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MEETING REPORT

 

Facing the challenges of the next decade

 

The Port Equipment manufacturers Association (PEMA) marked its 10th anniversary at its Annual General Meeting in Amsterdam on 6-7 February 2014, with some 100 members and guests in attendance from 15 countries.

 

As is usual at these gatherings, the opportunity was taken to have industry experts address delegates representing PEMA’s 70+ members. Rarely are terminal operators and others on the ‘customer’ side of the business able to talk with so many of their suppliers to outline their expectations and requirements for the coming years.

 

This year the speakers were Christer Granskog, former CEO of Kalmar and a motivating force in the establishment of PEMA 10 years ago, Marc Desmons, Engineering Services Manager at terminal operating group TIL and responsible for all the company’s equipment procurement, upgrades and repairs, Isabelle Ryckbost, Secretary General, European Sea Ports Organisation (ESPO) and Dr Khalid Bichou, a visiting professor at several universities and co-founder of the Port Operations, Research and Technology Centre (PORTec) at Imperial College, London, plus the recently-formed Global Port Research Alliance (GPRA).

 

The theme addressed by all four speakers was the challenge of how ports and terminals evolve in the decade ahead to achieve improved efficiency, maintain profitability and meet the increasing requirements of environmental protection.

 

Reflecting on what has happened in the decade since he was instrumental in establishing PEMA, and where the industry will find itself in 10 years’ time, Christer Granskog saw an inevitable trend towards more automation, a real focus on the overall cost of equipment ownership and less on pure headline price, more energy efficiency and improved environmental protection.

 

He said there will be increasing recognition that many port locations in the world do not need all of the sophistication that equipment manufacturers offer today and can instead achieve their goals with a “good enough” solution. He highlighted three big trends that will impact the shipping and transport industry worldwide: re-industrialization, Polar Route shipping and internet shopping.

 

Big ships will drive big change

TIL’s Marc Desmons looked at the operational impact of handling 18,000 TEU ships. He cautioned that even before all of the issues involved with the current wave of new giant vessels are solved, several lines are already looking at 20,000 and even 24,000 TEU ships. Terminal operators and the equipment sector therefore need to be aware that there is more to come, and possibly quicker than any would have predicted.

 

Mr. Desmons said that further increases in ship capacity would probably not mean longer ships, but rather more width and draft. Vessel draft could increase by 1.5 metres, he forecast, with width going up by 7 metres to 26 container rows. A 26 row vessel would mean a 65 metre outreach, said Mr Desmons, putting the crane trolley beyond the generally recognised limit of human fine judgement and making more automation essential.

 

“Real and permanent” terminal productivity improvements are crucial for handling the numbers of containers we are now looking at, added Mr Desmons. Achieving 30- 32 moves per hour is now essential – meaning a move every two minutes and a target of handling the big ships within 36 hours. To achieve this, it will be critical for adjacent hatches to be handled at the same time, so simply increasing crane span will not be an option. Rather, he said, crane manufacturers will need to work on design improvements and using lighter but stronger materials.

 

“The days of us buying what the manufacturer offers are over,” said Mr Desmons. “In the future, we will say what we require and expect the supplier to meet that requirement. Key competencies will move from supplier to buyer.” He added that life time cost and after sales service will be deciding factors, not headline price, and manufacturers that do not invest in after-sales and R&D will die.

 

Electrification and automation essential

Horizontal movement equipment will probably not change much in size but increased automation and environmental efficiency are essential – diesel and hydraulics will be “history” in 10 years’ time, forecast Mr Desmons. Electrification and automation are more of a challenge on STS cranes, but there will be more moves in that direction. He said that some studies have shown that if just one more move per operator per shift can be achieved, revenues rise by $400,000. With today’s high levels of investment, squeezing productivity to this extent is required to achieve necessary ROI.

 

Co-ordinating private and public funding

Shifting massive numbers of containers is a challenge that does not end at the terminal gate. Isabelle Ryckbost of ESPO spoke to the assembled executives about the needs of hinterland infrastructure and what the European Union is doing to help. While terminal development relies largely on private investment, road, rail and waterway development beyond the terminal usually depends on public money – and public money is a scarce commodity in these cash strapped times.

 

Ms Ryckbost outlined the EU’s Ten-T policy, which gives a central role to 94 core ports throughout Europe with a further 200+ playing an essential backup role. The EU emphasis is on developing sustainable hinterland connections, with all core ports being connected by rail or waterway by 2020. The EU allocated €8 billion to Ten-T up to 2014, but between 2014 and 2020 is making an additional €20 billion available. “If a project is on the list, and all core ports are, then funding will be available.” confirmed Ms Ryckbost.

 

A challenge for terminal operators is to convince local or central government that when they invest their money in terminal development then public funds must be provided to build the infrastructure and enable the terminal to achieve optimum efficiency. Marc Desmons commented that very often the recognition is there, but the commitment is absent. With €20 billion of EU money being made available, this is something for terminal operators in Europe to target.

 

Thinking outside the four walls

Khalid Bichou explained to the meeting some of the issues that he and his team are addressing. He said that 45% of world trade is ‘inter-company’, maybe a car manufacturer making engine parts in 2 or 3 different locations, then assembling the engine somewhere else and finally moving the engine to where the car is completed.

 

Dr Bichou gave an interesting example of how detailed analysis of this inter-company trade characteristic and a bit of lateral thinking can solve an apparently intractable problem. Mauritius had two ports and one of them relied exclusively on one shipping line. For its own reasons the line stopped calling at Mauritius, leaving the port with no customer. Studies of possibilities lead to looking at the manufacture and distribution of jeans. It was found that jeans were manufactured in one location and then moved closer to the eventual market, where the zips and buttons were fitted. The Mauritian authorities approached the jeans manufacturers with an offer to create a facility to fit zips and buttons in Mauritius, which lead to a revised distribution chain and the port getting vibrant and healthy trade back.

 

Dr Bichou said that there is generally a 30% mismatch between port supply and port demand because a ship can be brought on stream in about two years but a port takes 5- 10 years to develop. While 85% of global port projects are now PPP (public private partnerships) there is still a gap between port and terminal development and that of the hinterland infrastructure, confirming what other speakers had addressed.

 

To achieve increased capacity at a port it will now often be more economic and practical to build a new facility rather than expand an existing site, argued Dr Bichou. Bigger and heavier cranes may require a level of civil engineering that is not economic and the need to close one third of a facility while upgrade takes place is not practical.

 

Looking at global development trends, he forecast that while China will continue to grow over the next decade, this will be increasingly due to domestic home consumption – a copy of the USA trade situation. This could have a big impact on established trade flows, but should see China importing considerably more. India is the biggest potential market and has the biggest need for infrastructure development, but “democracy in India is getting in the way of progress”.

 

PEMA will hold its next member meeting in Dubai this October; the first time that the Association has gathered in the Middle East.

 

Download the full of report of the 2014 AGM here:
PEMA 2014 AGM report (2)

 

About PEMA 

Founded in 2004, PEMA provides a forum and public voice for the global port equipment and technology sectors. The Association has seen strong growth in recent years, and now has more than 100 member companies representing all facets of the industry, including crane, equipment and component manufacturers, automation, software and technology providers, consultants and other experts.

For more information about this media release, please contact the PEMA Secretariat: 

Fae Brennan, PEMA Head of Administration:

fae.brennan@pema.org
Mob: +44 7766 228 958
Tel: +44 2034 093 100

 

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