Just as the dogs line up at the pound’s kennel fence barking “Pick Me, Pick Me” with the anxiety of salvation, the container ports around the globe are jostling fiercely for position in a Darwinian version of musical chairs.
The combination of larger vessels, slow steaming at sea, changing shipping patterns, overcapacity and an expanding Panama Canal are factors influencing a race to upgrade, almost regardless of cost. The formation of P3 alliance by the three biggest container operators (Maersk Line, Mediterranean Shipping Co, and CGA-CGM) and their consequent need to rationalise their port calls has added the latest twist.
The changes were already well under way. The ordering of 18,000 teu ships and the cascading of ships by size down the line had altered the requirements to compete.
The amount of money being thrown into the upgrade mix is substantial. A group of North European ports are collectively ponying up $13bn to upgrade to bigger cranes, bigger terminals, longer berths and larger container yards.
Billions are being spent at US East Coast ports for dredging to handle mere 8,000 teu vessels at a time when ships twice that size are on order.
One port, Miami, proudly hails the $2bn it is spending for dredging, on-dock rail, and a related highway in an effort to slip into position for when the Panama Canal expansion occurs. Given its geography at the end of a long peninsula, the strategy can only be described as a gamble.
These investments are putting pressure on current port financial returns, because the new expense is not being recouped in a flagging market.
One casualty of the financial squeeze may be the single-use terminal, as port operators seek a higher utilisation of the rising capital investment.
Another publication has just produced a listing of global ports by productivity, measuring the number of containers handled between the time a vessel docks and returns to sea. This underlines the pressure on ports to speed up, oddly as ships steam more slowly at sea.
One observer at a smaller port demurred: “I am not sure the port should be spending $250m for dredging for ships that may never come.” But that sentiment is largely being ignored in the rush to become a base port serving mega-sized ships or be relegated to feeder status.
Like the dogs at the pound, the ports fear being bypassed. Winter is coming and nobody wants to be outside.