19 million tons because of the severe droughts. China used to be a main importer of the U.S. soybeans, but the Sino-U.S. trade frictions slashed China's grain imports in 2018, by 22.5 percent to 103 million tons.
Data source: Clarksons
Figure 2-21 Grain Trade in Asia-Pacific Economies in 2018
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2. Growth of dry bulk shipping capacity further slowed down in Asia-Pacific economies
In 2018, the share of Asia-Pacific shipowners in the global market by dry bulk shipping capacity was further tuned down to 53.4 percent from the 57.6 percent in 2017. Among the world's top 20 dry bulk shipowners, Asia-Pacific companies took up 15 seats in 2018, increasing by one seat over 2017. A Japanese shipowner, Mitsui & Co, joined the top 20 club within the period.
Data source: Clarksons
Figure 2-22 Ownership of Dry Bulk Ships by Registry in 2012-2018
Table 2-4 Rankings of Global Top 20 Dry Bulk Shipowner Groups
Fleet Scale
Ranking Dry Bulk Shipowner Economy million Quantity DWT 1 China COSCO Shipping Group China 297 33.2 2 NYK Lines Japan 187 17.4 3 Fredriksen Group Cyprus 123 15.4 4 Wisdom Marine Group Chinese Taipei 120 6.5 Hong Kong, 5 China Merchants Group 116 14.2 China 6 KLINE Japan 116 13.8 Hong Kong, 7 Pacific Basin Shipping Ltd 113 4.5 China 8 Mitsui O.S.K. Lines Japan 111 13.2
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2018 APEC Port Development Report www.apecpsn.org 36 9 Oldendorff Carriers Germany 110 10.9 10 Star Bulk Carriers Greece 109 12.5 11 Imabari Shipbuilding Co., Ltd Japan 81 8.1 12 Mitsubishi Japan 79 6.7 13 Pan Ocean Shipping Korea 75 11.2 14 Navios Group Greece 75 8.2 15 Nissen Kaiun Japan 72 7.0 16 Nissin Shipping Japan 69 4.0 17 Fednav Canada 66 2.5 18 Doun Kisen Japan 64 5.8 19 Mitsui & Co Japan 62 5.2 20 Polish Steamship Co. Poland 62 2.5
Data source: Clarksons
3. Freight rate fluctuations of major Asia-Pacific routes
In 2018, global oil prices plummeted after fluctuating rises, with a higher annualized average price than that in 2017. Consequently, dry bulk freight rates on Asia-Pacific routes demonstrated a similar trend and scored a higher average price than that in 2017.
Data source: Clarksons
Figure 2-23 Freight Rates of Major Shipping Routes in the Asia-Pacific Region
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2.2.3 Review of tanker shipping market in the Asia-Pacific region
1. Oil tanker shipping demands remained low and volatile
According to Wind Information, the annual average crude oil demand by Asia-Pacific economies in 2018 stood at 8.16 million barrels/day, consistent with the 2017 level. This indicated stable oil shipping demands overall. Asia-Pacific economies took up 8.2 percent of the world's total demand for crude oil in 2018, down by 0.2 percentage points year-on-year. Trade frictions served as important hindrance to such growth. As the financial environment tightened, geopolitical tensions intensified, and oil import costs soared, emerging economies faced stronger downward pressures. Oil demand in the Asia-Pacific region was also impacted by the recovering oil prices globally.
Data source: Wind Information
Figure 2-24 Crude Oil Demands in Asia-Pacific Economies and Shares in the World in 2012-2018
2. Oil tanker shipping capacity supply tightened in Asia-Pacific economies
According to Clarksons, Asia-Pacific economies took up 8 spots among the world's top 20 oil tanker owners in 2018, with their shipping capacity totaling 100 million DWT, an increase of 1.5 million DWT over that in 2017. The growth rate was also consistent with that in 2017. However, it was noticed that their shares in the world's total shrank further to 50 percent from the 52 percent in 2017. Against the lower growth of oil tanker shipping demand, the shipping capacity supply slowed down in Asia-Pacific economies.
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2018 APEC Port Development Report www.apecpsn.org 38 Table 2-5 Rankings of Global Top 20 Oil Tanker Owners
Fleet Scale Ranking Oil Tanker Owner Economy million Quantity DWT 1 China COSCO Shipping Group China 168 21.8 2 Mitsui O.S.K. Lines Japan 168 14 3 Ocean Tankers Singapore 129 8.9 Hong Kong 4 China Merchants Group 128 19.3 China 5 SCF Group Russia 127 12.3 6 Scorpio Group Monaco 115 7.9 7 BW Group Norway 104 6.6 8 MCC Transport Denmark 91 5.1 9 Stolt–Nielsen Norway 91 2.3 10 Teekay Corporation Canada 90 11.9 11 Pertamina Indonesia 89 2.4 12 TORM A/S Denmark 82 4.9 13 NSCSA Saudi Arabia 81 15.7 14 Petronas Malaysia 78 10.8 15 Tsakos Group Greece 77 8.1 16 Sinokor Korea 72 8.6 17 Sinochem Group China 72 2.5 18 Euronav NV Belgium 71 18 19 Dynacom Tankers Mngt Greece 68 11.1 20 Minerva Ocean Greece 67 7.7
Data source: Clarksons
3. Oil tanker freights rates dipped further
From a global perspective in 2018, the Asia-Pacific oil market suffered slowdown in both its demand and supply growth, and its freight rates dipped further continuing the downward trend from 2017. Charter rates on U.S. West Coast-China, Gulf- Japan, and Gulf-Singapore routes were lower than the 2017 levels to varied degrees. According to Drewry's projection, oil tanker shipping freights in Asia-Pacific economies will continue to drop in 2019.
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Table 2-6 Freight Rates of VLCC Ships
Current Freights (WS) TCE (US$/day)
U.S. U.S. West Gulf to Gulf to West Gulf to Gulf to Coast to Japan Singapore Coast to Japan Singapore China China 2017 61 58 60 19792 22617 20567 2018 56 55 54 19500 21400 17900 2019 51 48 50 25500 25100 24700 2020 68 63 66 31900 30400 29700 2021 70 66 69 36200 35800 35000 2022 68 64 67 36200 35800 35000 2023 69 65 68 37100 36800 35900 Q4 2018 85 86 85 43200 48900 44000 Q1 2019 45 44 45 24100 19700 18000 Q2 2019 45 41 44 19600 17000 17600 Q3 2019 50 46 49 26900 23500 23800 Q4 2019 64 60 63 38600 40000 39400 Q1 2020 72 65 72 33000 32600 35900 Q2 2020 59 55 58 22700 21900 21700
Note: * indicates projects. WS (Worldscale) refers to New Worldwide Tanker Nominal Freight Scale. Data source: Drewry
2.3 Shipping Costs Showed Overall Downtrend
Against the slow economic recovery globally and sluggish shipping markets, shipping enterprises have been seeking ways, such as mergers and acquisitions, container ship upsizing, and oil consumption cuts, to reduce operational costs. In 2018, the global shipping market experienced weak recovery and ship upsizing, with an expanded shipping capacity resulting from deliveries of large container ships. Subject to the pressure, shipping enterprises rolled out various measures to reduce costs.
2.3.1 Ship-building costs picked up modestly
According to Clarksons, the average new ship price index picked up modestly in 2018 from the 2017 level, standing at 128.33 points, up by 4.2 percent over that in 2017. The average container shipbuilding price index was 77.11 points in 2018, up by 11.4 percent year-on-year. Ship markets showed signs of recovery, but the
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2018 APEC Port Development Report www.apecpsn.org 40 conflict between the weak demand and oversupply persisted. In 2018, mergers and restructuring were observed among shipbuilders in China, Japan and Korea. This led to a higher degree of concentration in the industry, as evidenced by the fiercer competition among Chinese and Korean shipyard giants.
Data source: Clarksons
Figure 2-25 Average New Ship Price Index in 2014-2018
Data source: Clarksons
Figure 2-26 Average Container Shipbuilding Price Index in 2013-2018
2.3.2 Global fuel price dropped before moderate rise
In 2018, the global crude oil prices dropped before a moderate rise. Brent crude oil recorded an average annual price of US$71.69/barrel, up by US$16.96/barrel over that in 2017, at a growth rate of 31 percent. WTI crude oil recorded an average annual price of US$64.90/barrel, up by US$14.05/barrel, at a growth rate of 27.6 percent. Brent and WTI crude oil futures prices rose to four-year highs on October 3, 2018, at US$86.29/barrel and US$76.41/barrel, respectively, and then dropped
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to lows in the past more than a year on December 24, at US$50.47/barrel and US$42.53/barrel, respectively.
Data source: Choice
Figure 2-27 Global Oil Price Trend in 2015-2018
In 2018, global fuel prices also witnessed rises before taking a downturn. As a result of shipping market volatility and seasonal factors (most economies use fuel oil to generate power in summer), the global fuel oil price had been on the rise since April 2018. Take Singapore's 180cst price as an example. The oil price increased from the US$397.9/ton in March and hit a yearly high at US$514.25/ton in October, before it went down. Due to the high demands for fuel oil in summer, the Singapore fuel oil reserve dropped to a nine-year low in August 2018. Generally, the international fuel oil price in 2018 was higher than that in 2017, and the fuel oil cost for shipping rose.
Data source: Choice
Figure 2-28 Fuel Oil Prices in the Asia-Pacific Region in 2014-2018
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2018 APEC Port Development Report www.apecpsn.org 42 2.3.3 Port costs showed overall downtrend
Chinese ports further reduced fees. In 2018, China's Ministry of Transport and National Development and Reform Commission (NDRC) launched serial policies such as Measures for Charging and Billing at Ports, and the Notice on Further Opening Port Charges and other Relevant Measures, urging to cut down the compliance cost on container import by at least US$100 from the previous year, and by even wider margins at main coastal ports.
With implementation of new port fee policies, China's port enterprises reviewed and adjusted the charges collectable and the calculation methods, voluntarily reduced the amounts, improved price transparency in end-to-end logistic processes, and upgraded their logistic services for the purposes of greater efficiency and lower costs. So far, provinces and cities such as Jiangsu, Hubei, Chongqing, Jiangxi, Zhejiang, and Anhui have cut their port dues for cargoes to varied levels, and port groups such as Guangzhou Port have reduced port facilities security charges. As a result, tugboat costs among China's ports went down and the handling charges of foreign-trade containers dropped significantly. According to Ningbo Zhoushan Port Company, starting from January 1, 2018, the lump sum charge of port operations for a local 20-foot loaded container for foreign trade visiting Ningbo- Zhoushan Port is now charged with RMB 490 for cargo handling, down by RMB 130.53 from the original RMB 620.53, and that for a 40-foot container was cheaper by RMB 180. Based on the 2017 workload of the port, it was estimated that a total of RMB 836 million can be saved in 2018. Shanghai Port, the world's No. 1 port in terms of container throughput, is expected to trim its handling income by about RMB 1.5 billion due to lowered handling charges for foreign-trade containers. Port fee reductions in China will help further lower down logistic costs and propel the shipping industry development in Asia-Pacific economies.
2.3.4 Ship operating costs kept rising
1. Crew cost
According to crew recruiting websites, the employment market of captain, first chief, chief engineer and second engineer positions was basically saturated in 2018. But international lines showed significant understaffing for the captain position, along with basically balanced supply and demand of senior crew members. However, international lines presented a shortage on sailor, engineer, boatswain, and chief engineer positions. In terms of salary cost, China was expected in 2017 to raise crew salary for state-owned China-flagged ships by 2 to 3 percentage points, the rise being corroborated by the salary levels in recent years. As China implements an individual income tax reform, companies will spend more in real term on staffing. Besides, the tough maritime work gives rise to recruitment difficulty for various countries around the world. Crew understaffing is a key issue to be addressed, and the short supply will further drive up crew costs. Although efforts have been made on developing automated ships worldwide, it will take time to strike a balance between technical cost and staffing cost.
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Table 2-7 Crew Salary Level of Chinese Container Ships in December 2018
Ocean-going Inshore Ocean-going Inshore containers in containers in containers in containers in 2018 (US$/ 2018 (US$/ 2017 (US$/ 2017 (US$/ month) month) month) month)
Captain 7600 6500 7400 6500
Chief Engineer 7600 6300 7300 6300
First Mate 6400 5600 6700 5700
Second Mate 3100 2300 3100 2200
Third Mate 2200 1600 2500 1400
Boatswain 1600 1500 1450 1300
Sailor 1400 1400 1200 1150
Data source: Recruitment of Crew Members, Shipping Online
2. Ship operating costs
According to Moore Stephens, an international accounting and shipping consultancy company, new regulatory costs are regarded as the biggest factor impacting ship operating costs. The total ship operating costs in the global shipping industry is expected to grow by 2.7 percent in 2018, and by 3.1 percent in 2019. Ship docking may become the cost item with the sharpest rises in 2018 and 2019, by 2.1 percent and 2.3 percent, respectively. Ship repair and maintenance costs are expected to grow by 2.0 percent in 2018, and by 2.3 percent in 2019. It is estimated that the cost rise will aggregate to a record high in the marine industry, with the annual average rate hitting 4.1 percent in 2018, and 4.2 percent in 2019. In comparison, the bulk ship industry will see a cost increase of 1.8 percent in 2018, and 2.6 percent in 2019. Oil tanker operating cost is expected to increase by 2.4 percent in 2018, and by 2.9 percent in 2019. Container ship operating cost will grow by 4.2 percent in 2018, and by 3.8 percent in 2019.
2.4 New Changes in Shipping Laws and Regulations
2.4.1 Changes in international shipping laws and regulations
1. IMO global restrictions on sulfur content steadily implemented
In October 2016, the 70th meeting of the IMO Marine Environmental Protection Committee adopted a resolution that the global sulfur emission cap of 0.5 percent of marine fuel oil will become mandatory on January 1, 2020. On April 13, 2018, IMO endorsed an amendment (to be officially approved in October 2018), requiring that ships without desulphurization equipment are not allowed to carry onboard fuel oil
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2018 APEC Port Development Report www.apecpsn.org 44 with excessive sulfur content when the rule takes effect in 2020.
The new regulation will increase ship operating costs by reducing the world's maximum sulfur emissions from 3.5 percent to 0.5 percent from 2020. Some consultants estimated that global shipping fuel costs will rise by 25 percent, increasing by about US$24 billion annually, and the global shipping industry will face a new round of rebalancing. Under the "sulfur restriction order", shipping costs need to be increased to achieve the balance of ship operating costs, and the increased costs will be transferred to all links of the transport chain through various ways.
2. Baltic Sea and North Sea designated as nitrogen oxide emission control areas (NECAs)
In 2018, the MEPC286 (71) Resolution by the IMO's Marine Environment Protection Committee proposed to control nitrogen oxide emissions in the Baltic Sea and North Sea, in additional to incorporating them as sulfur emission control areas (SECAs). Ships built on and after January 1, 2021, that is equipped with 130 kilowatts and above engines must meet Tier III emission standards when operating in the emission control areas. This rule also applies to replaced engines or additional engines mounted on and after January 1, 2021, that is not the original engine. Effective from January 1, 2019, the four emission control areas (the Baltic Sea, the North Sea, the North American ECA, including most of the U.S. and Canadian coast, and the U.S. Caribbean ECA) will implement controls over both NOx and SOx emissions. Looking forward, regulation on these areas will be enhanced, with potentially greater coverage of pollutants and geographical scope.
3. IMO Marine Environment Protection Committee adopted Amendments to the International Maritime Solid Bulk Code (IMSBC)
The IMO Marine Environment Protection Committee adopted amendments to the International Maritime Solid Bulk Code (IMSBC) in December 2018. The amended IMSBC clarified new cargo categorization standards and revised part of existing cargo categories. A highlight is the amended classification of coal which now allows a coal type to be classified into both Group A and Group B unless otherwise properly tested. Shippers have two ways to prove that the coal does not belong to Group A: first, the share of particles sized smaller than 10 mm in the coal does not exceed 50 percent by weight; second, the coal is classified as not in Group A by lab standards determined by competent authority of the country where the loading port is located (following standards equivalent to those in Appendix 2 in IMSBC on Group A).
In addition, shippers must declare and hold the required documents with regard to whether their solid bulk cargoes contain any dangerous substances that are hazardous to the maritime environment. The classification of solid bulk cargoes hazardous to the marine environment should be based on MEPC.277 (70). Emissions of cargo residues (including hazardous and non-hazardous substances) should be recorded in Part II of the Garbage Record Book. This requirement took effect on March 1, 2018. In actual operations, it is encouraged that ship captains use
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forms provided in Appendix I of MEPC.1/Circ.834/Rev.1 to report any deficiency in port reception facilities to the flag state and port state authorities.
4. EU regulations on monitoring and filing carbon dioxide emissions
According to EU requirements, a shipping company must send to the EU and flag state authorities complete MRV (monitoring, reporting and verification) emission reports satisfactorily verified for each ship that the company is liable for. The emission report should contain information on carbon dioxide emissions and other relevant information within the report period and needs to be assessed by the verifier. All ships to or from an EU port must carry onboard a certified Document of Compliance if any voyage was conducted in the report period. The Document of Compliance, which has a validity of 18 months, must contain the following information: details of ship identity (ship name, IMO identifier, port of registry or home port), details of ship owner (name, address and principle business address), and details of verifier, issuance date, validity term, and report period of the Document of Compliance. It is required by the EU that by June 30, 2019, all applicable ships must hold a Document of Compliance.
The EU will disclose information on carbon emissions by ships, including ship identity (ship name, IMO identifier, port of registry or home port), technical efficiency of ship (EEDI or EIV, as appropriate), annual total fuel consumption and total carbon dioxide emissions, annual average fuel consumption and carbon dioxide emissions calculated by navigation distance, annual average fuel consumption and carbon dioxide emissions calculated by navigation distance and cargo dead weight, annual total navigation time, monitoring methods adopted, issuance and expiration dates of Document of Compliance, and details of verifier.
2.4.2 Changes in Asia-Pacific shipping laws and regulations
1. Mainland China, Chinese Taipei and Hong Kong, China, clarified requirements on emission control
In 2018, the State Council of China issued the three-year action plan to fight air pollution (hereinafter referred to as the "Action Plan), putting forward requirements on enhanced control on ship emissions. It requires to enlarge ship emission control areas to key coastal ports in China by the end of 2019. In the meantime, China will promote renovation of inland ships, enhance control on particulate matter (PM) emissions, and launch pilot projects on nitrogen oxide emission control areas. On July 9, 2018, the Ministry of Transport launched the Adjustment Scheme for Ship Emission Control Areas (Draft for Opinion). According to the draft, ship emission control areas will be "expanded and upgraded". In the scheme, new requirements were proposed on sulfur oxides and particulates: from January 1, 2019, ships should use ship fuel with no more than 0.5 percent m/m sulfur content when voyaging in coastal control areas and at dock. From January 1, 2020, ships should use ship fuel with no more than 0.5 percent m/m sulfur content when voyaging in coastal control areas and use ship fuel of no more than 0.1 percent m/m sulfur content when at
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2018 APEC Port Development Report www.apecpsn.org 46 dock. Ships should use ship fuel of no more than 0.1 percent m/m sulfur content when voyaging in Hainan waters and at dock. China also requires that ships with shore power receiving capacity (liquid cargo vessels excluded) must use shore power when berthing at a port for more than three hours in a coastal control area that has shore power supply capacity, or when berthing at a port for more than two hours in an inland control area that has shore power supply capacity. Consistent with emission control area requirements in other jurisdictions such as the U.S., the Caribbean Sea and Northern Europe, the Chinese requirements are among the "most stringent standards" currently in the world.
Chinese Taipei and Hong Kong, China, also issued regulations on sulfur emissions. Chinese Taipei requires that ships without exhaust scrubbers, before entering its international commercial port area, must use fuel oil with no more than 0.50 percent m/m sulfur content. Hong Kong, China, requires that existing fuel oil rules during berth (requiring that ships should use fuel oil with no more than 0.50 percent m/m sulfur content then) will be replaced by new rules. When enforced, the new rules will extend the requirement to all ships working on Hong Kong waters. Ships without exhaust scrubbers, whenever they are on Hong Kong waters, at sea or at anchor, should use fuel oil with no more than 0.50 percent m/m sulfur content.
2. China's ports to collect low sulfur fuel surcharges
Following the collection of low sulfur fuel surcharges by Shanghai Port and Ningbo Port in November 2018, all other ports in China will apply the requirement from January 2019. Various ship owners have decided that this cost will be shared with cargo owners starting January next year. It is estimated that an additional US$20 dollars charge will arise for each TEU. As of now, many ship owners have issued bylaws on the fee collection.
3. New regulation on coal and palm oil exports in Indonesia
On October 31, 2017, the Ministry of Trade of Indonesia launched new regulations to promote shipping development and enhance competitiveness of local shipping industry in export markets. The new regulations, originally targeted for implementation in April 2018, required that coal and palm oil exports in Indonesia must use Indonesian-flagged ships and insure with Indonesian insurance companies for export shipping. But in this April, Industry Minister Airlangga Hartarto announced that, in order to stimulate exports and enhance foreign reserve, Indonesia would postpose implementation of using Indonesian-flagged ships for coal export shipment to May 1, 2020, and implementation of using Indonesian insurers to February 1, 2019, according to the final decision of the Indonesian government.
After implementation of the insurance rule, a company must insure the goods with a local insurer designated by the Indonesian government or a foreign insurer in collaboration with such a local insurer, when exporting coal from Indonesia. The
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new rule has led to severe backlog of coal in Indonesia's biggest coal mining area, Kalimantan.
2.5 Development Trends of Shipping Organizations in the Asia-Pacific Region
2.5.1 World Shipping Council
In 2018, the World Shipping Council (WSC) continued to work on issues of maritime environment, maritime security, and cargo liability. Regarding maritime environment, the council members worked to establish sound environment management, with special focus on reducing and managing ship emissions. The WSC is the first industrial organization to approve establishment of stringent global controlling mechanisms, covering emissions of NOx, SOx and PM. WSC also worked with IMO, the U.S. Coast Guard, the U.S. Environmental Protection Agency, and other relevant organizations to build emission standards on various ship types. In support of the on-going work to enhance marine security, the WSC has established a U.S. Security Advisory Committee, a European Security Advisory Committee, and various supporting working groups comprised of representatives from member companies. The primary role of these committees and work groups is to analyze, propose and implement measures at the national, regional (EU) and/or international level for the enhancement of the security of ports, vessels, cargoes and personnel. On cargo liability, the WSC worked as part of the U.S. delegation to the United Nations Commission on International Trade Law (UNCITRAL) to achieve cargo liability reform through the development of a new international convention. The new convention will cover multimodal transport (not just port-to-port as in the case of existing conventions), permit carriers and shippers to negotiate terms and limits that differ from the convention in volume contracts or service contracts in the U.S. trades, and introduce new, more balanced burdens of proof.
2.5.2 Baltic and International Maritime Council
In 2018, Baltic and International Maritime Council (BIMCO) focused on issues on environment protection, cyber security, and maritime digitalization. BIMCO called on the Maritime Safety Committee (MSC) to take stronger positions on anticipated security implications by compliant fuels before the IMO 0.50 percent sulfur restriction rule takes effect, encouraged ship owners to authorize the flag state or a creditable organization to report all applicable EEDI values in their fleets to IMO, supported IMO's plastic waste campaigns, worked on implementation of Ballast Water Management Convention, and studied China's proposal on using port receiving facilities to discharge ballast water as an implementation method (III 5/14/2).
On cyber security, BIMCO launched the guidelines on cyber security onboard and cyber security terms and conditions to provide guidance on how to address cyber security risks and incidents. BIMCO also conducted surveys on this topic, showing that cyber-attacks in the shipping industry have reduced in the previous year. In addition, BIMCO called on shipping companies to enhance cyber security protection,
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2018 APEC Port Development Report www.apecpsn.org 48 provide relevant training, and improve security awareness.
Regarding maritime digitalization, BIMCO launched the Computerised Maintenance Management Systems (CMMS) to expand the use of Shipdex. Shipdex is the standard protocol for exchanging technical data – such as manuals – electronically between supplier and ships directly, cutting the need for huge stacks of paper manuals. So far, the CMMS has initiated a Maritime Connectivity Cloud (MCC) to facilitate a Maritime Connectivity Platform (MCP), in order to further promote digitalization in the maritime industry.
2.5.3 Maritime and Port Authority of Singapore
In 2018, the Maritime and Port Authority of Singapore (MPA) prioritized on improving port efficiency, and enhancing maritime transport connectivity, security, and sustainability. In the 35th ASEAN Maritime Transport Working Group Meeting (MTWG) hosted by MPA, Singapore proposed to enhance cooperation between ASEAN members and China, Japan and Korea to implement MTWG initiatives. Moreover, the MPA sponsored maritime cyber security seminars, established around-the-clock maritime cyber security operation centers, and further promoted maritime cyber security. Working with Singapore Maritime Institute and universities, the MPA launched the cyber security research initiative that studies protection of physical maritime cyber networks. It worked with Singapore Polytechnic to offer courses on cyber security awareness to ship managers, operators and shipping company executives in order to enhance their expertise on managing cyber risks onboard. The MPA also worked actively on promoting free trade and openness in the region, advancing port connectivity, and promoting international cooperation.
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Chapter 3 Review of Port Development in the Asia-Pacific Region in 2018
3.1 Route Density and Major Hub Ports Distribution in the Asia-Pacific Region
1. Features of route distribution
According to the ship-based AIS big data of the Port and Shipping Big Data Laboratory of Shanghai International Shipping Institute, among the three major trunk routes in the world, the Asia-Europe route (Far East-Europe) was dominated by container ships of 8,000 to 12,000 TEUs; the Pacific route (Far East-North America) was dominated by container ships of 4,000-12,000 TEUs; the Atlantic route featured evenly distributed ship sizes, and the South-North route and in-region shipping routes were dominated by container ships of up to 4,000 TEUs.
In terms of ship type distribution on routes in the Asia-Pacific region, the shipping in East Asia, Southeast Asia and South Asia was dominated by small containers ships of 0-4,000 TEUs, and the container ships between Asia and Oceania (primarily with Australia) were mostly of 4,000-8,000 TEUs. The capacity of the Panama Canal has greatly enhanced after its expansion, as evidenced by the soaring number of container ships of 8,000-12,000 TEUs from the Far East to East America. Large container ships of above 18,000 TEUs were mostly distributed on Asia-Europe shipping routes. Singapore, Hong Kong, Shanghai and Ningbo were major ports handling containers.
Data source: Shanghai International Shipping Institute
Figure 3-1 International Route Map of Global Container Ships Based on AIS Trajectory Statistics from Jan to Aug 2018
2. Development features of hub ports
According to the AIS statistics of Shanghai International Shipping Institute, the ship arrivals at global container ports from January to August 2018 rose by around 20 percent over that in the same period of 2016, implying the brisk performance
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2018 APEC Port Development Report www.apecpsn.org 50 overall in the global container shipping sector in terms of ship arrivals. Moreover, starting 2016, the ship arrivals at global container ports have been on a steady rise on a yearly basis. This can be attributed to three major reasons. First, the global cargo trade keeps growing, driving up the cargo imports and exports between ports and leading to higher density of liner shipping on container routes and a larger number of ship arrivals. In the past two years, the top 20 container ports in the world witnessed their throughput grow by 5.6 percent and 3.8 percent, respectively. Second, the big data concept has been sweeping the world in recent years. The information technologies are becoming advanced, and more and more AIS big data base stations were put into use, leading to a general increase of AIS data for ships. Third, most of the world's top 20 container ports are located along the Pacific routes, such as ports of Shanghai, Shenzhen, Hong Kong and Los Angeles. Subject to the Sino-U.S. trade frictions, some containers were shipped ahead of schedule, leading to the increased density of liner ships.
Data source: Shanghai International Shipping Institute
Figure 3-2 Structure of Ships Calling at International Major Container Ports Based on AIS Trajectory Statistics from Jan to Aug 2018
The AIS ship statistics show that most hub ports of Asia-Pacific economies were located in China, Korea, Chinese Taipei, Hong Kong, China, Singapore and the U.S. With the help of the AIS big data for ships, we can find that the development of hub ports in the Asia-Pacific region displays the following features and trends.
(1) Features of arriving ship structures
Singapore is the busiest port in the world. According to the AIS statistics for ships during January to August 2018, the Port of Singapore remained the busiest port in the world. If we conduct a statistical analysis on the ship arrivals at 20 major container ports in the world, we can find that the ships can be primarily divided into three echelons. The first echelon is represented by Singapore, Shanghai, Busan, Shenzhen, Hong Kong and Ningbo ports with their average annual ship arrivals
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exceeding 10,000 ships/times. We can find that the first echelon only involves core and hub ports in the Asia-Pacific region. Port of Rotterdam, Kaohsiung Port, Qingdao Port, and Xiamen Port form the second echelon, with their average annual ship arrivals between 5,000-10,000 ships/times. Port of Antwerp, Tianjin Port, Guangzhou Port, Port of Dubai, Port of Tanjung Pulapas, Port of Hamburg, Dalian Port, New York-New Jersey Port, Port of Los Angeles, and Port of Long Beach form the third echelon, with their average annual ship arrivals lower than 5,000 ships/times. The Port of Singapore was the world's busiest port beyond controversy in terms of ship arrivals.
Regional hub ports embraced a higher proportion of "smaller ships". From the structure of arriving container ships in the world in 2018, we can see that regional hub ports such as Port of Busan, Dalian Port and Kaohsiung Port saw a higher proportion of ships of under 4,000 TEUs, the share being higher than 50 percent among all arriving ships. Take Dalian Port, a regional container hub port in Northeast China, for example. The containers for domestic trade at the port took a share of 45 percent, and more than 90 percent of containers for foreign trade in the three provinces of Northeast China were transshipped at Dalian Port. Most of its foreign trade routes lead to Japan, Korea and Europe, and the routes to Japan and Korea take nearly half of all foreign trade routes. As a result, small container ships on near- sea shipping routes contributed a large part of ship arrivals at the port.
The U.S. ports witnessed higher proportions of ships of 8,000-12,000 TEUs. Data shows that among the 20 major container ports in the world, the ports with the highest proportions of 8,000-12,000-TEU container ships were all located in the U.S., including the Port of Long Beach, the New York-New Jersey Port and the Port of Los Angeles. Canada, Mexico, China, Japan and Euro Zone economies were major destinations of trade shipping routes of the U.S. In the aftermath of the Panama Canal expansion, ships of 8,000-12,000 TEUs took the largest share among those launched to the Far East-North America and North America-Europe routes, while ships of above 12,000 TEUs on ocean-going international trunk routes were less seen. In addition, ships launched to the south-north routes between North America and South America were dominated by ships of above 4,000 TEUs. Therefore, ships of above 12,000 TEUs and of below 4,000 TEUs took a smaller share in the ship arrivals at ports in the U.S.
Shenzhen, Singapore, Shanghai, and Ningbo were typical ultra-large ports for ship receiving and unloading. The statistics show that the ports handling ultra- large ships of above 12,000 TEUs in 2018 mostly served the Asia-Europe routes. In terms of the size of ports receiving ultra-large ships of above 12,000 TEUs, Shenzhen, Singapore, Shanghai, and Ningbo ports ranked among the top. Shenzhen is the most called port for ships of above 12,000 TEUs in the world. From January to August 2018, it received more than 1,000 such ships. This is primarily because the throughput of containers from Shenzhen Port to Europe and America accounted for 50 percent of all the port's containers for foreign trade, hence the higher proportion of bigger ships on ocean-going routes.
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2018 APEC Port Development Report www.apecpsn.org 52 Data source: Shanghai International Shipping Institute
Figure 3-3 Large Ship Calls at Ports Handling Ultra-large Ships
(2) Features of comprehensive efficiency of port services
Ports serve ship companies, and ship companies' service experience at ports can be summarized into two aspects: time and cost, and ship companies are even more sensitive when it comes to time. The service efficiency at ports can be determined by a ship's stay at the port. Port services for ships can be divided into two categories, that is, the handling services and the auxiliary services. The auxiliary services include tugging fees, pilotage dues, wait for berth, and port inspections. Therefore, the efficiency analysis on port services to ships should put stress on statistics of the time efficiency of handling services and auxiliary services.
The handling efficiency of major container ports in China is generally high. On the one hand, container ports above a designated scale in China are many in number and densely distributed. The container loading and unloading volumes for single ships were diverted, shortening the handling time of single ships at the berth. On the other hand, China's port handling technologies and operation levels have led the world in the past years, and the handling time at berth is a favorable proof. Take the Guangzhou Port as an example. The handling operation time at berths of Guangzhou Port was roughly between 5-20 hours. Apart from the high handling efficiency, the short ship stay at berths at Guangzhou Port can also be attributable to the smaller handling volume per container ship in comparison with other ports, namely at around 500-1,000 containers/ship, hence the shorter average stay of ships for terminal operations.
Terminal operation time at ports in the U.S. is generally long. In terms of handling efficiency at ports in the U.S., the operation time at berths there is much longer compared with other ports. Each ship has to stay for 50-60 hours on average at Port of Long Beach and Port of Log Angeles, which is around three times more than that at ports in Asia. This is primarily because that, compared with China, the
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U.S. has fewer large container ports and its container ports are sparsely distributed. Port of Long Beach and Port of Los Angeles primarily handle ocean-going large ships on Pacific routes, and the New York-New Jersey Port primarily handles medium-sized and small container ships on Atlantic routes. The U.S. features a higher handling volume per ship than China, and its ports are also adapted to high- volume handling, hence the longer stay at berths for handling operations. However, estimates show that the gaps between the two in terms of the handling volume and the handling time are not proportionable: the ship stay at U.S.’ berths for cargo handling is around 4-5 times longer than that at China’s, which is largely contributed by the labor system in the U.S. that leads to the low handling efficiency.
The long terminal operation at Port of Singapore is a result of its comprehensive services. Compared with other international container hub ports such as Hong Kong and Shanghai, the stay per ship at berths for handling operations at Port of Singapore is longer. This is primarily because that the Port of Singapore is an international supply port and may offer other services such as ship supply and repairs apart from cargo handling after ship arrivals. According to statistics, 36.2 percent of container ships arriving at the Port of Singapore will receive refueling and cargo handling services at the same time, and 4.5 percent of arriving container ships will load/unload cargoes and make materials replenishment, and 10.8 percent of arriving container ships will even receive the above three services at the same time. While those ships for cargo handling only account for mere 32.8 percent.
Operation efficiency of berths at container ports is correlated to overall size of ships. Statistics show that the operation efficiency of berths at container ports is positively correlated to the overall size of ships. The larger the container ship, the longer the stay at berths. The handling efficiency at berths of all the global top 20 container ports roughly conform to this law. For example, the average stay per ship of 0-4,000 TEUs, 4,000-8,000 TEUs, 8,000-12,000 TEUs, and above 12,000 TEUs at berths for operation is 10.4, 12, 16, and 18.1 hours at Hong Kong Port. Major reasons for this include, first, the cargo handling volume is correlated to the container ships size to some extent. Container ships tend to grow larger. In particular, ultra-large container ships prefer to call at fewer ports to highlight the economic effectiveness by using more time for sailing and reduce the shipping cost per container of cargoes. Therefore, the global top 20 container ports usually depend on a hub-and-spoke network for operations when serving large container ships - the larger the ship of call, the higher the handling volume. Second, the handling efficiency of large ships at container terminals is lower than that of small container ships. Subject to the impact of shore crane equipment, a container ship of 20,000 TEUs will see its handling efficiency significantly lower than that of two container ships of 10,000 TEUs each.
Supporting services in the U.S. have higher efficiency. Despite the fact that the handling efficiency at berths of the U.S. is lower, requiring a longer stay at the berth, the supporting services in the U.S. demonstrate a higher efficiency and a shorter duration than its handling operations. The supporting operation efficiencies for
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2018 APEC Port Development Report www.apecpsn.org 54 different ships types at Port of Los Angeles and Port of Long Beach rank among the best.
Small ships usually spend more time waiting for berthing at various large ports. Container ships of less than 4,000 TEUs usually need longer out-of-berth supporting services than other ships types do. Major container hub ports around the world usually give priority to large ships, and small ships, when berths are limited, will spend more time waiting for berth. The auxiliary operation time for ships of less than 4,000 TEUs at container hub ports is significantly longer than that for ships of above 4,000 TEUs.
Ultra-large hub ports face capacity strains. In view of the data for different ships types, Shanghai, Shenzhen and Tianjin ports, though equally matched with other ports in terms of auxiliary service duration, have no superiority in terms of rankings. In particular, Shanghai and Tianjin ports are known for their longer auxiliary services for ships of above 8,000 TEUs. A major cause lies in the fact that the high ship arrivals lead to tensions in the port capacity and ships usually need to line up to enter the port. The entry speed depends on ship size and queuing status, and small ships may retard the entry of large ships. But overall, the time difference is marginal compared with other ports.
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Operation Efficiencies of Global Top 20 Container Ports Based on AIS Data in 2016-2018 (Unit: hours/vessel) Figure 3-4
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2018 APEC Port Development Report www.apecpsn.org 56 3.2 Review of Port Production
3.2.1 Review of port throughput development
1. Global port cargo throughput grew stably
In 2018, the global ports continued the production growth from 2017, and cargo throughput of major ports maintained steady growth. But subject to the worldwide economic downturn and slowdown of trade numbers, the cargo throughputs of global ports reported a significant drop in year-on-year growth. In 2018, the cargo throughput of major ports in the world increased by 3.3 percent year on year, down by 1.39 percentage points from that in 2017.
Region-wise, the port throughput growth in most regions around the world was slow, between 1 percent - 4 percent. In the Euro Zone, the old manufacturing economies headed by Germany witnessed significantly slower economic growth, and their trade growth was lackluster due to the global trade frictions. The United Kingdom's exit from the EU and the unstable political situations in Italy among other political factors jointly contributed to a drop of 2.16 percentage points of throughput growth in major ports of the Euro Zone. Apart from this, several major hub ports in the Euro Zone, such as Rotterdam and Antwerp, were plagued by severe congestion from the second half of the year as a result of the barges shipping, which is also a contributor to the throughput growth slowdown. In the America, created trade frictions with Canada and Mexico, dealing a blow to the overall cargo throughput of ports in the continent which grew by mere 2.25 percent in the year. The growth was significantly lower than that in last year by 5.67 percentage points. Specifically, Brazilian ports in South America benefited from China's soaring demand for soybeans as a result of the Sino-U.S. trade frictions, and the annual soybean export volume from Brazil increased by 23 percent year-on-year to 83.85 million tons. In Asia, major ports demonstrated generally stable yet slower growth as a result of the sluggish domestic demand and external trade frictions, and the growth rate of cargo throughput decreased slightly by 0.54 percentage points from last year. Specifically, emerging Asian economies, led by India and ASEAN economies, have benefited from the high trade growth with China in 2018, with their cargo throughputs posting rapid growth. In Oceania, the declining dry bulk trade undermined cargo throughput growth at ports. The growth rate of Port of Hedland, the largest port in Australia, fell by 1.75 percentage points year-on-year to only 2.5 percent. In Africa, the cargo throughputs of major African ports fell to negative growth again and the growth gaps between ports were widening due to the grim economic situation and the negative impact of international trade tensions. The growth rate of Port Elizabeth reached 9.85 percent, while those of Port of Saldanha Bay, Port of Cape Town and Port of Mossel Bay have fallen below double digits.
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Data source: Official websites of various ports
Figure 3-5 Throughput Trends at Major Ports in Various Regions in the World in 2018
2. Cargo throughput growth at ports in Asia-Pacific economies slowed down
In 2018, against the backdrop of rising global trade protectionism, trade interactions among Asia-Pacific economies were restrained and trade market confidence was hit, resulting in a slowdown in production growth of major ports in the Asia-Pacific region. Major ports in the Asia-Pacific economies reported a cargo throughput of 15.63 billion tons, increasing by 2.6 percent year-on-year, down by 2.1 percentage points from that in 2017. Except Chinese Taipei, Malaysia and Australia, all the other economies saw their ports suffer declining cargo throughput growth to varied degrees.
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2018 APEC Port Development Report www.apecpsn.org 58 Table 3-1 Cargo Throughputs and Growth Rates of Major Ports in Asia-Pacific Economies in 2018 (Unit: 1,000 tons)
2017 2018
Throughput Growth Rate Throughput Growth Rate
Major Ports in 7312120 5.88% 7587480 3.77% China
Port of Hong Kong, 281550 9.67% 258540 -8.17% China
Major Ports in 723860 -1.13% 732140 2.15% Chinese Taipei
Major Ports in 683050 2.60% 678020 -0.74% Japan*
Major Ports in 1586000 4.39% 1635610 3.13% Korea
Seaports in Viet 271750 12.64% 287050 5.63% Nam*
Major Ports in 72430 4.10% 65340 -9.79% Indonesia
Major Ports in 103800 4.40% 105680 1.81% Thailand
Major Ports in 533610 -5.91% 545600 2.25% Malaysia
Major Ports in the 253560 4.02% 256330 1.09% Philippines
Port of Singapore 626170 5.54% 630130 0.63%
Major Ports in the 728710 6.47% 729390 0.09% U.S.*
Major Ports in 185130 5.57% 190790 3.06% Canada
Major Ports in 1079010 1.50% 1104550 2.37% Australia
Seaports in Russia 786970 9.01% 816500 3.75%
Note: Statistics for major ports included in the economies in table can be found in Table 3-2. Data source: Official websites of various ports or port associations in various economies
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Table 3-2 Major Ports for Statistics Included in Asia-Pacific Economies
Economy Major Ports for Statistics
Ningbo-Zhoushan, Shanghai, Suzhou, Tianjin, Guangzhou, China Tangshan, Qingdao, Dalian, Rizhao, Yingkou, Yantai, Huanghua, Shenzhen, Xiamen, Lianyungang, Qinhuangdao
Chinese Taipei Kaohsiung, Taichung, Taipei, Keelung, Hualien, Suao
Japan Nagoya, Yokohama, Kobe, Tokyo, Kawasaki, Osaka, Shimizu
Busan, Incheon, Taesan, Pohang, Mukho, Taean, Hadong, Masan, Korea Gwangyang, Pyeongtaek-Dangjin, Ulsan, Mokpo and others
Indonesia Tanjung Priok, Balikpapan, Tanjung Perak, Makassar, Belawan
Kelang, Tanjung Pelepas, Penang Pulau, Johore, Kuantan, Bintulu, Malaysia Tanjung Bruas, Kuching, Miri, Rajang, Sabah, Dickson, Kemaman
Thailand Bangkok, Laem Chabang
New York-New Jersey, Los Angeles, South Louisiana, Long Beach, United States Tacoma-Seattle, Virginia
Canada Vancouver, Montreal, Halifax
Hedland, Newcastle, Gladstone, Hay Point, Melbourne, Fremantle, Australia Brisbane, Flinders
Note: * indicates projections. Data source: Official website of each port or port association of each economy
Figure 3-6 Cargo Throughputs and Growth Rates of Major Ports in Asia-Pacific Economies in 2017-2018
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2018 APEC Port Development Report www.apecpsn.org 60 By comparing the growth rates of major ports in Asia-Pacific economies, we can find that the cargo throughput growth of Port in Hong Kong, China suffered the sharpest decline year-on-year. In 2018, the throughput of Hong Kong, China, decreased by 8.2 percent due to Sino-US trade frictions and the lack of obvious competitive advantages with ports in the Greater Bay Area. In contrast, the cargo throughput of Chinese Taipei's ports increased by 2.15 percent year-on-year to 739 million tons in 2018, second only to the 748 million tons in 2014, which is the second highest over the years. Specifically, Kaohsiung Port ranked first in cargo throughput, up by 1.98 percent year-on-year to 459 million t, accounting for 61.9 percent of the total cargo throughput in Chinese Taipei. Taichung Port, Taipei Port and Keelung Port ranked second, third and fourth with 129 million, 75 million, and 62 million tons of cargo throughput, respectively.
In 2018, the cargo throughput growth of China's major ports declined by 2.12 percentage points year-on-year as a result of a series of negative impacts such as the enhancing downside pressure of economic performance, the continuing slowdown in investment and consumption and the Sino-U.S. trade frictions. The growth rates of throughputs for domestic trade and foreign trade both fell, by 1.05 and 2.18 percentage points year-on-year, respectively, to 6.1 percent and 4.2 percent. As far as cargo type is concerned, natural gas imports in 2018 continued the high growth as China tightened up its domestic environmental protection policies, with 90.385 million tons of natural gas imported in the year, an increase of 31.9 percent year-on-year. Grain-wise, soybeans and cereals imports and exports were impaired by the Sino-U.S. trade frictions, and China's grain throughput for foreign trade at ports grew slower, with 100 million tons of grain for foreign trade handled in the year, down by 6.6 percent year-on-year. Specifically, soybean imports stood at 88.031 million tons, down by 7.9 percent year-on-year. Cereals and cereal flour imports stood at 20.469 million tons, down by 20.0 percent year-on-year. Meanwhile, as a result of the anti-dumping measures imposed on China-exported steel products by developed economies such as the European Union and the United States, China's port steel exports in 2018 registered 69.336 million tons, down by 8.1 percent year-on-year.
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Data source: General Administration of Customs of the People's Republic of China
Figure 3-7 Throughputs and Growth Rates of Cargoes for Domestic and Foreign Trades of China's Ports in 2014-2018
Note: * indicates projections.
Figure 3-8 Cargo Throughputs and Growth Rates of Major Ports in Asia-Pacific Economies in 2017 and 2018
In 2018, despite the strong economic growth in the United States, the manufacturing PMI, the State Street Investor Confidence Index (SSIC), and the Personal Consumption Expenditures (PCE) index all stayed high. However, with the uncertainty in economic policies increasing and the negative effects of tariff hike on trade surfacing, most major ports in the U.S. posted dramatic declines in production growth. Specifically, the Port of South Louisiana was severely affected by the Sino-U.S. trade frictions. The throughputs of major taxable cargoes including
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2018 APEC Port Development Report www.apecpsn.org 62 chemicals, soybeans and steel all experienced drop of different degrees. Its port cargo throughput fell by 1.55 percent year-on-year to 303.1 million tons. Port of Tacoma-Seattle benefited from the increases in sundries throughput and automobile throughput brought by the new ro-ro terminal facilities in the southern port area and enjoyed cargo throughput growth of 9.5 percent year-on-year against the trend to 30.17 million tons. Due to the North American Free Trade Agreement and the continuous plunge in international crude oil prices, the throughput growth rates of major ports in Canada declined, especially the Port of Halifax where the throughput growth slumped to -4.79 percent from its peak of 12.33 percent last year. The Port of Vancouver benefited from strong global demand for Canadian cereals, special crops and other agricultural products, with its cargo throughput reaching a record 147 million tons, up by 3.5 percent year-on-year. The export volumes of potash fertilizers, canola products and barley also set new records in 2018.
Southeast Asian economy grew rapidly in 2018. Major economies such as Malaysia, Indonesia, Viet Nam and the Philippines all recorded higher than 5 percent of economic growth rates. Benefiting from China-proposed "Belt and Road" Initiative, the trade values between ASEAN economies and China reached new highs in 2018. The growth rates of import and export trade of major Southeast Asian economies such as Malaysia, Singapore and Indonesia were all above 10 percent. However, the Euro Zone economic recovery slowdown led to a decline in freight volumes on Asia- Europe routes, resulting in slower cargo throughput growth of Southeast Asian ports which are the major transshipment ports on Asia-Europe routes. Port of Singapore was the most affected, with its cargo throughput growth tumbling by nearly 5 percentage points from that in 2017. In addition, DP World announced in September 2017 that it will not renew its contract with the Surabaya Container Terminal (TPS) in Port of Tanjung Pella, Indonesia, and the throughput of Port of Tanjung Pella plummeted by 28 percent as a result. The cargo throughput of Indonesian ports also fell sharply. In contrast, Viet Nam's ports delivered eye-catching performance. In 2018, Viet Nam's economic growth reached as high as 7.08 percent, and both its imports and exports grew, with the exports up by 13.8 percent, and the imports by 11.5 percent. As a result, the cargo throughput growth of Vietnamese ports is expected to top the Asia-Pacific economies. Among major cargoes for import and export, Viet Nam's steel exports increased by the widest margin, 33.5 percent year- on-year to 6.3 million tons. The increased steel exports mostly went to the United States, Thailand and Cambodia.
Japan's export orders were sluggish as a result of the weak overseas demand for Japanese manufacturing products, coupled with the frequent natural disasters and low output because of raw materials shortage. Major Japanese ports failed to maintain the growth last year in terms of cargo throughput, and the year-on- year growth again turned negative. The growth of ports in Korea declined a little compared with that in the last year but was still higher than the average level in the past five years. Among the various cargo types, liquefied petroleum gas and natural gas, wood and food such as sugar enjoyed significant growth, which greatly boosted the throughput of Korea. But the throughputs of sand and steel slumped, with the former slipping by 51 percent, crippling further increase in throughput growth.
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The cargo throughput growth of Russian ports was primarily contributed by ports in the Far East headed by Vladivostok which witnessed its cargo turnover rising by 4.6 percent in 2018. Besides, Russian coal production and exports in 2018 both reached a high since 2013. As a result, the coal throughput of Russian ports recorded rapid growth higher than 7 percent. The cargo throughput of Australian ports increased slightly, but gaps between the ports widened. Specifically, the Port of Hedland was negatively affected by the declining iron ore exports from China, with its cargo throughput growth slowing down by 1.8 percentage points year-on-year. The Port of Hay Point, boosted by the robust growth of steam coal exports to India, recorded 8.6 percent of year-on-year growth in cargo throughput, reversing the negative growth trend of last year.
3. Rankings of top 30 ports in the Asia-Pacific region in terms of cargo throughput
The competition among the Asia-Pacific ports was intensified in 2018 with significant changes in port rankings. The top 30 ports in the Asia-Pacific region recorded a total cargo throughput of 11.99 billion tons, rising by 3.3 percent year-on-year. Specifically, the cumulative cargo throughput of the top 10 ports reached 6.26 billion tons, accounting for 52.2 percent of the total cargo throughput of the top 30 ports. The total throughput of the top 10 ports increased by 3 percent year-on-year, which was slightly lower than the growth rate of the total throughput of the top 30 ports. Among the top 30 ports in the Asia-Pacific region ranked by cargo throughput, 19 ports were in China, four in Japan and Korea, three in the United States, and two each in Australia and Southeast Asia.
In the ranked Chinese ports, Ningbo-Zhoushan Port maintained strong growth and topped the world with more than 1 billion tons of throughput. The robust growth can be ascribed to growth of mineral building materials, iron ore and ro-ro cargoes, which were 27 percent, 9 percent and 20 percent, respectively. Tangshan Port, with its 11.15 percent growth, surpassed Suzhou Port and Guangzhou Port, as well as the Port of Singapore that suffered weak throughput growth, becoming one of the top three ports in the world. Yantai Port and Rizhao Port also demonstrated remarkable growth in throughput. The latter was primarily boosted by its newly build terminals and the huge amount of oil bulks from oil pipelines, while the former was boosted by the growing bauxite trade with Guinea and the stable growth of crude oil throughput. On the other hand, the environmental policies limited the coal and mineral transferring operations on the Yangtze River, greatly reducing the coal and ore throughputs. As a result, the cargo throughput of Suzhou Port tumbled by as much as 11.96 percent, with its spot falling by three places. Hong Kong Port also fell by two places in the ranking because of the sharp decline in throughput by 8.17 percent.
Emerging markets augmented their trade values with the Korean market and the throughput of cargoes for transshipment also soared. As a result, the Port of Busan saw its cargo throughput rising by 14.97 percent to 460 million tons, with cargoes for transshipment accounting for 52.9 percent, and the port's ranking rose by three
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2018 APEC Port Development Report www.apecpsn.org 64 places. Port of Gwangyang and Port of Ulsan, however, witnessed flat rankings with their year-on-year growth rates going up a little, driven by their bulks throughput improvement. The Port of Nagoya in Japan continued its sluggish throughput growth, and rose by one place on the list, surpassing the Port of Los Angeles in the U.S., which suffered negative growth, by a slim margin. The rankings of ports in the U.S. and Australia remained basically unchanged.
Table 3-3 Rankings of Top 30 Ports in the Asia-Pacific Region in 2018 in Terms of Cargo Throughput (Unit: 1,000 tons)
Ranking Growth Port Economy 2018 2017 2018 2017 Trend Rate
Ningbo- 1 1 ← China 1084390 1007110 7.67% Zhoushan
2 2 ← Shanghai China 730480 750500 -2.67%
3 6 ↑ Tangshan China 637100 573200 11.15%
4 3 ↓ Singapore Singapore 630130 626170 0.63%
5 5 ← Guangzhou China 613130 589000 4.10%
6 7 ↑ Qingdao China 542000 513140 5.62%
7 4 ↓ Suzhou China 532270 604560 -11.96%
8 8 ← Headland Australia 517990 505330 2.51%
9 9 ← Tianjin China 507740 500560 1.43%
10 10 ← Dalian China 467840 455170 2.78%
11 14 ↑ Busan Korea 461550 401450 14.97%
Chinese 12 11 ↓ Kaohsiung 458930 450040 1.98% Taipei
13 13 ← Yantai China 443080 400580 10.61%
14 12 ↓ Rizhao China 438000 407000 7.62%
15 15 ← Yingkou* China 370010 362670 2.02%
South United 16 16 ← 303100 307860 -1.55% Louisiana States
17 17 ← Gwangyang Korea 301920 291830 3.46%
18 19 ↑ Zhanjiang China 301880 281520 7.23%
19 20 ↑ Huanghua China 287710 270280 6.45%
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Hong Kong, 20 18 ↓ Hong Kong 258540 281550 -8.17% China
21 22 ↑ Shenzhen China 249810 240970 3.67%
22 23 ↑ Lianyungang China 235560 228400 3.13%
23 24 ↑ Port Kelang* Malaysia 231470 211640 9.37%
24 21 ↓ Qinhuangdao China 231160 245230 -5.74%
25 25 ← Xiamen China 217200 210460 3.20%
26 26 ← Ulsan Korea 202780 202360 0.21%
27 28 ↑ Nagoya Japan 196520 195970 0.28%
United 28 27 ↓ Los Angeles 194500 198100 -1.82% States
United 29 29 ← Long Beach 179650 173210 3.72% States
30 30 ← Newcastle Australia 165070 167030 -1.17%
Note: ↑ indicates upward movement, ↓ indicates downward movement, and ← indicates no change; * indicates projections. Data source: Official websites of various ports
3.2.2 Container throughput growth
1. Global port container throughput showed steady growth
In 2018, container throughputs around the globe maintained positive growth overall, yet the growth rates were lower than those of last year to varied degrees. Region specific, North America and the Oceania were the fastest growing regions in terms of container throughput; Euro Zone and Asia outperformed the global average in container throughput growth; Latin America and Africa witnessed sluggish container growth; most ports in the world presented mild growth. The container throughputs at Asian and the Euro Zone ports kept growing, primarily as a result of the burgeoning imports and exports between China and emerging economies such as Malaysia, Viet Nam and Russia, as well as the closer ties between ASEAN and EU in trade investment and cooperation. Currently, China has maintained its position as the biggest trader partner of ASEAN for 10 years in a row, and EU has become the biggest source of investment for ASEAN. In the Americas, the U.S., Canada and Mexico recorded declining container throughput growth as a result of the trade frictions, but their growth rates remained high. Emerging economies in Latin America were clouded by devaluation of the currency, with their container throughputs stagnant. Benefiting from China's increased infrastructure investment and the economic pull from the increasingly brisk trade activities between China and Africa, the port throughputs in Africa resumed positive growth.
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2018 APEC Port Development Report www.apecpsn.org 66 Note: * indicates projections. Data source: Drewry
Figure 3-9 Container Throughputs and Growth Rates of Global Ports in 2006-2018
Note: * indicates projections. Data source: Drewry
Figure 3-10 Container Throughput Growth of Ports in Various Regions from 2012 to 2018
2. Container throughput growth of Asia-Pacific ports slowed
In 2018, major ports in the Asia-Pacific region accomplished a total container throughput of 460 million TEUs, a year-on-year growth rate of 4.5 percent, lower than the 6.3 percent in 2017. The growth rate was basically equal to that of global port container throughput.
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In 2018, the sluggish global trade and weak domestic demand led to slower growth in container throughput at China's ports. In particular, container shipping for foreign trade grew by mere 2.9 percent, while the container throughput for domestic trade sustained its robust growth at 9.2 percent year-on-year. Some ports adopted "bulk-to-container" handling mode for coal and some other cargoes to meet the requirements of environmental protection policies. Besides, the rapid development of railway-water multimodal transport in China was also another major driver for the robust growth of containers for domestic trade in China. Meanwhile, the increased uncertainties in the external environment as the Sino-U.S. trade frictions went beyond expectations in terms of scope and implication also impacted the container throughput growth in China to some extent. However, as most of the products that the U.S. levied tariffs against were technical or capital-intensive ones, and China had a large base number in container throughput, the implications were not that severe in the quantitative sense. Region-specific, the Bohai-Rim area achieved marginal growth, the Yangtze River Delta area remained a dominant point of growth for container throughput, and the Pearl River Delta area witnessed greatly varied container throughputs.
In 2018, the container throughput of Port in Hong Kong, China again declined. As Hong Kong Port comes under-pressure from the increasingly competitive ports in China and its neighboring regions, the role of Hong Kong, China as a transshipment hub comes under cloud. Coupled with its high cost and long-standing undersupply of berths and back-up land, Hong Kong, China is losing its competitive edges. Kaohsiung Port in Chinese Taipei overcame recession last year and enjoyed a slight rise in container throughput. However, after the restructuring of the three major shipping alliances, some container ships that used to call at Kaohsiung Port after they departed from Southeast Asian ports for transshipment now directly go to North America, therefore the container throughput at Kaohsiung Port went down. In addition, with the booming ports in China also posing a challenge in the contention for cargo sources, the container throughput growth at Kaohsiung Port remained weak.
In 2018, the enhanced trade opening in developing economies such as the ASEAN secured the high container throughput growth of Southeast Asian ports. However, the container throughputs of major ports in Viet Nam, Thailand and the Philippines fell to varied degrees. Among major ports in Malaysia, Port Kelang failed to push aside the shade of ceding the control of transshipment cargoes in 2017. As most lines now put Port of Tanjung Pelepas and Port of Singapore as hub ports in the Straits of Malacca, the Port Kelang only recorded 0.42 percent of year-on- year container throughput growth to 12.03 million TEUs in 2018. Port Kelang's performance formed a sharp contrast to its major rivals of Port of Singapore and Port of Tanjung Pelepas. Container throughput at the Port of Singapore rose by 8.96 percent to 36.6 million TEUs from the same period last year. Port of Tanjung Palapas benefited from increased investment in port infrastructure, while the opening of the logistics hub of the Tanjung Palapas Free Trade Zone (PTP) attracted more goods to the port, with container throughput up by 6.4 percent year-on-year to 8.79
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2018 APEC Port Development Report www.apecpsn.org 68 million TEUs.
The economic depression, declining manufacturing performance and weak demand for domestic and foreign consumption dragged down the container throughputs of major ports in Japan, leaving only the Port of Tokyo to enjoy sound growth. Korean ports welcomed strong growth in container throughput, with the growth rate 4.3 percentage points higher than that last year. Port of Busan, the largest port in Korea, handled 21.59 million TEUs of containers, rising by 5.48 percent year-on-year. Its transshipment container throughput hit 11.38 million TEUs in the year, surging by 10.69 percent year-on-year. At present, the transshipment container throughput constitutes 53 percent of all container throughput at Port of Busan, making the port the largest container transshipment center in the world.
In 2018, the container trade growth in the U.S. outperformed the nation's GDP growth by around 1.8 times, with the imported containers in the U.S. hitting a record high of 21.6 million TEUs. This was primarily because many importers sped up all of their orders from apparel to auto parts to avoid higher tariffs from the escalating trade frictions. All the top 10 ports in North America, except the Port of Balboa, all witnessed positive growth in container throughput. The Port of Long Beach, Port of New York-New Jersey and Port of Savannah all enjoyed growth rates higher than 7.0 percent. The container throughput of Port of Long Beach exceeded 8 million TEUs for the first time, primarily contributed by the improved port infrastructure and advanced shipment of cargoes before the imposition of new tariffs. Port of Los Angeles in its neighborhood recorded 9.46 million TEUs of container throughput as the busiest port in North America, hitting a 111-year high since the port's opening.
Table 3-4 Container Throughputs and Growth Rates at Ports in the Asia-Pacific Region in 2018 (Unit: 1,000 TEUs)
Port 2017 2018 Growth Growth Throughput Throughput Rate Rate Major Ports in China 216480 7.83% 226700 4.72% Port of Hong Kong, China 20755 5.73% 19590 -5.61% Major Ports in Chinese 14910 0.27% 15090 1.18% Taipei Major Ports in Japan 16000 5.06% 16420 2.65% Seaports in Viet Nam* 11090 7.97% 11970 2.42% Major Seaports in Thailand 9280 6.30% 9560 3.02% Major Ports in Malaysia* 23730 -3.54% 24480 3.15% Port of Singapore 33670 8.96% 36600 8.70%
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Major Ports in the 7060 9.97% 7540 6.80% Philippines Major Ports in Korea 27470 5.61% 28970 5.46% Major Ports in the U.S. 43625 6.87% 45750 4.87% Major Ports in Canada 6267 11.91% 6660 6.27% Major Ports in Australia 7230 4.78% 7650 5.77% Port of Veracruz in Mexico 1120 15.46% 1180 5.36% Port of Valparaiso in Chile* 890 1.14% 1040 16.85%
Note: Statistics for major ports included in the economies in table can be found in Table 3-5. * indicates projections. Data source: Official websites of various ports or port associations in various economies
Table 3-5 Major Container Ports for Statistics Included in Asia-Pacific Economies
Economy Major Ports for Statistics Shanghai, Shenzhen, Ningbo-Zhoushan, Guangzhou, Qingdao, Tianjin, Xiamen, Dalian, Yingkou, Suzhou, Lianyungang, Foshan, China Nanjing, Rizhao, Yantai, Fuzhou, Quanzhou, Dandong, Tangshan, Beibu Gulf, Zhuhai, Haikou, Jiaxing, Zhongshan, Shantou, Weihai, Zhanjiang, Wenzhou Chinese Kaohsiung, Taichung, Taipei, Keelung Taipei Japan Yokohama, Tokyo, Nagoya, Osaka, Shimizu, Kobe Thailand Laem Chabang, Bangkok Kelang, Tanjung Pelepas, Penang Pulau, Johore, Kuantan, Bintulu, Malaysia Kuching, Miri, Rajang, Sabah The Manila, Southern Luzon, Visayas, Mindanao Philippines Korea Busan, Incheon, Gwangyang, Pyeongtaek-Dangjin Los Angeles, Long Beach, New York & New Jersey, Savannah, Major Ports Tacoma-Seattle, Auckland, Virginia, Houston, Charleston, Kinston, in the U.S. Baltimore Major Ports Vancouver, Montreal, Prince Rupert, Halifax in Canada Australia Melbourne, Sydney, Brisbane, Fremantle
Data source: Official websites of various ports or port associations in various economies
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2018 APEC Port Development Report www.apecpsn.org 70 Figure 3-11 Container Throughputs and Growth Rates at Major Ports in Asia-Pacific Economies in 2018 and 2017
Figure 3-12 Container Throughputs and Growth Rates of Top 10 Container Ports in China in 2017 and 2018
Note: * indicates projections. Data source: Official websites of various ports
3. Rankings of top 30 ports in the Asia-Pacific region in terms of container throughput
In 2018, the top 30 ports in Asia-Pacific economies registered 367 million TEUs of container throughput, an increase of about 4.7 percent year-on-year, the rate being 1.4 percentage points lower than the 6.1 percent in 2017. Among the top 30 container ports in the Asia-Pacific region, China-based ports accounted for more than half, or 17 in total in China, while the U.S. saw five, Southeast Asia also five, and Japan, Korea and Canada one each.
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Among the top 10 ports, Shanghai Port remained unrivalled with more than 40 million TEUs of throughput, but its growth rate slowed down compared with the strong growth of 8.4 percent last year. A main cause is the plummeting growth of containers for domestic trade. Ningbo-Zhoushan Port ranked second in the nation and marched into the world's top three for the first time, primarily contributed by the rapid growth of its foreign trade business and its strengthened business cooperation with 2M, OCEAN, THE and other shipping alliances in route layout and hinterland expansion. Rankings of ports in the Pearl River Delta area were greatly changed. Shenzhen Port presented weak growth suffering from the decline in domestic-trade container throughput, with its ranking falling by one place. The container throughput of Hong Kong Port has fallen in recent years under the competition from ports in the Greater Bay Area in mainland China. Besides, the port's throughput on routes leading to the U.S. was also negatively impacted by the Sino-U.S. trade frictions, and China's containers transshipped through Hong Kong Port plummeted, making Hong Kong Port the only port on the list to suffer negative growth, and its ranking fell from the sixth to the seventh. Guangzhou Port benefited from the strong domestic- trade container growth as a result of integration of port resource and demonstrated outstanding growth in container throughput. It surpassed Port of Busan and Hong Kong Port to become the fifth on the list. Throughputs of Port of Singapore, Port of Busan, Qingdao Port and Tianjin Port grew steadily and their rankings remained unchanged.
The ports on the last 15 places on the list were in particularly fierce competition, with their rankings changing greatly. Most ports in the U.S. demonstrated outstanding performance. Port of Long Beach, New York-New Jersey Port and Port of Savannah enjoyed booming container throughput growth of higher than 7 percent, with Port of Long Beach surpassing Port of Laem Chabang on the list by a slim margin. Production of Port of Tokyo rose by a double-digit rate against the trend and climbed by two places on the list as the Port of Manila and Lianyungang Port suffered slow container throughput growth. The newly opened Southeast Asian container liner route of Rizhao Port refreshed the exported container volume record for three times in a row, mirroring the strong container throughput growth. The port jumped by three places on the list with as high as 24.07 percent of growth. Foshan Port, Port of Tacoma-Seattle and Port of Vancouver moved downward by one place each. Nanjing Port fell behind Fuzhou Port which recorded 12.86 percent of growth as a result of its weaker growth than Foshan Port.
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2018 APEC Port Development Report www.apecpsn.org 72 Table 3-6 Rankings of Top 30 Ports in the Asia-Pacific Region in 2018 in Terms of Container Throughput (Unit: 1,000 TEUs)
Ranking Growth Port Economy 2018 2017 2018 2017 Trend Rate 1 1 ← Shanghai China 42010 40230 4.42% 2 2 ← Singapore Singapore 36600 33670 8.70% Ningbo- 3 4 ↑ China 26350 24610 7.07% Zhoushan 4 3 ↓ Shenzhen China 25740 25210 2.10% 5 7 ↑ Guangzhou China 21920 20370 7.61% 6 5 ↓ Busan Korea 21590 20470 5.48% Hong 7 6 ↓ Hong Kong Kong, 19590 20760 -5.61% China 8 8 ← Qingdao China 19320 18300 5.57% 9 9 ← Tianjin China 16010 15070 6.24% 10 10 ← Port Kelang* Malaysia 12030 11980 0.42% 11 11 ← Xiamen China 10700 10380 3.08%
Chinese 12 12 ← Kaohsiung 10450 10270 1.71% Taipei
13 13 ← Dalian China 9770 9710 0.62%
United 14 14 ← Los Angeles 9460 9340 1.28% States
Tanjung 15 15 ← Malaysia 8790 8260 6.42% Pelepas*
United 16 17 ↑ Long Beach 8090 7540 7.29% States
Laem 17 16 ↓ Thailand 8070 7780 3.73% Chabang
New York- United 18 18 ← 7180 6710 7.00% New Jersey States
19 19 ← Yingkou* China 6490 6270 3.51%
20 20 ← Suzhou China 6360 5880 8.16%
21 23 ↑ Tokyo* Japan 5080 4500 12.97%
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The 22 21 ↓ Port of Manila 5050 4830 4.55% Philippines
23 22 ↓ Lianyungang China 4760 4710 1.14%
United 24 24 ← Savannah 4350 4050 7.41% States
25 28 ↑ Rizhao China 4020 3240 24.07%
26 25 ↓ Foshan* China 3960 3910 1.24%
Tacoma- United 27 26 ↓ 3800 3670 3.68% Seattle States
28 27 ↓ Vancouver Canada 3400 3250 4.51%
29 30 ↑ Fuzhou* China 3360 2980 12.86%
30 29 ↓ Nanjing China 3230 3170 1.97%
Note: ↑ indicates upward movement, ↓ indicates downward movement, and ← indicates no change. Data source: Official websites of various ports
3.2.3 Major bulk throughput growth
The major bulks throughput in the world continued the slow growth in 2018. Hampered by the downside trend of international dry bulk shipping market, major dry bulk cargo ports in the world faced slow or negative growth in cargo throughput. Specifically, the Port of Singapore gradually shifted its dry bulk cargoes and other low-value-added cargo categories to ports around Southeast Asia as a result of its port business transformation and environmental protection effort, and its dry bulk cargo throughput in 2018 declined dramatically by 9.4 percent. The throughputs of Port of Hedland and Port of Hay Point in Australia faithfully reflected the iron ore and coal export trade performance in Australia in 2018. The throughput growth of Port of Hedland slipped by nearly 1.5 percentage points year-on-year as a result of the slower growth of iron ore trade in the country, while Port of Hay Point rode on the tailwind of the against-the-trend rise of Australia's coal exports and recorded as high as 8.6 percent of throughput growth year-on-year. Port of Rotterdam’s dry bulk cargo throughput dropped by 3.2 percent as a result of the steel demand stagnation from blast furnace renovation in the steel plants in the port's industrial zone, as well as the shift of bulk grain business to the Port of Amsterdam. Soybean exports enhancement was the major driver of dry bulk cargo throughput growth of Brazilian ports. According to statistics, China's soybean imports from Brazil in 2018 accounted for 75.1 percent of all soybean imports of China during the same period. This enabled Brazilian ports to welcome 8.6 percent of dry bulk cargo throughput growth against the slowdown of iron ore exports growth.
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2018 APEC Port Development Report www.apecpsn.org 74 In terms of liquid bulks, the international oil prices were on a rise in the first half of the year. However, the Brent crude oil and WTI crude oil prices plunged by more than US$30 into July, because of the oversupply of crude oil in the market from the cancellation of the OPEC supply cuts and the rising shale oil output in the U.S., coupled with the slower economic growth in most economies in 2018 and the resulting spread of pessimism toward the market. The rising U.S. dollars also curbed the pickup of oil price. As a result, the global crude oil shipping volume grew slower in 2018 at 1.0 percent, 2.2 percentage points slower year-on-year.
1. Iron ore throughput growth rates of major ports in the Asia-Pacific region varied
The iron ore trade market in the Asia-Pacific region in 2018 was bleak with the iron ore shipping volume increasing by mere 0.2 percent throughout the year. On the supply side, among the major iron ore exporters, India's iron ore exports plunged by 56.8 percent in 2018 due to a moratorium on mining in Goa, the country's largest producer of iron ore, which has been boosted by strong domestic steel demand and a significant reduction in import tariffs Brazil had been hoping to expand its global share in iron ore exports through the larger vessel campaign, yet the move proved to be less than effective. In contrast, Australia demonstrated more growth in iron ore exports. Despite a decline in its iron ore exports to China, the export growth to other regions managed to secure a 3.3 percent iron ore exports growth rate. Among major iron ore importers, China’s iron ore inventory stayed high and the demand for imported iron ores fell as the nation advanced the environmental protection policies and supply-side reform and the iron ore imports hit record highs in 2017. As a result, China’s iron ore imports declined by 0.6 percent year-on-year, the first negative growth in the past nine years. Japan’s iron ore imports fell by 0.8 percent year-on- year for the fourth consecutive year because of its economic downturn and recession of domestic industries.
Note: * indicates projections. Data source: Clarksons
Figure 3-13 Iron Ore Exports of Major Iron Ore Exporters in the Asia-Pacific Region in 2012-2018
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Data source: Clarksons
Figure 3-14 Iron Ore Imports Growth of Major Iron Ore Importers in the Asia-Pacific Region in 2012-2018
Among the major iron ore handling ports in the Asia-Pacific region, Port of Hedland recorded a year-on-year growth rate of 2.3 percent, down by 1 percentage point, as a result of the slower iron ore exports growth in Australia. Boosted by the continuous progress of the major bulks trading center, Ningbo-Zhoushan Port registered 9.7 percent year-on-year growth of iron ore throughput, surpassing Tangshan Port to become the biggest iron ore handling port. The tightened environmental protection policies in Hebei province and the resulting cargo accumulation at ports in North China contributed to the plunge, namely 14.1 percent year-on-year, of iron ore throughput at Tangshan Port. Rizhao Port has received bulk cargo transfer from surrounding ports, and the construction of Rizhao International Iron Ore Distribution Center has brought a high demand for iron ore which increased by 22.5 percent year-on-year. Qingdao Port, however, suffered a year-on-year decline of 4.9 percent in iron ore throughput because of the continuing iron ore output trim of Vale in Brazil. Port of Pohang in Korea enjoyed 6.4 percent of iron ore throughput growth due to the expansion and renovation of No. 3 blast furnace of Pohang Iron and Steel Company and the increased iron ore demand from production expansion. The iron ore throughputs of Port of Gwangyang and Port of Pyeongtaek-Dangjin stayed flat with 2017 as no significant points of growth were in sight. The Port of Nagoya in Japan suffered 6.5 percent decline in iron ore throughput because of the drop in iron ore imports by Japan.
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2018 APEC Port Development Report www.apecpsn.org 76 Data source: Official websites of various ports.
Figure 3-15 Iron Ore Throughputs and Growth Rates of Major Iron Ore Handling Ports in the Asia-Pacific Region
2. Coal throughputs at major ports in the Asia-Pacific region showed faltering growth overall
The coal trade in the Asia-Pacific region in 2018 presented a downtrend. On the demand side, the boom of clean energy sources suppressed the demand for coal in Japan and Korea amid the global trend of coal abandonment. The marine imports of coal in Japan and Korea stalled. However, the coal demand from developing economies headed by China remained high. China's imports of marine shipping coal rose by 6 percent year-on-year, but the growth rate was nearly 3 percentage points lower year-on-year. The main reason is that China's scrap steel has entered the self-circulating stage, cutting the imports of coking coal. The brisk power generation demand in Southeast Asia also pulled the growth in steam coal imports from the world. India's coal imports were expected to increase by 7.4 percent for similar reasons: the brisk coal demand and the reduced domestic supply. On the supply side, following Indonesia's rise as the world's top coal exporter in place of Australia, its coal exports have been on a stable rise. Driven by China's soaring coal imports, Indonesia's coal exports in 2018 grew by 7.0 percent. Australia's coal exports to China declined, yet its coal exports grew by 3.0 percent year-on-year as Australian government continued a hard-line policy toward coal production and exports in spite of the initiatives in Paris Agreement. In addition, the U.S. restored its steam coal exports pace gradually to become an important steam coal exporter in the world.
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Note: * indicates projections. Data source: Clarksons
Figure 3-16 Coal Export Growth Rates of Major Coal Exporting Economies in the Asia-Pacific Region in 2012-2018
Note: * indicates projections.
Data source: Clarksons
Figure 3-17 Coal Import Growth Rates of Major Coal Importing Economies in the Asia-Pacific Region in 2012-2018
Among major coal handling ports in the Asia-Pacific region, the coal throughput of Qinhuangdao Port in China tumbled by 4.1 percent year-on-year as a result of the environmental protection policies that limited production. Tangshan Port’s coal throughput rose by 45.9 percent year-on-year, primarily contributed by its Caofeidian Port Area which officially launched the international freight trains from Caofeidian Port to Ulan Bator, creating new points of growth for the port area. Besides, the resource integration of ports in Hebei province encouraged the transfer of cargoes such as coal to Caofeidian Port Area, which also formed a new driver for coal throughput growth at Tangshan Port. On the other hand, Tianjin Port was negatively
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2018 APEC Port Development Report www.apecpsn.org 78 affected by these factors, including the cargo category restructuring, the gradual transfer of coal and other bulks to Tangshan Port and Qinhuangdao Port among others, and the ban on vehicle-shipping of coal, with its coal throughput dropping by 14.0 percent year-on-year. Huanghua Port maintained flat performance in throughput year-on-year. Boosted by the against-the-trend growth of coal exports in Australia, especially the strong growth of steam coal exports to India, Port of Hay Point, the largest coal handling port in Australia, witnessed a high growth rate of 8.6 percent.
Data source: Official websites of various ports
Figure 3-18 Coal Throughputs of Major Coal Handling Ports in the Asia-Pacific Region
3. Liquid bulk cargo throughput of major ports in the Asia-Pacific region grew slightly
As the U.S. reintroduced sanctions against Iran in 2018, the global crude oil supply landscape changed dramatically, with the geopolitics playing an increasingly greater role in the crude oil market. The U.S., Saudi Arabia and Russia became three major oil producers controlling over one third of crude oil supplies in the world. As the shale oil output in the U.S. climbed and the U.S.' political clout in the Middle East expanded, the OPEC's sway in the oil market shrank. Since the beginning of 2018, the global crude oil supply has improved against the continuous production cut of oil producers and geopolitical tensions. In the second half of 2018, the global crude oil supply turned to oversupply from undersupply in the first half due to the push by the three major oil producers. On the demand side, the global demand for crude oil highly coincided with the global economic trend. Amid the economic slowdown, it was hard to find new points for crude oil demand. The increased crude oil demand in 2018 was primarily from Asian countries including China and India and other emerging and developing economies.
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Among major liquid bulks handling ports in the Asia-Pacific region, China continued to hold the status as the world's largest oil importer, with its crude oil imports increasing by 10.1 percent year-on-year to 461.9 million tons. On the one hand, the independent importing policies for local oil refineries continued to wield influence. A total of around 30 independent oil refineries have obtained or are applying for the rights to use and import crude oil, with the capacity adding up to 114 million tons. It is estimated that the usage quota of imported crude oil will total 100 million tons, close to one third of China's current crude oil imports, which has spurred the demand for crude oil. On the other hand, price advantage of imported crude oil as a result of the plunging crude oil price in the second half of the year also boosted the rapid growth. Specifically, the crude oil imports in December alone rose by 29.9 percent, hitting a record high in the past three years, which was directly related to the U.S.' exemptions to China to import oil from Iran. The shale oil output in the U.S. increased, with its daily output even once surpassing that of Russia and Saudi Arabia. The crude oil exports hence were greatly elevated, making the U.S. a pillar supplier of oil in the world market. In Canada, another oil exporter, a steep fall in oil prices in 2018 had adverse implications on its oil sector, a pillar industry in the country, and thus also dealt a blow to its national economy. Alberta, a major oil producing base in Canada, also adopted crude oil production trim plans to cope with the reduced profit from oil price plunge. As a result, prices of Canadian heavy crude oil soared, leading to a fall in export volumes of crude oil.
3.2.4 Development of top 10 container ports
1. Shanghai Port
Shanghai Port continued to break records in the global container shipping history, securing its first place for nine years in a row. In 2018, the container throughput of Shanghai Port rose by 4.42 percent year-on-year to 42.01 million TEUs, the growth rate being nearly 4 percentage points lower than that last year, primarily because of the dramatic decline in containers for domestic trade. As Shanghai Port had a large base number in container throughput, and limited terminal and coastline resources for containers, the port was running under high load. The port is expected to see slower container throughput growth to some extent but increasing volumes of containers for international transshipment. In terms of port production, the Yangshan Automated Terminal of Shanghai Port is leading the production enhancement and development acceleration of the port. A total of seven container berths were built in Phase IV of Yangshan Terminal, with the coastline extending 2,350 meters in total. The terminal is currently the world's largest automated container terminal that features one-off establishment and owns completely independent intellectual property rights. Since its trial production on Dec 20, 2017, the Phase IV of Yangshan Terminal has received more than 600 ships/times for trunk routes and more than 3,200 ships/times for feeder routes. During the trial production, 16 gantry cranes, 88 rail-mounted gantry cranes and 80 automated guided vehicles (AGV) were put into production, delivering an annual capacity of 4 million TEUs, with the peak throughput at the terminal per day-night reaching 14,451 TEUs. In terms of terminal
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2018 APEC Port Development Report www.apecpsn.org 80 operation, Shanghai Port and Dafeng Port in Yancheng jointly established a joint- venture in container terminal handling in March 2018 to implement the requirements for integrated development of the Yangtze River Delta. The port acts as a core hub for cargo collection and outbound shipping in North and central Jiangsu areas, and a key feeder port for the coastal areas on the north of Shanghai Port. The move has greatly enhanced the water-water transit volume.
2. Port of Singapore
Port of Singapore is the world's busiest port, one of major transshipment ports in Asia, the third largest oil refining and trading center, the largest oil rig manufacturer and ship repair base, and the world's largest logistics hub and fuel supply port. At present, the port is connected to more than 600 ports in 123 economies in the world by 250 shipping routes. The cargo throughput and container throughput of the port rose steadily boosted by its increasing import and export volumes. In 2018, Port of Singapore handled 36.6 million TEUs of containers, rising by 8.7 percent year- on-year. Ship arrivals totaled 2.79 billion tons, close to the 2.8 billion tons in 2017. Its marine fuels sales approached 50 million tons for the second consecutive year, namely around 49.8 million tons, falling short of the 50.6 million tons in 2017 by a slim margin, securing its status as the world's largest oil supplying port. Singapore is also home to various shipping companies. More than 5,000 marine shipping companies there create more than 170,000 jobs, and the shipping sector contributes around 7 percent of the nation's GDP. In addition, the number of vessels registered in Singapore continues to rank among the top five in the world. In 2018, the tonnage of ships flying Singapore's national flag totaled 90.9 million tons, rising by 2.4 percent year-on-year.
3. Ningbo-Zhoushan Port
In 2018, while maintaining its world's only port recording more than 1 billion tons of throughput, Ningbo-Zhoushan Port’s container throughput crossed 26 million TEUs for the first time, ranking second nationwide and third worldwide with its high growth rate of 7.07 percent. The container throughput growth at the port was primarily a result of its cooperation with the three shipping alliances in shipping route layout and hinterland expansion. As of the end of 2018, Ningbo-Zhoushan Port had 246 shipping routes of varied types, including 120 trunk routes, accounting for nearly 50 percent of its total routes. Relying on the integrated development of seaports in Zhejiang province, Ningbo-Zhoushan Port sped up the advancement of transshipment on feeder routes and sea-river multimodal transport businesses among others. Jiaxing Port, Wenzhou Port, Taizhou Port, Yiwu Port and other feeder ports brought together a large amount of container cargoes for Ningbo-Zhoushan Port, greatly boosting the container throughput growth at the port. In addition, sea- railway multimodal transport business also became an important driver for the container throughput growth at Ningbo-Zhoushan Port. In 2018, Ningbo-Zhoushan Port opened nine sea-railway multimodal transport lines in succession, increasing the frequency of existing trains and opening China's first sea-railway multimodal transport train with double stacks in China, expanding its cargo hinterland to the
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depth of the inland area. Ningbo-Zhoushan Port currently operates seven sea- railway multimodal transport lines with each handling more than 5,000 TEUs of containers per month. The Yiwu train, in particular, achieved a routine monthly volume of more than 10,000 TEUs, and became the largest sea-railway multimodal transport line nationwide. Ningbo-Zhoushan Port handled more than 600,000 TEUs of containers in its sea-railway multimodal transport business throughout the year, rising by more than 50 percent year-on-year.
4. Shenzhen Port
Shenzhen Port is a container hub port in South China. It is now connected by 239 international container shipping routes leading to more than 300 ports in 100-plus economies, with a sound shipping network in place. Besides, Shenzhen Port has eight container berths of 200,000-ton berthing capacity, becoming a top choice for ultra-large container ships in South China. In 2018, the port handled a total of 25.74 million TEUs of containers, rising by 2.1 percent year-on-year, the rate being 2.5percentage points lower than that last year. It was overtaken by Ningbo-Zhoushan Port on the ranking list. Cargoes handled at Shenzhen Port were dominated by those for foreign trade. Foreign-trade containers accounted for more than 93 percent of the total container throughput at the port. Most of the shipping routes of Shenzhen Port lead to the Euro Zone, American and Asian regions, with those routes contributing as much as 80 percent of throughput for the port. It is estimated that one third of Sino-U.S. trade values were handled at Yantian Port of Shenzhen. This also explains the throughput decline of containers for foreign trade at Shenzhen Port compared with 2017, as a result of the Sino-U.S. trade frictions. In "waterway-waterway transit" and "sea-railway multimodal transport" businesses, Shenzhen Port kept striving to make breakthroughs. Currently, highway transport takes 60 percent to 70 percent in the port's cargo lightering business. Waterway transport including lightering and international transshipment account for 25 percent to 30 percent, while sea-railway multimodal transport only accounts for 0.5 percent subject to the lack of supporting hardware facilities in railway services. In "combined port" development, Shenzhen Port has signed combined port agreements with 18 inland river terminals and six inland dry ports. It opened 60 lighter routes (including Hong Kong Port) covering 52 feeder terminals in the Pearl River Delta and 14 sea-railway multimodal transport lines, and operated four inland ports, further strengthening its status as a main hub port in South China.
5. Guangzhou Port
With the cargo source structure in South China increasingly balanced and the exploration in multimodal transport solutions deepening, Guangzhou Port enjoyed soaring strength with its container throughput rising by 7.61 percent year-on-year to 21.92 million TEUs, bringing its ranking up to the fifth place, surpassing the Port of Busan and Hong Kong Port. This was primarily creditable to the robust growth of containers for domestic trade. From January to November 2018, the port handled 12.63 million TEUs of containers for domestic trade, a rise of 9.4 percent year-on- year. However, Guangzhou Port was relatively underperforming in foreign-trade
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2018 APEC Port Development Report www.apecpsn.org 82 container throughput. It still has room to improve in terms of opening more foreign- trade routes, especially those leading to Europe and America. As of the end of 2018, Guangzhou Port was connected to 209 container shipping routes including 103 for foreign-trade ships and 106 for domestic-trade ships. Nansha Port, on the other hand, enjoyed a rising status in the foreign-trade business. In 2018, Nansha Port Area introduced 17 foreign-trade shipping routes. Its container throughput exceeded 15 million TEUs, rising by 7.5 percent year-on-year. In terms of multimodal transport, Guangzhou Port set up multiple dry port offices in inland areas, aiming to combine its strengths in multiple transport modes to extend its hinterland to inland areas. From January to November 2018, Guangzhou Port accomplished 62,000 TEUs of cargo throughput by sea-railway multimodal transport, rising by 19.3 percent year- on-year. In addition, the cargo-distributing railway of the port running through four terminals of Nansha Port will complete construction in 2020. The railway will enable direct operations of cargoes after they arrive at the station, which will facilitate the attraction of inland cargoes sources for Nansha Port.
6. Port of Busan
In 2018, Port of Busan handled 21.59 million TEUs of containers, rising by 5.48 percent year-on-year, the growth rate being flat with that last year. Its transshipment container throughput hit 11.38 million TEUs in the year, surging by 10.69 percent year-on-year. At present, the transshipment container throughput constitutes 53 percent of all container throughput at Port of Busan, making the port one of the largest container transshipment centers in the world. Busan Port Authority introduced several incentive policies with the three shipping alliances as its target to further improve the transshipment volume. In addition, the throughput growth at the Port of Busan was also benefited from the support of SM Line which was established through acquiring some ships and Asian routes, trans-Pacific routes and Asia-U. S. West Coast routes of Hanjin Shipping after the latter's bankruptcy. It is visible that the Port of Busan has gradually stepped out of the shadow of Hanjin Shipping's bankruptcy. It opened 15 new international container shipping routes in 2018 in China, Japan, the Middle East and South America.
7. Hong Kong Port
Hong Kong Port used to be the most important cargo transshipment port in China's Pearl River Delta region and boasted significant advantages, including well- developed terminals, a high number of shipping routes and a location on trunk routes. Most of the cargoes from China's inland hinterland were transshipped in Hong Kong, China. However, the rise of Shenzhen Port and Guangzhou Port in recent years has undermined Hong Kong Port's role as a transshipment port for marine shipping, by virtue of their closer distances to inland economic hinterland and smoother connections. This has created a significant impact on the container throughput growth at Hong Kong Port. This year, Hong Kong Port's container throughput slumped by 5.61 percent year-on-year to 19.59 million TEUs, because of the Sino-U.S. trade tensions, and multinationals' faster pace of transferring production bases to Southeast Asia among other factors. The port's single-month container
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throughput even declined for 11 consecutive months, falling two places to seventh behind Guangzhou Port and Port of Busan on the ranking list. Despite the weaker role as a transshipment hub, Hong Kong Port still enjoyed competitiveness as a free port with its high efficiency and faster customs clearance. 18 port and shipping companies including Guangzhou Shipping Exchange, Hong Kong Shipowners Association, Guangzhou Port Company Limited, Shenzhen Oceanus Group Limited, Zhuhai Port Holdings Limited, and DG Port Group Limited signed a joint initiative for setting up Guangdong-Hong Kong-Macao Greater Bay Area Port and Shipping Alliance which is expected to become a new catalyst for container shipping of Hong Kong Port.
8. Qingdao Port
In 2018, the container throughput of Qingdao Port increased steadily by 5.57 percent year-on-year to 19.32 million TEUs, enjoying a safe lead among ports in North China. At present, Qingdao Port is connected by more than 160 container shipping routes, with more than 70 leading directly to Southeast Asia, the Middle East, the Mediterranean, Europe, Black Sea, Russia, Africa and Australia. Relying on its sea-railway multimodal transport advantages, Qingdao Port has opened more than 42 multimodal transport lines, building up cross-border logistic channels connecting Japan and Korea, Southeast Asia, Central Asia, China and Europe, and China and Mongolia. Based on that, Qingdao Port recently witnessed a sharp rise of import throughput with Shanghai Cooperation Organization (SCO) member states, with its four cross-border sea-railway multimodal transport lines demonstrating double-digit growth in terms of containers. In 2018, the sea-railway multimodal transport of Qingdao Port experienced explosive growth, achieving 1.15 million TEUs of container throughput throughout the year, rising by 48.7 percent year-on- year, making the port the first one to cross the 1 million TEUs mark in sea-railway multimodal transport volume of containers in coastal China. The port ranked first nationwide in terms of sea-railway multimodal transport volume for four consecutive years. The operation efficiency of Qingdao Port's fully-automated container terminal also rose steadily. In October 2018, the terminal handled 7,526 TEUs of containers per day-night, with its gantry cranes handling 1,075 TEUs per day-night per unit on average, and 1,200 TEUs at the maximum, setting a new world record.
9. Tianjin Port
Tianjin Port handled 16.01 million TEUs of containers in 2018, rising by 6.2 percent year-on-year, the rate marking a sharp rise against the 3.9 percent of last year. This was primarily contributed by the steady growth in its coal shipping volume by railway, shipping volume by sea-railway multimodal transport and cross-border shipping volume by the land bridge. Tianjin Port recorded a throughput of domestic-trade containers of 7.97 million TEUs, rising by 13.5 percent year-on-year, safely securing its seat as the second largest port in terms of domestic-trade container throughput. At present, Tianjin Port has eight weekly international routes, covering Europe, the
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2018 APEC Port Development Report www.apecpsn.org 84 Mediterranean coast, West Africa and Southeast Asia among other areas. Seven of them are operated with large ships of higher than 10,000 TEUs, and all of its five European routes are operated with ultra-large ships of 16,000 to 21,000 TEUs.
10. Port Kelang
In 2018, Port Kelang posted weak growth in container throughput, with an expected year-on-year growth of 0.42 percent and throughput of 12.03 million TEUs, primarily due to Port Kelang's loss to Port of Singapore in the transshipment trade war in the Straits of Malacca. Through establishment of a joint venture, PSA International managed to bundle itself with COSCO Shipping and CMA-CGM as long-term partners. As a result, carriers have thus used Port of Singapore as a regional operation center to change many of their routes that used to call at Port Kelang to Port of Singapore. Port Kelang has been hit hard in production since the second half of 2017, and its container throughput fell by 6.9 percent in the first half of this year. Despite the setbacks in 2017, Port Kelang continued to expand its handling capacity. The No. 9 container terminal (CT9) of Kelang Westport completed the Phase I development and plans to put it into operation in December 2017, which may bring the whole-port capacity to 15 million TEUs. In Kelang Northport, the upgrade of the No. 8 Terminal was wrapped up in 2017, enabling the terminal to handle ships of more than 18,000 TEUs and bringing the port's annual capacity to 5.8 million TEUs.
Malaysia has close trade ties with China, and China-Malaysia trade has grown steadily, boosting Sino-Malaysia shipping routes. However, it is worth noting that Malaysia decided to cancel the East Coast Rail Line and two oil and gas pipeline projects in August this year, due to national debt issues. This rail line is currently the largest economic and trade project between China and Malaysia. The cancellation of the project will impair the investment confidence of Chinese-funded enterprises, undermining China-Malaysia economic and trade relations and China-Malaysia seaborne trade.
3.3 Business Performance of Port Enterprises
3.3.1 Business performance of global terminal operators
Across the globe, all major terminal operators, except DP World and CK Hutchison, enjoyed improving business performance to varied degrees in 2018. In the year, global terminal operators continued to push forward their diversity-oriented development strategies. In addition to terminal expansion and upgrading, some operators also tended to extend their business reach and enhance high-quality services while exploring new opportunities in new technologies and blockchain industry among others. In addition, a new landscape formed by shipping alliances also facilitated cross-shareholding and frequent strategic collaboration between terminal operators and shipping enterprises, creating a significant synergistic effect and ensuring abundant cargo sources for ports.
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1. CK Hutchison growth slowed down
CK Hutchison operated at low levels overall. In 2018, CK Hutchison handled 84.6 million TEUs of containers totally, down by 0.12 percent year-on-year. Specifically, the throughput growth of the Euro Zone ports (up by 3 percent) made up the throughput declines in China and Hong Kong, China (down by 4 percent) to some extent. Overall, CK Hutchison enjoyed improved throughput performance in the past two years except in 2016 when its throughput fell due to its underperformance in the local market and the intensified competition in overseas markets. However, it continues to face tough competition. First, Hong Kong, China lacks a strong hinterland to support its throughput. The low-cost operation of China ports has convinced some cargoes to switch to China ports. In addition, with its overseas business development slowing down, CK Hutchison has become prudent in recent years, with its overseas business development slowing down, which has also impaired further growth of its port business.
Data source: Annual report of CK Hutchison Holdings Limited
Figure 3-19 Gross Throughput of Hutchison Whampoa in 2013-2018
Profit-wise, CK Hutchison recorded an operating revenue rise of 3.01 percent year- on-year to HK$35.18 billion, driven by the business growth of multiple Euro Zone ports, including the improving performance of Rotterdam, and the benefits from selling the full equity of Shantou International Container Terminal. Its EBITDA grew by 6.60 percent year-on-year to HK$13.39 billion.
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2018 APEC Port Development Report www.apecpsn.org 86 Note: The size of bubbles represents the gross throughput. Data source: Annual report of CK Hutchison Holdings Limited
Figure 3-20 Gross Throughputs and Profit Rates of CK Hutchison in 2014-2018
CK Hutchison has been sticking to a strategy of "expanding logistics, making prudent investment and upgrading equipment" in recent years while focusing on container operations to improve efficiency and reduce cost. In 2018, CK Hutchison introduced and equipped its ports with remote control cranes, and built D Terminal at Port of Laem Chabang in Thailand, which cost US$600 million, in an aim to make the terminal the world's first container terminal to be equipped with remote control technologies for all cranes and terminal-side RTGs. Meanwhile, CK Hutchison renewed its commitment to expand its logistic services. In 2018, it first acquired 50 percent ownership of TMA Logistics. Then it signed the "Southern Transport Corridor - Hong Kong-Chongqing Sea-Railway Multimodal Transport Logistics Cooperation" framework agreement with CCI Eurasia Land to develop diversified services. These measures not only instilled new vigor to the company, but also improved its market competitiveness.
2. AP Moller-Maersk maintained stable operations
AP Moller-Maersk continued to report steady growth in 2018. Throughout the year, AP Moller-Maersk recorded an equity throughput of 17 million moves, an increase of 9.1 percent year-on-year. The stable throughput growth of AP Moller- Maersk was largely attributed to Maersk Group's purchase of Hamburg Süd and business integration to achieve a synergistic effect. Meanwhile, the commissioning of AP Moller-Maersk's first deep-sea berth at the Moin Container Terminal (MCT) in Costa Rica also effectively boosted its throughput number.
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Data source: 2018 annual report of Maersk Group
Figure 3-21 Business Performance of AP Moller-Maersk in 2017-2018
In 2018, AP Moller-Maersk launched a new round of investment and construction, with the aim to shift investment and development strategy shifting from "invest in deep-water terminals and seize global share" to "extend business scope and expand inland services". Apart from investing in building a 1.5-million-t bulk terminal in Port of Poti in Georgia, AP Moller-Maersk focused on expanding inland services in 2018. It continued to invest in the inland logistics projects in India and build India's first refrigerated container station. The Indian customs made it an Authorized Economic Operator (AEO) in June, greatly facilitating the connection between the company's terminal and the inland logistic works.
Meanwhile, AP Moller-Maersk also committed itself to upgrading of terminal facilities and technologies. In 2018, the company first improved the electronic operation system for container truck entry of Port of Pipavav in India, and then launched the online customer platform "Lift" in Bahrain and piloted UAVs (unmanned aerial vehicle) for safety monitoring in port areas, in a bid to enhance service quality and operation safety at terminals and ultimately attract more ships. The company launched its new global core competitiveness enhancement program, the GC3 program, in September 2018, and announced plans to build an internal technical center. These measures not only elevated the terminal operation efficiency and reduced logistic cost, but also brought sound environmental benefits and enhanced the terminals' competitive edges.
3. PSA International enjoyed continuous growth
PSA International continued stable operation. In 2018, Singapore's PSA International recorded a container throughput of 81 million TEUs, up by 9.11 percent year-on-year. In the year, it launched a series of measures to enhance terminal operation efficiency, such as data analysis tools and cargo handling solutions, enabling sound business performance. In addition, the group's terminal projects in overseas markets such as the Bharat Mumbai Container Terminal (BMCT)
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2018 APEC Port Development Report www.apecpsn.org 88 in Mumbai, India, went into operation in succession, adding to the group's port performance.
Data source: PSA International website
Figure 3-22 Gross Throughputs of Singapore's PSA International in 2013-2018
In 2018, Singapore's PSA International continued its development strategy from previous years, investing in terminals for global expansion, as evidenced by its subsidiary PSA Canada Holdings' acquisition of 60 percent equity in Ashcroft Terminal (AT) in July, marking the group's march into the North America inland supply chain. Moreover, Singapore's PSA International first signed a memorandum of cooperation on new berths at COSCO-PSA Terminal (CPT) with COSCO Shipping Ports and then announced a joint venture with Japan's Ocean Network Express (ONE) to invest in and operate the Singapore-Brazil Pasir Panjang Terminal. The joint operation with shipping enterprises will to some extent drive the growth of terminal throughput.
At the same time, Singapore's PSA International began shifting its strategic focus to logistic supply chains and started active exploration in new technologies and blockchain. For example, Singapore's PSA International, Pacific International Lines and IBM Singapore built a supply chain platform based on the blockchain technology in February to pilot electronic bills of lading and realized the phased goal. In view of the current digitalization wave and industry-wide pursuit for predictive cargo flows, Singapore's PSA International will join hands with its customers and partners to work out new solutions and make full use of the opportunities offered by digitalization to facilitate cargo flow and trade circulation while creating new sources of profit.
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4. Growth rate of DP World plunged
DP World's performance plummeted. In 2018, DP World handled a total of 71.42 million TEUs of containers, an increase of 1.91 percent year-on-year, 8.17 percentage points lower than 2017. A key reason was the group's share investment in the terminal of Port of Busan, Korea, in 2017, which erased the direct incremental effect. Meanwhile, the group also trimmed its low-profit terminal businesses to boost profits. Region-wise, the group's businesses in the Americas and the Oceania maintained 2.75 percent of positive growth helped by the operation of the expanded project of Port of Prince Rupert in Canada. However, since the group trimmed its low-profit businesses in the UAE, its performance in the Middle East was sluggish, with growth in the region and in Europe and North Africa increasing by just 0.4 percent.
Data source: DP World website
Figure 3-23 Gross Throughputs of DP World in 2013-2018
In 2018, DP World registered a revenue of US$5.65 billion, up by 19.8 percent year- on-year. The increase in operating revenue was primarily contributed by its new M&A projects such as Drydocks World and Dubai Maritime City (DMC). Meanwhile, the company's container shipping sector, which grew by 6.3 percent, was also credible. In terms of profitability, benefited from the Doraleh Multipurpose Port (DMP) in Djibouti and Brazil's Port of Santos project, the group's net profit rose by 2.2 percent year-on-year to US$1.33 billion in 2018, with the adjusted EBITDA standing at US$2.81 billion.
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2018 APEC Port Development Report www.apecpsn.org 90 Note: The size of bubbles represents the gross throughput.
Data source: DP World website
Figure 3-24 Gross Throughputs and Profit Margins of DP World in 2018
A traditional terminal operator, DP World has ample funds for terminal construction and a professional management team, but it possesses relatively poor control over cargo sources. To rectify this shortcoming, DP World continued to strengthen its strategic cooperation with shipping enterprises worldwide. In March, it signed a memorandum of cooperation with COSCO Shipping Group to create a synergistic effect leveraging both parties' respective advantages in size and network. DP World announced in August that it would acquire a 100 percent stake in Unifeeder Group, the largest offshore operator on pan-European feeder routes and wrapped up the deal in December. This move will bridge the company's terminal reliance on the shipping businesses to ultimately enhance the group's terminal business volume and market competitiveness.
Meanwhile, DP World also renewed its commitment to tapping new opportunities in the global supply chain by making active investments and diversifying its portfolio to spread the risks so as to ensure profits. In 2018, DP World shifted its investment focus to inland logistic services. For example, it acquired two special economic zones (SEZ) in Kazakhstan in March to develop Eurasian multimodal train transport business. In May, the group completed its purchase of Cosmos Agencia Maritima SAC (CAM), an integrated logistics provider in Peru. At the end of October, the group won the franchise for establishing a free trade warehousing zone in the Jawaharlal Nehru Port, India, which has greatly consolidated the group's operations in the Jawaharlal Nehru Port (JNPT).
5. COSCO Shipping Ports posted robust growth
COSCO Shipping Ports Limited recorded excellent business performance, with improvement in global terminal network and enhancement of terminal operational
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capabilities in 2018. Backed by its parent company and the Ocean Alliance, COSCO Shipping Ports’ container throughput totaled 117 million TEUs in 2018, rising by 17.13 percent year-on-year, a much higher rate than that of the same period in 2017. Its equity throughput hit 37.06 million TEUs, up by 15.82 percent year-on-year, the rate also beating the trend. COSCO Shipping Ports' strong growth momentum was mainly due to contributions from its newly acquired terminals including the CSP Spain Group and Nantong Tonghai Terminal in 2017, as well as its increased stake in CSP Zeebrugge Terminal. Meanwhile, the Ocean Alliance also increased berths at terminals of the company against the in-depth adjustment of the shipping alliance landscape, gradually highlighting the synergy between fleets and ports.
Data source: COSCO Shipping Ports Limited website
Figure 3-25 Gross Throughputs of COSCO Shipping Ports Limited in 2013-2018
In terms of profitability, COSCO Shipping Ports’ revenue rose by 57.6 percent year-on-year to US$1 billion in 2018. The strong growth was primarily attributable to its shareholding increase of CSP Zeebrugge Terminal in 2017 (the revenue incorporated in November 2017 and December 2017, respectively, for calculation) and acquisition of the CSP Spain Group. In addition, the adjusted EBITDA of the company increased by 37.8 percent year-on-year to US$653 million. Specifically, the terminal holdings of the company were the main drivers for the profit growth, with the Piraeus Terminal in Greece and the Xiamen Ocean Gate Container Terminal in China as the main contributors. The growth of non-controlling terminals was primarily from the surging throughput at Kumport Terminal in Turkey.
Since 2018, COSCO Shipping Ports has gradually shifted its development strategy from the traditional endogenous growth to an innovative extensional growth mode, and from control of terminal resources to integrated allocation of port resources. On the one hand, the company continued to improve its global terminal network. Its Nantong Tonghai Terminal in China and the terminal in Abu Dhabi were put into operation successively, and construction of new berths in Singapore was in the
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2018 APEC Port Development Report www.apecpsn.org 92 pipeline. On the other hand, the company continued to strengthen cooperation with upstream and downstream players as part of its effort to explore innovative operating models. For example, it formed a strategic alliance with GLP China Holdings Limited and Eshipping Global Supply Chain Management (Shenzhen) Co. Ltd. to build a port supply chain platform. At present, many terminal operators are extending their scope of services to beat homogeneous competition, and eventually enhance their competitiveness by offering personalized, one-stop integrated services. With its continuous effort in enhancing its comprehensive port services, COSCO Shipping will gain more advantages over competitors.
6. China Merchants Port Holdings enjoyed steady growth
China Merchants Port Holdings maintained stable momentum. In 2018, China Merchants Port Holdings handled a total of 109 million TEUs of containers, with a rise of 5.98 percent year-on-year, and recorded an equity container throughput of 40.93 million TEUs, with an increase of 8.21 percent year-on-year. In the year, the company continued to adhere to its development philosophy of "integrate internally and expand externally" and actively advanced the unique "port-industrial park-city" operational model to achieve benign development of the port.
In the first half of 2018, China Merchants Port Holdings earned HK$16.55 billion, down by 31.9 percent year-on-year. This was because, first, the company did not count in the revenue of China International Marine Containers (Group) Ltd. (CIMC) in the second half of the year after selling CIMC, and second, the revenue of its ports' core businesses increased by 10.0 percent year-on-year driven by its newly acquired projects and growing volume of business. The company's after-tax profits (after-tax profits) of ports reached HK$5.92 billion, up by 141.5 percent year-on-year.
Data source: China Merchants Port Holdings website
Figure 3-26 Gross Throughputs of China Merchants Port Holdings in 2013-2018
Since 2018, China Merchants Port Holdings has paid continuous attention to
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integration of existing port businesses in China and port-city collaboration. By solving the horizontal competition issue with Shenzhen Chiwan Wharf Holdings Limited, the company managed to optimize its asset structures to reduce cost and enhance efficiency. On the other hand, it branched out and strengthened its global network. In February 2018, it acquired a 90 percent stake in Paranagua Port, the second largest port in Brazil, and bought a 50 percent stake in Newcastle Port, the largest port on the east coast of Australia. With these moves, the company completed a port layout covering all the six continents, which will ensure long-term benefits for the company.
7. ICTSI showed sound operation
The International Container Terminal Services Inc (ICTSI) of the Philippines maintained sound development with positive growth for the ninth consecutive year. In 2018, ICTSI posted a container equity throughput of 9.74 million TEUs, a year-on-year increase of 6.37 percent, the growth rate being flat with 2017. ICTSI's equity throughput growth was partly due to the commissioning of the group's South Pacific International Container Terminal in Papua New Guinea in Q1 and the completion and launch of expanded and upgraded terminals in the Philippines, Mexico and Iraq. On the other hand, the growth was also a result of the group's continuous advancement of its terminal expansion and upgrading strategies to improve its port turnover efficiency and service levels to get prepared for the ship upsizing trend. These moves have injected new impetus to the group's business volume growth.
Data source: ICTSI website
Figure 3-27 Equity Throughputs of ICTSI in 2013-2018
In 2018, ICTSI bagged US$1.39 billion in revenue, an increase of 11.36 percent year-on-year, with the net profit rising by 20.27 percent year-on-year to US$250
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2018 APEC Port Development Report www.apecpsn.org 94 million. The revenue growth was primarily from new contracts with shipping companies and the company's new terminals in Port of Lae and Port of Motukea in Papua New Guinea as well as the Port of Melbourne in Australia.
ICTSI positioned itself to focus on development, acquisition, and operation of public container terminals posting an annual throughput of 50,000-1.5 million TEUs and a high potential for growth and profit-making. In 2018, the group initiated the second round of expansion of the Basra Gateway Terminal (BGT) in Iraq and spent US$80 million to improve the turnover efficiency and service level of Port of Manila in the Philippines. In addition, ICTSI South Pacific, a subsidiary of the group, won a 25- year franchise for the Motukea Terminal in Port Moresby and the terminal was officially put into operation in May. In July, ICTSI won a 20-year franchise for Sudan South Port Container Terminal (SPCT). It is projected that the group will continue to see stable development in the future.
3.3.2 Business performance of major port enterprises in other economies in the Asia-Pacific region
Most ports in the world adopt the landlord model for operation, which is why many ports are jointly operated by different global terminal operators. Currently, global terminal operators contribute around 60 percent of the world's total capacity. With the continuous mergers and acquisition of new assets, local port enterprises will see their market shares shrink. In the Asia-Pacific region, China is home to the highest number of local port enterprises, while there are just a handful of local port enterprises, such as the MMC Group in the Philippines, Ports America in the United States, and Patrick Port Logistics in Australia, in other economies.
1. Major port enterprises in China
Shanghai International Port (Group) Co., Ltd
In 2018, Shanghai International Port (Group) enjoyed stable development in port business and its main business, and its diversity development strategy proved fruitful. Through continuous improvement of service capability and efficiency of Shanghai Port, the company succeeded in optimizing its terminal production organization and management and recorded stable growth in its production and operation. The port handled 42.01 million TEUs of containers, an increase of 4.4 percent year-on-year, and handled 561 million tons of cargoes, running flat with 2017.
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Data source: 2018 annual report of Shanghai International Port (Group)
Figure 3-28 Container Throughput and Gross Revenue of Shanghai International Port (Group) in 2013-2018
As of 2018, Shanghai International Port (Group) Co., Ltd topped the world for nine consecutive years in terms of container throughput. Leveraging its advantageous location of adjacency to the vast hinterland of the Yangtze River Delta and the release of policy dividends such as the "Yangtze River Strategy", the group boasts a strong anti-risk ability even in an economic downturn. Throughout the year, the group recorded a total operating revenue of RMB 38.15 billion, up by 1.9 percent year-on-year. To further meet the overall planning and development needs, the group adjusted the structures of break-bulk cargo sources and reduced the handling amount of coal, with a clear positioning aimed at container port businesses. Considering that the gross profit rate of the container handling business is significantly higher than that of break-bulk cargo handling, the group's gross profit margin is expected to increase in the medium and long term, and its business structure will become more robust. At present, Shanghai International Port (Group) Co., LTD is also striving to enhance its status as a hub port and elevate its service levels through innovation in technologies, management and services, and accelerate the building of a smart, green, technological and efficient port to ensure its sustainable and stable development.
Ningbo Zhoushan Port Group Co. Ltd.
In 2018, Ningbo Zhoushan Port Co. Ltd. maintained stable operation. In 2018, Ningbo Zhoushan Port Co. Ltd. recorded a total cargo throughput of 776 million tons, a rise of 7.7 percent year-on-year, and a container throughput of 27.95 million TEUs, a rise of 7.6 percent year-on-year. Its total operating revenue reached RMB 21.92 billion, an increase of 20.57 percent year-on-year. The sound rise in container throughput of Ningbo-Zhoushan Port was primarily attributable to the company's parallel running of multiple initiatives. On the one hand, it strengthened
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2018 APEC Port Development Report www.apecpsn.org 96 business interaction with major shipping alliances. In the first half of 2018, the company launched six new routes. On the other hand, it actively built high-quality routes and promoted in an all-round manner the "bulk to containerized" business, achieving business volume growth in both inland feeder routes and domestic-trade routes. Ningbo-Zhoushan Port has firmly grasped the opportunity of Zhejiang ports integration, and actively responded to the Yangtze River Economic Belt strategy, while optimizing its terminal resource allocation and expanding the development space.
Data source: 2018 annual report of Ningbo Zhoushan Port Group Co. Ltd.
Figure 3-29 Container Throughputs and Gross Operating Revenues of Ningbo Zhoushan Port Co. Ltd. in 2013-2018
Since 2018, Ningbo Zhoushan Port Co., Ltd. has enhanced effort in sea-rail multimodal transport and comprehensively pushed forward the informatization of sea-rail multimodal transport. It improved the operation capability of the railway station in the Beilun Harbor District, upgraded the Yiwu trains for sea-rail multimodal transport, and launched the first double-deck train for sea-rail multimodal transport of containers to drive up the rapid growth of sea-rail multimodal transport volume. In the future, the company will continue to give full play to the traditional advantages of the port and pursue a diversified development pattern driven by terminal operation, modern logistics and capital operation. Meanwhile, it will further accelerate the development of multimodal transport services such as sea-river multimodal transport and sea-railway multimodal transport, and further expand the inland hinterland to actively push forward Ningbo-Zhoushan Port to evolve from a big international port to a strong international port.
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2. Port enterprises in Malaysia
In 2018, the MMC Group, a local port enterprise in Malaysia, recorded low business figures overall with its profitability on a decline. The MMC Group is the largest terminal operator in Malaysia and its container throughput accounts for around 50 percent of Malaysia's total. The MMC Group's terminals are mostly located along the Strait of Malacca of strategic significance, including Pelabuhan Tanjung Pelepas, Johor Port, Penang Port and Kelang Northport.
Data source: MMC Group website
Figure 3-30 Distribution of Major Ports of MMC Group in Malaysia
In 2018, the MMC Group registered an operating revenue of RM2.99 billion in the port and logistics sectors, a rise of 6.07 percent year-on-year. The steady growth in operating revenue was primarily due to the good performance of Port of Tanjung Pulapas. According to official estimates, the container throughput of Port of Tanjung Pulapas is expected to exceed 9 million TEUs in 2018. Moreover, the MMC Group purchased the remaining 51 percent stake in Penang Port in May 2018, which made positive contribution to the annual financial income. Besides, the acquisition will enable the group to establish a strong foothold in the northern part of Peninsular Malaysia and strengthen the group's strategic presence throughout the Strait of Malacca.
However, the MMC Group's profits in the port and logistics sectors have fallen sharply in the past two years. In 2018, the group posted a profit before zakat and taxation of RM416 million in the port and logistics sectors, down by 13.03 percentage points year-on-year. The reason is that, on the one hand, the group's Material Off- Loading Facilitie (MOLF) for Refinery and Petrochemical Integrated Development
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2018 APEC Port Development Report www.apecpsn.org 98 (RAPID) project in Johor Port was suspended, cutting off part of its profit sources. On the other hand, due to changes in the shipping alliance landscape, the group's profitability in Kelang Northport was also compromised to some extent.
Data source: Annual report of the MMC Group
Figure 3-31 Operating Revenue and Profits of the Port and Logistics Sectors of the MMC Group in 2013-2018
In recent years, the MMC Group has been committed to strengthening port investment to consolidate its market position in Southeast Asia. In 2018, the group unsuccessfully participated in the bidding for the Sabah Port and later took full control of Penang Port. The group has also been improving the service capabilities of its ports. In 2018, it launched the expansion of Penang Port, adding 700,000 TEUs of container handling capacity. Its improvements in facilities and equipment in Port of Tanjung Pelepas and Johor Port were also underway. It is expected that the group's recent development strategy will continue to focus on expanding and consolidating its terminal assets, so as to ensure long-term benefits.
3.4 Review of Multimodal Transport Development of Ports
Multimodal transport has been favored in many economies in the world by virtue of its flexibility, environmental friendliness, reliability and safety, and cost-effectiveness. In 2018, the sea-railway multimodal transport in North America continued the steady growth while infrastructure investment was augmented. In Asia, China, despite its less-developed sea-railway multimodal transport business when compared with North America, has enjoyed rapid development with major breakthroughs achieved in recent years. For example, the sea-railway multimodal transport volume in
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Qingdao Port in China in 2018 exceeded 1 million TEUs, and Ningbo-Zhoushan Port launched China's first double-deck train for sea-railway multimodal transport of containers.
3.4.1 Multimodal transport development of ports in North America
Multimodal transport volume in North America enjoyed robust growth. North America is the most successful region globally for multimodal transport development. It has the world's densest railway network, with complete sea-railway and highway- railway multimodal transport systems. According to the Intermodal Market Trends and Statistics report released by the Intermodal Association of North America (IANA), the annual growth rate of annual performance in North America in 2018 was the strongest in past five years, up by 5.6 percent year-on-year to 189.31 million containers and trailers, where international containers grew by 5.4 percent and domestic containers by 4.9 percent.
Data source: IANA
Figure 3-32 Multimodal Transport Volume and Year-on-year Growth in North America in 2012-2018
1. Multimodal transport of ports in the U.S.
In 2018, the total multimodal transport volume in the United States reached a new high. According to the Association of American Railroads (AAR), the multimodal transports volume in the United States in 2018 stood at 14.47 million vehicles (including containers and trailers), rising by 3.3 percent year-on-year. The total business volume set a new record.
The sea-railway multimodal transport volume in the United States has been on a rise in recent years, posting a sound momentum of development. The United States, with the Atlantic Ocean on the east and the Pacific Ocean on the west, boasts a vast hinterland, which is inherently advantageous for developing multimodal transport.
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2018 APEC Port Development Report www.apecpsn.org 100 Since the first railway in the United States in 1830, the nation has developed a highly centralized and full-fledged railway market through nearly 200 years of development, with the market dominated by seven major companies (BNSF, UP, CSX, NSC, CN, CP and KCS). The combined market share of the seven companies was nearly 98 percent, and the intensive railway network extends across the country, providing strong infrastructure support for multimodal transport between ports on the east and west coasts of the country. Currently the United States has formed a multimodal transport promotion system strong in both soft and hard powers, featuring diverse development forms, advanced facilities and equipment, complete standards, smooth transportation organization, and strong policy support.
In the past two years, the U.S. economy has followed an upward curve as a result of Trump's expansionary fiscal policies and the implementation of the new tax act, driving investment and international trade, which has facilitated the transportation demand to some extent. Coupled with the constant upgrading of infrastructure investment, the steady development of the multimodal transport market in the U.S. is secured.
Data source: AAR
Figure 3-33 Multimodal Transport Volume and Year-on-year Growth in the U.S. in 2013-2018
Los Angeles-Long Beach Port
Los Angeles-Long Beach Port is an important port for trade between the West Coast of the United States and Asian economies, and a port of strategic significance due to its closest distance to the Panama Canal among ports in the United States. Los Angeles-Long Beach Port boasts a well-developed sea-railway multimodal transport network for containers. Railway lines connect its port areas and major terminals. The railway transfer stations are located at various terminals, including 10 pre-port railway transfer stations and one port-surrounding railway transfer station and two
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post-port railway junctures. The port is also equipped with special cargo-evacuating trains. To adjust the traffic flows into and out of the stations, the stations have two- way reversible lanes to facilitate the entry and exit of container trucks to improve the container evacuation capability in the station area. Meanwhile, the port is striving to build an intelligent information management system to enable equipment loading and unloading in station areas via computers, data exchange with the company's information management systems, and real-time tracking of cargoes.
Figure 3-34 Distribution of Container Terminal and Pre-Port Railway Stations in Los Angeles-Long Beach Port
Building the Alameda Corridor for cargo transport on railways to address the "one kilometer in the middle" problem of sea-rail multimodal transport. To alleviate the increasing contradictions between the port and the city, the port area, under the authorization of the federal government, built a 32-kilometer Alameda Corridor for cargo transport on railways to address the rough connection, road congestion and environmental pollution in the "one kilometer in the middle" of the transcontinental railways and the international sea passages. This has enabled efficient and fast connections between coastal ports and inland railway stations, truly improving the overall effectiveness of multimodal transport. According to the Alameda Corridor Transportation Authority (ACTA), the Alameda Corridor handled a total of 5.63 million TEUs of containers in 2018, accounting for one-third of the total throughput of the Los Angeles-Long Beach Port (about 17.55 million TEUs).
Continuous investment in railway infrastructure construction. Although Los Angeles-Long Beach Port has built up a relatively complete sea-railway multimodal transport system, port congestion still surfaces from time to time with the increasing trade volume, the mergers of shipping companies, the large-scale adjustment of the line alliance landscape and the shipping routes. To solve this problem, the port has constantly strengthened the improvement and upgrading of the railway network in
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2018 APEC Port Development Report www.apecpsn.org 102 the port area. In 2018, three projects in the Port of Long Beach commenced design and construction, including improving the railway network of the Pier G bulk terminal, building new railway tracks between the Pier T terminal and the Pier S storage area, and expanding the throughput capacity of the in-port railway station to 1.1 million TEUs to reduce the number of trucks and improve the environment in the port area. The Port of Los Angeles received a US$21 million grant from the Trade Corridor Enhancement Program (TCEP) in California in 2018 to expand the multimodal transport warehouse on the terminal, increasing five cargo-evacuating railway tracks to bring the Pier400 terminal railway station capacity to 525,000 TEUs. The Los Angeles-Long Beach Port's major initiatives in infrastructure construction will further enhance the operational efficiency, safety and network reliability of its port area railways, enabling faster and more convenient transit of containerized cargoes between ports and railway stations, so as to meet the growing transport demand and create greater social benefits.
New York-New Jersey Port
As the largest port on the East Coast of the United States, New York-New Jersey Port handles nearly one-third of the cargoes on the East Coast. The port is connected to the inland railway network through the ExpressRail sea-rail multimodal transport system, so as to ship cargoes from the East Coast to the central and western parts of the United States. Boosted by the completion and commissioning of the new railway facilities at GCT Bayonne Terminal in the port area, New York- New Jersey Port posted double-digit growth in sea-rail multimodal transport volume in 2018, up by 13.9 percent year-on-year to 646,000 TEUs, which, though, still fell short of the port's goal of 900,000 TEUs/year.
Figure 3-35 Multimodal Transport Railway Network of New York-New Jersey Port
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The sea-railway multimodal transport represents a relatively small proportion and needs to be further promoted. Currently, 75 percent of the cargoes at New York-New Jersey Port are shipped into and out of the port via container trucks, the proportion of sea-railway multimodal transport being relatively small compared with the Los Angeles-Long Beach Port to its west. To further elevate the sea- railway multimodal transport ratio, ease port congestion, reduce greenhouse gas emissions in the port area, and achieve green transformation, New York launched a US$100 million freight distribution system plan in 2018, including building new railway lines and facilities such as transfer stations, modernizing shipping and rail assets and improving door-to-door services for the multimodal transport supply chain. Meanwhile, the municipal government also allocated US$26.5 million to New York-New Jersey Port to support the latter's rail and port projects for the purpose of security enhancement, traffic congestion alleviation, and operational capability and competitiveness improvement. At present, the port area has kicked off the expansion of the ExpressRail sea-railway multimodal transport system. The synchronized upgrading of infrastructure inside and outside the port will inject a strong momentum into the multimodal transport development of the New York-New Jersey Port.
2. Multimodal transport of ports in Canada
Status quo
Railway has become a main mode of cargo collection and distribution among Canadian ports. First, Port of Vancouver and Port of Prince Rupert are located on the west coast of Canada. Port of Vancouver is the largest port in Canada, and about 75 percent of cargoes in the port enter and leave the port through railways, while Port of Prince Rupert almost fully relies on railways for cargo collection and distribution. In 2018, Port of Vancouver handled 147 million tons of cargoes cumulatively, rising by 3.5 percent year-on-year, including 3.4 million TEUs of container throughput, rising by 4.5 percent year-on-year. The container throughput of Port of Prince Rupert also grew steadily, with a total of 1.04 million TEUs of sea- railway multimodal transport volume, an increase of 11.8 percent over the same period in 2017.
Data source: Port of Prince Rupert website
Figure 3-36 Sea-railway Multimodal Container Transport Volumes of Port of Prince Rupert in 2013-2018
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2018 APEC Port Development Report www.apecpsn.org 104 Second, the Montreal Port on the east coast is the largest container port in eastern Canada and an important multimodal transport hub in North America. As per statistics, about 700,000 TEUs of containers are transported by rail to and out of the port area every year. In 2018, the port handled a total of 1.68 million TEUs of containers, with 42 percent being through sea-railway multimodal transport.
The "Montreal Mode" empowers efficient turnover of containers. The Montreal Port Authority (MPA) operates the railway network within its own port area, with the railways extending more than 100 kilometers. The rail tracks are laid along the berths and reach various terminals directly. Moreover, the railway network of Montreal Port is directly connected to the Canadian National (CN) and the Canadian Pacific Rail (CP) and its North American network. After being loaded and unloaded at the apron, containers are carried by locomotives operated by the port to the railway transfer stations in the port area to switch to the CN's or CP's locomotives. Correspondingly, the incoming cargoes by CN and CP unit trains arrive in the transfer area and are handled by in-port locomotives based on the terminal classification. Montreal Port operates trains to Toronto, Chicago and Detroit every day, with about 60 to 80 container trains passing through the port every week. In addition, Montreal Port attaches great importance to port informatization. At the entrance and exit of port trucks, various advanced information technologies (optical character recognition technology, automatic registration system, biometrics, etc) are utilized to save nearly 50 percent of waiting time for entering and leaving Montreal Port compared with that for general ports, greatly elevating the port's operational efficiency.
Prospect
However, as the international trade volume continues to rise, Canadian ports face insufficient port capacity. Meanwhile, the limited capacity of the sea-railway multimodal transport network in the port area and inland areas also hinders the development of the port. The natural permafrost in northern Canada makes Canada not suitable for construction of railway lines. Therefore, most of the railway network is concentrated near its south border with the United States. The limited network coverage, coupled with the seasonal adverse weather, further undermines the sea- railway multimodal transport development. To solve this problem, the Canadian government is currently investing large sums in the sea-railway multimodal transport network to enhance its ports' competitiveness in the global supply chain. In 2018, the Canadian government provided US$128 million to Port of Vancouver for infrastructure construction through the National Trade Corridors Fund of Canada. Meanwhile, the government also gave US$14.6 million of financial support to Montreal Port to optimize facilities of the port's railway network, including building a new six-kilometer railway track and installing new transfer equipment to further enhance the railway mobility of the port.
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Figure 3-37 Facility Upgrading Plan of Port of Vancouver in 2018
3.4.2 Multimodal transport development of ports in China
China has seen rapid growth of sea-railway multimodal transport business in recent years. China is endowed with the elements to develop the sea-railway multimodal transport. First, it has the advantageous geographical location with a hinterland as vast as the United States. Second, with the increasing investment, China's infrastructure is improving, especially with the multimodal transport demonstration projects in recent years, which has provided the hardware for developing multimodal transport. Coupled with the strong support of the "Belt and Road" Initiative, the in- depth promotion of "bridgehead" construction and the intensive opening of "China- Europe trains", China's multimodal container transport business has entered the fast lane.
China's sea-railway multimodal transport volume is highly concentrated in seven ports of Qingdao, Yingkou, Ningbo-Zhoushan, Tianjin, Dalian, Lianyungang, and Yantian Port of Shenzhen, accounting for about 90 percent of the country's total. According to statistics, the rail-water multimodal transport volume of containers in China's major ports increased by 29.4 percent year-on-year to 4.5 million TEUs. The business volume increased by nearly 80 percent within just three years. Specifically, the top three ports in terms of sea-railway multimodal transport volume are Qingdao Port, Yingkou Port and Ningbo-Zhoushan Port.
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2018 APEC Port Development Report www.apecpsn.org 106 Table 3-7 Sea-railway Multimodal Container Transport of Major Ports in China in 2018
Sea-railway Share in Total Multimodal Container Year-on-year Ranking Port Transport Throughput of Increase Volume (1,000 Port TEUs)
1 Qingdao 1153.7 5.97% 48.6%
2 Yingkou 762.6 11.76% 5.60%
Ningbo- 3 601.7 2.28% 50.2% Zhoushan Port
4 Tianjin 492.4 3.08% 41.3%
5 Dalian 393.4 4.03% -4.60%
6 Lianyungang 302.8 6.40% 18%
7 Tangshan 227.0 7.67% 126.5%
8 Shenzhen Port 110.5 0.43% -11.5%
9 Chongqing 78.4 6.70% -21.8%
10 Guangzhou Port 64.7 0.29% 21.2%
Data source: Ministry of Transport of China
Qingdao Port
In 2018, Qingdao Port witnessed another explosive growth in sea-railway multimodal transport business. The containers handled throughout the year totaled 1.15 million TEUs, an increase of 48.7 percent year-on-year, making the port the first to exceed 1 million TEUs for sea-railway multimodal transport among China's coastal ports, with the port's sea-railway multimodal transport volume ranking first nationwide for four consecutive years. Due to its unique geographical location, Qingdao has two- way access to the land and sea, which is particularly advantageous for developing sea-railway multimodal transport. Meanwhile, Qingdao Port continued to strengthen inland port construction to improve its grid marketing layout and increase its market share in sea-railway multimodal transport. As of now, Qingdao Port has launched a total of 40 sea-railway multimodal transport trains, including five international ones. With the commissioning of the cargo-evacuating railways in the port area, Qingdao Port is expected to continue leading the nation in the sea-railway multimodal transport business.
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Yingkou Port
The sea-railway multimodal transport volume in Yingkou Port increased steadily in 2018 and reached a record high of 762,600 TEUs, a year-on-year increase of 5.6 percent. Yingkou Port was one of the ports in China to launch sea-railway multimodal transport at early stage. Against the backdrop where multimodal transport has risen to a national strategy and China has proposed the "highway-to-railway" guiding policy for freight, Yingkou Port has kept innovating its business model and expanded its business areas, resulting in multimodal transport business growth. However, because Yingkou Port is located in the Bohai Bay, with its access to the sea inferior to Qingdao Port, adding to that the economic weakness of the northeast hinterland in China, the development of the port's sea-railway multimodal transport business lags far behind Qingdao Port. To boost the opening of northeast China to the outside world, the dedicated railway line connecting the Yingkou Port operation area and the sea-railway multimodal transport passage of the Yingkou area of China (Liaoning) Pilot Free Trade Zone started construction. After its launch, the 44-kilometer distance can be covered in just 17 minutes. This is expected to further promote the development of the multimodal transport business at the port.
Ningbo-Zhoushan Port
Ningbo-Zhoushan Port continued to maintain rapid growth in 2018 and handled a total of 600,000 TEUs of containers through sea-railway multimodal transport, a rise of 50 percent year-on-year. On the one hand, Ningbo-Zhoushan Port is committed to opening new routes to keep improving the company's cargo collection, distribution and transportation network, and on the other hand, improve its sea-railway multimodal transport services to build a service brand. In 2018, the port focused on promoting the construction of the sea-railway multimodal transport logistics channel from inland business points to the port, adding nine sea-rail lines such as from Chongqing, Pingdingshan and Wuhan, and increased existing train density. It is worth mentioning that Ningbo-Zhoushan Port opened China's first double- deck container train, which has greatly improved the sea-rail multimodal transport efficiency and reduced the logistics cost. The port will continue to strengthen in- depth cooperation with railway departments, ship companies and other enterprises, and vigorously develop cargo sources in the hinterland while increasing the train schedule density. As a result, the sea-railway multimodal container transport business is expected to improve further.
3.5 Review of Port Infrastructure Construction
With the demand for container terminal construction in Southeast Asia continued to grow, and the ports in southeast U.S. also utilized the opportunity of Panama Canal expansion to promote container terminal construction. Construction of dry bulk terminals remained generally stable, although the pace varied among regions. Meanwhile, as global environmental protection policies tightened, there was a boom in LNG terminal construction, as investments by China, the U.S. and other economies in LNG terminal construction rose significantly.
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2018 APEC Port Development Report www.apecpsn.org 108 Figure 3-38 Distribution of Major Terminal Construction Projects in the Asia-Pacific Region in 2018
Table 3-8 Construction of Major Terminals in the Asia-Pacific Region in 2018
Category Stage Port/Terminal Region Economy Port Newark Container The Americas United States Terminal (PNCT) Port of Virginia The Americas United States Port of Everett The Americas United States Savannah The Americas United States Port of New Orleans The Americas United States Port Everglades The Americas United States Port of Tasmania Oceania Australia COSCO-PSA Terminal Southeast Expansion/ Singapore Container (CPT) Asia Under- terminal Southeast construction Port of Laem Chabang Thailand Asia Southeast Patimban Port Indonesia Asia Southeast Kelang Westport* Malaysia Asia Phase IV of Macun Port, Asia China Haikou Phase I Integrated Port Area Container Terminal of Asia China Huanghua Port
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Phase II Container Terminal of the Second Basin of Asia China Jinzhou Port Intelligent Container Terminal of Jingtang Asia China Harbour District of Tangshan Port Container Terminal of Caofeidian Port Area of Asia China Tangshan Port Southeast Patimban Port Indonesia Asia Cavite Gateway Terminal Southeast The (CGT) Asia Philippines Under Plan Phase II Automated Asia China Terminal of Qingdao Port
Fairview Terminal of Port of The Americas Canada Prince Rupert New/ Port of Gulfport The Americas United States Completed Newcastle Bulk Oceania Australia Terminal General-purpose Bulk Expansion/ Terminal of Integrated Dry Bulk Under- Asia China Port Area of Huanghua Cargo construction Port Terminal Phase III Coal Terminal Asia China of Caofeidian Port New/ Dry Bulk Cargo Terminal Asia China Completed of Fuzhou Port
Rio Tinto Terminal The Americas Canada
LNG program of West Port Expansion/ Asia China LNG Area of Yantai Port Under- Tangshan LNG Receiving Terminal Asia China construction Station
Tianjin floating LNG Asia China receiving terminal project
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2018 APEC Port Development Report www.apecpsn.org 110 Qidong LNG distribution Asia China and transshipment station Tianjin LNG project Asia China Zhoushan LNG receiving Asia China and refueling station project Shenzhen LNG load shifting Asia China depot project Shenzhen LNG Receiving Asia China Station Fujian and Guangdong Economic Cooperation Zone LNG depot project Asia China in Chaozhou, Fangcheng Port, Guangxi Zhuang Autonomous Region LNG project of Dushan Asia China Port, Zhejiang LNG depot of Jiangyin LNG Asia China Distribution Center Zhangzhou LNG project Asia China Taoyuan Natural Gas Asia China Receiving Station South Texas Port The Americas United States Oil product Expansion/ Meizhou Bay Port Asia China and Under- chemical construction Public 300,000-ton Oil terminal Product Terminal of Ningbo- Asia China Zhoushan Port Public Liquid Chemicals Terminal of Changxing Asia China Island Port Area of Dalian Port
Oil Product Terminal of Rongxing Port Area of Asia China Panjin Port
Phase III 300,000-ton Crude Asia China Oil Terminal of Rizhao Port VLCC Terminal in Texas Under Plan The Americas United States Gulf
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3.5.1 Container terminal construction
1. Investment in terminal construction continues to boom in Southeast Asiah
With the global manufacturing industry shifting to Southeast Asia, the investment in port construction in Southeast Asia keeps rising, and port construction projects keep getting launched one after another, improving production efficiency at ports. Specifically, the Tuas Port in Singapore progressed in 2018. With the smooth advancement of Phase I, Phase II included the design and construction of a 387-hectare reclamation project and a 9.1-km caisson wall, which will increase the port capacity by 21 million TEUs before the end of 2027. Although the business volume of the Port of Kelang has been declining due to the restructuring of shipping alliances, Port of Kelang will continue to build the No 10 to No 19 container terminals at Westport on Carey Island to further expand the port market. After the expansion, the handling capacity of the Kelang Westport terminals will double to 30 million TEUs. The Port of Tanjung Pelepas, benefiting from the restructuring of shipping alliances, enjoyed a robust rise in container throughput growth. It also strengthened the port infrastructure investment to ensure capacity availability. In February 2018, Port of Tanjung Pelepas upgraded its No. 5 and No. 6 berths and increased the water depth from 16 meters to 18.5 meters through channel dredging to better serve large container ships.
2. North America port construction pushed ahead steadily
In June 2018, the Panama Canal Authority announced that the maximum ship width allowed to pass was further increased to 51.25 meters. The increase in the navigable width will attract more cost-effective large container ships to North American ports. Therefore, port construction activities in North America were dominated by expansion to meet ship berthing demand brought by the Panama Canal expansion. Specifically, the Port of Virginia in the United States began to push ahead the dredging project to set the channel to 55 feet deep and expand the channel in the selected areas to allow two-way traffic of ultra-large container ships. Port Newark commenced the terminal expansion project, including the expansion and improvement of the terminal, construction and upgrading of new gate facilities, as well as deepening and expansion of berths. The expansion project plans to expand the terminal area by 17 percent to 309 acres and will enable the terminal to handle 2.3 million TEUs in the future. Port of Prince Rupert in western Canada will also launch its next-phase expansion plan, which will expand the port in the middle of 2019 to increase 1.6 million TEUs of handling capacity.
3. Port construction investment in China went down
The adaptability of China's port throughput has remained moderately advanced in recent years. Although the supply and demand relationship in the port market has improved with the continuous integration of China's coastal port resources, the terminal adaptability has remained moderately advanced, and construction investment has experienced negative growth.
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2018 APEC Port Development Report www.apecpsn.org 112 Currently, China's container terminal construction is focused on expansion and automated terminal construction. Specifically, container terminal projects under construction include: Macun Port Area Phase IV project in Haikou, Phase I container terminal project of the Integrated Port Area in Huanghua Port, Phase II container terminal project of the Second Basin of Jinzhou Port, container terminal project of Caofeidian Port Area of Tangshan Port. This type of project is primarily centered around expansion of container terminals in the original port area and is expected to be completed and put into operation by 2020. In addition, the construction of the 24#-25# smart container terminals in Jingtang Port Area of Tangshan Port will be wrapped up in 2019 and become the fourth automated container terminal in China. Qingdao Port will also fully replicate the project experience and practices of its Phase I fully automated terminal and plans to launch Phase II of Qingdao Port's fully automated terminal. Overall, China's container terminal construction has changed from quantitative development to qualitative development, with large- scale professional terminals and deep-water channels fully developed on the whole. Terminal capacity remains moderately advanced, and port construction investment will continue to decline.
3.5.2 LNG terminal construction
The new regulations on sulfur emissions in 2020 by the International Maritime Organization (IMO) will be enforced soon. In February 2018, IMO again made it clear that starting from January 1, 2020, all ship fuels should meet relevant regulations on sulfur content of no higher than 0.5 percent. The Asia-Pacific economies have taken active measures in response to the sulfur limit, and the construction of LNG terminals has entered a fast track.
1. LNG terminal construction in China on a rise
China's LNG terminal construction continued the momentum from 2017 and maintained high growth to meet China's strong demand for LNG. Major LNG receiving stations will conclude construction and enter operation in the near future, which will boost the production capacity to a large extent. As per the Key Plan for LNG Terminal Distribution in the Bohai Rim Region issued by the Ministry of Transport of China in 2018, 16 LNG terminal berths will be built in five major ports around the Bohai Sea in China. Specifically, Dalian Port has already built one berth in the Nianyuwan Port Area, and one berth is in the planning stage. Caofeidian Port Area of Tangshan Port has completed one berth and three are planned. Dagang Port Area of Tianjin Port has built one berth and two are planned. Dongjiakou Port Area of Qingdao Port has built one berth and one is planned. The West Port Area of Yantai Port has two berths planned, and the Longkou Port Area of Yantai Port has two berths planned. Besides the Bohai Rim area, LNG construction projects led by energy companies such as China National Petroleum Corporation and China National Offshore Oil Corporation can also be found in ports such as Zhangzhou in Fujian, Ningbo in Zhejiang, Dachan Bay in Shenzhen, Rudong in Jiangsu and Qidong in Jiangsu, and are expected to be put into operation between 2020 and 2022. According to the current progress and plans, it is expected that China's LNG
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receiving capacity may reach 82.7 million tons per year by the end of 2020, and the utilization rate could rise to 97 percent to make up the gap between China's natural gas supply and demand.
2. U.S. ports expected to become LNG export centers
North America is home to a large amount of low-priced natural gas reserves, making the area well positioned to develop LNG refueling business. With the Sulfur Restriction Order approaching in 2020, LNG has been gaining increasing attention as a ship fuel, and the U.S. investment in LNG refueling facilities has also increased significantly. Specifically, the Port of Jacksonville, the Port of Fourchon and the Port of Tacoma have all started to build LNG terminals. Cove Point on the East Coast of the United States was completed and put into production in April 2018. At present, LNG exports at the terminal have become a normal part of the operation, signaling that the United States is turning into a major exporter of global LNG at a faster speed and will challenge Australia and Qatar's global LNG export dominance in the next five years. In addition, the United States will build three new LNG terminals along the coast of the Gulf of Mexico to further enhance the its LNG export capacity.
3.5.3 Dry bulk terminal construction
In 2018, the global bulk cargo terminal construction remained stable overall, although the pace varied among regions. Australian coal terminals recorded oversupply, stalling investment in construction. China's bulk cargo terminal construction presented regional differences between the north and the south. The supply capacity of terminals in Japan and Korea can basically meet the current and future import and export demand.
1. China's coal terminal construction differed between the south and the north
The shipping pattern of departure ports of coal in northern China may undergo a dramatic change. There is an increasing expectation for the functional transformation of Qinhuangdao Port which may exit the coal shipping market within 20 years. The majority of thermal coal shipping volume in the Bohai Rim ports will be further transferred to ports such as Caofeidian Port. At present, Phase III of coal terminal of Caofeidian Port in China has entered trial operation, and Phase IV of Shenhua Coal Terminal of Huanghua Port and Phase II of Shenhua Coal Terminal of Tianjin Port have been approved and will begin construction. Due to the reduced demand from coal-fired power plants, the construction of coastal coal-unloading ports has fallen. The Tsuen Wan Coal Terminal in Huizhou was put into operation and completed the cargo-evacuating railway construction. The alteration work of berths No. 1 to No. 3 of Fuzhou Port was also officially approved by the Ministry of Transport of China, with plans to build two 300,000-ton large-scale bulk cargo terminals to adapt to the major bulks shipping demand for coal and ores in Fujian and surrounding areas and the ship upsizing trend, so as to effectively promote the construction and improvement of the cargo collection, distribution and transportation system at ports.
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2018 APEC Port Development Report www.apecpsn.org 114 2. Bulk terminal construction investment in Australia stalled
Coal export is an important source of income for Australia, so the Australian government has always given high priority to building coal terminals to export coal resources. However, as the coal demand growth levels off, coal terminals in Australia face oversupply, leaving a large number of new coal terminals and expansion projects in abeyance, and some terminals in operation underutilized. Since 2012, Abbot Point T2 and Dudgeon Point coal terminals have been canceled, and Abbot Point T1 is operating at less than 50 percent capacity, a serious financial crisis for the terminal.
3.6 Review of Intelligent, Green and Safe Port Construction and Development
3.6.1 Intelligent port construction
1. Digitalized development of ports
Unmanned technologies, such as information technology, AI, simulation, intelligent machine control, and sensing technology can fuel the replacement of manpower for port production, so as to address the shortage of drivers and on-site operators as well as to avoid accidents caused by fatigue, improve operational efficiency and reduce safety risk. The Asia-Pacific economies have taken many measures to digitalize port production. The BNCT (Busan New Container Port) in Korea completed the unattended terminal test with intelligent automatic equipment such as driverless cranes and RFID readers in 2009. In 2017, the construction of China's Yangshan Port Phase IV unmanned port became a model for the intelligent management system and unmanned port operation in a heavy industrial park. In 2018, China Zhenhua Heavy Industry Co., LTD pioneered an autonomous driving system for port equipment based on multi-source sensor data and simultaneous localization and mapping (SLAM) technology, enabling vehicles to stay fully AI- powered for autonomous navigation.
In 2018, replacement of manpower with machines was also spotted in port production and operation systems of the Asia-Pacific economies, featuring the integration of various information technologies with port production and operation to avoid errors in and speed up data transfers in the port. This has opened up a possibility for future data sharing throughout the port and shipping logistic chain. Specifically, portnet.com, a subsidiary of PSA International, developed the CITOS system; Tidework Company of the United States created the Mainsail Vanguard system; Korea's TotalSoftBank (TSB) developed the CATOS system for the port; China's Yantai Huadong Electron Technology Co. Ltd. launched the automated yard control system (AIS-Yard) and the I-Gate intelligent gate system, both of which use intelligent information collectors. Combining technologies such as EDI, intelligent identification, information technologies and automated control technologies, ports in the Asia-Pacific economies enabled data collection, identification and human- computer interaction of containers and trucks, hence facilitating unattended
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operation at ports while ensuring data objectivity and correctness, with the intelligence level of container terminals greatly enhanced.
Table 3-9 Management Systems of Major Terminals in the Asia-Pacific Region
Terminal Operator or Third-Party Terminal Operation System Economy Supplier
Portnet.com CITOS Singapore
Tideworks Mainsail Vanguard United States
NAVIS Navis United States
TotalSoftBank CATOS Korea
CyberLogitec OPUS Korea
Hong Kong, HPH-HIT&YIC nGen China
Shanghai Harbor e-Logistics Software Co. Ltd. under TOPS China Shanghai International Port Group
Yantai Huadong Electron CITOS China Technology Co. Ltd.
Realtime Business Solutions RBS Australia (RBS)
2. Information-based ports
With the rapid business growth and the continuous infrastructure improvement for smart ports, the transformation and upgrading of ports in the Asia-Pacific economies have been centered on a digitalized platform integrating the business nodes involved in the port business, such as customs, maritime affairs, shipping enterprises, and financial service departments to achieve information connectivity of the port supply chain.
Major ports in the Asia-Pacific economies have established or updated their logistics service information platforms through information technologies and kept expanding their logistics functions. The platform services are rapidly moving toward integration, diversification and digitization. The port community platform ePort of China Merchants Group and the PortNet port information platform used by the Port of Singapore are the platforms developed by ports. Such platforms often center on related parties to port businesses, such as freight forwarders, container terminal operators, container loading and unloading stations and container chassis leasing companies. A central private cloud serves to provide real-time data of these parties
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2018 APEC Port Development Report www.apecpsn.org 116 to the entire port, to achieve seamless end-to-end process management of flows of people, capital and cargoes, thereby improving the cargo handling efficiency throughout the supply chain. In addition to port companies, port logistics platforms provided by third parties, such as the “Logistics Chain Cloud Platform” under China’s Shanghai vTradEx and the “Shen Gang Tong Port and Logistics Service Platform” of Shenzhen Vehicle Infonet Technology Co. Ltd., also play a part. These systems provide a platform for full-chain logistics management for related parties such as cargo owners, carriers, private line companies, drivers, warehousing service providers and consignees in the form of system applications. Compared with the platforms developed by the ports, third-party platforms are relatively neutral in terms of business and data circulation, which can effectively promote orderly competition of service providers.
Table 3-10 Logistics Information Platforms of Major Ports in Asia-Pacific Economies
Port Platform and Major Functions
PortNet: primarily for ordering port services, collecting ship Port of information, offering real-time data on port and logistic services and Singapore cargo deliveries.
Yangshan Comprehensive information service network (yangshanterminal. Port in com): primarily for real-time inquiries of port information, production Shanghai information, port services and company-related applications.
Ningbo- Eporthub.com: primarily offering single windows, EDI, logistics Zhoushan transactions, public information inquiries, cargo and ship insurance Port services, etc.
LineMate: primarily for matching the supply-demand information of Dalian Port cargo owners, ships and freight forwarders and offering real-time inquiries of ship, cargo and port information.
Yesinfo.com.cn: primarily offering inquiries of ship, port and other Yantian Port public information, customs clearance services and customs in Shenzhen declaration value-added services
3.6.2 Green port construction
1. GPAS program progress in 2018
To cope with the mounting global energy crisis and environmental degradation, APSN has been committed to promoting green ports in the Asia-Pacific region since 2011. Drawing experience from the green port and shipping certification system implemented by developed economies in the Euro Zone and the Americas, APSN developed a green port assessment system adapted to the diversity of economic and social development levels in the Asia-Pacific region, namely the Asia-Pacific Green Port Award System program (GPAS).
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The GPAS system uses three-level graded indicators for assessment. The first-level indicators are the willingness and determination for green development, the actions and implementation for green development, and the effectiveness and performance of green development. Under the umbrella of each Level 1 indicator are several Level 2 indicators. The GPAS evaluation committee will evaluate the performance of applicant ports in Level 2 indicators based on the reference criteria of each indicator and work out a score. The scores for each indicator are weighted and added up to work out the final score.
As per the review by the GPAS evaluation committee, and endorsement of APSN Council, nine ports (port authorities) from six Asia-Pacific economies were awarded the Asia-Pacific Green Port title. The award-winning ports (ranked in alphabetical order) are: Port of Bangkok (Thailand), Jurong Port (Singapore), Kai Tak Cruise Terminal (Hong Kong, China), Port of Singapore (Singapore), Cagayan de Oro Port (Philippines), Xiamen Hairun Container Terminal (China), Taipei Port (Chinese Taipei), Shanghai International Port (Group) Shangdong Container Terminal (China) and Xiamen Ocean Gate Container Terminal (China).
In the future, APSN plans to release the Asia-Pacific Green Port report on a yearly basis, summarizing and sharing the advanced concepts, typical experiences, environmental technologies and achievements of the Asia-Pacific green ports. It is GPAS' goal to build the most authoritative evaluation system for green ports in the Asia-Pacific region and to encourage the sustainable development of the port industry in the region.
2. Green development measures of Asia-Pacific ports
With the advancement of global energy transformation and low-carbon and emission- reduction schemes, ports in Asia-Pacific economies have taken active measures to shift to zero-emission, recyclable green ports.
Specifically, the Port of Oakland in the U.S. reduced emissions by increasing the use of shore power and modifying electric machinery. The moves are expected to reduce exhaust emissions by more than 45 tons per year and greenhouse gas emissions by 40 percent. In addition, the Port of Oakland published an air quality improvement draft (Draft Seaport Air Quality 2020 and Beyond Plan), proposing three major clean air strategies: continuing to implement the 2009 plan, which requires a reduction of 85 percent of diesel emissions by 2020; pushing zero-emission equipment and operation in accordance with California's greenhouse gas targets for 2030 and 2050; and building infrastructure containing electrical systems to support cargo handling equipment and trucks that rely less on diesel. The Port Hueneme in the United States accelerated its environmental protection measures and green projects, including a new zero-waste policy, gradually adopting high-mast LED lighting, and upgrading port patrol boats. The Port of Seattle also announced its 2019-2023 investment plan, setting forth to invest US$30 million in onshore power supply to reduce greenhouse gas emissions and berthed cruise ships and improve port air quality.
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2018 APEC Port Development Report www.apecpsn.org 118 As the world's largest transit hub port, Port of Singapore announced in November 2018 that it will ban the discharge of wastewater from open-loop scrubber systems into the sea in the port area starting January 1, 2020, and ordered that ships that have hybrid desulfurization equipment installed should switch to closed-loop mode in the port area of Singapore. This measure not only serves to comply with the new IMO regulations on sulfur emissions, but also as a principal means to protect the water environment in Port of Singapore for the purpose of developing a green port.
China has actively answered the call for green port construction. In 2018, Tianjin Port of China launched the all-round construction of shore-based power supply system for ships, planning to equip more than 50 percent of established specialized berth for container ships, ro-ro passenger ships, cruise ships, passenger transport of more than 3,000 tons and dry bulk transport of more than 50,000 tons with the capability of shore power supply before the end of 2020. In addition, the China Maritime Safety Administration (MSA) expanded China's carbon emission control areas (ECA) to include all ports in the Pearl River Delta, the Yangtze River Delta and Bohai Bay to further boost green and sustainable development of China's ports.
3.6.3 Safe port construction
With the growing cargo throughput at port year after year, ports are subject to an increasing number of problems. The transport, handling and storage of hazardous cargoes at ports relate to the safety of personnel and properties of ports. To this end, various Asia-Pacific economies have established safety laws and regulations, standards and norms and special supervision and management institutions to manage port production safety.
1. Improving safety production specifications at ports
With the rapid development of ports, the throughput and storage capacity of hazardous cargoes in ports are on a rise, and the variety is also growing, posing higher requirements for port safety management. To build a safe port, the corresponding laws and regulations as well as management measures should be updated and improved.
The International Maritime Dangerous Goods (IMDG) Code incorporating Amendment 38-16 was enforced on January 1, 2018. The new edition of code added classification of documents, waterfall fireworks, substances forbidden to transport, etc., and adjusted some special regulations. It added 10 cargo items to the hazardous list, with major changes made to vehicle cargo items and a polymeric materials item added. In the packaging directive section, new requirements for prototype batteries and the battery packs, as well as major bulks among others were added, and the lithium battery labels and signs content was added. In general, the International Maritime Dangerous Goods (IMDG) Code enforced in 2018 further enhanced the behavior norms for marine transport and terminal handling of hazardous cargoes based on the original requirements.
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Meanwhile, the Asia-Pacific economies have introduced various rules and regulations for port safety and adopted different measures to ensure safe production at ports. The Ministry of Transport of China issued a three-year plan (2018-2020) for safe traffic, in which a number of special rectification campaigns targeting ports were listed out, including in-depth rectification for safety of handling hazardous cargoes at ports and special rectification for active storage tank safety. The Maritime and Port Authority of Singapore (MPA) issued a ban on ship passing or staying in the designated waters in Eastern Anchorage (AEW) and Eastern Holding C Anchorage (AEHC) effective from November 13 to November 15, 2018, and a port marine circular (PMC) requiring all LNG carriers, LPG carriers and chemical tankers to park at designated waters to avoid the dangers from the flammable or explosive cargoes onboard in port. To improve the navigation safety of ships in busy waters, Hong Kong, China will add eight speed-limit zones to avoid accidents caused by ship collisions.
2. Improving safe operation awareness at ports
To avoid accidents with hazardous cargoes at ports, many port operation and management departments in the Asia-Pacific economies strengthened supervision capability building, in a bid to enhance safety awareness and expertise of port employees through safety training and education and ultimately achieve safe production at ports.
In 2018, Busan Port Authority and the KIFFA (Korea International Freight Forwarders Association) jointly launched a campaign to increase the safety awareness of terminal operators and cargo truck drivers. Meanwhile, Busan Port Authority will develop a port safety system incorporating technologies such as blockchain to ensure safe operation of port machinery and networks. COSCO Shipping Ports Group strives to enhance the safety awareness of port staff through daily SMS reminders on safety, organizing employees to watch safety education films, holding safety knowledge contests, and conducting special post-specific safety theory training in its port programs.
3.7 Development Trends of International Port Organizations
Sustainable development of port has been an important topic in recent years, with environmental pollution, infrastructure construction investment and port safety, in particular, becoming shared problems faced by many ports around the world. International organizations such as the International Association of Ports and Harbors (IAPH), the European Sea Ports Organisation (ESPO), and the American Association of Port Authorities (AAPA) have launched diverse initiatives and activities to empower port development.
1. International Association of Ports and Harbors
The International Association of Ports and Harbors (IAPH) is currently the world's largest non-profit NGO for ports, representing 180 ports in 90 economies and
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2018 APEC Port Development Report www.apecpsn.org 120 140 port-related departments. With enhancing global port ties and promoting port industry collaboration as its vision, the IAPH helps solve common problems of global ports and improve port service capabilities.
In 2018, the IAPH continued to stay committed to boosting sustainable port development. In March, the IAPH, together with multiple international/regional port organizations, officially launched the World Ports Sustainability Program (WPSP) in Antwerp, Belgium, covering five areas of inter-port cooperation: elastic infrastructure, climate and energy, safety and security, community outreach and port-city exchanges, and governance and ethics, with an aim to coordinate the sustainability of global port development by strengthening international cooperation. In June of the same year, the IAPH and the International Cargo Handling Coordination Association (ICHCA International) signed a memorandum of cooperation, which will greatly spur the execution of the global sustainable development plan for ports through investments in core equipment, technologies and financial service providers.
Figure 3-39 World Ports Sustainability Program
The WPSP emphasis on infrastructure retrofits and the use of clean energies, with a particular focus on promoting the Environmental Ship Index (ESI), which calls for port energy transformation. Since the adoption of the Paris Agreement in 2015, the emission reduction initiative has received wide attention across the shipping industry, and the IMO has also been working to accelerate an emission-reduction mechanism applicable to the global shipping industry. The "preliminary strategy" for the emission reduction of the port and shipping industry was pinned down at the 72nd Marine Environment Protection Committee (MEPC) meeting of the IMO in April 2018, that is, "reducing the greenhouse gas emissions by the shipping industry by at least 50 percent by 2050; meanwhile, striving to achieve zero carbon emissions before the end of this century; in addition, including diesel particulates, nitrogen oxides and other air pollutants in the requirements". Against this backdrop, the IAPH actively answered the call of the IMO, and cooperated with the IMO in October of the same year to develop a port emission toolkit, including a guideline for port emission assessment and a guideline for port emission-reduction strategy development, for the purpose of evaluating and solving emission problems of ships and ports. With the approach of the "Sulfur Restriction Order" in 2020, how to reduce sulfur emissions
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will be an urgency shared by global shipping companies.
In addition, the IAPH is also working to strengthen cooperation between ports in a broader region and between ports and other shipping-related departments. The IAPH represents the fundamental interests of many ports and port organizations around the globe. It has always been actively involved in the cooperation between ports, shipowners, and maritime departments, and has issued common policy documents to avoid policy-caused disparity of inter-regional port competitiveness which may distort market demand. In view of the current trends of ship upsizing and mushrooming shipping alliances and innovative service demands (such as full- process logistic services, and refined transportation services), a close connection between ports and other links in the supply chain is of significant importance.
2. American Association of Port Authorities
The AAPA represents more than 130 public port authorities in the United States, Canada, the Caribbean and Latin America. Through a series of policies and initiatives, it helps ports improve services, ensure long-term port development, and enhance port contribution to communities and socioeconomics. In 2018, the AAPA focused on port infrastructure investment, port safety, and policies encouraging free and fair trade.
In 2018, the AAPA continued to invest in infrastructure investment, especially in the port multimodal transport. In May, the AAPA issued the "State of Freight III – Rail Access and Port Multimodal Funding Needs", which studied in depth the freight demands, especially the rail transport demands, of various ports in the United States. The survey showed that, the funding gap of port-rail multimodal transport in the United States will exceed US$20 billion in the next decade. The Panama Canal expansion has brought more new Panamax vessels to the U.S. ports. Coupled with the continued growth in trade volume, ports are under increasing operational pressure. However, the current port-related project funding from the federal government has seen no increase. For example, in the US$11 billion subsidy of the Fixing America's Surface Transportation (FAST) Act, only US$1.13 billion went to the freight sector, and just US$275 million went to multimodal transport programs. 67 percent of the surveyed ports said insufficient funding has become the biggest obstacle for ports to launch port infrastructure construction projects. To this end, the AAPA has called for more financial support from the government. In 2018, the association sent a letter to the U.S. House of Representatives and the Senate, requesting increased financial support to the Consolidated Rail Infrastructure and Safety Improvements (CRISI) and the Transportation Investment Generating Economic Recovery (TIGER) programs to address the current infrastructure difficulties for ports.
In addition, policies encouraging free and fair trade have always been an important part of the AAPA. Uncertainty in trade policies has a direct bearing on port development. In 2018, the trade frictions between China and the United States dealt a blow to the U.S. ports. For example, some U.S. ports planned to invest in port infrastructure to adapt to trade demand. However, they were forced to cancel their
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2018 APEC Port Development Report www.apecpsn.org 122 plans due to the news of Sino-U.S. trade frictions. Moreover, the outbreak of trade frictions will directly slash port business volumes, which may further put job positions such as terminal workers and truck drivers in jeopardy and dampen the entire socioeconomic picture. To secure the sound development of ports, the AAPA and other relevant organizations stood up for major ports in the United States in 2018, lobbying the U.S. federal government to consider the negative impact of trade tariffs on the U.S. ports and other trade-related employment opportunities, and encouraged the U.S. Congress to support free and fair trade.
3. European Sea Ports Organization
The ESPO is a port organization within the European Union, which coordinates the interests of ports in the form of council, participates in the formulation of EU shipping policies, protects the statuses of EU member states and all EU countries, and offers technical advisory services and funds support for specific port projects.
In 2018, the ESPO continued to pay attention to port pollution issues. It develops and publishes environmental reports of European ports on a yearly basis, listing top 10 environmental priorities to serve as a guide for future development of ports. In 2018, the ESPO still put air quality as a top priority, followed by energy consumption and noise pollution. Europe has designated two major emission control areas, namely the Baltic Sea and the North Sea ECAs, but air pollution remains in the first place, embodying the ESPO's emphasis on this regard. Meanwhile, the increasing shipping waste has also attracted its attention. In 2018, it set waste-related issues such as ship waste as the fifth priority and urged ports to take immediate actions to handle shipping waste. Due to the shortcomings in existing systems, 7 percent-34 percent of ship waste fails to be delivered at ports. In January 2018, the ESPO put forward a new motion on waste receiving facilities to strengthen the principle of "polluter pays". It hopes to set up a more effective system to prevent traveling vessels from dumping waste into the sea.
In addition, the ESPO also seeks increased investment in ports. The ESPO said the demand for investment in European ports may reach 48 billion euros in the next decade. These demands are primarily driven by such factors as trade volume growth, new marine trends, environmental requirements, digitalization and intelligent technologies, urban development and safety challenges. Specifically, the investment in offshore passenger infrastructure access and hinterland access will account for more than half of the estimated total demand in the next 10 years. In the past three years, the projects initiated by port authorities only received 4 percent of the Connecting Europe Facility fund, and only one-third of the projects received support funds. In June 2018, the ESPO proposed to EU institutions to earmark 30.6 billion euros of budget in the Connecting Europe Facility fund (CEFII) for 2021-2027 for the transportation sector and increase the share of ports entitled to the fund to ensure further development of ports. To some extent, port investment can create great social value, but for investors, especially for port authorities, the return on investment tends to be low and the cycle to be long. That is why external investment is essential.
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Chapter 4 Review and Comment on Major Shipping and Port Events in the Asia-Pacific Region in 2018
4.1 Review and Comment on Ten Major Shipping Events in the Asia-Pacific Region in 2018
1. Top ocean carriers and terminal operators initiate blockchain consortium
Terminal operators DP World, Hutchison Ports, PSA International, Shanghai International Port Group, as well as ocean carriers CMA-CGM, COSCO, Evergreen Marine, OOCL, Yang Ming and CargoSmart, a software solution provider, jointly signed the letter of intent on November 16, 2018, for building the world's first shipping blockchain alliance - the Global Shipping Business Network (GSBN) for joint promotion of formulation of digitalization standards of the industry. Previously, Maersk and IBM also launched the TradeLens platform to facilitate global container tracking and management utilizing the blockchain and other new technologies.
With the shipping blockchain boom mounting, the blockchain technology has enjoyed expanding applications in the shipping sector, witnessing rapid permeation in paperless procedures and information tracking of ports, shipping exchange, shipping registry, container leasing and other niche segments. Shipping blockchain, through building a public platform connecting up various entities engaged in the international ocean shipping logistics business, helps reduce document-handling procedures, streamline payments, monitor cargo handling statuses and track goods. As things stand, TradeLens and GSBN have around 60 percent of the market share and the figure is growing, and they may play a leading role in the development of shipping blockchain platforms and formulation of digitalization standards. Yet shared standards and systems are still absent to cover the entire container shipping industry, and the independent development of the two platforms may result in data silos growing into data chasms. In addition, multiple problems still lurk in the path toward the goal of building up a shipping blockchain ecosystem, including the platform operation modes, the option between public chains and the private chains and enterprise data privacy. To enable a truly open platform in the future to facilitate industry information connectivity and help shipping companies, the shipping industry and all stakeholders should focus on offering value-added services in joint cooperation with all parties in the industry involved.
2. Sulfur limit confirmed again and emission control areas to be put into effect soon
The IMO has finalized the draft MEPC circular on guiding the development of a ship implementation plan for the consistent implementation of 0.5 percent sulfur content limit at ISWG-AP1 on July 9, 2018, setting forth countermeasures targeting possible problems from the enforcement of the new fuel standard, and confirmed again that the 0.5 percent m/m sulfur emission limit for global ship-use fuels will be enforced starting from January 1, 2020. Meanwhile, China and Chinese Taipei also announced moves to implement the new sulfur emission control area (SECA) rules from January 1, 2019. The shipping routes with ports in the new SECAs as departing ports or destination ports started to charge Low Sulfur Surcharge (LSS) in succession at the end of 2018. Moreover, multiple ship enterprises also issued
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2018 APEC Port Development Report www.apecpsn.org 124 their new standards on fuel surcharges, and LSS will be imposed for routes with their loading ports or unloading ports falling into the emission control areas in North Europe, North America and China.
Ever since IMO put forward the 2020 IMO fuel sulphur regulation, shipping enterprises have resorted to the use of low-sulfur fuels, replacement to dual- fuel engines or installation of desulphurization equipment to process ship tail gas to reduce ship emissions. The advanced enforcement of sulfur emission control areas will act as a precursor to the IMO sulphur regulation in 2020, revealing the implications of sulfur emission limit on the industry. First, the regulation will drive up ship operation cost. Shipping enterprises may resort to speed cuts or freights rises to keep the cost down, and charge fuel surcharges, etc to transfer the cost to various links on the transportation chain. This will put small and medium-sized enterprises that struggle to afford the cost under severe challenges. Second, shipping enterprises will conform to the environmental requirements by ordering environment-friendly ships and installing desulphurization equipment, giving a boost to the shipbuilding and repair sector. Finally, LNG may also be a trend for the shipping industry to respond to the regulation, which may boost the LNG and clean energy markets.
3. Maersk Group launched major restructuring
Maersk announced on September 19, 2018, the integration of Damco supply chain services into Maersk Line's ocean product, along with their respective value-added services. The move will enable customers to enjoy all-round services, including shipping, multimodal transport, warehousing, supply chain management, and customs declaration, as well as digitalized end-to-end logistics solutions, from 2019. The restructuring of Maersk Group will help the group offer more diversified portfolios through uniform teams, establish clearer brand structures, and thereby tap to all niche segments from production to consumption to leverage the group's business advantages.
Maersk's development plan to expand its supply chain is the inevitable result of shipping enterprises' reaction to the changed trade patterns and cargo sources. In recent years, the digitalized consumption represented by cross-border e-commence has changed the traditional distribution systems, and the traditional port-to-port and door-to-door shipping services are already unable to meet the new demands of customers and the latest trends in the market. Shipping enterprises have started to shift from a business pattern dominated by ocean shipping services to end-to- end supply chain logistic services that feature full-process, efficient and responsive services. Maersk's merger of its shipping and supply chain businesses, CMA CGM’s acquisition of CEVA Logistics and the latter's merger with CMA CGM Logistics are all important representations of such a trend. With the new import trade patterns lead by cross-border e-commerce taking shape, customers will pose requirements for more refined, intelligent and transparent cargo transport. This means shipping enterprises should change the traditional business philosophy that pursues scaled economy for benefits and build the capability of quickly spotting customer needs to provide precise and tailor-made services.
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4. INTTRA to be acquired by E2open
INTTRA, a world-renowned space booking and transaction platform and software and information provider, was acquired by E2open, a supply chain solution provider in the U.S., on October 22, 2018. This acquisition marks a major breakthrough in shipping space booking platform in the face of the digitalized transformation of the container shipping industry. The two joining strength will fully exploit the advantages of the industry-leading business network of E2open and of the marine carriers and shippers network of INTTRA to co-build a third-party shipping platform connecting global manufacturing, logistics and marine shipping, with the space booking, container tracking and shipping data openness further improving. This will inject new vitality to the digitalized transformation of the shipping industry.
In the digitalized transformation of the shipping industry, digitalization will permeate across the supply chain along with the transformation of shipping enterprises, presenting full-chain supply chain digitalization in the shipping, logistics and trade links. During this process, apart from the digitalization endeavors by market players, the role of third-party platforms such as INTTRA cannot be neglected. Unlike the "scale economy" philosophy, which plays a leading role in the traditional shipping industry, third-party platforms improve their service experience through innovating business modes and achieve full connectivity between upstream and downstream business links through digitalization, thereby establishing more well-structured business modes and enabling more transparent user experience information and more standardized services. In the future, the traditional port and shipping enterprises, third-party shipping platforms and outside-industry e-commerce groups and electronic technology enterprises may compete to grab the shipping digitalization market and reshape the shipping digitalization landscape.
5. Maersk Honam fire heated up shipping safety
Maersk Honam, a container ship of Maersk, caught fire on March 6, 2018, killing five seamen. That blaze was the most serious accident in the shipping history of Maersk, causing a huge economic loss and casualties. After the accident, "Maersk Honam" operator Maersk Lines conducted a thorough examination on existing safety regulations and policies for hazardous cargo loading and carrying and introduced new regulations on September 26, redefining the risk scope of ships, in an aim to minimize the risks for seamen, cargoes, environment and ships after a fire and eventually reduce losses caused by fires.
"Maersk Honam" blaze attracted industry-wide attention to ship safety supervision. Frequent fires to container ships have been seen in recent years. Apart from major fires, smaller incidents were also reported. Major causes for ship fires include misdeclaration and concealment of hazardous cargoes, regulations falling behind market changes, and lack of supervision. Therefore, to ensure ship safety, we should impose strict requirements in the regulation aspect, check for supervision weakness and loopholes, improve the legal and regulatory framework and enhance inspection and supervision over hazardous cargoes.
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2018 APEC Port Development Report www.apecpsn.org 126 6. Japan's ONE went into official operation
The Ocean Network Express (ONE), a joint venture by three shipping giants in Japan, NYK Lines, MOL and KLINE joining their container shipping and terminal businesses, entered official operation on April 1, 2018. The company's shipping capacity ranks sixth among the global peers and enjoys 7 percent share of the global container market. It will take a leading position on in-Asia trade routes. In addition, ONE will reduce repeated voyages to cut down costs and improve ship operation efficiency and optimize its routes and expand its service scope through closer collaboration with THE alliance.
Currently, the international container liner transport market sees a much higher concentration ratio, and shipping enterprises such as ONE are trimming direct capital output through integration and sharing ships and routes among other resources with partners, so as to eventually achieve effective allocation of resources and facilitate profit growth. The higher concentration ratio of the container liner market will enable liner companies to have a greater status on the entire container transport chain, while enjoying cost effectiveness, scaled economy, network improvement and service efficiency enhancement. However, it may also lead to a smaller number of routes, which will generate a higher potential anticompetitive effect on cargo owners and port enterprises among other upstream and downstream players. With authorities increasingly raising concerns on monopolies, the large-scale merger wave among huge container lines may ease to some extent.
7. IMO put forward 2050 emission reduction goals for the marine shipping industry
On April 13, 2018, IMO signed the marine emission reduction agreement in London, proposing to cut the greenhouse gas emissions of the shipping industry by 50 percent by 2050 from the 2008 level and eventually achieve zero emissions. Member countries will carry out negotiations in the next five years centering around the specific measures for achieving the goal, eying to conclude a final agreement by 2023 and settle down the detailed implementation plans for achieving the strategic goal.
As a goal for energy conservation and emission reduction of the shipping industry, marine emission reduction agreement requires various shipping parties to set out specific implementation measures based on practical situations and reliable projections, which may pose higher requirements on the environmental performance of the shipping industry. In recent years, the shipping industry has made initial progress with regard to ship emission reduction through their efforts in coping with environmental policies such as the IMO 2020 regulation and the ballast water management convention. They utilized technical means such as optimized ship types, improved engine efficiency and recovery of exhaust heat to improve ship energy efficiency, and reduced emissions through low-speed navigation and scaled economy among other measures. However, as the efficiency improvement materialized through fossil fuel technologies is unable to eliminate or even
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significantly reduce carbon emissions, except keep the carbon emissions at the current level, the exploitation and application of new energy sources may become an effective approach to cut down carbon emissions from ships. At present, new-energy ship development has achieved initial result, but the technical and financial feasibility of decarburization solutions still needs to be strengthened before the ships officially enter operation.
8. Product oil tanker shipping industry continued integration
Since 2015, the global liner shipping industry has undergone a round of shipping enterprise mergers to address the fragmented and dispersed shipping capacity, and the concentration of the container liner market has greatly increased. In 2018, the integration trend in the oil shipping industry was even more significant to cope with the shipping periodicity. BW Tankers completed its merger of Danish oil tanker company Hafnia Tankers in September 2018, bringing into the world the largest product oil tanker fleet. The U.S. shipowner Diamond S Shipping announced in November 2018 that it would merge with the product oil and crude oil businesses of the Greek shipowner Capital Product Partners, and the new establishment will become one of the world's largest oil tanker companies.
Unlike the container shipping industry, the oil shipping industry is demand-driven, with a large number of product oil tankers extensively distributed. Apart from shipowners dedicated to oil tanker operation, oil product traders and oil companies also have ships of their own, rendering the integration scale and scope of product oil tankers subject to limitations. Faced with the demand for fleet updates and compliance with new environmental regulations, crude oil tankers and dry bulk shipowners are willing to expand their sizes and benefit thereof. Besides, the concentration of the oil shipping industry is lower than that of the container shipping industry, which means there are less regulatory barriers for further integration. Private equity funds may become a key driver for the integration of the two sectors. The merger trend in the product oil tanker industry may shift to the crude oil shipping market and dry bulk shipping market, with the integration scope expanding further.
9. Korea unveils five-year plan to save its maritime sector
Korean government issued the Five-Year Plan for Rebuilding Korean Shipping (2018-2022) on April 5, 2018, proposing to elevate Korea's shipping competitiveness to global top five by 2022. The plan focuses on shipbuilding, ports and shipping finance, including enhancing shipping enterprises' competitiveness while winning more and more stable cargo sources for shipping, building more new and modern ships, and promoting stable management through continuous innovation.
At present, Korea's shipping sector is mired in domestic strife and foreign troubles. After the bankruptcy of Hanjin Shipping, except Hyundai Merchant Marine which ranks ninth worldwide in terms of shipping capacity, all the other seven existing liner companies are small in size. The total capacity of Korean liner companies takes mere 3 percent of the global total, and they lack competitiveness amid the increasing
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2018 APEC Port Development Report www.apecpsn.org 128 concentration of the industry. Besides, both China and Japan, major rivals of Korea in the Asia-Pacific region, have completed the integration of liner industry and rank third and sixth, respectively, in the globe by capacity, adding pressure on Korea shipping industry. The integration and scaled development of shipping enterprises in Korea may become a top priority for revitalizing the marine industry in Korea under the guidance of the five-year plan, and various marine sectors such as liner shipping and shipbuilding will initiate integration led by the government or the market. However, the five-year plan, though capable of integrating Korea's shipping resources to some extent, may fail to address the root cause of the shipping stagnation in Korea. The marine sector in Korea should change its extensive operation philosophy and extend and expand the upstream and downstream service industries to improve service capabilities of market players.
10. World's first zero-emission fully autonomous container ship kicked off construction
The world's first zero-emission fully autonomous container ship "Yara Birkeland" entered construction on August 15, 2018, and is expected to be delivered for use in Q1 2020. By 2022, the ship will achieve fully autonomous navigation between Porsgrunn, Brevik and Larvik ports.
"Yara Birkeland" is regarded as a forerunner in innovation of highly intelligent technologies for shipping. Once built and put into operation, the ship will bring valuable practical experience for commercial operation and R&D of fully autonomous ships, helping enterprises with practice-grounded analysis and assessment of autonomous ship operating costs and risks. With the ship-shore integrated communications, cargo supervision and control and other technologies maturing and applied, the logistics efficiency will be boosted, and more new business opportunities will unfold before shipping enterprises. Meanwhile, after remote supervision and autonomous driving pass the risk testing, they will empower new types of ships, creating new markets for shipbuilding and shipping. By then, the shipping industry will undergo unprecedented changes. Yet the popularization and use of autonomous ships still face many obstacles. Unmanned driving may reduce seamen or even render seaman intervention unnecessary. As a result, traditional ship liability and insurance rules, maritime laws and regulations should be updated to adapt to the new business patterns. Piracy and hacking risks also need to be addressed.
4.2 Review and Comment on Ten Major Port Events in the Asia-Pacific Region in 2018
1. China Merchants Group led port integration in Liaoning
The resource integration of ports in Liaoning province made substantial progress following the China Merchants Group's involvement on November 4, 2018. The group plans to become a shareholder of Liaoning Northeast Asia Port and Shipping Development Company Limited through SPO and rename the company to Liaoning
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Port Group. Liaoning Port Group will become one of the biggest port groups in China in terms of asset scale and cargo throughput. China Merchants Group will initiate in- depth collaboration with Liaoning provincial government in multiple sectors including port operation, logistics transport, industrial park development and financial services, in a bid to lay a solid foundation for Dalian to build the Northeast Asia International Shipping Center and elevate the international competitiveness of the port.
China has launched the port resource integration wave at provincial level since 2016 to deter homogeneous competition among regional port groups. Beibu Gulf Port and Ningbo-Zhoushan Port are paragons in this regard by taking the lead to set up regional port groups. As port integration advances, it has become a new trend for cross-region global terminal operators to take part in regional port integration. Unlike the in-depth integration of port groups in the "postport resource integration era", the engagement of global terminal operators in port integration will, in addition to helping solve the homogeneous competition among regional port groups, facilitate regional port groups to grow network-oriented on the global scale leveraging the global terminal operators' professional operation models and their port networks around the world, and eventually bridge up the region and the regional port groups to encourage industrial reforms and transformation. China Merchants Group leading the port and shipping resources integration in Liaoning province will introduce the "China Merchants Shekou" development pattern to Liaoning ports to push forward the rear industry development of the port and economic growth of the city. Global terminal operators will join port integration in a more profound manner, and more financial capital, trade capital and industrial capital will take part in port resources integration. This will extend ports' service functions and help build exclusive featured logistics and port shipping systems through cooperation with factories, traders and consortia.
2. Frequent congestion at Asia-Pacific ports
The year 2018 witnessed frequent congestion incidents at multiple ports in the Asia- Pacific region because of the changes in the international trade situations and the environmental policies. In January 2018, China officially enforced its ban on foreign waste imports. The United Kingdom, the United States and Japan among other countries had to transship their plastic waste to Southeast Asian economies. Ports in Southeast Asia such as Viet Nam TanCang-Cai Mep International Terminal (TCIT) experienced severe congestion. In September, Qinhuangdao Port limited the coal exit volume and ships switched to Caofeidian and Huanghua ports, leading to 265 ships stuck at the five ports in North China. In October, the advanced shipment peak because of the Sino-U.S. trade frictions led to extreme congestion at the Port of Los Angeles and Port of Long Beach on the West Coast of the U.S. In addition, the Chattogram Port in Bangladesh and the Port of Manila in the Philippines witnessed congested ships and overstocked cargoes because of strikes.
Overall, the port congestion in the Asia-Pacific region in 2018 was primarily a result of the changes in the world economic and trade situations and policies. In particular, the tightening environmental policies in China and tariff policies changes because of the Sino-U.S. trade frictions resulting in supply shortage of some ports to cope
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2018 APEC Port Development Report www.apecpsn.org 130 with the soaring cargo volumes. Such congestion caused by trade situation and policy changes can be addressed through taking timely measures but may easily happen again once the trade situation and policy change again. Therefore, apart from improving their infrastructure to elevate the terminal operations and production organization efficiencies, ports should also engage in collaboration with government agencies and various parties along the shipping chain. On the one hand, government authorities should introduce supportive policies and legal provisions for the construction of port inland distribution network and encourage cargo owners to distribute their cargoes through rail and lighters. On the other hand, government authorities should improve the current supervision patterns and service procedures for port services, improve services level, and timely identify issues with ports while enhancing communications and cooperation with port enterprises to improve port services.
3. Asia-Pacific coal ports unveiled trend of transformation
Coupled with the de-coal trend in the global power industry and the unexpected development of new energy technologies and policies, the coal market has embarked on a slow downward path. Meanwhile, the highly professional equipment at coal terminals, though greatly enhancing the efficiency, has revealed their vulnerability in market changes. Therefore, as the coal demand growth slows down, the coal terminals in some areas see oversupply of coal and port transformation and upgrading become an urgent task. Multiple coal ports in the Asia-Pacific region sought diversified development in 2018, and a trend of port transformation was unveiled. The Port of Newcastle in Australia put forward a strategy of staged container terminal development, planning to build a container terminal of 2 million TEUs throughput a year to transform to container handling business. Qinhuangdao Port in China put forward development goals of advancing coal terminal transformation and upgrading and speeding up the development of Qinhuangdao International Cruise Home Port. Except for the coal ports in active pursuit of transformation and upgrading, many other coal ports suffered sluggish development and operation performance, such as the Port of Abbot Point in Australia which aborted its T2 coal terminal expansion, as T1 coal terminal struggled with overcapacity with a utilization rate lower than 50 percent.
As the coal demand continues to go down, the global coal terminals may face the challenges of active or passive transformation. It has become a key consideration of terminal operators to choose a suitable path of transformation based on the market and regional demands. Clean combustion technologies of coal may secure a seat for coal in the future energy structure. Areas with high coal import and export demands may choose to transform their ports into smart and green coal ports through upgrading and transformation of technologies and equipment. Besides, areas with slowed demand for coal shipping may try to transform their coal terminals into container terminals, cruise terminals or terminals for other purposes to fully leverage existing port resources of coastline and shipping lanes, or they can transform the terminals into comprehensive urban functional areas, with their industrial production facilities at terminals changed to life and leisure facilities.
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4. Singapore sped up intelligent port development
The Singapore Maritime and Port Authority (MPA) signed seven major agreements with multiple parties on April 25, 2018, centering on the development of Singapore maritime sector for automation, data analytics, intelligent system and network security. Port of Singapore has been committed to promoting port digitalization and development of next-generation ports and leads the world in intelligent port construction. The seven major agreements cover milestones such as the development of the next-generation ship traffic management system (NGVTMS), autonomous vessels and the Singapore Maritime Data Hub (SG-MDH), marking an important measure to put into practice its Maritime Transformation Programme (MTP). These endeavors may play a crucial role in pushing the marine industry transformation in Singapore. In the future, the Port of Singapore will fully exert the supportive role of innovative maritime technologies to efficient port operation, and deploy automation, digitalization and AI technologies to its next-generation port - the Tuas Port, to improve the port connectivity and reliability and cement its status as an international shipping center.
The Asia-Pacific region has seen steady progress of port intelligentization in the past two years, represented by the Port of Singapore. Specifically, automated terminals at Xiamen Ocean Gate Container Terminal, Shanghai Port and Qingdao Port enjoyed stable operations. The smart container terminal of Jingtang Port Area of Tangshan Port, and the Phase IV automated terminal of Nansha Port Area in Guangzhou gained speed for development. The Port of Los Angeles and Long Beach in the United States piloted the "port optimizer" in collaboration with GE Transportation to enhance port efficiency, the Port of Oakland and the Port of New York-New Jersey built a digital portal website to offer information services. The Port of Singapore announced a plan to launch the Maritime Transformation Programme (MTP) to support the Sea Transport Industry Transformation Map (ITM) of Singapore. In the future, with the technologies of big data, cloud computing, and AI among others evolving, port and shipping enterprises will reach a consensus about transforming the industry with technology. Digitalization transformation will be a major direction for ports to improve efficiency and service values and cope with cross-sector competition.
5. Asia-Pacific economies vied to be LNG refueling centers
With the IMO 2020 regulation on the verge of taking effect, LNG-powered ships have rapidly increased in recent years covering all ship types, and the ship size has also grown. The growth of LNG market demand has also driven the boom in the LNG refueling market. The United States, Singapore and Japan among other Asia-Pacific economies all look to further growth of the LNG fuel, and are committed to building LNG refueling centers.
Based on the current developments, Japan and Singapore may become major LNG refueling centers in Asia, primarily serving Southeast Asia and European trade routes and East Asia-North America trade routes, respectively. The three main ports
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2018 APEC Port Development Report www.apecpsn.org 132 in Keihin, Japan (Yokohama, Tokyo and Kawasaki) are located on the west coast of North Pacific trade routes, sporting a favorable geographical location. Besides, Japan has been importing a large amount of natural gas for a long time, ensuring well-established infrastructure for LNG. Japan has launched preferential policies to support the LNG refueling business. On May 10, 2018, K Line, NYK Line, Tokyo Electric Power and Toyota Tsusho Corporation issued a joint statement announcing the establishment of two joint ventures engaged in LNG refueling business in central Japan. Singapore, as a world-leading refueling port, views it its major strategy to build an international LNG refueling center against the backdrop of low-sulfur rules challenging its status as a big refueling port. The Singapore Maritime and Port Authority (MPA) has stayed well poised to push forward LNG application and LNG refueling, and striven to speed up the LNG refueling business development through setting up and implementing an LNG refueling license system, offering financial subsidiaries and tax cuts, and building an international LNG refueling port network.
6. Seven ports jointly drafted World Ports Climate Initiative
In 2018, IMO proposed to cut the marine emissions by 50 percent by 2050. Ports, as kernel hubs in the global marine network, play an important role in emission reduction of the global shipping industry. Two initiatives were rolled out in the port sector in 2018. In March 2018, IAPH officially launched the World Ports Sustainability Program (WPSP), in a bid to formulate industry standard practices related to the sustainability goal of ports in collaboration with ports and supply chain partners. In September, seven ports and port authorities including the Port of Rotterdam, Port of Antwerp, Port of Los Angeles, and Port of Long Beach announced the establishment of a port emission reduction alliance, and jointly drafted the World Ports Climate Initiative (WPCI) to cut down port emissions and combat global warming.
Content-wise, the World Ports Sustainability Program (WPSP) stresses on setting out guidelines and instruments, clarifying the emission reduction goals and offering technical support, while the WPCI aims to help ports implement these guidelines, instruments and strategies to point out the directions of emission reduction for global ports. The WPCI urges to increase the use of renewable energy-powered ships and decarbonize ship fuels among a total of five action plans. These plans will be materialized primarily through providing rewards to climate-friendly ships, including fee reduction or exemption for ships that slow down navigation as they approach the port, and passage priority for environment-friendly ships. Currently, 28 out of the top 100 ports in the globe have adopted this approach. With regard to the long-term development of ports, the container throughput of the Asia-Pacific ports accounts for more than half of the world's total container throughput. Yet in terms of energy conservation and environment protection performance, the Asia-Pacific ports still technically lag behind their European and American counterparts, and more ports should take active part to achieve the port emission reduction goals.
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7. Hainan given green light to build free trade zone and pilot free trade port
Hainan province of China faces the China South Sea in the south and is near to the Pacific Ocean, making it an important strategic passage for heading southward from China. It is also a key part in Southeast Asia. Hainan province welcomed a major opportunity in April 2018: China decided to support Hainan to build a free trade pilot zone covering the entire island, and support Hainan to gradually explore and steadily push forward the development of a free trade port with Chinese characteristics. The Guiding Opinions on Supporting Hainan for Comprehensively Deepening Reform and Opening-up was issued later pointed out to support Hainan to set up trading venues for international energy sources, shipping services and carbon emission rights and focus on developing tourism, internet and other modern services, and set forth that a free trade port will take an initial shape in Hainan by 2025.
Unlike China's other free trade pilot zones as well as mature free trade ports such as Hong Kong of China and Singapore in the Asia-Pacific region, Hainan enjoys exceptional advantages in scale, location, system and market for building free trade pilot zones. With the supportive policies for free trade port development, Hainan may become a representative in market opening-up in the Asia-Pacific region. Meanwhile, the free trade port system building will also benefit port functions expansion in Hainan, facilitating Hainan's exploration of developing international shipping trade and transaction platforms and building a container transit hub serving Southeast Asia and major Asia-Pacific economies. This will also help open a crucial shipping route of strategic resources in the Asia-Pacific region, pushing Hainan Free Trade Port to grow into a new point of growth and innovation in China and the Asia-Pacific region at large.
8. ILA and USMX signed contract
International Longshoremen's Association (ILA) and United States Maritime Alliance (USMX) signed on September 26, 2018, a formal six-year extension of their East and Gulf Coast labor contract. The two sides reached consensus on the aspects of wages, automated equipment usage and healthcare benefits. The new contract will terminate on September 30, 2024. International Longshore and Warehouse Union (ILWU) on the U.S. West Coast and the International Longshoremen's Association (ILA) on the U.S. East Coast are major representatives of terminal workers in the U.S. The strikes led by the two organizations for the purpose of defending rights and interests of terminal workers play a crucial role for the stable operation of ports in the U.S. and the economic activities across the U.S., Asia and the globe at large. The official signing of the ILA-USMX contract, and the ILWU-PMA extension contract signed in 2017 mean that the workers' labor unions and terminal operators in the U.S. will embrace a peaceful period, guaranteeing the stability in the next five years in the U.S.' logistic supply chain.
Port infrastructure in the U.S. has been falling behind that of Europe and the Far East since the beginning of this century, with one major cause of this being the labor unions' boycott against automation technologies in ports out of unemployment
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2018 APEC Port Development Report www.apecpsn.org 134 concerns. As intelligent ports evolve, ports in the U.S. are also launching intelligentization gradually. The Port of Long Beach and Port of Los Angeles on the U.S. West Coast are planning to use unmanned vehicles and other intelligent equipment to improve port efficiency. APM Terminals is also planning to "test and eventually deploy" automation equipment at the No. 400 Terminal in Port of Los Angeles. However, as the use of automated and semi-automated equipment at terminals continues to face limitations, the attempt may again face resistance from labor unions. In the long run, apart from solving infrastructure and operation management issues, ports in the U.S. should also well coordinate the relations with workers and companies to ensure rapid progress of port production and development.
9. OOIL acquisition wrapped up yet the fate of Long Beach terminal remained at stake
After nearly one year of review, as of June 29, 2018, all the five prerequisites for COSCO Shipping's purchase of Orient Overseas International Ltd (OOIL) have been reached. But as a condition for review by the Committee on Foreign Investment in the United States (CFIUS), COSCO Shipping Holdings has reached agreements with relevant parties to sell the Long Beach Container Terminal (LBCT) controlled and operated by OOIL. Before the purchase is done, the terminal will be managed by a third-party trust under the U.S. management for a one-year period.
LBCT is a project planned to be developed in the 40-year franchise agreement signed by OOIL in 2012. Located in the Middle Harbor of Port of Long Beach, the terminal was planned to become the most technically advanced and automated terminal in the U.S. by 2019. However, since the LBCT was excluded from the OOIL purchase case, difficulties clouded the selling of the terminal. First, the Sino-U. S. trade frictions and the oversupply of container handling capacity at the Los Angeles and Long Beach port group lowered the prospect of LBCT, undermining the investment enthusiasm of financial investors. Second, Singapore's PSA International (PSA), DP World and China Merchants among other companies may face the same national security review as COSCO Shipping did. Last, SSA and Ports America, two local terminal operations in the U.S., are hanging back in view of the power of terminal labor unions to rashly operate a fully automated terminal. Despite the challenges, it is undeniable that the terminal, as the most advanced automated terminal in the U.S., still possesses huge potential. In the future, it may further enhance the terminal operators' say in the possible port resource integration of Los Angeles/Long Beach port group (LA/LB).
10. China customs integrated commodity inspection
The roles and responsibilities as well as teams of China entry-exit inspection and quarantine administration were put under China's General Administration of Customs on April 20, 2018. It will carry out the work of the customs. The port window posts in China achieved uniform employment, uniform customs clothing, and uniform customs ranks. Later, China's General Administration of Customs announced cancellation
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of the Entry/Exit Inspection and Quarantine Clearance Declarations starting June 1, 2018, and imported commodities can be declared at one go through the "single window" interface for both customs clearance and quarantine inspection. The reform improved China's cross-border trade environment, creating a more convenient and safer international trade atmosphere. It is of significance for achieving efficient, safe and convenient port and customs clearance services.
After entry to the WTO, China has seen a surge in import and export cargo trade. Yet the separated customs clearance and quarantine inspection procedures in the past led to a long logistics turnaround, with the high logistic cost increasingly prominent. In recent years, China launched a series of measures including the paperless customs clearance, and customs and quarantine inspection collaboration for "one declaration, one inspection and one clearance" to improve the customs efficiency at ports, laying a foundation for the merger of the customs and entry-exit quarantine inspection. This merger and cancellation of the entry-exit certification comply with the international practice and eliminate repeated inspections by the customs and quarantine inspection organs, improving the customs efficiency at ports. It is the first reform that got down to the customs organizational structure in the real sense in recent years and extends the customs functions by changing the original fragmented and segmentary management pattern, resulting in an improved business environment for China's cross-border trade.
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