Drewry Analyst Considers Melford/Novaporte Propositions

On Tuesday, I watched a Drewry webinar on the Ports and Terminals market.

The brief (under an hour) presentation was based on Drewry’s Ports and Terminals quarterly report, in which the Maritime research and consulting firm looked at key trends in the sector.

Presenter Neil Davidson, senior analyst in Drewry’s Ports and Terminals practice, discussed issues like terminal fragmentation, port call patterns and port thru-put trends.

And then, this slide appeared:

Slide from Drewry Ports & Terminals Market webinar, January 2017

Slide from Drewry Ports & Terminals Market webinar, January 2017

Davidson mentioned, briefly, that both Melford and Sydney were potential new trans-shipment hubs “lurking” in the North Atlantic region.

Attendees were allowed to ask questions, so I asked Davidson’s opinion as to the viability of the Sydney and Melford projects. He didn’t get to my question during the seminar, but responded by email afterwards which I think was pretty swell. He said the question was “the crucial one” but “pretty much impossible to answer other than to say that the concept of the two port projects being mooted is different from the existing ports in the region.”

Davidson continued:

The existing main ports like Halifax, Montreal, New York/New Jersey are located closer to (or in) the centres of population and demand like the cities of New York, Montreal, etc but also the Mid-West.

So they can be regarded as natural gateway ports established over decades whereas the Melford and Sydney projects are different concepts, not yet proven on the east coast of North America.

They are located more remotely from the centers of container demand and are seeking to persuade shipping lines to serve the region in a different way (use very large ships that are too large to access any other east coast port) and have cargo move to and from its inland origins/destinations in a different way (some cargo at least moving by smaller feeder vessels to/from the traditional ports).

They therefore need major shipping lines to radically change the way they do things today. As a result, to succeed the projects will require not only the participation of an experienced and professional terminal operating company (Sydney has Ports America and Melford now has SSA Marine I believe), but likely also long term backing from one or more major shipping lines, probably as equity partners in the project.

On the subject of the larger vessels, Davidson said no shipper has ordered an ultra-large-container (ULC) vessel larger than 20,000 TEU (twenty-foot-equivalent units) and most seem to be of the opinion that 19,000 TEU is “as big as they should go.” Drewry analysis, he said, also suggests that economies of scale begin to break down at this point, as increased port costs set in.

Davidson says that while this may be good news for ports and terminals, in that ship size may have hit a ceiling, the “cascading” effect is “still very much at work.” (“Cascading” is what happens when a 19,000 TEU vessel replaces a shipping line’s largest vessel, which then goes to the next-tier route, replacing the largest vessel there, and so on. The result is that the average vessel size is growing on most trade lanes.)

The webinar should be available on the Drewry website soon.




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