Making intra-Asia trade pay looks promising over time, but all indications show it will take time
 To make money in the high-volume, low-value intra-Asia trade, one's business must be everything the intra-Asia trade is not - quick, clean, and efficient.
Hope emerges from this otherwise bleak picture from the phenomenal growth of the e-commerce and the popularity of online shopping among Asians.
One must also factor in the near disappearance of absolute poverty in the developing world, bringing with it a demand for reefer cargo, which signals a critical mass of affluent consumers.
Couple this with the continuing growth of the various Chinese Belt and Road projects, a tunnel here, a bridge there, the financing for a port development, or a railway in Africa, and we have the makings of something approaching a global connectivity of historic proportions.
What will be conveyed along these new supply lines into previously inaccessible hinterlands in which the poorest have access to a mobile phone, will be mere cheap trinkets at first, low cost items that have always best suited for the most economical container carriage.
While things look good for the future, one must face and fix the present. Because if the inefficiencies of the present are not remedied, these problems promise to grow, multiply and mire the intra-Asia trade, and condemn it to be the big cry baby it is today.
Equipment has become an issue of great concern, especially the lack of quay cranes at many smaller Asian ports, which reduces the number of moves per hour, resulting in still more delay. Handling smaller vessels also restricts the number of cranes that can be deployed.
“Vessels catering specifically to the intra-Asia trade are smaller than those on the main trades. The smaller vessel sizes and shorter vessel lengths of the intra-Asia trade [1,500 TEU], make it difficult for terminals to achieve higher productivity, because operators would not be able to deploy as many cranes to service these smaller vessels,” said Hutchison Ports analyst Helen Li.
“In addition, these intra-Asia vessels may not necessarily require as many crane moves, which affects operational efficiency as the time required for berthing and unberthing would still be similar despite the relatively lower volume of moves,” she said.
Chittagong and Bangkok, two river ports, have problems that typify other intra-Asian ports. First there are draft restrictions. Chittagongmaxes are limited to 6.5 metres while Bangkok can manage nine.
There are also cargo handling deficiencies. While Chittagong has ordered additional cranes, they have yet to start working. Thus, there is greater reliance on geared vessels that conduct their own ship-to-shore cargo handling autonomously with deck cranes, however inefficiently.
These vessels are also restricted to the general cargo berth and while there are grand plans for new container terminal at Chittagong, there is much delay. The Chittagong Port Authority (CPA) has announced ambitious plans to develop new container terminals plus a deep-sea mega-terminal.
Port congestion is a big problem at Asian ports in general, but especially at Chittagong where seven days at an anchor waiting for a berth is not unknown.
Some intra-Asia carriers say Bangkok, Chittagong, Kolkata, and Shanghai are among the worst ports, with berthing delays of a week. While part of the problem has been caused by growing container volumes, carriers also point to inefficient operations and inadequate infrastructure.
Unlike most ports, Chittagong and Bangkok ports operate berths on a “first come, first served” basis rather than allowing carriers to pre-book a berthing window. There is a total of 57 geared vessels and seven gearless ships registered to call with the CPA at Chittagong.
At Chittagong, seven of the 15 containerships at anchor waiting to berth at the port had been anchored for four days or more. Five have been waiting for three days or more, and three have been waiting for two days or more.
“Because of the nature of the intra-Asia trade, the requirement it places on ports and terminals is the need for flexibility and efficiency. This creates challenges to terminal operations in yard shuffling needs, as well as transshipment and operational complexity,” said Ms Li.
“The intra-Asia trade is a complex and fast-moving trade with particular characteristics,” she said. To sum up, what's needed for profitability is high service frequency coupled with quick vessel turnaround time, less buffer in network schedules, greater transshipment connectivity requirements and an ability to handle late instructions or last-minute changes.
More of a northern port problem, but still one that bedevils intra-Asian profitability is unstable weather conditions in China have caused carriers significant problems at Shanghai and Ningbo. Intense fog and strong winds affected port operations and vessel services in Shanghai, Ningbo and Qingdao, causing disruptions to normal port operations and resulting in vessel service delays.
Port operations at Shanghai's Waigaoqiao and Yangshan facilities were being delayed by up to three days with limited opening hours for container yards.
To mitigate the time carriers lose to delays caused by congestion, bad weather and the knock-on effect of extended waiting time on other Asian ports, Hutchison Ports said it works closely with carriers towards improvement in operations planning, handling efficiency and fine-tuning the capabilities required to cater to the needs of customers.
As demand for reefer cargo rises with the rising affluence of these hinterlands, so too will the need for speedy and efficient handling and digitisation.
Speaking at the 4th Cool Logistics Asia in Hong Kong earlier this year delegates saw the intra-Asia trade was ripe for a reefer revolution now that new technologies are were available to help them get the job done at less expense.
“Reefer is our major growth area,” Hutchison Port managing director Gerry Yim, told delegates of the work of his flagship terminal Hongkong International Terminals (HIT), which in 2017 handled some 600,000 TEU of reefer and has 9,000 reefer plugs split between the Hong Kong terminal and the one in Yantian.
Mr Yim billed HIT as the global fruit express gateway to China and cited industry figures suggesting an annual global growth rate of seven per cent, driven by higher fruit production and consumption in intra-Asia as well as the forecast that China will overtake the US.
But it cautioned that the market has special needs beyond the normal logistics needs of normal containers. There must be greater digitisation to have the trade become an “integrator of supply chains” and not simply a port operation. He also said Hutchison was “working with suppliers and lines to streamline our procedures and process so that everybody hopefully makes more money and cuts costs”.
He applauded effort to develop remote reefer monitoring, electronic release orders and track and trace solutions, which help to bring efficiency and visibility to the supply chain. At the moment about 20 per cent of reefer volume at HIT goes through its priority lane where a combination of electronic systems and special arrangements ensures that these high value products get out to market quickly.
The CEO of the Japanese owned but Singapore-based Ocean Network Express (ONE), Jeremy Nixon, cited five new technologies that can be applied to the reefer container trade. These include data analytics and artificial intelligence (AI), robotics and process automation, the Internet of Things (IoT) including real-time monitoring, the use of drones and the use of blockchains and cryptocurrency in the supply chain.
Mr Nixon said ONE was embarking on a programme of “EDI-max” where EDIs or electronic digital interfaces are used for everything possible to provide a server to server interface. He noted that ONE does about 80,000 EDI message sets a day now and this is set to increase.
“Already we see now a strong move by Maersk Line to the telematics area, and there’s a number of pilot schemes going on with some of the other carriers and I think we’re going to see that telematics will become a really significant part of the supply chain,” Mr Nixon said.
All this goes to show that there are minds at work deploying new technology to do what shipping has always done - that is, get the job done at a lower cost so one returns with a profit and not a loss.
All admit this is not easy in the intra-Asia, fraught as it is with inefficiencies and delays. But given global economic trends the future of the world's biggest low value trade looks promising indeed.
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