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Encyclopedia of Transportation: Social Science and Policy

CONTAINER TERMINALS Words: 2539

A container terminal is the set of facilities at a port devoted to the loading and unloading of containers through autonomous operations. One or more of these terminals exist in a cargo port that engages in the transfer of containerized goods and is referred to as a container port.

Container terminals represent a recent perspective of serving maritime transportation. They appeared the last 40 years due to the increasing use of the standardized box that can hold about twenty tons in weight and can withstand having five full containers stacked on top of it. Before 1970 only the New York Port Authority and the ports of Rotterdam and Singapore had invested in building and operating specialized container terminals.

Today, specialized container terminals are found in all seaports that serve international trade. They lift more than 50 million containers per year around the globe, as over 90 per cent of international non-bulk trade travels in containers, including cargoes that were previously considered not suitable for containerization. Containers handled are either full or empty ones. The latter account for more than 20 per cent of the global container port throughput. More than 100 ports handle over one million TEUs (twenty feet equivalent unit) per year, with two or more container terminals operating in the vast majority of them. Annual throughput in nine ports in Asia and in Rotterdam exceeds 10 million TEUs.

The transhipment (ship-to-ship) concept, and the increasing transportation of intermediate goods along supply chains are driving forces for the rise of container handling, the operational restructuring of this handling, and the specialization of container terminals.

The modern container terminal is generally found in one or both of two types of ports. The transhipment hubs are designed to optimize the transfer of containers from one maritime vessel to another between networks of long distance and/or short distance (feeder) shipping services. While they are not directly associated with a direct hinterland, an indirect one does exist. The gateway ports are designed to service the needs of local, regional and sometimes large, inland populations. They may transfer its cargo to an inland terminal to service its significant distant markets, or may transfer cargo to local distribution or transload centres for further on carriage. A distribution centre usually involves warehousing materials until needed while a transload centre specialises in cross-docking the contents of sea-going containers into domestic trailers and the reverse, to serve both a sorting function and the freeing up of marine containers for reuse near the port.

Some terminals may provide both gateway and transhipment services. Others are feeder terminals, where containers may arrive from either of the other two port types, but these are generally run using older equipment and the emphasis is on servicing the local population and the captive hinterland. Such feeder operations may handle a mix of containers and trailers on a single vessel, and the speed of terminal operations is not of paramount concern.

The success of container terminals is the outcome of the quality of their infrastructure and services, the operational productivity within terminal cargo handling, an efficient interface with inland transport systems, and their integration in modern supply chains.

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Operating Container Terminals The growing quantities, along with the increased size of containerships, which almost doubled within the first decade of the 21st century, imply investments in infrastructures and dredging to enable container ports to serve larger vessels. Berth and channel depth have become more important, and berth length is more crucial to servicing sea-going container flows.

They are also associated with a fundamental change in container terminal operations, as new generation yard equipment modern cranes offer terminal berth productivity improvements. Competitive container terminal facilities provide capital-intensive cranes able to manage as many lifts per hour, or the capability to lift more than one boxes side by side at one time, as containerships do not have onboard cranes as bulk-carriers do. Important pieces of yard equipment include rubber-tyred gantries and straddle carriers to pick up or drop off containers over stacks dockside to and from nearby container stacking areas, thus being the last, or first, link in a container terminal, and container rail-mounted gantry cranes that position containers along a linear stacking yard. Technological advancement lead to the introduction of automatic guided vehicles used for grounded container operations. The latest models of the latter aim to ensure the required performance and improved reliability in combination with reduced fuel and maintenance costs. An example of them are the electrically driven diesel hybrid automatic guided vessels that are already in use, for instance at the ECT Delta terminal in Rotterdam.

As machines carry containers, and technological advancements allow for almost full terminal automitisation, labour and of once powerful port labour organizations, have seen their numbers role and influence diminish at the expense of the role of capital.

The productivity of the modern container terminal is highly dependent on the layout of terminals as well. Ample storage space to stack containers dockside, berths designed to accommodate for quick ship turnaround are important for effective dockside operations between the ship, the crane and the container storage areas. The structure and configuration of container handling operations change container terminals that tend to occupy more space for moving, storing, temporary or not, and providing value added facilities at containers and the goods transported within them.

Most important is the way that the container terminal operators manage these yards. As a buffer between the containership and the hinterland, the yard of the terminal, needs to resolve operations at berth, movements within the terminal, complex stacking processes, unforeseen situations, like repositioning of several containers, randomly pick ups by customers, delayed containership arrived. Landside operations go well beyond the unloading and storing of full and empty containers, not least because containers terminals serve the only transport system that allows shipment to be used by ship, rail and road modes of carriage. Trains and trucks operate within or nearby the yard, and the smooth integration of the various modes is key to a terminal competitiveness. The common practice is the handling of quantities of containers through sophisticated electronically applied and monitored operations linked with supply chains.

To avoid disorganised development of container terminal facilities and allow a prompt response to changing demand, planning is as flexible as possible. This planning aims to enable anticipation of different scenarios, thereby minimising the risk of losing markets and enhancing port profitability. It is used to resolve problems arising from both foreseen and unexpected situations, such as greater demand, new port policies, greater competition, the loss or incorporation of areas with or without equipment, and interruptions to terminal access. Along with other factors traditionally included in the calculation of port terminal capacity, container

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terminal planning is commonly dynamic so as to facilitate adaptation to variations in demand and unexpected situations that along with forecasting difficulties mark the container market.

One of the first tasks when planning a terminal is to determine port demand and capacity. For the estimation of capacity, one needs to determine what may be expected at the port berth and others for storage capacity. In the case of an import container, capacity is calculated from the time the container is unloaded to the time it leaves the port i.e. it is equivalent to the capacity to unload a container, have it remain for some period in the yard and eventually exit through the gate. For an export container, the steps are similar but in reverse and, for a transhipment container, capacity involves loading and unloading the container plus its stay in the terminal.

Integration in supply chains Container terminals are increasingly elements in value-driven chain systems not simply places with particular functions. With shippers transporting vast quantities of final and intermediate goods, opening the box within nearby terminal locations, or even within the terminal, is as crucial as the efficient and effective operational integration of container terminals in multimodal transport chains that allow the provision of value added services and logistics at locations where, for example, inland depots and logistics related service providers exist. The terminal captures value for itself and for the chain (i.e. shippers, third party service providers), maritime companies demand further services specialization within the port area, and firms providing port or value adding services and logistics are interested in the development of logistics pathways in which the terminal is embedded.

Container terminals are thus associated with a growing number of stakeholders. The relevant cluster involves multiple actors who are involved within the supply chain, and the operation of all of them conditions port competitiveness. This implies a change in port governance, with port authorities that had acted as a landlords of private operated terminals only, assuming a more active role in networking these actors, in resolving collective problems, like port marketing, and in promoting the interest of all those involved in the relevant container terminals cluster that operates within a given port.

All the above have led to the spatial and functional expansion of the activities of the container terminals, as well as those economic and operational activities related to it, a process described by Notteboom and Rodrigue as hinterland and foreland ‘port regionalisation’. The latter associates container terminals with economic growth, yet it generates several challenges in the relations with port-cities that see port terminals seeking further expansion of their activities the more competitive they are; in turn generating a number of negative externalities such as noise pollution, and usage of scarce land space.

Terminal entry

The changes in the organisation of container handling resulted in the transformation of port governance. A key move is the progressive entry of private terminal operators, an opportunity for entry and rise of international terminal operators. This implied a fundamental shift in the concept of port, from one whose operations are coordinated and controlled by a public agency whose actions are shaped by local and regional interests to one that is made up of independent terminals whose activities are determined by the commercial interests of its international long-term lessors – a shift termed by Slack as ‘the terminalisation of seaports’.

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The acquisition of a concession to provide terminal services, along with variable commitments to infrastructure building, is the dominant mode of private entry in all continents. Governments, or port authorities, commonly retain the initiative of planning.

The awarding concession procedures differ between regions, within countries, even within a given port. In Europe and USA, where port authorities transfer the rights to provide port services to the private sector, dual practices exist as calls for tenders for a new terminal are combined with direct talks with incumbents, whereas corporatization and listing of the seaport in the Stock Exchange is seen as a precondition in some cases. In the booming ports in China public-private joint ventures involve public sector operators that retain a share of at least 75% and foreign investors.

Different types of container terminals emerge as regards the responsible operator. Some remain public or state run, with facilities used by all commonly on a first comes first served basis. Others operate by terminal operators that invest directly in operation, handling facilities, and when applicable the construction, of the terminal. Stevadores, the companies that act as terminal operators, expand into new markets to replicate their expertise in terminal operations and to diversify their revenue geographically. Port of Singapore Authority (PSA) is the largest global terminal operator coming from a stevedore background. Similarly, shipping companies, either alone or in collaboration, also operate container terminals. These terminal facilities operate on a single-user dedicated base, where major shipping lines sign long-term contracts for using the terminals exclusively, or alternatively are open to third shipping lines. In many cases hybrid structures are formed with separate business units or sister companies active in terminal operations. APM Terminals, a sister company of Maersk, is the largest global terminal operator from this background. Joint venturing of carriers and terminal operators also exist, whereas there are fewer partnerships among the shipping lines that have multi-user long term contracts to share out the terminal usages.

Ports witnessed the emergence of international terminal oparators operating a global portfolio of container terminals across various ports, regions or countries. In the 1990s carriers and terminal operators doubled their involvement into terminal management. Since then, international terminal operating companies continued to take a bigger share of the global container handling market at the expense of both family-controlled stevedores and state-owned enterprises.

In the last decade they were joined by the various financial interests ranging from investment banks, retirement funds to sovereign wealth funds attracted by the port container terminal sector as an asset class and for revenue generation potential. The majority has an indirect management approach; acquiring an asset stake and leaving the existing operator take care of the operations. Others manage directly the terminal assets through a parent company, an example that marks the extent of this financ being Dubai Ports World (DP World), a branch of the Dubai World sovereign wealth fund, marking the extent of that financialisation trend.

Today the four major container terminal operators, Port of Singapore Authority Corporation (PSA), Hutchison Port Holdings (HPH), Dubai Port World (DP World) and APM Terminals handle 46% of global container trade and the 10 major ones approximately 65% of world container traffic; whereas a decade ago they handled 45% only. The extent of this presence is such that challenges the contestability of the container terminals market.

These trends chaged the nature of the competition between container terminals and the ports that host them. The competition between ports in different locations for the handling of containers, commonly termed as inter-port competion, is now accompanied by intra-port

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competition, a situation where two or more different terminal operators have jurisdiction over respective terminal areas, for berth to gate, within the same port are vying for the same market. In bigger ports, for example Hong-Kong, it takes the form of intra-terminal competition with companies competing to provide the same services within the same terminal.

Responding to market development port policies with reference to container terminals developed. The emphasis on the integration of ports to multimodal transport networks. It is also on the facilitation of intra-port competition that allows for operational flexibility, and inovation and limits excess rent seeking by those operators mantaining monopoly posititions. With few exemptions, port authorities develop policies to promote it whenever the scale of the operation is of a scale that allows more than one terminal operator to be active in a specific port. Athanasios A. Pallis University of the Aegean, Greece See Also: World Container Ports, Containerization/Container Shipping, Ports and Harbors; Global Competition in Transportation Markets Further Readings de Langen, Peter W. and Athanasios A. Pallis. “Analysis of the benefits intra-port competition.” International Journal of Transport Economics, 33(1), (2006) Farrell Sheila. “The ownership and management structure of container terminal concessions.” Maritime Policy and Management, 39/1 (2012). Notteboom, Theo and Jean-Paul Rodrigue. “Port regionalization: towards a new phase in port development.” Maritime Policy and Management, 32/3 (2005) Notteboom, Theo and Jean-Paul Rodrigue. “The corporate geography of global container terminal operators.” Maritime Policy & Management, 39/3, (2012) Slack, Brian et al.“The Terminalisation of Seaports.” In: Wang James et al. (ed). Port Cities and Global Supply, Cheldenham: Edgward Elgar, 27-39, (2007).