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Industry insight New Zealand ports and freight yearbook 2018
New Zealand ports and freight yearbook 2018 | Contents
Contents
Introduction 3
Glossary 4
Global Perspectives 6
Thought Leadership – Smart Ports 19
Thought Leadership – Port / City Duality 25
Domestic Environment 29
New Zealand Freight Task 31
Port Performance 41
Port Summaries 53
2
New Zealand ports and freight yearbook 2018 | Introduction
Introduction
The Deloitte Ports and Freight Yearbook is The Yearbook also presents the most
a concise snapshot of selected recent data on the New Zealand freight
macroeconomic and domestic drivers of task, as well as operational and financial
New Zealand port and freight activity. As performance of New Zealand’s major
a recent initiative, we welcome your ports.
feedback in relation to the content and
presentation format, and look forward to
future discussion and engagement.
Key updates to this years publication
include a contribution from Deloitte’s
specialist economic advisory team,
Deloitte Access Economics, who provide
an overview of both the global economy
and the prospects for global trade.
We also include two thought leadership
pieces that highlight the challenges and
opportunities facing ports in New Zealand
and internationally.
The first examines smart ports, the
technology that makes them possible and
what their future holds. This includes the
internet of things, 3D printing and
automated port operations.
The second looks at the relationship
between ports and cities, how this
relationship has changed overtime and
provides examples of initiatives to
enhance the integration of ports into the
wider urban environment occurring
elsewhere in the world.
3
New Zealand ports and freight yearbook 2018 | Glossary
Glossary
AKL Ports of Auckland / Auckland HKB Hawke’s Bay
AS-NA Asia to North America Trade Route IDN Indonesia
IMF International Monetary Fund
AS-ME Asia to Middle East Trade Route
IND India
AS-Med Asia to Mediterranean Trade Route
IoT Internet of Things
AS-NE Asia to Northern Europe Trade Route
ISPS International Ship and Port Security
AS-SA Asia to South America Trade Route ITS International Trade Statistics
AUS-FE Australia to Far East Trade Route JPN Japan
BLU Southport (Bluff) KOR South Korea
LNG Liquefied Natural Gas
BOP Bay of Plenty
LPG Liquefied Petroleum Gas
BRA Brazil
LYT Lyttelton Port of Christchurch
CAGR Compound Annual Growth Rate
MAN Manawatu
CAN Canterbury MLB Port Marlborough
CHN China MMH Marsden Maritime Holdings
DEU Germany MoT Ministry of Transport
EBIT Earnings Before Interest and Tax MYS Malaysia
EIA Energy Information Administration NAFTA North American Free Trade Agreement
EST Eastland Port NA-SA North America to South America Trade Route
FEU Forty-foot Equivalent Unit NATO North Atlantic Treaty Organisation
FIGS Freight Information Gathering System NE-NA Northern Europe to North America Trade Route
FTA Free Trade Agreement NE-SA Northern Europe to South America Trade Route
GDP Gross Domestic Product NFDS National Freight Demands Study
GFC Global Financial Crisis NIP National Infrastructure Plan
GIS Gisborne NPAT Net Profit after Tax
GT Gross Tonnes NPE Napier Port
4
New Zealand ports and freight yearbook 2018 | Glossary
Glossary
NPL Port Taranaki VICT Victoria International Container Terminal
NSN Port Nelson VNM Vietnam
NTH Northland WAI Waikato
NYMEX New York Mercantile Exchange WLG Centreport / Wellington
NZIER New Zealand Institute of Economic Research Inc WST Westland
NZTA New Zealand Transport Agency WTI West Texas Intermediate
OCR Official Cash Rate WTO World Trade Organisation
OECD Organisation for Economic Co-operation and Development
OTG Otago
POE Port of Otago
RBNZ Reserve Bank of New Zealand
RCEP Regional Comprehensive Economic Partnership
RMA Resource Management Act
SAU Saudi Arabia
STEO Short Term Energy Outlook
STH Southland
T&L Transport and Logistics
TAR Taranaki
TEU Twenty-foot Equivalent Unit
THA Thailand
TIU PrimePort Timaru
TNM Tasman-Nelson-Marlborough
TPP Trans Pacific Partnership
TRG Port of Tauranga
TWN Taiwan
USA United States of America
5
Global Perspectives
6
New Zealand ports and freight yearbook 2018 | Global Perspectives
Global perspectives
Global economy1 Tax cuts in the United States (US) are Both Australia and New Zealand are This solid economic performance in
expected to stimulate investment activity, expected to benefit from the pick up in coming years is weighted to the downside
The global economy is strengthening after
flowing through to employment and global growth, expanding by 2.9% and in the IMF’s medium term forecasts. The
a period of subdued growth. The
household consumption. This will support 3.0% respectively in 2018. strength of business sentiment and
International Monetary Fund’s (IMF)
broader momentum in growth, with US investment activity could be curtailed by
World Economic Outlook (January 2018) Despite the broad-based pick up in global
GDP projected to grow at 2.7% faster than expected interest rate hikes.
estimates global gross domestic product growth, price pressures remain subdued.
in 2018. This would also dampen the rally in equity
(GDP) growth reached 3.7% in 2017, up Labour markets have tightened across
prices and strong price growth across
from 3.2% in 2016. This is stronger than The strength of Asian economies has been developed countries, but the flow on to
various housing markets, posing a risk to
anticipated, as the cyclical recovery in the an important driver of economic activity, wages and spending activity has been
household spending activity.
Eurozone accelerated and manufacturing accounting for around 60% of global GDP slow. Commodity prices have fallen as
activity in Asia increased. growth over the past 10 years. This will supply exceeds demand and further Politics in the US and Europe also pose
remain the case in 2018, with China dampens price growth. a risk to the global outlook. The
The global outlook remains bright, with
alone contributing nearly 30% towards negotiations around the United Kingdom’s
growth estimated to accelerate to 3.9% The IMF expects inflation to accelerate to
global growth. departure from the European Union have
in 2018 and 2019. This is well above the 3.3% in 2018 as job growth translates
made progress over the past year, but
average 3.3% rate achieved in the years into higher wages and spending. This will
there is still much to be decided, including
following the 2008 Global Financial be the strongest rate of growth since
terms around trade and financial access to
Crisis (GFC). 2013.
the single market. A deterioration in
Real GDP growth (annual change) With inflation expected to pick up, the negotiations could result in a disorderly
20 period of accommodative monetary policy exit, disrupting the region’s economic
is coming to an end. The US Federal recovery.
Reserve has already commenced the
Forecast
15
The Trump administration managed to
process of monetary normalisation,
10 pass its tax bill in late 2017, alleviating
raising interest rates by 75 basis points in
concerns about its ability to enact policy.
2017. Markets are expecting a further
5 However, the administration’s focus on
%
three rate hikes in 2018.
protectionist policies now poses a more
- Monetary normalisation is not just immediate risk to the growth outlook. An
occurring in the US. The Bank of England increase in trade barriers and restrictive
(5)
also raised rates in late 2017, in response regulation could derail the current
to a weaker currency and strong job momentum in global growth.
(10)
Australia China India growth, and the European Central Bank
New Zealand United States World
has indicated that it would taper its asset
Euro area
Source: IMF world economic outlook purchase programme.
1: Economic analysis performed by Deloitte Access Economics 7
New Zealand ports and freight yearbook 2018 | Global Perspectives
Global perspectives
Global trade1 Trade liberalisation started in earnest The Regional Comprehensive Economic
Global trade activity exceeded after WWII, accelerating in the 1990’s Partnership (RCEP) negotiations were
expectations in 2017 after gaining with a proliferation of free trade launched in November 2012, with
momentum in the back half of 2016 and agreements (FTA). Since 1980, average countries included in the proposed free
reversing two years of pronounced tariff rates in both advanced and trade area accounting for almost half of
weakness. The IMF expects volume trade emerging economies have more than the world’s population, almost 30% of
in goods and services to have expanded halved. Over this period of time, global global GDP and over a quarter of world
by 4.7% in 2017, marking the first time economic growth also accelerated, exports. Negotiations are still ongoing
that trade has outpaced output growth benefiting from value chain efficiencies with bilateral agreements between
since 2014. Emerging markets and and opening of new markets. More participating countries a key prerequisite
developing economies have been a key recently, the number of new trade before the RCEP can progress further.
driver with import and export volumes agreements have slowed as their
growing by 5.9%. coverage expands. Currently, a record
25% of global GDP is covered by FTAs.
The outlook for 2018 remains upbeat,
with growth moderating slightly to 4.6%, After the US pulled out in January 2017,
which remains stronger than global output the Trans-Pacific Partnership (TPP)
growth. The World Trade Organisation continues to be negotiated among the 11
(WTO) revised their estimate for growth remaining countries, including New
in world merchandise trade volume in Zealand. In January, the TPP-11 finalised
2017 to 3.6%, up from the previous the terms of a ‘Comprehensive and
estimate of 2.4%. The improvement was Progressive Agreement’, which
driven by increased import activity in Asia incorporates the majority of the original
and North America as demand recovered TPP terms agreed upon in 2015. This
from a weak performance in 2016. The agreement is expected to be signed
WTO projects that merchandise trade in March.
growth will moderate to 3.2% in 2018.
Looking ahead, trade activity is likely to
be constrained by rising global interest
rates and slower economic activity in
China. Structural issues, such as the
slower pace of global value chain
integration and trade liberalisation, will
also limit growth in trade over the
medium term.
1: Economic analysis performed by Deloitte Access Economics 8
New Zealand ports and freight yearbook 2018 | Global Perspectives
Global perspectives
Container freight trends The importance of Asia (especially China)
Global freight task
is exemplified in its participation in the
China has dominated the container trade 60,000 18.0%
top four container trade routes.
for over a decade, principally as an
16.0%
exporter. The US, in second place, is a The majority of Twenty-foot Equivalent 50,000
14.0%
net importer. Units (TEU) shipped on the Asia-North
America trade route are East bound, 40,000 12.0%
Billion tonne-miles
Since 2000 the proportion of total global
heading from Asia to North America, this 10.0%
freight that is containerised has steadily 30,000
is consistent with China’s status as the
increased and as of 2016 containerised 8.0%
World’s dominant exporter. The West
goods make up 15.7% of total freight 20,000 6.0%
bound trade between Asia and Northern
(billion tonne-miles).
Europe reinforces this notion. 4.0%
10,000
2.0%
- -
2002 2004 2006 2008 2010 2012 2014 2016
Container Other Dry Oil/Gas/Chemicals Container Share (RHS)
Source: The Shipbuilders Association of Japan
Full container volumes Top trade routes
120 25
100
20
80
Million TEU
Million TEU
15
60
10
40
20 5
- CHN USA KOR JPN IDN THA DEU TWN IND VNM BRA MYS SAU Other - AS-NA AS-NE AS-Med AS-ME NE-NA AUS-FE AS-SA NE-SA NA-SA
Exports Imports West Bound East Bound North Bound South Bound
Source: Worldshipping Source: Worldshipping
9
New Zealand ports and freight yearbook 2018 | Global Perspectives
Global perspectives
Container shipping These risks are further discussed below:
The shipping industry plays a pivotal role Growth in emerging markets
within the global economy. Shaped since
China’s stunning economic growth over
the 1960’s by the two mega trends of
the last three decades was a boon to
globalisation and containerisation.
global shipping. In 2000 China imported
The shipping industry is constantly and exported 13 million TEU, by 2015 this
evolving, striving for increased efficiency had quadrupled to 52 million TEU.
through innovation with new larger ships, However, as China begins to moderate it’s
specialised for each trade (especially forecasts of GDP growth and move
containers) and adopting emerging towards a services based economy, this
technologies to boost efficiency and rate of growth in container volumes is
improve environmental outcomes. unlikely to persist. Among emerging
economies only India has the potential to
After difficult years in 2015 and 2016, the
have a similar impact on global trade and
shipping industry experienced somewhat
the reforms necessary for it to do so may
of a recovery in 2017, with the majority of
happen much more slowly than in China.
lines forecast to record an operating
profit. Analysts expect this to continue
into 2018. According to the IMF’s World
Economic Outlook, global economic
growth for 2018 is projected to be
approximately 4%. This growth has a flow
on effect to the shipping industry, with
Hapag-Lloyd predicting that global
container shipping volume will increase
between 4.8% and 5.1% from 2018
to 2021.
Despite the positive economic outlook
the shipping industry faces a number of
challenges. According to McKinsey, the
global container shipping industry is
exposed to a number of risks which
could result in a material slowdown in
container trade.
10New Zealand ports and freight yearbook 2018 | Global Perspectives
Global perspectives
Changing manufacturing footprints Dematerialisation of demand With the trade deals of the last 30 years existing deals, may prove to be an
providing a significant stimulus to trade impediment to continued growth in
Digitally enabled technologies (robotics, This is a phenomenon observed in wealthy
growth, a retreat by developed countries global shipping.
and 3-D printing) has the potential to societies where demand for physical
from new deals or the withdrawal from
alter the regions in which the production goods is replaced by demand for services.
of goods occurs.
As China has become wealthier, demand
If labour costs are no longer a key has started to shift towards services.
determinant of manufacturing location, This, coupled with income growth in the
due to the automation of the process, developing world slower than that
then manufacturing may return to achieved by China in the last 30 years,
countries that had previously outsourced means the growth rate in trade may lag
this function to developing countries with that previously observed.
lower labour costs.
McKinsey also cites the miniturisation of
The above risk is qualified by noting that products as another factor impacting
labour costs were a key driver for only trade growth. With smaller products or
13% of all TEUs in 2015 and that over products boasting multiple features that
half of TEUs were generated by goods were once the realm of a variety of
where access to raw materials is of different goods, fewer containers of
more significance. goods need to be shipped to meet
consumer demand.
The impact that the emergence of 3-D
printing will have on trade volumes is not Geopolitical risk
yet fully understood. 3-D printing is
In recent years the march towards
notable for its efficient use of materials
globalisation has started to stall with
resulting in lighter finished goods and
nationalist and isolationist sentiment
reduced waste of raw materials.
increasing through much of the developed
In theory this means that fewer raw world. This is exemplified by the decision
materials would need to be transported of the US to withdraw from the TPP trade
in order to produce the same quantity of deal and it’s current threat to withdraw
a given product and the final product may from, or renegotiate, the North American
be smaller or lighter potentially reducing Free Trade Agreement (NAFTA) between
the number of containers required by the US, Canada and Mexico.
the shipper.
11New Zealand ports and freight yearbook 2018 | Global Perspectives
Global perspectives
Consolidation The three largest alliances are:
Top 20 container lines
According to key shipping observers • 2M Alliance: The two largest lines, 5.0
(Drewery, Lloyds Register and Alphaliner), Maersk and MSC formed the 2M 4.5
one of the themes expected to alliance, later adding Hyundai (38% 4.0
3.5
Million TEU
characterise 2018 is the continued share of global containership capacity). 3.0
consolidation of shipping lines. 2.5
• Ocean Alliance: CMA, CGM, COSCO,
2.0
The top seven lines control nearly 70% of Evergreen and OOCL, unravelling 1.5
global container ship capacity in a market several preceding pacts (28% share of 1.0
where economies of scale are considered global capacity). 0.5
vital. The continued quest for scale has -
COSCO
NYK
PIL
SITC
X-Press
Hyundai
Evergreen
Maersk
MSC
Hapag-Lloyd
Zhonggu
Wan Hai
QASC
KMTC
Zim
K Line
CMA CGM
OOCL
Yang Ming
MOL
• THE Alliance: Hapag-Lloyd, having
seen the largest shipping lines form three
merged with UASC, formed an alliance
major alliances.
with Yang Ming, Hanjin, K Line, NYK
These three alliances collectively control and MOL (15% of global capacity).
80% of global containership capacity, 2M Ocean Alliance Independent Chartered Orderbook
The three largest Japanese lines have Source: Alphaliner
90% of Trans-Pacific trade and 96% of
recently announced their intention to
Asia-Europe Trade.
enter into a joint venture to commence
The benefits of alliances are many and operations in April 2018. The three lines,
include the ability to capture scale without NYK Group, MOL and K Line, will operate
the need to commit significant amounts of as Ocean Network Express (ONE) and will
capital or adding additional capacity into a remain part of THE Alliance.
market which is already oversupplied.
In further M&A activity, COSCO
Alliances can also improve utilisation of
announced a US$6.3 billion takeover of
vessels and increase the frequency of
OOCL. When complete, COSCO will be the
services available to shippers.
world’s third largest container line with
Despite the benefits a number of potential over 430 vessels and 2.5 million TEU
drawbacks exist, these include a reduced in capacity.
scope for differentiation and the inability
These moves follow the acquisition of
for a carrier to provide transparency to
Hamburg Sud by Maersk in 2017, the
shippers for the entirety of the end to
acquisition of APL/NOL by CMA CGM and
end process.
the merger of COSCO and CSCL.
12New Zealand ports and freight yearbook 2018 | Global Perspectives
Global perspectives
Scrapping
As new ships are delivered into continued
over capacity, scrapping will continue. In
2016 an all time record of over 670,000
TEU was scrapped. Initial forecasts were
for scrapping in 2017 to be even higher,
however increased demand coupled with
lower scrap prices resulted in lower than
expected volumes, with only 427,250 TEU
ultimately scrapped in 2017.
Notably almost half of forecast scrapping
will be Panamax-size ships, a class now
made largely obsolete since the expanded
Panama Canal was commissioned in
June 2016.
Containership demolition activity 2015-2017YTD
120
100
80
000 TEU
60
40
20
-
Apr-15
Apr-16
Apr-17
Oct-15
Nov-15
Nov-16
Oct-16
Dec-15
Dec-16
Aug-16
Aug-15
Sep-15
Sep-16
Jul-15
Jul-16
Mar-17
Mar-15
Feb-16
Mar-16
Feb-17
Feb-15
May-16
May-15
Jan-15
Jun-15
Jan-16
Jun-16
Jan-17
Intermediate (+3000-7999 TEU) Panamax (+3000 TEU) Feeder (100-2999 TEU)
Source: BIMCO, Clarksons
13New Zealand ports and freight yearbook 2018 | Global Perspectives
Global perspectives
Excess capacity The order book remains strong with some
Capacity and demand growth
three million TEU to be delivered by 2020.
Prior to the GFC shipbuilding activity 15.0%
Despite chronic over capacity, shipping
exceeded demand as shipping lines all
lines continue to invest in new larger
pursued the same growth strategy - 10.0%
ships. Reports suggest CMA CGM is
larger more efficient new-generation
preparing to order six 22,000 TEU ships
ships. The order book peaked at an all- 5.0%
with the option for a further three of the
time record 170 million Gross Tonnes
same size. Once complete these ships
Growth
(GT) in 2007 (pre-GFC). Even as shipping -
would replace the 21,413 TEU OOCL Hong 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
line losses continued, the order book
Kong as the largest container ship.
remains at historically elevated levels. (5.0%)
Drewery Maritime Research remains
According to Alphaliner, capacity reached
critical of the continued ordering of ultra- (10.0%)
a record 21 million TEU in November
large ships, having identified capacity
2017. Capacity is expected to breach the
management and continued consolidation (15.0%)
22 million TEU threshold at some time
as the two key requirements for sustained Container shipping demand Capacity Growth
during 2018. This increase can be Source: Crucual Perspective
liner profitability. Over capacity is partially
attributed to scrapping being more
to blame for the US$3.6 billion industry
than offset by the arrival of new ultra-
wide operating loss in 2016 although most
large ships.
carriers are expected to report a profit for
2017 despite a weak final quarter. Idle capacity
Although new ships continue to enter 2,500 10.0%
service and scrapping in 2017 was lower
than expected, idle capacity has 2,000 8.0%
decreased from the highs of late 2016
when more than 1.5 million TEU, 1,500 6.0%
000 TEU
representing over 8% of the total global
fleet, was idle. Total TEUs considered idle
1,000 4.0%
are now less than 500,000, approximately
2.4% of the of the global fleet.
500 2.0%
- -
Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17
Carrier Owned Non-Carrier Owned Idle fleet share of total fleet
Source: DreweryMaritime Research
14New Zealand ports and freight yearbook 2018 | Global Perspectives
Global perspectives
Shipping rates In container markets, two prominent
World container price index
indicies are Drewery’s World Container
Analysts have reported a US$3.6 billion
Index (WCI) and the Shanghai Shipping 1,800
industry-wide loss for container shipping
Exchange’s Shanghai Container Freight 1,600
operators in 2016. This reflected over
Index (SCFI).
capacity coupled with depressed freight 1,400
rates. Pacific rates between Asia and West The WCI uses an average of spot rates on 1,200
US$ per FEU
Coast North America dropped below 11 key global routes. 1,000
US$750 per Forty-foot Equivalent Unit
The Shanghai Shipping Exchange created 800
(FEU), and US$1,500 per FEU to the East
the SCFI in 2005 as a composite of key 600
Coast, previously sectors which averaged
global routes. 400
US$2,000 and $US3,000 per FEU
respectively. 200
-
However, trade began to increase from Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17
the end of 2016 with Drewery reporting SSE - SCFI - Shanghai-Europe Drewry - WCI - Global
that the average revenue per FEU in Source: Drewery Maritime Research, SSE
December 2016 had recovered to
US$1,645, high enough to be profitable
for most shipping lines.
Maersk recorded a loss of US$496 million
in 2016 but reported a 2017 profit of
US$356 million on the back of increased
average freight rates, that were up over
14% on the same period in 2016.
Shipping rates vary for each route, by
cargo and client, between shipping lines,
and over time.
Various indicies such as the Baltic Dry
Index (BDI, for dry bulk) seek to track
price changes over time.
15New Zealand ports and freight yearbook 2018 | Global Perspectives
Global perspectives
Ship size The current order book emphasises the
pursuit of scale with ten ultra-large
The first container ship was introduced in
container vessels due to be delivered in
1956. The Ideal X carried 58 containers.
January 2018 alone. Included in this
Within eight years the Associated
number are seven “megamax” vessels
Steamship company had introduced ships
(19,000 – 21,000 TEU) and three ships of
with a capacity of nearly 1,000 TEU. Since
more than 14,000 TEU. These deliveries
then the capacity of container ships has
come despite the deferment of ten ultra-
continued to increase at a rapid rate. The
large vessels by COSCO until 2019
largest ships currently in service are now
(including six of 19,000 – 21,000 TEU)
almost 400 metres in length and have a
and the delay of three 14,000+ TEU
capacity of more than 21,000 TEU.
vessels by Yang Ming until 2019.
The continuous pursuit of scale economies
COSCO has the largest order book at
is the rationale behind the ever increasing
present with 27 vessels to be delivered
size of container ships. Larger vessels
between January 2018 and December
provide cost efficiencies in fuel, crew and
2019, including 17 between 20,000 and
greenhouse gas emissions per container.
21,000 TEU destined for the Asia-Europe
However there is a question as to how
trade route.
much longer ships can continue to
increase in size. For a start the world’s Bunker price plays an important role in
shipping lanes may simply not be wide the economies of scale achieved by larger
enough or deep enough to handle vessels ships. The largest savings are due to the
significantly larger than those already reduced cost of fuel per container shipped
under construction. Additionally, returns but with forward bunker prices ranging
to scale decline with size, with the from US$50/bbl to US$63/bbl, down from
attractiveness of increasing vessel size prices of more than US$100/bbl in 2011
from 20,000 to 30,000 TEU being and 2012, these cost advantages are
significantly less than from 10,000 to reduced by up to a third (McKinsey).
20,000 TEU. It is notable that nine new CMA CGM
ships are to be powered by Liquefied
Natural Gas (LNG).
16New Zealand ports and freight yearbook 2018 | Global Perspectives
Global perspectives
Bunker prices Heading into 2018, the oil price
predictions by major organisations and
As shown in the graph below, bunker
investment banks are generally not widely
prices peaked pre-GFC, fell briefly (as did
divergent. Energy Information
prices for many commodities), before
Administration (EIA) forecasts Brent
firming from 2009 to 2014. Since 2015
crude oil prices to average US$50/bbl and
aggressive global production (including US
US$61/bbl in 2018. On 10 January 2018
shale oil) has seen prices fall steeply,
New York Mercantile Exchange (NYMEX)
although recently prices have staged a
contracts suggest a range for 2018
recovery from near US$30/bbl to over
between US$50/bbl and US$63/bbl.
US$50/bbl.
Oil price
140
120
100
80
US$/bbl
60
40
20
-
Dec-88 Dec-92 Dec-96 Dec-00 Dec-04 Dec-08 Dec-12 Dec-16 Dec-20
Brent FOB NYMEX Futures
Source: EIA, CME Group
17New Zealand ports and freight yearbook 2018 | Global Perspectives
Global perspectives
International ports As in previous years, Chinese ports saw The global container port and terminal This is placing greater demands on
large increases in throughput with an industry is nevertheless under pressure stevedores speeding up terminal
The international ports sector appears to
average increase of 9.3%. The continued from two interrelated factors. First, larger automation. While shipping lines or
be in good health. Global throughput
strength in the US economy saw North shipping alliances are creating more shippers may wish ports to lower prices,
growth remains positive except for a
American port throughput grow by 8.7%, complex and formidable counterparties. global consultancy Drewery has warned
decline in the fourth quarter of 2015.
Northern Europe by 4.7% and Southern that demands for lower terminal handling
Second, to cater for even larger
Throughput growth, a key port measure, Europe by 8.2%. charges may put future port investment
containerships, ports are required to
was particularly marked across the top 20 at risk, and so the ability to handle larger
The figure below presents the 20 largest invest heavily in more capacity and new
ports, averaging 4.1% for the period from ships. The scale, cost and risk of port
ports globally by TEU. Notably ten of technology, driving up capital expenditure
2011 to 2014, then easing to 1.2% from expansion is rising.
these are Chinese ports and a total of requirements and operating costs. This is
2014 to 2016. According to Alphaliner, in
15 from Asia, three from Europe, one true not just for major ports on the main The consolidation occurring in the
2017 global container throughput grew
from North America and one from the trade routes which are required to service shipping industry is also having an effect
7.7% year on year. This represents the
Middle East. ultra-large container ships (14,000 TEU on ports. As the alliances adjust their
highest rate of growth since the beginning
and over), but also ports on secondary sailings to optimise utilisation and
of 2011.
routes who are faced with a cascade of efficiencies, ports gain or lose services. In
larger vessels from main routes that have Asia for example the Port of Singapore
been replaced by ultra-large ships. will attract 34 weekly calls up from 29 at
present. However, Port Klang in Malaysia
The capital expenditure required to
will have port calls fall from 11 to five and
service these larger ships is evident in the
Top 20 ports Hong Kong Port will have only seven and
fact that between 2000 and 2016 nearly
three calls on the Northern European and
45 US$69 billion was committed across 292
40 Mediterranean services respectively, down
35 port projects.
from ten and five at present.
Million TEU
30
25 Larger ships are segmenting container
20 terminals into those that can handle
15
10 larger ships versus those that are unable
5 to. These ships make fewer visits,
- creating higher peak workflows, while
Antwerp
Tianjin
Xiamen
Shenzhen
Guangzhou
Kaohsiung
Qingdao
Los Angeles
Ningbo-Zhoushan
SIngapore
Port Klang
Shanghai
Hong Kong
Keihin Ports
Rotterdam
Dalian
Busan
Jebel Ali
Hamburg
Tanjung Pelepas
demanding faster handling, and creating
accelerated terminal obsolescence.
2013 2014 2015 2016 2017
Source: Annual Reports, Deloitte Analysis
18Thought Leadership
Smart Ports
19New Zealand ports and freight yearbook 2018 | Smart Ports
Smart ports
Deloitte Port Services impact will further increase. Ports need to inspection will also lead to increased Security has become a top priority for
prepare by becoming data-minded and efficiencies. ports worldwide. The International Ship &
The Deloitte Port Services team recently
implementing new approaches to data Port Security Code (ISPS) is becoming a
released a paper outlining key challenges The industry will move towards self-
management. This involves setting up critical factor for international shipping
and opportunities for port operations with steering ships and the usage of sensors
new platforms, innovative delivery models and transportation companies.
one of the focus areas being smart ports. will replace the need for towing.
and governance.
They have also recently released a paper The Norwegian shipping company Yara, in Maersk Cyber Attack
Data is key
focused on smart port technology. partnership with maritime engineering The importance of cyber security as a
Data analytics and data exchange are group Kongsberg, is already developing parallel to physical security is
The following is primarily drawn from
becoming a new comparative advantage the world’s first fully automated (and demonstrated by the July 2017
those reports. If you would like access to
for port players. Capacity sensing, route emission free) 120 TEU container ship NotPetya cyberattack which affected
either of the full reports please contact us
optimisation, energy management, fault planned for launch in 2018. The ship will Maersk Line and its associated container
for a copy.
detection & resolution can be done with be equipped with sensors enabling it to terminal operations.
Smart ports much more efficiency. Advanced data dock autonomously.
analytics allow for streamlining and The attack is estimated to have cost the
Data-driven technologies and the Internet Technology has a dark side company between US$200 and US$300
optimising existing infrastructure usage
of Things (IoT), combined with advanced million dollars. Maersk was prevented
and operations by eliminating Fast-evolving technologies represent
robotics, analytics and 3D printing will from taking new orders for a number of
unnecessary/empty transport. unprecedented opportunities as well
redefine the future of ports. days causing a significant negative
potential threats for ports. Cyber security
3D printing will change global impact on business volumes. As ports
Ports, ships, shippers and regulatory and cyber-resilience are becoming more
shipment become more reliant on data driven
agencies increasingly operate via important as a parallel to physical
integrated systems which monitor, 3D printing will transform the cargo of security. technologies and the IoT, the risks of a
analyse and share data and market ships in the future. similar attack damaging port operations
information. Technological advancements will increase if not proactively managed.
3D printing is driving manufacturers
offer ports new business model
towards the goal of zero-inventory and
opportunities and the potential to
will reduce the need for shipping finished
transform into smart ports.
goods. It will however mean increased
Becoming a smart port to remain shipment of raw materials.
relevant
Robots and sensors will continue to
Smart ports are capitalising on the replace people
expanding IoT universe. Technology
Increased efficiency of robotics and
already has a strong impact on ports
analytics will drive automisation even
around the world today, but that
further. The potential use of drones for
20New Zealand ports and freight yearbook 2018 | Smart Ports
Smart ports
Technological advancements offer ports the opportunity to transform into smart ports
Impact of digitalisation
Much stronger life cycle integration, new entrants
Design & Engineering Construction Operations
Life cycle integration
Big data and analytics
User interfaces and
applications
Simulation and virtual reality Mobile interfaces and augmented reality
Technology integration
Building information modelling (in the cloud)
Software platform and
control
Ubiquitous connectivity and tracking
Additive manufacturing
Digital / physical
integration layer
3-D scanning
Intelligent construction equipment and scanning
Sensors and equipment
Unmanned aerial vehicles Embedded sensors
Source: Deloitte Port Services – Deloitte Netherlands
21New Zealand ports and freight yearbook 2018 | Smart Ports
Smart ports – the Internet of Things
Smart ports The Internet of Things There are three main challenges driving Migrating activities
the need for smart ports: The second challenge driving the IoT in
According to Olaf Merk, Administrator for Seaports are playing catch-up with the
Ports and Shipping at the International large transport and logistics (T&L) 1. Operational excellence seaports is migrating activities. The need
Transport Forum (ITF) "Smart ports are players when it comes to developing to be smart is also driven by the
2. Migrating activities (challenging challenging external market environments.
the only ports that will survive”. A true insight driven solutions and IoT
external market) Shifting transport networks also endangers
smart port means there is no waste of applications.
space, time, money or natural resources. 3. New business opportunities traditional port leaders. Changes in global
Being part of both larger T&L supply shipping routes increase competition and
The challenges of creating a smart port chains and in itself being a cluster of The size of a port is no longer the primary render the value propositions generated by
correspond to the current challenges of companies and businesses active in the focus, but rather efficiency and smarter IoT, like cost reductions and increased
ports: spatial constraints, pressure on T&L sector, ports are in a unique position operations. Automation and information efficiency, even more important.
productivity, fiscal limitations and the to fully grasp the potential generated by services can be used to address the
need to be green. these new high tech developments. challenges listed. New business opportunities
Technology and innovation are the driving Becoming a smart port means developing Addressing operation excellence The third challenge driving the IoT in
force behind smart port productivity. This solutions that will address the current and seaports is the development of new data-
The primary challenge driving the IoT in driven business models. IoT applications
technology, in the form of physical and IT future challenges faced by seaports
seaports is operational excellence. On the provide more added value than only
infrastructure, could be the best way to including spatial constraints, pressure on
supply side the main challenges are; updating existing frameworks. Next to the
see benefits in a smart port environment. productivity, fiscal limitations, safety and
capacity, efficiency, reliability, support physical flows, more emphasis will be put
security risks and sustainability. Ports are
“The ultimate smart port may be the fully and costs. On the demand side port users on data-driven models like value-added
faced with a range of technical and
automated port where all devices are might want extra services like savings in services, subscriptions, apps and anything
strategic issues. The diverse nature of a
connected via the IoT”, believes Peter time, security and traceability. Improving as a service.
port, with a wide variety of companies
Lundgren, Sales Director at JLT Mobile these drivers is where the quick wins lie
operating different kinds of equipment Blockchain
Computers, as elsewhere, the major for ports. Addressing the issues
and requiring different types of products
drivers in smart ports are productivity and associated with operational excellence can Maersk Line has recently announced its
and services, creates a complicated
efficiency gains. be seen in current IoT implementation in intention to work with IBM to develop a
environment with multiple stakeholders.
ports. The digital port solutions focus on system that will enable global trade to be
Port operations are starting to integrate
efficiency improvements such as traffic conducted using blockchain technology.
various infrastructures, both physical and
management systems, improving flow
IT, including different network and The technology is intended to standardise
throughout the port area, automation,
positioning technologies. For smart ports information flows and provide an open
reducing costs, digital invoicing (customs)
to be effective it is important for the platform for those involved in the global
and improving lead time.
technology to be able to work together supply chain to easily and safely
with other ports and service providers to exchange information in real time.
effectively share information.
22New Zealand ports and freight yearbook 2018 | Smart Ports
Smart ports - from digital to smart
Port development –becoming a smart Smart port development
port
The development of a smart port should
Becoming a true smart port that uses the be something that stems from a defined
full potential of an IoT network and smart strategy. A port should have a clear
data solutions means that a port must be business case in mind when planning its
able to identify and take advantage of IoT implementation.
new business models.
The nature of the business makes this Container terminal automation
challenging, since it requires integration Victoria International Container
between the supply and demand side Terminal (VICT) is an example of the
from the T&L sector, assimilating not only increased utilisation of technology in the
logistics firms, suppliers and distributors, operation of modern ports. VICT has;
but also their clients. 11 automatic container carriers, 20
Ports have already positioned themselves automatic stacking cranes and six
in the supply chain as a place for supply automatic lashing platforms. The
and demand to meet. In other words, terminal has a truck gate system where
they represent a physical manifestation of trucks are loaded and unloaded using
a platform business model. fully automated equipment and a
paperless booking system. Automated
A port platform model would be cranes are equipped with load sensing
represented by three parties: capabilities that enable the port to
• Supply – this side of the market monitor weight distribution across
includes inbound logistics, ship individual containers. The terminal is
owners, terminal operators, maritime able to operate continuously without the
service providers, etc. disruption previously caused by shift
• Platform – this is represented by the changes. Automated stacking cranes
platform itself. The Port provides a and container carriers move containers
physical/business platform for supply precisely without the risk of damage or
and demand to meet. misplacement.
• Demand – this includes outbound
logistics, manufacturers inside and
outside the port, and distributors.
23New Zealand ports and freight yearbook 2018 | Smart Ports
Smart ports – the development of a smart port
Challenges ahead The final level of integration will be a • Clean – the port will be clean and Terminal operations
result of stakeholder management and vessel waste recycled
Firstly the port needs to determine what Terminal operators today need to off-load
determination shown by the port.
they want to achieve by becoming a • Highly efficient – ports will be able to larger and larger vessels, reduce
smart port. The strategic goal should go Becoming a smart port, driven by smart increase handling capacity through throughput times and manage landside
beyond increased efficiency improvements technology like IoT, is a fundamental part increased automation logistics. Terminal operators are relying
and focus on long term strategy, where of the future of ports. on technology to meet these challenges.
• Secure – using automated container
insights are distilled from smart Cranes off-loading containers from ships,
Ports of the future screening technologies and digital
applications enabling a transition towards transporting containers, scanning
security monitoring.
an insight driven company. Shipping plays a major role in our global containers, certifying cargo – all of these
economy and seaborne trade has • Transparent – new technologies will activities take place within the dock yards
The challenge that ports face is that a
quadrupled since the late 1960’s. The port improve transparency and reduce costs and transfer areas.
large variety exists between ports e.g.
industry has embraced new technologies associated with running local customs
pure bulk port versus a container port. The technology used to complete all of
over time, but has not yet been disrupted operations.
A second challenge is the increased focus these operations is crucial to terminal
by the massive growth in new
• Employers – ports will continue to operators as they increase throughput,
on cyber security. The port industry is technologies. Blockchain, 3D printing and
source local employment and new reduce the cost per container handled and
responsible for customer data, which is smart mobility technologies all have the
technologies will require more highly reduce the amount of time required for
extremely valuable, and are also potential to dramatically impact the
skilled people. moving goods into and out of the
responsible for physical goods. shipping industry according to Smart
terminal.
Ports: Competitive Cities by Siemens. Managing the port of the future
Currently, port security is limited to the
Cities and their ports need to strategise
global ISPS code, which focuses on Managing the port of the future and its
as to how best prepare, change and
physical threats. Ports need to be aware various complex applications, processes
benefit from current and future
that digital threats are just as significant, and systems while optimising safety,
technologies.
especially if ports continue on their path security, energy efficiency, cost and
towards digitalisation. According to Siemens, ports of the future environmental care will continue to be an
will be: ever increasing challenge. Ports will have
For smart ports to operate effectively
to rely more and more on technology.
there will need to be co-operation • Electric – powered only by electricity
between ports in order to share data and Other logistics hubs are already starting
• Digital – a single system, where all
insights. to digitally integrate their distributed
elements are digitally connected
systems and partners in order to move
This will present another challenge as
• Emissions free – terminal operations passengers and freight more smoothly,
there is a certain level of protectionism by
and docking vessels will run only on efficiently and in a more cost effective
each port of their data.
electricity way.
24Thought Leadership
Port / City Duality
25New Zealand ports and freight yearbook 2018 | Port / City Duality
Port / city duality
Port / city duality stackers or quay cranes that require only
one person to operate them.
Many of the world’s major cities grew in
size and wealth on the back of the trade The disconnect between ports, the urban
that flowed through their ports. As ports environment and residents has stimulated
have become more industrialised a a great deal of discussion on the place of
disconnect between port and city has ports within a city.
developed. Mechanised port traffic and
The expansion of both ports and cities has
operations coupled with security concerns
brought the spatial constraints of the port
mean that it is no longer feasible for the
/ city relationship into focus.
public to be allowed unrestricted access to
port areas. Local policy makers are well aware of the
vital role ports play in an economy and
Despite the spatial disconnect, ports
that the development of ports is crucial to
retain their influence on the economic
continued prosperity. However, ports
strength of global metropolitan centres
located in or near the city centre are often
and their regions.
seen as undesirable by residents due to
Ports and cities have also developed an noise and environmental impacts.
institutional disconnect as a result of
City growth places a strain on available
increased privatisation in the sector.
land and forces land values upward. As a
Where once ports were owned and result, key operations of local ports are
operated by central government or local being relocated to sites where there is
authorities, internationally this role has less impact on cities and their residents.
increasingly been performed by private
With the relocation of some port
companies whose primary responsibilities
functions, the development of the areas
are to their shareholders, rather than the
previously occupied by a port is key to the
city or community as a whole.
economic growth of local economies.
The number of people that have first hand
experience of interacting with ports has
decreased significantly with the advent of
mechanisation and containerisation. The
hundreds of workers previously employed
by ports to load and unload cargo have
been replaced by automated container
26New Zealand ports and freight yearbook 2018 | Port / City Duality
Port / city duality
Port-related waterfront development The right mix of functions for Fisherman’s Wharf in San Francisco has
successful waterfront redevelopment had similar success by developing a range
As discussed in The Competitiveness of
of waterfront seafood restaurants and
Global Port-Cities: Syntheses Report Successful waterfront projects, have
markets in an area previously reserved for
released by the OECD, port-related generally achieved the right mix of
fishermen and their fleets. Despite the
waterfront development might present an diversified functions that render the
redevelopment a number of fishing
opportunity to create a new image for a waterfront area economically vibrant. In
vessels still use the area as their base of
city or a region. most port redevelopments the mix of
operations.
functions that attract people, tourism, and
A number of former port areas are being
business and in turn create economic Darling Harbour in Sydney is an example
redeveloped into bustling working and
value, consist of the following: of a successful redevelopment following
living areas.
the decline and obsolescence of the
• port functions;
Port redevelopment offers a new existing port. Darling Harbour for many
waterfront focal point for residents and • developing recreational and cultural years hosted warehousing and woolstores
visitors. The most successful examples of activities; and in addition to extensive rail yarding
waterfront development have tended to operations. A government review in the
• expanding food related businesses
focus their land use on non-maritime 1980’s deemed port operations to be
such as food markets or restaurants.
functions including: inefficient and recommended their
For example, Port Vell in Barcelona relocation. The New South Wales
• commercialising the location i.e.
attracts more than 16 million visitors per government then announced their
marinas, fisheries and aquariums;
annum. intention to redevelop the area. An
• applying the port function to the aquarium was opened in 1988 shortly
The old port area was transformed
tourism industry i.e. cruise passenger followed by museums, shops, hotels and
through an interesting and vibrant mix of
terminals; bars. Other attractions include Chinese
functions. Port Vell continues to operate
Gardens, a convention centre and public
• utilising the ports maritime history i.e. as a port through marina facilities, ship
parks. Development continues to this day
preserving and adapting historic repair dockyards, and a cruise terminal. It
with a major business and residential
buildings for new uses; and now offers numerous cultural and
project in progress, supplemented with
recreational activities, including a
• organising events that will attract further open public spaces. Reinforcing
Maritime Museum, Aquarium and water
locals and tourists to the port. the areas link with the city.
sports facilities. The historic former
warehouse, Palau de Mar, has been
refurbished to accommodate restaurants
where visitors are able to enjoy waterside
dining.
27New Zealand ports and freight yearbook 2018 | Port / City Duality
Port / city duality
Port history
Liverpool’s waterfront area utilises its port
heritage as a catalyst for the tourism
industry. The waterfront has preserved a
great deal of port related heritage making
it an attractive destination for tourists and
residents alike. The photo to the right
shows the port in its present state. The
refurbishment and retention of the
historic port buildings, and their
contribution to making the waterfront a
vibrant location, is clear.
Port history does not necessarily need to
be included as part of a successful
redevelopment. The Dongjian Bay Scenic
Area in Tianjin, China houses the largest
manmade sand beach in China and Asia’s
largest cruise port. This redevelopment
has created a new area for the city’s
tourism and cultural industries without
including the area’s historical background.
28Domestic Environment
29New Zealand ports and freight yearbook 2018 | Domestic Environment
Economic environment
Reserve Bank Monetary Policy The RBNZ has revised its November Quarterly Predictions, December 2017 Quarterly Survey of Business Opinion,
Statement February 2018 estimates of the impact of Government Predictions, December 2017
According to NZIER the growth outlook is
policies based on Treasury’s Half Year
On 7 February 2018, the Reserve Bank of slightly softer as population growth slows. NZIER report that confidence fell in the
Economic and Fiscal Update. The
New Zealand (RBNZ) left the Official Cash September quarter, with only a net 7% of
predicted net impact of these policies There is much uncertainty over the effects
Rate (OCR) unchanged at 1.75%. businesses expecting an improvement in
has been revised down in the near term of the new Government’s policies.
general economic conditions.
Global economic growth continues to although the Kiwibuild Programme will Nonetheless, the New Zealand growth
improve, although inflation and wage contribute to residential growth outlook remains positive. A decline in business confidence is not
outcomes remain subdued. Commodity from 2019. unusual heading into a general election.
prices have increased. Bond yields and Although economic activity has come off
Annual CPI inflation was 1.6% in
credit spreads remain low although they the boil, businesses expect a rebound in
December, lower than expected due to
have increased since November and demand in the next quarter.
weakness in manufactured goods prices.
equity prices are near record levels but
Non-tradables inflation is moderate but
are exhibiting increased volatility.
expected to increase gradually as capacity
Monetary policy remains easy in the
pressures increase. Tradables inflation has
advanced economies but is gradually
remained subdued. Overall, CPI inflation
becoming less stimulatory.
is projected to remain near the midpoint
The exchange rate has firmed since the of the target range and longer-term
November Statement largely due to a inflation expectations are well anchored Official cash rate
weak US dollar. RBNZ assumes the trade at 2%.
9.0
weighted exchange rate will ease over the
Monetary policy will remain 8.0
projection period.
accommodative for a considerable period.
7.0
GDP growth eased over the second half Numerous uncertainties remain and policy
6.0
of 2017 but is expected to strengthen in may need to adjust accordingly.
response to accommodative monetary 5.0
%
policy, high terms of trade, government 4.0
spending and population growth.
3.0
Employment growth has been strong and 2.0
GDP growth is projected to strengthen,
1.0
with a weaker outlook for housing and
-
construction offset by accommodative 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
monetary policy, the continued high terms
of trade, and increased fiscal stimulus. Source: RBNZ statistics
30New Zealand Freight Task
31New Zealand ports and freight yearbook 2018 | New Zealand Freight Task
New Zealand freight task
This section reproduces elements from Petroleum and coal freight are
New Zealand freight generated by commodity
Deloitte’s 2017 Ports & Freight yearbook. concentrated on a few key regions where
5.0 60
the resources are located and extracted,
The information in this section is drawn 4.5
coal from West Coast and Waikato, and
Billion tonne-kilometres
4.0 50
from the National Freight Demand Study,
petroleum from Taranaki and Northland 3.5
Million tonnes
a pivotal source of information for New 40
where it is imported and refined. 3.0
Zealand’s freight task. The first National
2.5 30
Freight Demand Study (2008) guided Key construction materials, aggregate and 2.0
freight infrastructure and investment and cement, are also produced in high 1.5 20
land-use planning decisions across the volumes, although generally close to 1.0 10
public and private sectors. domestic markets given their bulk and 0.5
relatively low unit value. Manufactured - -
The National Freight Demand Study was
and retail goods, whether domestically
updated in 2014, and has not been
made or imported, are usually smaller
updated since.
and of greater unit value, and are
The primary sector is New Zealand’s key transported greater distances. Billion tonne-kilometres Million tonnes
Source: NFDS 2014
generator of domestic freight, much of it
destined for export. The flows are from
source (farm gate or plantation forest)
either direct to ports for export (such as
logs) or more usually via intermediate
processing industries (dairy factories) for
both domestic consumption and / or
export. Favourable export conditions and
a buoyant construction sector have
supported the strength in forestry, while
dairy has enjoyed rapid expansion (much
enabled by irrigation). Dairy alone
exceeds the tonnage of all other
agricultural commodities: livestock, meat,
wool, horticulture, grains and fish.
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