Container ports, specialized facilities for handling containerized cargo, have seen rapid growth in both number and capacity, mirroring the global surge in containerized shipping, according to Marine Insight.
Foundation Of Container Trade
The foundation of container trade is built upon standardization. This means that regardless of the nature of the commodity, once it is packed in a container, the subsequent handling, transport and logistical requirements are largely similar.
It is this standardisation that has facilitated the rapid rise of container trade, and the movement towards containerization of commodities that were traditionally transported in bulk.
While standardisation might have made the transport process more efficient and driven a reduction in transport costs, the upfront investments required to enable container trade are significantly higher.
For container carriers, this includes investments in container equipment (with a mix of various equipment types and sizes), and container vessels of varying sizes (to serve various trades and countries), while for terminal and port operators, this includes cranes (Quay Cranes/ RTGC’s/ RMGC’s etc), as well as equipment to handle containers within the terminal (such as Reach Stackers), and finally trucks and chassis to move containers to the hinterland (or vice versa).
Further, since faster operations and cargo handling is a key benefits of containerization, terminals need to achieve a minimum level of efficiency that can guarantee faster handling of vessels and rapid evacuation of containers.
Container Carrier Perspective
The way modern supply chains have evolved, reliability is more important than speed. This means that customers would prefer a stable and robust supply chain where the delivery times are standard rather than where the delivery times exhibit variation (this is because stable transit times help shippers and importers to plan their inventory of raw materials, stock of finished goods, replenishment schedules, manufacturing timelines, etc with greater precision if the transit times are stable. Conversely, if the transit times vary, they will not be able to accurately plan inventory levels and production schedules).
This tendency is reflected in the container shipping business as well. Container carriers need to maintain schedule reliability, so they can provide a consistent level of service, wherefore it is critical for them to have the assurance that their vessels will be able to call at a certain port at a pre-decided time and depart at the specified time.
Berth Planning
The practice earlier amongst ports was to handle vessels on a First Come First Served basis, which meant that the port would handle vessels in the order in which they arrived at the port. While this might seem logical, it neglected the profit-maximization aspect and did not give any options for carriers who might be willing to pay a premium for the rights to be berthed upon arrival (at a pre-decided time).
For container carriers to be able to ensure schedule integrity and adhere to published vessel schedules, it is important for them to have the assurance that they will be allocated a berth when (and if) they arrive at a time that has previously been agreed to with the port.
Concept of FBW
The concept of Fixed Berthing Window has been steadily gaining ground in the ports industry and is considered a best practice, which a growing number of ports and terminals are incorporating.
Under the FBW system, ports and carriers agree on fixed berthing windows, i.e. pre-decided times when the container carrier’s vessel will arrive at the port and will berthed. This provides the carrier with the assurance that their vessel will not have to wait in a queue (provided they arrive at the stipulated time) while the port earns higher revenue by charging the carrier a premium over normal port charges.
This is a win-win situation for the ports/ terminals, carriers, and their customers, as it stabilises their supply chains at a slightly higher price, where the FBW premium is more than recompensed by other accruing benefits such as faster cargo movement, faster turnaround of vessels and equipment, higher schedule reliability levels, lower vessel waiting times, and reduced probability of delays.
Benefits of FBW to Ports and Carriers
FBW offers several advantages to all players in the supply chain, including ports, carriers, exporters and importers.
These benefits include:
- A structured and coordinated approach to improve port operations
- Facilitates advance Vessel, Yard and Evacuation Planning
- Enables optimum utilisation of Port and Terminal assets
- Faster Vessel and Cargo handling
- Optimise Space management
- Lower probability of bunching of vessels
- Enhanced Productivity and Efficiency
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Source: Marine Insight
