Ports worldwide may be going ‘Green’ but is the case for automation just as compelling?

Not necessarily, according to a recent report, The future of automated ports, produced by McKinsey & Co, who found that “automated ports are generally less productive than conventional counterparts,” and “while operating costs decline so does productivity, and the returns on capital are currently lower than the industry norms.” Dane Jones from the Longshore & Warehouse (ILWU) addressed the Maersk AGM on the proposed automation of Los Angeles port, saying that “automation is expensive, whether fully or semiautomated it requires hundreds of millions if not billions to construct or retrofit full-size modern container facilities. A container operator must also pay for facilities upgrades, software solutions, product support and maintenance. A marine terminal earns revenue by moving cargo and automated container ports do not move cargo as quickly or profitably as those worked by people,” he added.

To put some figures on it, McKinsey estimated that the operating expenses of a greenfield terminal would have to be 25% lower than a conventional terminal, or productivity would have to rise by 30% while operating expenses fell by 10% to make it a worthwhile investment. While operating expenses of automated ports do fall they only decline by 15-35% and productivity falls by 7-15%. An executive of a global port operator told McKinsey that at fully automated terminals the average gross moves per hour for quay cranes, a key indicator of productivity, is in the low twenties.

At many conventional terminals it is in their high thirties. “With numbers like these automation can’t overcome the burden of up front capital expenditures.”

‘Green’ issues are inexorably driving ports to ever-more investments in clean cargo handling machines. Hyster, for example, is developing a zero emission reach stacker featuring a hydrogen fuel cell for the MSC terminal at Valencia as part of the Horizon 20-20 programme and H2 project. This port will be the first in Europe to incorporate hydrogen energy in its operations. The technology will help evolve this industry into a low carbon and zero emission sector. Noise levels, energy and maintenance costs will all be lower. Kone Cranes has received an order from Gulftainer USA for Wilmington port for nine all-electric rubber-tyred gantry cranes and three 45-tonne capacity reach stackers. The electrical power will be supplied by a bus bar system backed up by battery packs.

The ports of Los Angeles and Long Beach, meanwhile, have pencilled in the target date of 2030 for up to 100% of all cargo handling equipment to be zero emission.

Ironically, perhaps, the drive to become more profitable as well as cleaner while at sea through adoption of ultra large container vessels (ULVCs) may begin to work against environmental issues owing to the safety and risk factors involved with these behemoths of 20,000 TEUs and more. Ports are investing heavily in facilities to take ever-larger container ships, but bigger ships mean bigger risks for everyone, including buyers of JIT supplies. It seems that these ULVCs that have become the new normal on the Asia-Europe trade lane have not proved popular as the lines that operate them hoped. Several shippers could not hide their aversion to these ocean giants and it appears the insurance industry also has concerns.

In its 2019 Safety and Shipping Review, Allianz said that these ULVCs “are a particular concern” for the insurance industry, given that bigger vessels mean bigger risks with the potential for a loss as big as $4 billion. Fires on board at sea are often a hazard and Allianz cites misdeclared cargo, including incorrect labelling and packaging of goods is believed to be the root cause of a number of fires, exacerbated by larger vessels. Inadequate storage and lashing also pose a serious risk in bad weather. While loss prevention measures have not kept pace with the upscaling of vessels it is difficult to see how a downsizeing trend could be stopped if insurance premiums soar after a multi-billion pound claim is filed for the loss of one ULVC.

BILL REDMOND

Features Editor

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