Hapag-Lloyd Strategy Presentation

10 October 2016

This happens because ports are gateways into continents and from ports goods are transferred to the mainland. As a result a congested port can affect the entire distribution of some products in a wide region. Although traffic in ports was reduced in the past few years due to the economic recession, according to forecasts, the amount of cargo going through ports is going to rise dramatically by 2020, affecting the congestion issues for many ports. (Maguire, A. et al, 2010). Port operations can be subcategorized in three sectors.

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Firstly, there are the seaside operations where vessels arrive at the port and a berth should be available for the ship to unload or load its cargo. Secondly, there is the yard operation of the port where the cargo is handled and stored after the loading or unloading has taken place. The last sector is the landside operations which connect the yard side with the mainland and it is responsible for managing any incoming or outgoing cargo. (Maguire, A. et al, 2010). Furthermore congestion can be found and in hinterland transport and can have the same impacts as the port congestion has.

This paper will identify issues ports are facing according congestion and will suggest appropriate solutions. Financial and Political concerns Before going in depth on analyzing the specific congestion issues that port and inland transport are facing, some general issues should be addressed first. A common problem is the lack of investment capital. The reforming and upgrading of ports infrastructure is a matter that requires a large amount of funds. It is quite often that ports do not get the funding they need from state agencies.

Foreign investments from major companies operating in this field can be many times the solution to ports funding problems. (Bernstein, M. 2006). Another issue is that people do not seem to understand the importance of shipping and they only feel this importance when they experience the lack of benefits derived from shipping. An example is when they start noticing shortage of some specific products in the stores. Thus, people may appreciate a new highway but will not consider very beneficial a new port terminal.

This appreciation is seen in politics in some countries where there is a lack of motivation for governments to invest in major maritime infrastructure improvement operations. Education of the general public on the importance of shipping along with the creation of big political campaigns to sensitize governments to provide funds for the maritime and transportation sector are two possible solutions to these matters affecting the shipping industry. (Bernstein, M. 2006). Seaside congestion issues Sea commerce and transportation of goods are increasing in a global level.

Ports around the world are facing exciding numbers of shipments and many times they are unable to cope with this high supply. Two major factors for this increased traffic is firstly the extended use of containerized cargo (Schwitzer, M. et al, 2011) and secondly the fact that Chinese exports have grown dramatically in numbers and as a result their shipments are flooding US and European ports. (Bimco, 2005). An example is that in the first month of 2007, 73 percent of ships carrying container cargo arriving in European ports were delayed due to lack of available berths at their port destination.

This percentage is significantly higher than 43 percent of ships arriving late that was reported in 2006. (Mudeva, A. 2007). Additionally, in 2007 many of the largest European ports such as Southampton, Felixstowe, Hamburg and Rotterdam were unable to receive a number of container ships for loading and unloading their cargo. As a result the vessels were directed to other destinations. (Marex, 2007). A possible solution on behalf of the logistics providers is to consider rerouting their ships to ports in close proximity that do not face alarming congestion issues.

This way cargo can be loaded or unloaded in a much more efficient way and then distributed to inland destinations. About 80 percent of shipments arriving in the west coast of USA are received by Los Angeles and Long Beach. An alternative destination to alleviate congestion from west coast ports are ports on the east coast such as New York and Savannah. This route requires passing through the Panama Canal. If the canal is also congested, another solution is to ship vessels directly to the east coast through the Suez Canal. (Ward, A. 2005).

For European ports the alternative destinations for docking are many due to the fact that European ports are many and densely located. In some cases rerouting of the ship is not a viable option and other solutions should be considered. Vessels very often sail from their destination even though it is almost certain that the port of arrival is going to be congested when they arrive. This happens because the policy of many ports is to serve the ships with the order they arrive. As a result, ships travel in full speed consuming fuel only to arrive in an already congested port.

They remain anchored in the water area surrounding the port only adding danger to safety and pollute the maritime environment. (King, M. 2011). An upcoming solution to this problem is for ports to adopt a virtual arrival system to replace the existing berthing policy. Vessels can communicate with the port authorities and be advised to slow down their speed in order to arrive later in their destination. The advantage of this policy is that at that time of arrival a pre-arranged slot will be ready for the ship.

This way congestion is going to be battled and costs for fuel consumption will be decreased because of the slow steaming. A successful implementation of the arrival system was made in the port of Newcastle, Australia at 2007 and the result was the huge decrease in ships queued waiting to discharge cargo. (King, M. 2011). Additionally, seaside port congestion can occur also due to another factor. Bulk carriers create a huge amount of congestion in some ports when their equipment for unloading the cargo in their halls is inefficient.

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