[260119.EN.SEA] Singapore Remains World's Top Transshipment Port

SINGAPORE port operator PSA has entered into an agreement with Japan's largest shipping line after forming a joint venture with Ocean Network Express to operate four mega container berths from the first half of 2020, turning the Lion City into a major port of call for ONE's services.

The deal was the final piece of the puzzle in drawing all of the world's three major shipping alliances - which account for three-quarters of the world's container shipping trade - to the island state, SCMP reported, given that ONE belongs to THE Alliance. The other two leading box shipping alliances worldwide are Maersk Line and MSC's 2M Alliance, and Ocean Alliance.

The deal puts the port of Singapore ahead of its nearest competitors in Asia. For Malaysia's port Klang, in particular, the partnership between PSA and ONE comes "as a blow", said shipping consultancy Alphaliner's chief analyst Tan Hua Joo, who is based in Singapore.

"Port Klang is the main loser as the move limits their ability to draw away Singapore's customers, now that all three of the global shipping alliances are tied to PSA through various joint-venture arrangements," Mr Tan was quoted as saying.

Mr Tan explained that the joint venture will moor ONE's shipping volumes to Singapore, effectively removing the immediate threat of THE Alliance moving to Port Klang, an idea that had been mooted over the past two years.

The PSA-ONE joint venture will be able to handle four million TEU annually, once it overcomes regulatory hurdles.

"In terms of alliance longevity, we should not expect a lot of additional merger and acquisition activity between the larger lines that would be disruptive," said Singapore-based CTI Consultancy partner Andy Lane.

"Most of the competing hubs are also pretty well utilised, which means they have limited spare capacity in which to grow their market shares. So, Singapore appears to be in a very strong position for the next five or so years."

The port of Singapore is currently the world's top transshipment port and the second busiest port globally, after Shanghai, handling 36.6 million TEU last year, up 8.7 per cent year on year. Shanghai's container volume grew four per cent to climb to a record of 42 million TEU in 2018.

This comes as more regional ports develop capabilities to handle larger ships. The Cai Mep Thi Vai port complex in south Vietnam, for instance, has seen exceptional growth, with volumes up by 21 per cent in the first 10 months of 2018. Expansion works are also under way at Jakarta's Kalibaru port.

"With ports like Cai Mep and Kalibaru, shipping lines would have less need to transship in Singapore and go direct," noted Ocean Shipping Consultants director Jason Chiang, based in Singapore. "It's already happening, in fact. More carriers are opting to make direct calls."

He cited data showing that within the Strait of Malacca the level of transshipment activity has dropped from 91.5 per cent in 2010 to 73.4 per cent in 2016, as a result of more direct calls.

Mr Lane from CTI Consultancy is more optimistic. He points to the gradually narrowing gap between supply and demand in global container capacity, as well as the International Maritime Organization's new 0.5 per cent sulphur cap for marine fuel, which is expected to push up fuel costs and transshipment demand when it is introduced in January 2020.

Hong Kong in recent years has dropped out of the top spot as the world's leading container port, having ceded volumes to mainland China ports that are increasingly automated.

Singapore, for its part, is not being complacent. Last November, just before the PSA-ONE deal was announced, China's Cosco Shipping Ports launched two new berths at its own joint venture container terminal with PSA, raising its total capacity from three million TEU to five million TEU annually.

Source : HKSG.