Port development and grain transportation in Southeast Asia
February 01, 1998
by Teresa Acklin
Port expansion and renovation are key elements for Southeast Asia to increase its influence in the world grain market.
By Eric Schroeder, Assistant editor
With the volatile situation in Asian financial systems, it is easy to question the idea of continued growth in Southeast Asian economies. Port expansion and renovation are key areas of growth, but drastic declines in currency rates in countries such as Indonesia and Malaysia have caused a sense of urgency worldwide. The full impact of the crisis has yet to be felt, and the upcoming months will be critical in establishing a solid foundation for the years ahead.
In March 1997, the U.S. Feed Grains Council released an extensive analysis of the status of Southeast Asian ports, existing plans for development and the potential for new port improvements to handle grain imports. The recent troubles have no doubt brought many port projects to a standstill and will cause lengthy delays in many others. The potential growth of the port complexes in Southeast Asia will ultimately depend upon the region's ability to overcome financial restraints.
While many ports in Southeast Asia are currently underdeveloped and small, plans have been drafted in some countries to install more modern equipment with better capacity standards, according to the Feed Grains Council report. Current productivity in most Southeast Asia ports is low and erratic. Discharge is at a general cargo berth and is done by mechanical grab. Storage is often inadequate. Trucks, which distribute grain from the port, come and go with long intervals in between, resulting in fluctuating productivity.
As a result of the poor productivity rates, few dedicated grain port facilities exist in Southeast Asia. Typical unloading productivity for a crew in Indonesia is 45 to 55 tonnes per hour, while in Malaysia and Taiwan the rate is closer to 90 tph, according to the U.S. Feed Grains Council study. Productivity is also influenced by the type of vessel that is unloaded.
The three major types of vessels are Panamax, Handymax and Handysize. The Panamax vessel ranges in vessel deadweight tonnage (dwt) from 50,597 to 78,750 tonnes. Cargo dwt is typically 48,000 to 66,000.
A fully loaded Panamax has a typical maximum load draft of 12.5 meters. The draft of the Panamax vessels excludes them from operating fully laden in many exporter ports and from operating fully laden into many Asian receiving ports. Panamax vessels have the most expensive rates per day, but as infrastructure and port productivity improve, they become more cost-effective on a U.S. dollar per tonne basis.
The Handymax vessel ranges in vessel dwt from 33,037 to 52,581 tonnes. Cargo dwt is typically 25,695 to 45,000 tonnes. A 40,000 dwt Handymax has a typical loaded draft of 11.7 meters. Charter rates for Handymax vessels normally are $1,000 to $2,000 per day lower than Panamax.
The Handysize vessel ranges in vessel dwt from 19,717 to 38,323 tonnes. Cargo dwt is typically 12,000 to 25,000 tonnes. A 30,000 dwt Handysize has a typical loaded draft of 10.5 meters. In recent years, both importing and exporting countries, where infrastructure permits, have moved gradually away from Handysize vessels to capture cost efficiencies.
Each of these vessels is important in some aspect of the Asian grain market, but not all ports are capable of supporting even the smallest of these vessels.
With a population of more than 206 million, Indonesia makes up a large portion of the Southeast Asia grains market. Indonesia does not produce wheat, therefore it must rely on imports. The regions of West Java and Sumatra combine for two-thirds of the grain demand in Indonesia, and many of their ports are capable of handling Panamax vessels, according to the U.S. Feed Grains Council report.
Tanjung Priok is the main international gateway of West Java. Tanjung Priok is focused on containerized shipping, but because it is highly congested, it is draft limited for larger volume bulk consignments.
The Banten area, located in West Java, contains the ports of Ciwanden and Cigading. Ciwanden has a deep water multipurpose berth equipped with a surplus gantry crane that has a grab bucket unit capable of unloading grain. A conveyor system is planned to transfer the grain from ship to truck.
At Cigading, a joint venture allows for expanded import of coarse grain. Cargill, Inc. and Bulog, the Bureau of National Logistics, created the joint venture, which has exclusive use of one berth at Cigading. The berth has a working draft of 10 meters with plans for the installation of bulk unloading equipment. After imports at the port reach 500,000 tonnes per year, a conveyor from berth to storage will be installed.
The port of Bojonegra, located in Teluk Banten, consists of a grain storage silo located inshore of the approach trestle to the multipurpose berth. Plans call for a multipurpose facility by 1999 constructed specifically to handle dry bulk, including maize, soybeans and soy meals. The facility will enable the port to operate 24 hours per day at no less than 300 days a year.
Ports in East and Central Java are not as well developed as West Java. Expansion and renovation are still considered possibilities in East and Central Java because the government would like to minimize inland transportation, but actual development is unlikely because of cost.
For example, renovation costs for the port of Gresik in East Java appear to be enormous, ranging from U.S.$35 million to U.S.$50 million, based on a study of the necessary dredging work. Currently, the port of Gresik is used to discharge grains to the flour mill at Surabaya through the P.T. Petrokimia private berth.
The port of Banyuwangi, located on the Bali Strait waterway at the east tip of Java, is going through major expansion because it is considered a long term alternative for serving East Java. The wharf structure, currently 380 meters, is being expanded by 130 meters to a total of 510 meters. Development is also under way on loop tracks for large scale bulk rail movements.
Developmental actions are taking place in hopes that a multi-product bulk terminal can be installed. The terminals could be one- or two-berth Panamax size and additional land could be accessed with a conveyor.
The port of Cilicap has a deep harbor and should be capable of handling Panamax vessels by 2010. However, other than Australia, shippers generally have not supported Cilicap because of its poor inland access to major population centers.
In Malaysia, Port Klang, located on the West Port gateway, is one of the main terminals. Port Klang offers a good example of how the typical port in Southeast Asia operates.
The process of grain loading and unloading in developing countries is often time consuming. The grab discharge of grain can only function in completely dry conditions. Therefore, hatch covers must be closed at the first sign of rain, which is usually 30 minutes prior to the actual precipitation. When the warning goes out, all operations must cease. This type of system shows why productivity is lower not only in Malaysia, but in other countries in the region.
Currently, Port Klang can accommodate Panamax vessels fully laden at 60,000 tonnes. Construction of a conveyor system linking the ship discharge operation to the storage shed was scheduled for completion later this year. The conveyor system will increase ship unloading productivity and decrease product losses from spillage.
Johor Port, located on the Malaysian Peninsula near Singapore, is heavily container oriented although it does handle some grain at Prai bulk cargo terminal, where flour mill storage is about 70,000 tonnes of grain and soy. Currently, several flour mills lease the storage space for their grain.
Three of Thailand's major ports are on the east shore of the Bight of Bangkok within about 100 km of each other. All will benefit from planned rail and road construction, which is designed to encourage the region's economic development.
The northernmost port is Sriracha, which is about 90 km southeast of Bangkok. Sriracha has sufficient water depth for Handysize vessels at 11.6 meters, but is limited in its cargo installations. The port is bulk oriented and could be modified for grain importation.
About 100 km south of Bangkok, in the province of Chonburi, is the port of Laem Chebang. The terminal at Laem Chebang has the greatest potential for coarse grain imports because it currently handles heavy bulks at a depth of 14 meters. The port consists of four operational berths, while a fifth berth is currently under construction.
Laem Chebang is fully equipped with the most modern equipment and tools. One end of the port is container oriented while the other end of the port is undergoing expansion. The expansion could allow for a bulk grain import facility and could accommodate Panamax consignments. The port of Sattaship is 320 km from Bangkok and is container oriented with limited facilities for general cargo. Sattaship can now receive fully laden 60,000 dwt Panamax vessels and will have 14 meters of working draft after 2005.
Because of the country's length, it is doubtful that any single Panamax port will be developed that can serve the entire country. Vietnam is a Handysize market and any realistic port plan may need to include provisions for private support of dredging. Development of a single Panamax port appears to be a losing battle because of the lack of modern equipment and funds. Despite these shortcomings, many smaller ports in Vietnam that can be developed to improve grain handling still exist.
The port of Phu My, located near the city of Qui Nhon, has 15,000 tonnes of storage capacity and is looking for justification to increase capacity even more. The wharf at Phu My was built as part of a joint venture with a French company, set to be suitable for ships of 44,000 dwt.
Cargill Vietnam Ltd. opened a 200,000 tonne capacity feed mill in the Sonadezi Industrial Zone II in Vietnam in August 1997. Cargill also has plans to build a soy crushing mill at Bien Hoa next to existing feed mills, which is a short distance from Phu My and could increase traffic at the port.
Can Tho is a small port situated in the southern point of Vietnam that is limited to 5,000 dwt vessels. Plans call for expansion to accommodate 10,000 dwt vessels, but most of the heavier traffic goes straight to Phu My.
Many projects and expansion plans are under way for ports in Vietnam. United States, Thai and Belgian companies have been formed to advance projects in the Dinh Vu Economic Zone near Haiphong. The plans call for a port with the capability to handle 30,000 dwt vessels, although no specific bulks are mentioned.
Also in the north, about 50 km east of Haiphong, is Cai Lan, where plans are to dredge depths of 13 meters by 2000. This would allow for the handling of 50,000 dwt vessels by 2010. The government of Vietnam hopes that the port will serve northern Vietnam and southern China, especially the provinces of Yunnan and western Guangxi. Construction is set to begin on a 150 meter conveyor system that will stretch across the land lying between the wharf and the flour mill that currently belongs to a third party.
Both Kaohsiung and Taichung, the two major ports in Taiwan, are operated by Far East Silo & Shipping (FESSCO). The company is owned by the major grain importers in Taiwan including members of the Taiwan Feed Industry Association, the Taiwan Vegetable Oil Manufacturers Association and the Taiwan Flour Millers Association.
The port of Kaohsiung, located on the southwest coast of Taiwan, has Panamax size grain discharge capabilities and 180,000 tonnes of storage. The discharge facilities run on two shifts with an annual handling of 9 million tonnes. The typical time to discharge a Panamax vessel is four to six days at terminals with a draft of at least 13 meters. Future considerations for Kaohsiung include a third shift to increase throughput by up to 2.0 million tonnes per year for purposes of transshipment and then to dedicate a second berth for transshipment.
The U.S. Feed Grains Council and the Taiwan Feed Industry Association are considering a proposal to establish a feed grains transshipment program at either Kaohsiung or Taichung. The goal of the Taiwan government is to make Taiwan the major shipping center of the Asia Pacific region by 2000. This goal could be accomplished with the completion of updated facilities that would allow for the transshipment of cargoes that require no local customs administration.
In addition to updated facilities, the National Shipping & Agency Corporation, an affiliate of FESSCO, is working to establish a network of operations from Taiwan into the ports of China. Business relationships with feed millers in China have been developed, and the political groundwork is being established to permit operations from Taiwan to China, the Feed Grains Council report said.
Qinghuangdao on the northern coast of China is home to the largest coal port complex in the world. Even though the port serves a grain surplus area, the construction of a grain export terminal does not seem likely because the port and its interior distribution systems are dominated by coal traffic.
The port at Dalian, like Qinghuangdao, serves a grain surplus area. Further development has taken place at the port and grain is now received at Dalian from the interior and distributed along the coast to grain deficit areas in smaller vessels.
The Dayao Bay terminal at Dalian's port complex has a depth of 10.7 meters and currently handles 25,000 dwt vessels at its general cargo berths. As of 1995, wheat discharging berths for 80,000 dwt vessels were scheduled. This expansion would put the port in competition with Taiwan ports.
The Xiang Lu Jiao terminal at Dalian's port complex has ambitions of becoming an import grain distribution center with onward movement by coastwise vessels. Currently the terminal includes feed storage among its activities, but has limited draft and berth space.
Near Beijing, the port of Tianjin is the major import site and can receive lightened Panamax vessels, making it a good prospect for second calls from Dalian. A master plan has been prepared for reclamation and development of a deeper draft expansion area, but implementation is unlikely for the foreseeable future.
The gateway to the Jiangsu province is the terminal at Lianyungang. Lianyungang is currently a container port but the possibility exists for importation of bulk materials. A draft limit of 42,000 dwt in a 60,000 dwt Panamax vessel is in place but plans to deepen the draft to 13 meters would allow for full capacity.
Shanghai, with a population in excess of 25 million, is the financial and trading center of China. The port at Shanghai is located at the mouth of the Yangtze River and handles grain imports through the Ming Sheng District. Grain vessels of up to 100,000 tonnes are handled by lightering.
The gateway to the Zhejiang province is the terminal at Ningbo, near Shanghai. Ningbo has a 50,000 tonne capacity bulk cargo berth and several multipurpose berths. At the port, bulks are unloaded by two gantry cranes with discharge capacity of 2,600 tph. Ningbo is a candidate for future bulk terminal construction and could handle more grain while Shanghai focuses on containers.
The southern coast of China contains the major ports of Guangzhou, Yantian, Xiamen and Zhanjiang. Guangzhou, with grain silo capacity of 25,000 tonnes, is located about 150 kilometers from Hong Kong on the Pearl River and consists of a very light draft, only 22,000 dwt in a 30,000 dwt Handymax.
Guangzhou's sister port, Huangpu, is 20 km south of Guangzhou. The Huangpu port has two bulk berths able to work Handysize vessels that are discharged by pneumatic unloaders at a nominal 1,000 tph. Xiamen, like the port of Guangzhou, is draft limited. Located in the Fujian province, Xiamen is capable of supporting 40,000 dwt in a 50,000 dwt Panamax or 48,000 dwt in a 60,000 dwt Panamax. The port appears to be a good prospect for feeder service from Taichung, Taiwan, which is only 240 km away.
The most positive aspect of the port of Yantian is its ideal connections to the hinterland. The port of Yantian is just outside the mouth of the Pearl River and is situated in the Guangdong province within the boundaries of the city of Shenzhen. Although it does not have a bulk handling facility and is being developed for containers, Yantian can handle a fully laden 60,000 dwt Panamax.
The port of Mariveles, located in Manila Bay, has a new grain import terminal operated by Asian Terminals, Inc., which is owned by a consortium that includes P&O Australia, Inc., a major port operator active world-wide.
Roughly 60% of all imported wheat is handled in Manila. Mariveles has a daily discharge capacity of 10,000 tonnes of free-flowing grains and 6,500 tonnes of soymeal. The port at Mariveles has a draft of 14.5 meters and is the only port in the Philippines that can receive a 60,000 dwt Panamax vessel. Mariveles was selected as the new terminal because the area surrounding the terminal will allow for expansion and land availability for other industries. The terminal is enclosed to provide year round weather protection. Mariveles is the most modern and most efficient grain import point in the Philippines.
The port at Batangas is located in the northeast Philippines on the island of Luzon. The port's deep water makes it attractive to bulk shippers. Both the Pacific Flour Mill wharf and the Purefoods Corporation Flour Mill have operations at Batangas. The Pacific Flour Mill can handle vessels up to 150 meters long at a draft of 14 meters, while the Purefoods Corporation Flour Mill has a causeway type pier with a working depth of 11.5 meters. Room for expansion exists, but no plans are under consideration for the port.