Tuesday, 15 August 2017

Tanjong Pagar Terminal cleared ahead of schedule, port lease expires in 2027; Port marks 'end of era' with Guinness World record for Largest Shipping Container Image

PSA transfers all 500 staff to Pasir Panjang; move could impact property, shipping sectors
By Jacqueline Woo, The Straits Times, 14 Aug 2017

Singapore's great port migration - which has major implications for both the shipping and real estate sectors - has crossed a key milestone well ahead of schedule.

Port operator PSA Singapore has moved all its 500 staff from Tanjong Pagar Terminal to the newer Pasir Panjang Terminal and is dismantling the cranes, as part of plans for the even bigger move to the future mega-port at Tuas. The relocation - well ahead of the city port's lease expiry in 2027 - means PSA might be ready to hand the 80ha site back to the Urban Redevelopment Authority (URA) far earlier than expected.

PSA did not comment on whether it is looking at doing so, but a URA spokesman told The Straits Times: "We are in discussions with PSA on this matter, and are not able to comment further at the moment."

This, in turn, has raised the possibility that plans for the Greater Southern Waterfront project - a sprawling 1,000ha development three times the size of Marina Bay - could kick off faster than expected.

The huge project is to be built on land freed up when the ports in the city, including Tanjong Pagar, and Pasir Panjang are relocated to Tuas.

The Government could set aside some land for release earlier than expected, depending on market conditions and demand, said Ms Alice Tan of property consultancy Knight Frank Singapore.

"With real estate needs changing rapidly along with consumer and business trends, it could make sense for land use planning to evolve more flexibly ahead of changing needs," said Ms Tan, the firm's director and head of consultancy and research.

Mr Desmond Sim, head of CBRE Research for Singapore and South-east Asia, on the other hand, believes it is still much too early to tell if the Greater Southern Waterfront project could start earlier.

"It is a huge project, and there is still a lot of elasticity in land supply today, especially at Marina Bay. So, there is no need to rush and trigger plans for the waterfront area."

That said, Mr Sim noted that both PSA and the state planners would stand to gain if the land is vacated before the lease runs out.

"This would give PSA more buffer time to sort out any teething problems and ensure the handover goes smoothly. For the state planners, getting control of the land earlier... allows them to have more flexibility with planning."

Mr Sim said the land would be best used if predominantly set aside for mixed developments. "It is a very prime piece of land, and we have to maximise the plot ratio. The last thing we need in land-scarce Singapore is for land to be zoned for use only in certain hours of the day."

The transfer of 500 staff to Pasir Panjang Terminal, which involved the port unions, is complete, said a PSA corporate spokesman.

All the workers were prepared for their new roles and a new environment at Pasir Panjang. No workers were retrenched. The cranes are gradually being dismantled as well.

The spokesman said: "With the advent of larger container ships that require deeper berths, PSA has started the process of moving our operations from our city terminals at Tanjong Pagar, Keppel and Brani to our newer facilities at Pasir Panjang, where we will operate for at least another 20 years.

"This transition is part of an overall long-term plan to consolidate container port facilities eventually at Tuas."

The port leases for the city terminals at Tanjong Pagar, Brani and Keppel are due to expire in 2027. Pasir Panjang's lease runs out in 2040.

The big move to Tuas is expected to take place well before 2040.

Earmarked as the centrepiece of Singapore's Next Generation Port vision, the new Tuas mega-port will be opened progressively from 2021.

When completed by 2040, it will be able to handle up to 65 million standard containers of cargo a year, more than double what the port handled last year.

Tanjong Pagar Terminal: An icon of the Port of Singapore
By Jacqueline Woo, The Straits Times, 14 Aug 2017

For 45 years, it has served as a visual cue for the health of the Singapore economy.

The iconic Tanjong Pagar Terminal - just a stone's throw from the city's commercial centre - has been a significant cornerstone of Singapore as a global port city.

Now, as the Republic expands its port operations in the west of the country, the oldest container terminal is set to give way to the future Greater Southern Waterfront city once its port lease expires in 2027.

Back in the late 1960s, container ships plying trade routes to South-east Asia were unheard of.

But key decision-makers at the then Port of Singapore Authority took the gamble of building a container terminal at East Lagoon (today's Tanjong Pagar) and secured a $45 million loan from the World Bank to help fund the construction.

When Tanjong Pagar Terminal opened on June 23, 1972, it made waves not just as the country's first container terminal, but also as the first such facility in South-east Asia.

At the port's opening ceremony, then Minister for Communications Yong Nyuk Lin told an international audience: "Singapore has therefore made a quantum leap today, into the container era... able to deal right away with the larger, more sophisticated and latest type third-generation container ship with the official opening of its container port. This is as it should be."

It received its first container ship that day - the MV Nihon, which sailed into port from Rotterdam, carrying about 300 containers.

Global container shipping really started only in the early 1970s. Container trade here got off to a slow start that decade but grew in a big way during the 1980s, thanks to rapidly expanding world trade, which boosted Singapore's ambitions as a global container port.

By 1982, Singapore had grown to become the world's busiest port by shipping tonnage, and managed to handle one million standard cargo containers a year for the first time - a milestone Tanjong Pagar Terminal played a big part in. Singapore crossed the five million box mark eight years later to become the world's largest container port.

Today, the Port of Singapore continues to rank among the world's busiest, and as the top transshipment hub globally. The maritime industry accounts for 7 per cent of Singapore's gross domestic product and employs over 170,000 people.

The Tanjong Pagar Terminal that Mr Teo Siong Seng of home-grown shipping line Pacific International Lines (PIL) remembers back in the 1970s was full of bustle - forklifts, trucks, clerks and stevedores were constantly moving in and out, and it was messy and dirty at times.

As a 15-year-old student back in the day, he had taken on his first holiday job as a tally clerk for ships.

"But that was the nature of the trade back then. I was awed by the people driving the cranes and the stevedores handling the cargo, the way things were moving so fast, and I had to be careful not to get in the way. You don't see this any more," says Mr Teo, PIL's managing director, better known in industry circles as S.S. Teo. "We've come a long way from when we first received the MV Nihon," he tells The Straits Times.

He officially entered the industry in 1979 when he joined PIL, his father's company. "I remember there used to be these tongkangs or tuakor (light wooden boats for carrying goods) that were phased out in the early 90s as Pasir Panjang Terminal was being built. The ships had to be punctured with holes and sunk so people could be convinced to let go. It was quite emotional," he recalls.

"But it's the passing of an age. Now you have all these container berths that are unmanned, so there is a lot of difference, but that is progress. We have to keep moving forward."

Work on the new port in Tuas is already under way, with reclamation ongoing for two out of four phases of the development.

Ocean Shipping Consultants director Jason Chiang believes it makes more sense economically for PSA to combine its operations at a single location now, in the light of the unprecedented wave of consolidation that the container shipping industry has seen since last year.

"Most of its customers, the container shipping lines, have decided to merge or buy over each other. So having four or five separate terminals to service fewer players, who probably want their ships to call at dedicated berths at the same location, doesn't make sense," Mr Chiang notes. "They could even try to speed up plans for Tuas."

For now, Tanjong Pagar Terminal - Singapore's oldest container terminal - will continue to offer ancillary services such as car transshipment, and serve occasional calls by container vessels, says a PSA spokesman. He adds that PSA plans to hold an event later this year to honour the role that the terminal has played in Singapore's port history.

In 2008, at the inaugural Singapore Maritime Lecture, then Minister Mentor Lee Kuan Yew had described the port as Singapore's reason for existence.

"Singapore's raison d'etre was its port; Singapore must strive to remain a major hub port."

* World record set at Tanjong Pagar Terminal to mark 'end of an era' of port operations there
Tanjong Pagar Terminal celebrates 45 years of operations, sets record with container image
By Lim Min Zhang, The Straits Times, 31 Oct 2017

Back in 1972, Mr Sreevardhanan Vasu Pillai joined PSA as a clerk and was responsible for keeping track of loose cargo that was unloaded at Keppel Terminal in wooden cases and gunny sacks.

In his 45-year career with the port operator, he has seen a "sea change" in the improvements in efficiency and reliability of port operations.

For instance, in the 1980s, an integrated computer system was implemented that streamlined the process of checking and transferring loaded and unloaded goods. Such work was done and recorded manually for the longest time.

Mr Pillai is now 66 and an assistant manager at Singapore Terminals 1 planning department. He and other PSA pioneer workers were commended for their contributions at an event yesterday at Tanjong Pagar Terminal to mark its 45 years of operations.

The terminal, which was the first such facility in South-east Asia when it opened, is winding down its operations as its lease will expire in 2027. It is currently handling ancillary services such as bringing in vehicles.

At the event, organised by PSA Singapore and attended by former and current PSA staff, a world record was also set for the Largest Shipping Container Image.

The lion head display measures 128m by 128m, is made up of 359 containers, and took 15 hours to complete. A certificate from the Guinness Book of World Records was officially presented to PSA at the terminal, with guest of honour and Coordinating Minister for Infrastructure Khaw Boon Wan in attendance. Calling it "an end of an era", Mr Khaw, who is also the Transport Minister, said that despite the impending shift of its core port operations to Pasir Panjang Terminal, Tanjong Pagar Terminal will "always hold a special place in our hearts as Singapore's very first container terminal".

Earlier this year, PSA Singapore relocated all of its 500 staff from the terminal to Pasir Panjang.

On keeping the Singapore port relevant, Mr Khaw added: "We have to keep raising our game, particularly in harnessing technology to enhance productivity. PSA is testing electric automated guided vehicles, and automated wharf and yard operations at the Pasir Panjang Terminal."

With the Tuas port slated to be operational only from 2021 and fully ready by 2040, Pasir Panjang Terminal will handle the majority of Singapore's shipments for the next two decades.

Said Mr Pillai: "It's a very sad thing to see the place where I started going away, but, of course, we have to look at the future - upskilling our people and leveraging our technology to move forward to serve our clients better."

Public area in the works at Pasir Panjang Terminal
PSA wants to bring people closer to port, which has traditionally been off-limits
By Jacqueline Woo, The Straits Times, 16 Aug 2017

In a move unusual for Singapore's port operator, PSA Singapore is set to incorporate a public area in new facilities being built at its Pasir Panjang Terminal.

PSA is planning for a new office building and a staff clubhouse at the terminal, which will include the public space that will "bring people closer to our port", a spokesman told The Straits Times.

He declined to elaborate on what form this space will take, but said the move will help raise awareness of port activities in Singapore.

The Port of Singapore has traditionally been closed off to the public, although ports around the world are warming up to the idea of engaging the public.

"The port plays an important role in Singapore's economy. We want to bring people closer to the port... and showcase PSA's developments," the spokesman said.

Construction on the new facilities is expected to start early next year and be completed in 2020.

The idea of making Pasir Panjang Terminal part of the community experience dovetails with the Government's vision for the future Tuas port, which will be designed to be integrated with its surroundings and be open to the public.

The new mega port, scheduled to open in phases starting in 2021, will consolidate all container port activities by 2040, allowing Singapore to handle about 65 million standard-sized containers of cargo a year.

The Maritime and Port Authority of Singapore (MPA) said that it is looking at incorporating cafes, retails stores in the likes of Tesco and Decathlon, and even a jogging track in the Tuas port.

MPA project director (next generation port) Eugene Khoo said in a recent report: "We want to develop Tuas as a maritime hub, more than just a container terminal. The idea is to bring life and vibrancy to the terminal with commercial spaces and amenities. People can shop, walk around, and also have food and drinks while looking at port operations just directly below."


Work at the Tuas port has started, while preparations for the big migration are well in progress.

But with the new port slated to be operational only from 2021 and fully ready by 2040, Pasir Panjang Terminal is clearly positioned as the centrepiece for the next two decades.

Since last year, PSA has begun to move operations from its city terminals at Tanjong Pagar, Keppel and Brani to the newer Pasir Panjang Terminal. All 500 workers at Tanjong Pagar Terminal, for instance, have been moved out, and cranes are being dismantled.

The port leases for the city terminals are due to expire in 2027, while Pasir Panjang Terminal's lease will end in 2040.

First opened in 2000, Pasir Panjang Terminal was built to raise Singapore's container-handling capacity amid rapid growth in world trade and internationalisation.

More was later done to beef up the terminal's capabilities in a mammoth $3.5 billion project, which saw Phases 3 and 4 launch in 2015.


A key reason behind the expansion of Pasir Panjang Terminal was to enable the Port of Singapore to better serve mega vessels (massive ships that stretch over 400m in length and hold 18,000 standard-sized containers or more) as well as meet the complex needs of shipping alliances.

The 503ha site houses 33 container berths and a dedicated automobile terminal. It received two new mega max container vessels in recent months: the MOL Triumph on April 20, and the OOCL Hong Kong on June 2 - the world's largest container ship to date with a capacity of 21,413 containers.

Mr Andy Lane, a partner at shipping consultancy firm CTI Consultancy, said that certain features at the older city terminals, such as land space, shape and superstructure equipment, which were highly relevant through the last three decades, have become obsolete due to changes within the industry.

"At Pasir Panjang, you have more symmetrical terminals with deeper and longer berths, and modern equipment - all designed to handle the demand dynamics of today and the future," he said. "So Tanjong Pagar Terminal has served its purpose very well in establishing the Port of Singapore as one of the world's largest hubs, but the future is at Pasir Panjang, and ultimately Tuas."

PSA said it continues to sharpen its edge by making commercial arrangements to attract and retain its customers, and ensuring service levels remain competitive to meet customer expectations.

The port operator moves over 150 containers in an hour on average for mega vessels, while productivity for its quay cranes, which load and unload containers from ships, has improved more than 20 per cent since the end of 2015.

Today, Pasir Panjang Terminal is the main South-east Asian hub for shipping lines and major alliances like Ocean Alliance, THE Alliance and 2M. It is also home to PSA's joint ventures with top carriers CMA CGM, China Cosco Shipping and Mediterranean Shipping Company.

"From the last round of alliance musical chairs, Singapore emerged as the clear winner in South-east Asia due to a well-planned and executed strategy by PSA," said Mr Lane. "This will help to sustain the port as a major hub for many years to come, although further diligence will always be required as transhipment demand and flows will always be highly volatile."


Another vital part of PSA's strategy lies in investing in world-class infrastructure to meet customers' needs - with technology and automation, unsurprisingly, as areas of focus.

Pasir Panjang Terminal employs advanced port technologies such as automated port equipment and intelligent systems to assist in operations, making it a model for the upcoming Tuas port.

The facilities at terminals 4, 5 and 6, for instance, deploy over 144 automated yard cranes - a scale unseen anywhere in the world, according to PSA. These cranes are completely unmanned and monitored remotely from a control centre, which also oversees planning and engineering or technology support. They may be used at Tuas, depending on the technology available then.

A fleet comprising 26 automated guided vehicles is also test-bedded in live operational trials for use at the future Tuas port. These vehicles are used to transport containers between the quay side and the container yard without human drivers.

The fleet runs 24/7, and will grow to 30 units by early next year.

In addition, drones equipped with high-resolution cameras are being tested to carry out inspections for cracks and other weaknesses in cranes, which would save time and improve safety in maintenance processes.

"As global shipping alliances make PSA Singapore a major port of call, it cements our position as the world's largest transshipment hub. We continue to develop and upgrade Pasir Panjang Terminal with the expansion of our port facilities," the spokesman said.

Meanwhile, PSA International last year unveiled its venture capital arm, PSA unboXed, to invest in start-ups with innovations that PSA can use. PSA unboXed runs an incubator programme with an initial fund size of $20 million that aims to look not only at port technology, but also logistics technology, trade and financial technology. Its latest projects include Hakovo, an online marketplace for companies to connect with shipping lines and logistics service providers, and Haulio, a jobs-sharing platform for hauliers.

Port workers ride digital wave to new, bigger roles
PSA says latest terminal, Tuas port will be highly automated with intelligent systems
By Jacqueline Woo, The Straits Times, 16 Aug 2017

When PSA employee Kenny Tan was told to move from Tanjong Pagar Terminal to the newer Pasir Panjang Terminal last August, he was not quite sure what to expect.

After all, the 51-year-old had been working at Tanjong Pagar Terminal for nearly three decades, manually driving cranes that pick containers up from trucks and move them into the yard, and vice versa.

Mr Tan today operates automated yard cranes as a container equipment specialist at the control centre. He takes over the controls only when there are exceptional cases to be handled - for example, when an automated yard crane is unable to read a container number.

"I was quite apprehensive at first because this (new) job is totally different," he told The Straits Times (ST). "But when I came here, my mentor trained and guided me throughout the process. I didn't feel there was a lot of difficulty in picking up the new skills."

Mr Tan spent three weeks at a training and reskilling programme - as part of PSA's move to relocate operations in the city terminals to Pasir Panjang Terminal - before obtaining certification to operate the automated yard cranes.

He noted that the new role has allowed him to be "more well-prepared for the changing world which requires less manpower, more automation".

"I'm now also working in a much more comfortable office environment, and I get to interact with my colleagues and superiors," Mr Tan said. "In the past, it was just me working alone inside a crane cabin. Communication was only through the radio set. Sometimes, we didn't even know who we were talking to."

The push for automation in an increasingly digitalised world has not excluded ports globally. But even as automation could mean cleaner, more efficient and less costly operations, it has inevitably sparked fears that port workers could be rendered obsolete.

For PSA, at least, readying its workforce for the future is high on the agenda. The port operator has relocated all of its 500 staff from Tanjong Pagar Terminal to Pasir Panjang Terminal in a process that involved reskilling and upskilling for its workers. No one was retrenched.

A PSA corporate spokesman said the latest Pasir Panjang Terminal as well as the future Tuas port will be "highly automated and driven by highly intelligent systems". "The new jobs that are being created will require a higher level of skill and knowledge," he said. "As our front-line roles continue to evolve, our staff will reskill for new roles and job scopes. They will also learn skills to operate new equipment. For example, they will move from operating single machines to using cutting-edge systems to manage the operations of a range of equipment and automated machines."

The spokesman added that PSA will bring more engineering and information communication technology roles into its fold as it equips staff with new competencies related to systems engineering and data analytics.

The Government at this year's Budget debate had said that some 13,000 new jobs could be created in the air and sea transport sectors by 2025 as Singapore builds smarter ports and develops vibrant enterprise ecosystems.

"A skilled maritime workforce is key to powering the growth of Singapore's maritime industry," Maritime and Port Authority of Singapore (MPA) chief executive Andrew Tan told ST.

He added that the MPA is working closely with industry stakeholders to "transform and create higher value-added jobs for Singaporeans" under the Industry Transformation Map for the sea transport sector, to be rolled out next year.

For Mr Mohamed Khairul, 30, another PSA employee, the move towards automation has helped boost his career.

Mr Khairul moved up the ranks when he transferred from Tanjong Pagar Terminal to Pasir Panjang Terminal last October - from a prime mover driver to an operations controller now, overseeing the operations of the automated yard cranes and supervising automated yard crane operators.

"It was a big change, from driving a truck to facing computer monitors. But there's some progression in my career, new things to learn, so I'm actually quite excited."

We are not done building Singapore yet: Lawrence Wong
National Development Minister says ongoing and coming big infrastructure projects will boost nation's economy
By Marissa Lee, The Straits Times, 16 Aug 2017

Singapore may already look "built-up" but major infrastructure projects that will unfold here over the next 10 years will put the economy on an even stronger footing, said Mr Lawrence Wong, Minister for National Development and Second Minister for Finance, yesterday.

Mr Wong told 600 representatives from more than 40 countries at the Singapore Regional Business Forum at the Ritz-Carlton: "Singapore may be a little red dot, very small; some of you may have the impression that we are already very built-up. But, in fact, we are not done building Singapore yet. We have not reached our physical limits.

"The infrastructure that we're putting in will include several major pieces. For example, we will be building a new Terminal 5 that will double everything that you see in Changi Airport today.

"Look at our sea ports; they look big, but we are building a new Tuas mega-port in the western part of Singapore which will also double the capacity of what we have today."

These efforts, as well as others to improve rail connectivity to Malaysia, will enhance Singapore's linkages to the region, Mr Wong said.

"There is a lot of work for us to do, but we must have confidence that we can make it happen. If you look at our history in Singapore, we have never failed in restructuring our economy before.

"Let's have confidence in ourselves, in our companies, and in the partnerships that we have forged."

Mr Wong added that Singapore is "fully supportive" of China's Belt and Road Initiative (BRI), noting that Singapore companies are "natural partners" for Chinese firms looking to set foot in South-east Asia.

The annual forum, which is organised by the Singapore Business Federation, is focused this year on the opportunities made available by the Chinese project.

A survey commissioned by the business chamber and released yesterday has suggested that the BRI would benefit if China could share more details with the business community.

Out of 77 business leaders polled in the region in June, 45.3 per cent said that their company "is unclear about what the opportunity might be at this point".

"The lack of detail and vagueness is a challenge for companies who are interested in investing and want to evaluate the opportunities presented by the BRI," wrote the Economist Corporate Network in its report.

There also seems to be some confusion over what constitutes a BRI project, with 25 per cent of those polled saying they were "not sure", and 52 per cent defining a BRI project as "any infrastructure-related project with mainland Chinese involvement".

The Economist Corporate Network wrote: "Although the Chinese authorities offer plenty of principles, ideals and features, they fail to offer a concise definition of what does or does not constitute a BRI project.

"This may partly reflect the lack of ownership of the project. Despite the high-level political backing given to the BRI, no single entity has day-to-day oversight."

Nevertheless, over two-thirds of business leaders polled said they are ready for the BRI or working towards it.

Singapore geared up to keep its spot as major port
Mega infrastructure projects in region and Arctic route opening among its challenges
By Jacqueline Woo, The Straits Times, 21 Aug 2017

Work is well under way to secure Singapore's future as a key port of call - most prominently in the form of the new Tuas mega port.

But these efforts may be met with some serious competition as neighbouring countries such as Malaysia and Indonesia take on or plan for a range of large-scale infrastructure projects that will vie for transhipment business in the region.

Malaysia, for instance, wants to build a giant port on an island next to its main Port Klang, while a new East Coast Rail Link (ECRL) has been touted as an "alternative trade route" that could see a projected 53 million tonnes of cargo bypass Singapore annually by 2030.

The country's two key ports, Port Klang in Selangor and Port of Tanjung Pelepas in Johor Baru, have emerged in recent years as Singapore's closest rivals for transhipment volumes in South-east Asia.

And the possibility of new trading routes such as Thailand's Kra Canal continues to be a wild card.

In a report earlier this year, Credit Suisse economist Michael Wan had described Singapore's status as a major port to be "under threat".

"Global warming is opening up the Arctic route, and China is already looking at more trade links through Thailand and Myanmar... So to say that Singapore will always be a pre-eminent logistics and sea hub is probably a bit of wishful thinking," he wrote.


Malaysia has unveiled a string of infrastructure investments to achieve its maritime ambitions.

These include plans for a number of deep-water ports - as part of the Carey Island port-industrial city project beside Port Klang, which is valued at RM100 billion (S$31.8 billion), as well as in the RM42 billion Melaka Gateway project.

Meanwhile, the planned RM55 billion ECRL, slated for completion in 2024, will connect ports on the east and west coasts of Peninsular Malaysia, possibly altering current regional trade routes between the Strait of Malacca and the South China Sea through Singapore. Another new deep-water port in Kuantan, which is being developed with China in a RM4 billion expansion project, will be joined to the west coast via the ECRL to Port Klang.

But Mr Tan Hua Joo of shipping data provider Alphaliner says it is unlikely the projects will have a significant impact on Singapore.

The Melaka Gateway project, for example, will house only a small container port component, he says. "It simply does not have the scale to compete with Singapore or even its own Malaysian competitors in Port Klang and Tanjung Pelepas."

Mr Victor Wai, lead ports analyst at Drewry Financial Research Services, is also not convinced the ECRL will take off in a big way.

"Cargo owners will find it very expensive to use inter-modal transport if their cargoes are not meant for Malaysia," he notes.

"Imagine having to pay to unload containers from vessel to quay, to load them from quay to rail, to pay for rail freight, and then to unload them from rail to quay on the west coast, and finally to load the charge from quay to an outbound vessel. The cost is going to be very substantial as opposed to transhipping."

A train may carry only about 100 twenty-equivalent units (TEUs) in containers in a service, says Mr Wai. This is a tiny fraction of the 20,000 TEUs that mega vessels today can carry.

Mr Tan believes the bigger challenge for Singapore will continue to come from Port Klang and Tanjung Pelepas, both slated to ramp up capacity significantly. Tanjung Pelepas also houses dedicated berths for Maersk Line, the world's No. 1 container shipping company.

He notes that the combined transhipment volume from the two ports has grown in recent years, accounting for 39 per cent of the total transhipment cargo handled in South-east Asia last year.

Countries elsewhere, like Indonesia, Thailand and Vietnam, have also announced plans to invest heavily in port infrastructure.

But it could be difficult for competing ports to find anchor tenants, with many of the top shipping lines already in Singapore, says Ocean Shipping Consultants director Jason Chiang. Besides, the massive industry consolidation that has taken place since last year has shrunk the pool of players.

The Pasir Panjang Terminal is the main South-east Asian hub for shipping lines and major alliances like Ocean Alliance, THE Alliance and 2M. It is also home to PSA's joint ventures with top carriers CMA CGM, China Cosco Shipping and Mediterranean Shipping Company.

"Cost will remain a big consideration for shipping lines, but a lot of them have also invested in joint ventures here, which means savings and possibly even returns over the longer term," Mr Chiang says.

"So it's hard to imagine them giving up the joint ventures. It will take a lot more than cheap rates for them to want to move."


The idea of building a canal through the Kra Isthmus in Thailand came about hundreds of years ago, has been resurrected many times since and continues to linger as a potential threat for the Port of Singapore.

The canal would connect the Gulf of Thailand with the Andaman Sea across southern Thailand - allowing ships to skip Singapore and Peninsular Malaysia, and cut up to 72 hours of sailing time or 1,200km in distance. But Mr Andy Lane, a partner at CTI Consultancy, is sceptical that the project, estimated to cost US$28 billion (S$38.2 billion), will even materialise.

"The periodic rumours of a Kra Canal as an alternative to Malacca Strait do not appear to be realistic on many fronts."

IHS Markit Asia-Pacific chief economist Rajiv Biswas similarly notes that the feasibility of such a mega project is still in question.

He points to another potential game changer: the opening of Arctic shipping lanes, particularly Russia's Northern Sea Route, which runs across the top of Siberia and provides the shortest route between Europe and Asia.

"The impact of global climate change on the Arctic ice cap is a real challenge for Singapore as the opening up of the Northern Sea routes will create a faster shipping route between Europe and North-east Asia," Mr Biswas says. He adds that around 6.5 million tonnes of cargo were shipped via the Northern Sea route last year, and "rapid growth is expected in tonnage shipped on this route over the next decade".


Maritime and Port Authority of Singapore chief executive Andrew Tan says the emergence of alternative trade routes could affect trade flowing through the Strait of Malacca and Singapore.

"We cannot be complacent, and will have to monitor these developments closely and respond to them," he tells The Straits Times.

"Our stable government, our long-term and forward thinking, reliability and good track record are all strong attributes that we can rely upon to stay ahead of the competition."

Singapore Shipping Association president Esben Poulsson notes Singapore is taking steps to modernise and expand its own container port.

Earmarked as the centrepiece of Singapore's Next Generation Port vision, the new Tuas port will consolidate all container port operations, with a capacity to handle up to 65 million standard containers of cargo a year when completed in 2040. Its features will include deep-water berths to serve the mega vessels that are increasingly being used today, as well as technologies to boost productivity.

Port operator PSA , for its part, remains confident about prospects, noting that it is "well positioned to meet the future growth of regional and global trade, and the long-term needs of our customers".

Hardware aside, a strategic location has always been Singapore's stronghold, and will likely remain so - for now. "The biggest advantage we have is our location. So unless that changes, that advantage will still be there," says Mr Chiang.

"Singapore should do whatever it can to boost its infrastructure, technology and service to stay on top of its game. But beyond that, it's really out of our hands."

* Port Klang business hit as key firms shift operations to Singapore
Major shipping companies move to Singapore under new pacts, raising doubts over plans for new harbours
By Shannon Teoh, Malaysia Bureau Chief In Kuala Lumpur, The Straits Times, 11 Sep 2017

Business at Malaysia's main shipping hub in Port Klang has taken a hit this year as major shipping companies shift their operations to Singapore under new alliance agreements, industry officials say.

This has raised questions over the aggressive plans by Kuala Lumpur to build new harbours and rail links along the Strait of Malacca, one of the world's busiest maritime trade routes.

Many of these are partnerships with Beijing, yet the Ocean Alliance - which includes state-owned China Cosco Shipping, the world's fourth-largest player - made a huge shift from Klang to PSA Singapore's terminal in April. The Straits Times understands that this has added to concerns in the industry over China's commitment to supporting the logistics industry in Malaysia.

Beijing and Kuala Lumpur had been talking up joint transport infrastructure in Malaysia, such as last month's launch of the RM55 billion (S$17.6 billion) East Coast Rail Link to be built and financed by China. The project will link Port Klang to Kuantan Port which faces the South China Sea, in what Prime Minister Najib Razak called an "alternative trade route" to Singapore.

"Only Kuantan Port has Chinese equity so far because it also aids Beijing's South China Sea claims. Other infrastructure plans have either not taken off or are only loans, or worse, just Chinese companies winning construction deals," former Port Klang Authority chairman Lee Hwa Beng told The Straits Times.

Data compiled from Northport and Westports, the two operators in Klang, showed that after nearly four years of increasing loads, cargo throughput was down a sharp 8.4 per cent in the second quarter of this year to 3 million twenty-foot equivalent units (TEU). This followed a flat first quarter of 0.9 per cent growth.

Westports, which controls three- quarters of Klang's total capacity, "is now conservatively guiding 2017 volume may decline 7-12 per cent", and next year's prospects remain "murky", according to UOB-Kay Hian's analyst Kong Ho Meng.

The new alliance agreements' biggest impact on Klang was the loss of transshipment volumes - goods stored before being shipped to their final destination - from giants United Arab Shipping Company (UASC) and France's CMA CGM. This could total up to 2 million TEU annually. UASC has now merged with Germany's Hapag-Lloyd, making it part of THE Alliance, while CMA CGM is the biggest company in the rival Ocean Alliance.

Both groups, which handle nearly half the world's shipping capacity, started realigning in April, resulting in more than half of Klang's Asia-Europe calls being shifted to Singapore, said industry officials.

CMA CGM and Cosco have naturally gravitated to Singapore as both have major investments there. PSA saw a 9.6 per cent jump in the second quarter to 8.5 million TEU.

Among the world's top 20 ports, Klang was one of only two, the other being Tanjung Pelepas on the south coast of Johor, to see a drop in volume in the first half of this year.

The slowdown added to concerns of oversupply due to plans for new China-backed megaports like the RM43 billion Melaka Gateway and on Carey Island, which sits just off Klang. Both government and industry sources told The Straits Times that Chinese companies earmarked to take a stake in these two projects have had reservations over their viability. The planned port for Carey Island now has an Indian partner, with its mooted valued halved to RM100 billion.

Surprisingly, the government last month gave Westports permission to double its capacity to 30 million TEU - which is as much as what PSA handled last year - despite its volume shrinking in the year to date.

"We are still unsure of the need for the group to expand its capacity to the level mentioned as the talk of a third port in Klang is gaining traction," said Hong Leong Investment Bank's analyst Lim Sin Kiat.

Still, the Malaysian government is insisting that cargo volumes are set to rise as the country strengthens connectivity with southern Thailand and Sumatra across the Strait of Malacca.

"Only the transshipment volume came down a bit but our local volume increased. We can see a strong growth in Malaysia, especially our economic production," Transport Minister Liow Tiong Lai said last Monday. He added that "we have a very good relationship" with Cosco, which is "confident about Malaysia", and played down as an "internal working operations issue" the fast-expanding firm's investment in container berths in Singapore.

Tuas mega port: Phase 1 of Tuas Terminal construction begins 29 April 2016
Malaysia's East Coast Rail Line touted as a game changer, new trade links could bypass Singapore
Pasir Panjang Terminal's $3.5 billion expansion kicks off
Circle Line will become a full circle by 2025
Greater Southern Waterfront
Tuas mega port: Keeping the ships sailing in – why the mega port matters

No comments:

Post a Comment