As congestion at container terminals around the world has become commonplace, port productivity has inevitably come into focus.

A measure of just how serious the threat of port congestion is to global commerce was put into context by Moffat & Nichol’s chief economist Walter Kemmsies, who recently described it as a “new form of trade barrier”. The recent travails of shipping lines and their customers on the US west coast has brought the matter to public attention – particularly when it involved a human interest story, such as McDonalds being forced to ration portion sizes to Japanese customers because exports of US potatoes were stuck on the docks.

It’s a story that puts a smile on people’s faces, whether born of schadenfreude or not, but the underlying impact of port congestion is far, far more serious. The economic damage caused to the US by the west coast congestion has been put at between $1bn and $2bn per day.

More insidious is the fact that it appears to be contagious. As cargo began to pile up along California’s shores, either on land, or waiting on anchored vessels seeking a berth, congestion pinch points began to emerge at Asian export hubs. Manila was worst affected, with ships waiting up to two weeks to berth and export containers sometimes delayed for months before loading.

There are, of course, mitigating factors – local issues that accentuate the congestion and can often appear to be its cause. In Manila a ban on daytime trucking was blamed, but the reality, according to comments from MCC Transport chief executive Tim Wickmann, was that Asian ports – including top 10 global gateways such as Hong Kong, Shanghai and Qingdao – were all suffering their worst congestion levels for two decades. These backlogs were related, not isolated.

In an increasingly globalised world, port congestion is an increasingly globalised problem. In the early part of this year it also returned to haunt the major north European import gateways, although not on the seismic scale that was experienced in the first half of 2014.

One of the root causes of the issue in North Europe was the terrible late winter weather, which literally blew ships off their schedules, and illustrated the glaring vulnerability of intercontinental container supply chains – the inability of ports to press a throughput accelerator if factors outside their control lead to a cargo backlog.

The requirement for ports to raise their productivity levels has been apparent ever since increasing container vessel sizes became the norm. Since the launch of Maersk’s Triple-E series every major container line has become convinced of the economic merits of operating ultra large container vessels (ULCVs).

Currently these are restricted to deployment on the Asia-Europe trades, but their entrance means existing vessels have been cascaded to other trade lanes, with the net effect that ports everywhere are suddenly dealing with larger boxships unloading ever larger numbers of containers in single calls.

But can ports step up to the challenge that Maersk Line chief executive Søren Skou issued at the recent TPM conference in Long Beach?

“Every time I meet with a port operator I stress productivity to get the bigger ships in and out – we have not seen any increase in berth productivity over the last six or seven years, and with productivity at current levels sooner or later we are going to run out of space.

“Crane and yard productivity can be faster, and in US ports in particular rail truck and chassis productivity all need to go up,” he told delegates. In mitigation, however, he added that the lack of progress lay partly with the drop in volumes seen after the onset of the global economic crisis.

“The subsequent decline in volumes and other associated problems masked the issues that were beginning to emerge in 2006 and 2007. The period of lower volumes meant there was no investment, so we have lost five years in terms of dealing with these issues,” he said.

But it is not as if the new requirements that larger vessels would place on ports has not been talked about. Since the 18,270 TEU Maersk-McKinney Møller was launched in mid-2013, observers have routinely talked about the need for terminals to be capable of handling 5,000-6,000 containers within a 24-hour period – equivalent to 208 – 250 container moves per hour.

However, it is apparent from data published in the Journal of Commerce’s ground-breaking berth productivity reports that the industry as a whole remains way off this target. The latest data, covering the first half of 2014, shows that the best-performing terminal globally, the APM Terminal’s facility in Yokohama, is hitting an average of 180 moves per hour – equivalent to handling 4,230 in a 24-hour period. The best of the best is still some 14-28 per cent off the minimum productivity levels required by the ULCV class of container ships.

The result is that on the Asia-Europe trade, Maersk has found the time that vessels spend in port on a standard round trip has increased 50 per cent from 12 to 18 days, while Drewry Maritime Advisors recently found that upsizing from a 13,000 TEU vessel to 19,000 TEU, a capacity increase of some 46 per cent, had led to only a 20 per cent increase in berth productivity.

A further issue is the knock-on effect of ULCVs in ports unable to meet new productivity requirements – by taking so long at berth these vessels, which offer cheaper freight rates to shippers and lower operating costs to carriers, are, by dint of the ensuing congestion their presence causes, increasing costs in the supply chain.

However, because vessels have become wider rather than longer, terminal operators have been unable to do what they did previously when faced with bigger ships – deploy more cranes.

Here’s the contrast: the 2009-built Gerda Maersk is 366 metres long, 43 metres wide and offers a capacity of 9,000 TEU; by comparison the Maersk-McKinney Møller is just 10 per cent longer at 399 metres, but 37 per cent wider at 59 metres and carries twice as many containers. As ships carry more cargo Gerda Maersk vessel dimensions increase marginally – the Emma Maersk is just two metres shorter and two metres narrower than the Maersk-McKinney Møller but has a capacity of 15,500 TEU – the latter is only fractionally bigger but carries 18 per cent more cargo.

“Vessel size increases are not proportionate with the length of the vessels, so we cannot put more cranes into operation,” says APM Terminals head of design and automation Alexandru Duca.

According to Drewry’s director of ports, Neil Davidson, eight is the maximum number of cranes that can be set to work on the largest ship, while most terminals deploy six. The only other option, he says, is to increase crane moves per hour, but here too there are limitations – the critical space on the dockside under the cranes, coupled with the way containers are moved between yard stacks and quays, is too small to allow operators to achieve a step change in productivity.

“The problem is congestion under the crane – getting the boxes to and away from the crane is the fundamental issue. The more boxes you lift on and off a ship per crane per hour, the more trailers, tractors, straddle carriers and the like are arriving in the lanes between the crane’s legs, and you get a congestion problem on an individual crane.

“If you put more cranes on a ship to try and spread the traffic you create congestion all along the quay, so you either get congestion at one crane or along the whole quayside,” he says.

There have been a number of press releases from terminals recently declaring huge numbers of containers handled in a single call, in some cases more than 10,000. These are often accompanied by a photo of the vessel at berth, and it is instructive to count the number of cranes at work on the ship – in one example there were six in a port that averages 25 moves per crane per hour – 150 total moves per hour – meaning that the vessel was likely in port for just over three days.

In another recent example, the 17,700 TEU CMA CGM Kerguelen made a call at its south-east Asian hub of Port Klang on its maiden voyage and was served by no fewer than 12 cranes at one time. “The high crane density on these occasions is, however, atypical of normal port operations for ULCVs,” liner shipping analyst Alphaliner wrote recently, in a short piece entitled: Photo opportunity beckons when large ships call.

“At most loading and discharge ports, crane use is usually limited to about one third of the vessel’s bays, which corresponds with a gantry fleet of seven to nine units on a modern-day ULCV.

Westport’s use of 12 cranes on CMA CGM Kerguelen was partly due to the high number of re-stows undertaken by CMA CGM at the port,” it continued. Anecdotally, another operator related a recent visit to a mainland Chinese port and was startled to see 11 cranes working on a single ship. “They’re not all deployed,” his guide admitted. “We put them there for the photo opportunity.”

Back in the real world, “150 moves per hour is perfectly reasonable and acceptable in today’s environment,” says Mr. Davidson. “It is well in the upper echelons of productivity, and the lesson is that if you are a shipping line and are throwing 10,000 boxes at a single port, don’t expect to be out of there in less than three days.”

Others however, disagree, and argue that carriers should expect terminals to up their game. Andy Lane, partner at CTI consultancy in Singapore, says: “What needs to happen is that port calls need to be handled like F1 pit-stops, with far higher intensity.

Mr. Lane argues that 36 moves per hour is “not even a stretch target”, on the basis that a typical crane cycle takes around two minutes and averages 1.2 container moves – in fact he argues that a crane cycle could be completed in 90 seconds. “But we see average performance in large Asian and European terminals struggling to exceed 30 moves per hour. So there is at least 17 per cent waste, but probably a whole lot more in the terminal process,” he says.

On the basis that terminals should strive to offer ULCVs the productivity they gave the first generation of post-Panamax vessels, the 6,600 TEU Regina Maersk class introduced in the mid-1990s, Mr. Lane says that to deploy 9.25 cranes per ULCV, which at 36 moving per hour would exchange 6,000 boxes in 18 hours.

“Søren Skou has left money on the table and not asked for enough!” Mr. Lane says. “6,000 in 24 hours should be considered as an early milestone – essentially one of few ways in which a terminal can differentiate and avoid commoditization and competition on price only.”

According to CTI analysis from last year, which correlates with the JOC productivity figures, the average crane across the world’s 12 largest ports handles 187,000 TEU per year – ranging from 90,000 TEU per year at Los Angeles-Long Beach to 239,000 TEU a year at Qingdao. Mr. Lane argues that if this is produced by a crane moving 26.7 containers an hour – the global average – then that represents a utilization of just 50 per cent.

“Getting an average 33 moves per hour out of cranes which are designed to produce upwards of 45 can surely not be difficult. Balancing peaks, a joint responsibility which also involves shippers, and getting utilization of the bottleneck up to 60 per cent also cannot be considered as a stretch target,” he adds.

What has become clear as this debate moves into its next phase is that while cranes are able to make many more moves per hour than they currently undertake, they are constrained by the interface between the quay and the yard, although APM Terminals’ Mr. Duca argues that this aspect cannot be looked at in isolation.

In an interview with The Loadstar, he repeatedly stresses the word “holistic” and the need to address “small pockets” where efficiency is lost. “The first thing to be improved is the mind-set. We need to take a step back and engineer a complete solution for the crane interface – and at the same time if we split the terminal operation into smaller parcels we will find there are repetitive processes which can be streamlined.”

This theme resonates with Mr. Lane. “It has to start with recognition and acknowledgement that doing more of the same will not produce different or better results – that would be close to insanity. New strategies need to be hatched and implemented, and then to be consistently and relentlessly championed top-down, combined with organizational capabilities, enhanced to support the strategy.

“What gets measured gets done – do we measure enough of the right things? And this is not solved by “big-data” or “business intelligence” dashboards – it needs engineering from the execution processes and upwards. There is good data in the quay and yard cranes – about production – but it is used (and secretly kept) by maintenance or engineering departments,” he says.

And terminals will need help from carriers if they are to raise productivity. “It is also not a singular effort – we also need much greater cooperation with shipping lines. A well-planned stowage, for example, is also very important to achieve these targets,” Mr. Duca says. There is huge financial gain at stake for carriers, especially as most try to emulate the tremendous cost savings that Maersk has extracted from its business over the last few years – which may well be found in how it chooses its terminals, and organizes its rotations. Is this what Maersk means when it refers to “network efficiencies” in its financial reports?

According to CTI analysis, Maersk Line spends some 19 per cent of its total costs on ship fuel – amounting to $4.6bn per year – and makes around 31,000 port calls with its own operated ships, with 1,500- 1,800 moves per call. Mr. Lane calculates that a 7 per cent reduction in port stay, say 1.3 hours out of a total of a 13-18 hour call, would “reduce fuel consumption to the tune of maybe $120m per year”, because it would allow the company to steam slower once it had left port.

But is the industry really capable of achieving these productivity wins? At face value it would appear not. The JOC figures show quite a large jump in berth productivity at the world’s leading ports and terminals between 2012 and 2013, but it would appear that things slid backwards last year.

A comparison of the numbers at the top 25 leading ports – where productivity figures have been aggregated over the different terminals – shows that more ports delivered worse productivity levels in the first half of 2014 than improved their performance: 15 saw productivity decline compared to just seven where it improved.

On the other hand, at a terminal level there is definite progress. The average berth productivity of the top 10 Asian terminals in 2013 was 111.3 gross cranes moves per hour, whilst in the first half of 2014 it had jumped to 131. In Europe the same comparison was 89.6 in 2013 and 99 in the first half of 2014, while in the Americas it had declined from 78.4 to 74.3.

What is confounding is that in 2012, average berth productivity in the same 10 terminals in Asia was 83.4, in Europe 64.5 and in the Americas 60.1, showing significant progress had been made by 2013.

However while improvements can be made under the current system, there is something of an upper limit, and for the next leap forward, a new way of organizing terminal operations will have to be developed.

However, the very recognition of that requirement is a step forward in itself, Mr. Duca says.

“We need that stress moment to change; these pressures will change the way that we look at our operations. When the first cars appeared on the streets the people called them horseless carriages, but the improvements that the car has brought to the world are much greater than simply getting rid of horses – we are now making the next step in the industrial revolution after mechanization.”