By Alan M. Field

How do Canadian ports stack up against the world’s largest ports when it comes to productivity? What are the most useful ways for measuring and comparing port productivity in Canada with port productivity elsewhere? Although maritime carriers, terminal administrators and other stakeholders have been gaining access to more and more comparative data in recent years, collecting comprehensive and actionable data about the productivity of the world’s major ports has remained an elusive goal. For Canadians, analyzing the relevant data, and making meaningful comparisons between productivity performance in Canada and productivity elsewhere around the world remains a major challenge.

One of the most ambitious efforts to achieve that goal took place in Australia in 2009, when BITRE, Australia’s Bureau of Infrastructure, Transport and Regional Economics, released a report that compared Australian ports with 29 leading international container ports. Port Metro Vancouver was the only Canadian port included in the analysis. Using eight key metrics, the report concluded that Port Metro Vancouver’s performance was on par with the world’s leading container ports.

And in an even more comprehensive approach, Drewry Shipping Consultants released a study in 2010 entitled Container Terminal Capacity and Performance Benchmarks. The study assessed the performance of nearly 500 container terminals worldwide against the following indicators: (1) ‘quay-line’ performance (measured as twenty foot equivalent units per meter of quay per annum); (2) ship-to-shore gantry crane performance (measured as TEU per crane per annum); and (3) container yard performance (measured as TEU per hectare per annum).

Until recently, however, “port productivity studies were few and far between, with no consistency that would allow productivity trends to be tracked over time,” said Peter Tirschwell, Senior Vice-President, Strategy at JOC Group. With that goal in mind, JOC Group has spent some five years developing a database of productivity data from major ports worldwide, which will “go live” very shortly. The data will be updated on a quarterly or monthly basis. The initial report, focusing on data from East Asian ports was issued last February, highlighting the well-known fact that many of the largest container ports in Asia are the world’s most efficient reports. It did not offer comparative data about Canadian ports.

Unlike other port productivity databases, the data in the JOC database is provided by seventeen carriers, noted Mr. Tirschwell. Why is this important? Mr. Tirschwell explained, “Although carriers and others regularly cited numbers for crane moves per hour and berth productivity at various ports and terminals, there was no independent verification of the data.” It was “common knowledge” that North American port productivity lagged that of Asia, but no one really knew by how much. Meanwhile, terminals were starting to self-declare productivity records – claiming to have handled a “record” number of moves per hour on a particular ship, “with no third party to verify the accuracy. Part of the reason for the absence of independent productivity data was the approach. Those seeking such data in the past invariably approached ports and terminals, which, for obvious reasons, were reluctant to divulge such data. The carriers, after all, are their customers.”

The carriers had “increasingly viewed productivity in terms of total berth moves per hour, with the higher the number equating to the faster the ship would be on its way to the next port. As fuel prices skyrocketed and slow-steaming became the industry norm, the attention on berth productivity only grew, and so did the need for the data to be collected and presented on a global basis.” Instead of approaching the ports and terminals, JOC approached the carriers, which were “most motivated to see productivity levels rise because of the need to cut fuel costs.” For the JOC database, the carriers shared their operating data – the time their ships arrived and departed; and the number of moves during that time at the time they call globally, down to the individual vessel call. Tirschwell argued that this “groundbreaking” approach generates a regularly “updated database of berth productivity” – the total moves per hour achieved, broken down by terminal, port, region, ship size and call size.

Lessons from Asian ports

In its initial report, the JOC database confirmed that container ports in North Asia, a region which included China, Japan, South Korea and Taiwan, consistently handled more total containers per hour than any other region in 2011 and 2012. North Asian ports collectively surpassed more than 70 gross moves per hour in 2012, an increase over the 67 recorded for 2011. The second most productive port region in 2012 was the Middle East, with 62 moves recorded on average per hour, followed by North American and Southeast Asian ports, which averaged 49 gross moves per hour. According to analysts, the main factors behind the high productivity of Asian ports include the high level of investment in modern equipment; the high skill levels of crane operators; the absence of labor strife in countries like China, where labor unions have limited power, despite the nominally Communist nature of the government.

Why are these sorts of comparisons so useful? Mr. Tirschwell said, “Terminal productivity has not improved over the past decade [worldwide], but it needs to improve” for various reasons. First, if there is an improvement in gross berth productivity – measured by the total number of moves per hour – carriers can take advantage of opportunities to engage in “slow sailing,” which not only lowers their energy costs, but is also helpful to the environment. Moreover, as ships get larger and larger, if port productivity remains stagnant, bottlenecks of inefficiency will raise costs, and impede the smooth functioning of global supply chains.” In addition, “Carriers, terminal operators and others will be able to improve their own productivity by comparing specific indicators such as data about “lines down and lines up” in various ports. “There are opportunities to reduce the time between lines up and lines down,” and this database will make such opportunities easier to identify, he said.

Mr. Tirschwell added that there will also be opportunities for ports and investors in marine terminals because the database will make it possible to compare the productivity of various ports where they might choose to invest. The data may also be used to compare the impact on productivity of specific advanced technologies, such as the NAVIS software used in many ports. People will be able to see “to what extent are NAVIS systems correlated with higher productivity,” he added.

Limitations of comparisons

But how useful are these comparisons between ports in Asia, on the one hand, and ports in North America, on the other? To what extent can Canadian port operators take advantage of the data in these kinds of data to improve their productivity and competitiveness? More fundamentally, how should stakeholders at major Canadian ports approach the issue of measuring port productivity? Some experts are skeptical.

Louis-Paul Tardif, Director, Economic Analysis & Research at Transport Canada, argues that stakeholders in North American ports need to be very careful that they are really comparing apples with apples, even when the data appears to be precise and specific. “When you look at Asian ports, you have to differentiate the so-called ‘greenfield’ ports versus the more mature, long-standing ports. Along the coastlines of China, there are so many new ports, such as Dalian and Qingdao; and even Shanghai is a very new facility. So you have to be careful.” On the other hand, “When you look at Port Metro Vancouver, you are into a very dense urban area. So yes, improvements must be made and, yes, technology must be applied in order to raise productivity. But you cannot do that in our society without considering the living community, as well as environment.” For his part, Mr. Tirschwell agreed that Chinese ports “are fundamentally different from North America” in many aspects, but that the need for improving productivity is so apparent that benchmarks for specific performance indicators must – and can – be created, using relevant comparative data.

Walter Kemmsies, Chief Economist at Moffatt & Nichol, a global infrastructure advisory firm, argued that broad, high-level comparisons between ports with very different characteristics make little sense, so it is vital to make sure that any port-to-port comparisons are limited and highly specific. Mr. Kemmsies said, “No two ports are comparable; no two ports are alike. Each of them serves a different economy; a different set of companies; a different set of liners; a different set of trade lanes, and have different political circumstances.” Ideally, added Mr. Kemmsies, “What you need in a database is a zillion variables. Imagine all the ports listed in one column; and then the next column is the volumes they handle; and the next column would say how many were fully loaded import boxes; how many were empty boxes; how many were exported; and then broken down into volumes of dry and bulks; dry and reefers” and so forth. “These different kinds of cargos will each have different kinds of productivity levels. You can’t just throw a reefer box anywhere on a ship.”

Adding to the complications, “Another thing you need to know is the composition of the fleet calling at the port,” said Mr. Kemmsies. “For example, if the Port of Los Angeles is handling some very small ships,” unlike the major ports in Asia. “A typical port in Latin America is handling really small ships but “the guys in Asia are so big, they literally load and reload 70 percent of the capacity of the ship” by highly mechanized cranes. “If you don’t have these descriptors of what is going on in the port, then how is this data of any value to me? If I want to see benchmarks for my port – or just go to a set of ports that are like mine, then I need to narrow the list to see only a set of ports that operate under similar circumstances. If the database can’t do that, then it’s of very little value.”

Mr. Tardif agreed that high-level comparisons between North American ports and those of other regions have little value. However, he defended the notion that Transport Canada and ports around Canada are making significant progress on the road to improving their productivity, despite their own geographical, historical, cultural and demographic peculiarities and limitations. Mr. Tardif said, “I think we are moving at a pace that our society is allowing us to move. And improvements are being made in a really consensual way. I was in Shanghai and Hong Kong – and I would always shy away from me versus you; I don’t think that’s the point. The point is, when we speak to the shipping lines, and there are 18 shipping lines operating in Vancouver, the issue seems to be coming out all the time, that ports don’t tend to compare one versus another; they tend to compare, for example, [various ports in] North America West Coast but not compare North America West Coast versus Singapore or Shanghai or South Korea. They tend to be very pragmatic about those comparisons. So in our view, we are limiting ourselves to a comparison of the competitiveness of our ports with other North American ports.”

Noting Canada’s unique cultural and historical legacy, Mr. Tardif said, “Very few people know that our biggest Marine terminal in Vancouver is called Deltaport. It is a new terminal but it is built next to a First Nation community, and this has huge implications for us” if, for example, the port wants to expand in size.” This type of cultural issue “is very specific to each continent. Comparisons have to be understood.”

The importance of productivity benchmarking

Because the BITRE report from 2009 was the only international port-benchmarking study then available for purchase, Transport Canada Economic Analysis (TCEA) saw an opportunity to adopt and harmonize its own metrics for productivity, with those of BITRE, in an effort to explore at least identify and explore some comparability between Australian ports and Canadian ports. Mr. Tardif said Transport Canada is also involved in a different, parallel approach to measuring the productivity of Canadian ports. In this initiative, “What we track is end-to-end supply chain productivity from Shanghai to Toronto – -with each port as one piece of the sum, so that we have a true supply chain approach. The ports are in there, and around the ports we have a set of key indicators.” He said that the agency has added to and revised the list of indicators, over the years, to reflect changing technologies, business processes and needs. “Thirty years ago, shipping line reliability was not necessarily a big issue but now it is. So we use [this indicator] to track online the reliability of the ships’ arrival in the port.” However, he cautioned that, “Many of those performance indicators have to be seen in a broader context and not necessarily on their own.”

Mr. Kemmsies argued that the problem with using key performance indicators is that “you are never going to find two ports with data that are perfectly comparable. Every port is unique. And so what you might want to do is to compare your performance of certain things with one set of ports; and your performance of other things with another set of ports. And so your KPIs are not always against a fixed set of ports. Your KPIs are benchmarked against a set of relevant ports – and you only want to look at the relevant data from these relevant ports; not all of the data. “

Port Utilization Indicators

In an ongoing initiative aimed at establishing a standardized set of performance indicators on a national level, the Economic Analysis Directorate of the Policy Group (Transport Canada) launched the Port Utilization Indicators (PUI) project in 2008. The goal is to help ports monitor operational performance over time. These indicators have been expected to significantly increase the analytical capability and provide “fact-based information on the reliability and efficiency of the system to be shared with trading partners.” Thus, “an objective and rigorous set of indicators will also be useful to deconstruct misconceptions about Canada’s ports by supporting an international gateway marketing effort,” according to an internal draft report by Transport Canada.

The first phase of the initiative (2008-9) was aimed at implementing intermodal indicators at Canada’s four leading containers ports: Vancouver, Prince Rupert, Montreal and Halifax. Every step of the process was based on partnerships between Transport Canada, the various port authorities and the private terminal operators. The second phase (2010-11) implemented three key metrics for bulk trade in strategic export commodities (iron ore, coal, potash, and grain) at six leading Canadian bulk ports. This involved replication of the same approach used earlier by working groups to develop intermodal indicators. Industry consultations were also supplemented by technical field visits to deepen operational understanding of marine bulk facilities. The bulk metrics were compiled and aggregated by commodity.

The final phase (2011-12) involved rolling out the indicators across the remaining Canadian ports that participated in the project. Transport Canada’s Economic Analysis (TCEA) bureau then reviewed what was actually being done internationally when it came to implementing port KPIs. Unfortunately, said Mr. Tardif, TCEA discovered that “global practice in the collection and public dissemination of port KPIs was very limited and – moreover – highly fragmented.”

Confusing methodology hampers accurate development of productivity metrics

What else have Transport Canada analysts learned so far? According to one TCEA internal draft, prepared in April 2012, although several leading Canadian ports have established sophisticated sets of KPIs, very few ports disseminate their results for public consumption. “Port Metro Vancouver is actually a global leader in port performance measurement and monitoring,” according to the internal draft. “As for North American ports, it was generally found that West Coast ports displayed a greater level of transparency in vital statistical information reporting. Other leading ports in North America include Los Angeles, Prince Rupert, Norfolk and Savannah, although their degree of performance reporting does not match Vancouver’s.”

Continued the TCEA internal draft, “There are surprisingly few studies cross-comparing port performance internationally. It was concluded that port KPIs yielded very limited opportunities for port-to-port benchmarking and comparison. The primary challenge stems from the lack of standard definitions and calculations of the indicators. There is a generalized lack of methodological transparency among leading studies on port performance measures so that comparison becomes meaningless in the absence of common standards. This lack of methodological transparency seriously hampers accurate development and interpretation of existing metrics.” Noting this obstacle, TCEA originally sought implementation of port KPIs that had a more realistic objective of measuring continuous improvement (i.e., utilization monitoring over time), rather than a comparative exercise of one port versus another. TCEA acknowledged that it stakeholders have “strongly shared” this assessment.

Another major challenge facing the collection of marine terminal data, said the same draft report, was that “the data is often contingent on the capture tools and technologies used at marine facilities. The use of varying terminal operating systems can mean that a single statistic can be captured and computed differently across terminals in Canada or even within the same port!” This barrier further made standardization of data and calculation on a national scale “an arduous task and requires creative approaches to obtain standard definitions for the same indicator across various ports.”

To mitigate this problem, Transport Canada’s PUI (Port Utilization Indicator) project made use of two basic methods: First, standardized templates used for defining each indicator; and, second, indicators that were pilot-tested before they were fully implemented. The template approach allowed the agency to establish “a harmonized, consensual and unequivocal definition for each of the indicators as they clearly laid out such parameters as: [the] objective of the metric, definition of terms, calculation method, units of measurement and scope of application (e.g. commodity, vessel type, etc.).” Since nine ports were participating in the same exercise, this standardized approach injected “a degree of discipline into the process “

Terminal operators, carriers, and other stakeholders in the continuous improvement of port productivity should keep in mind that participation in the agency’s PUI project is voluntary; and that “participation by terminal operators can sometimes be difficult to secure, and data-sharing then comes with conditions (better to have aggregated data than no data!),” according to the draft report. On the other hand, “port authorities legitimately wish to conduct their own quality control to ensure data integrity.” Moreover, regardless of their preferred approach, “the methodology remains standard, open and transparent such that each port authority is naturally peer-pressured to deliver quality data.” TCEA has established ways to validate third party data by independently collecting its own data through GPS or other technologies about such indicators as truck turnaround times (GPS), truck wait times at terminal gates (GPS), container dwell times, vessel turnaround times, and ocean transit times.

Transport Canada’s quest for continuous improvement

In all such initiatives, Mr. Tardif stressed the importance of pursuing continuous improvements. “Never stop. Look at ways that you can always improve. All the stakeholders share this common theme. For example, in Vancouver, their target in 2011-12 for port-dwell times for rail containers was set at three days. On average, a container would be dropped in Vancouver, and three days later, it would have been moved out of the marine terminal there and on to its destination.” But early this year, continued Mr. Tardif, “When we met again, the group – all of the stakeholders – agreed that this metric should be dropped to 2.5 days. This is a continuous improvement because the yardsticks are continuously moving elsewhere around the world. Los Angeles is not sitting still. Tacoma is improving; Seattle is improving, and on and on. So continuous improvement is one part of the transportation and supply chain picture.”

Tardif characterized this improved yardstick – from 3 days to 2.5 days – as “very aggressive in my view. There is a commitment on the part of all the partners –shipping lines, marine terminals, railways, trading companies and the port – who all agreed to move to that [yardstick]. If there are any actions that one can take as a party to that, we try to do that. In our case, last year we made available to the stakeholders some information from our ‘single window customs initiative’. We took that single window approach from the Canada Border Services Agency (CBSA) and worked with the partners – all shipping lines and terminals – to see how the information we get from CBSA can benefit operational efficiency of the port.” This year, Transport Canada is investing in a joint partnership with Port Metro Vancouver in a reservation system for the drayage companies “so we are helping the port to equip the drayage trucks with GPS-positioning systems. Continuous improvement to minimize the waiting times at the gate in a very fluid way. Continuous improvement is a guiding principle that all stakeholders have set for themselves – and what you see in terms of metrics allows that. If you cannot measure it, it is difficult to talk about it.”

Despite such ambitions, Mr. Tardif advised port managers to set realistic goals. “Know what you can control and you don’t control. For instance, people talk a lot about slow steaming. This is out of what you can control, in a sense. It is controlled by fuel prices. The number three lesson is the importance of transparency.”

Mr. Tardif also stressed that while his agency does not choose or decide which technologies should be used by ports to improve their productivity. “But in some cases, we try to assist as much as possible” in adopting technologies like solar, and tools like GPS. Moreover, “We don’t make the decisions; we participate as a partner,” such as in the Asia Pacific Gateway and Corridor Initiative, where the federal government, along with other levels of government and the private sector, have strategically invested over $1 billion in initiatives that boost port capacity, efficiency and other measures of productivity. Mr. Tardif concluded, “Any partnership starts with one big thing – which is respect and understanding; those things have now been built into the process. You don’t point fingers by saying things like, ‘Last month, rail [performance] was really bad.’ Everybody has a little bit of blame in these things [when something goes wrong]. It is a very difficult process.