Commentary Trading Places

By Peter Tirschwell

The idea only works with hub ports like PTP performing to perfection , or nearly so .

Anyone curious as to how Maersk and Hapag-Lloyd will fulfill an ambitious promise of 90 % -plus schedule reliability once their Gemini Cooperation network is rolled out next year should look closely at Port Tanjung Pelepas ( PTP ) in Malaysia .

A facility 30 % owned by the Maersk terminal unit APM Terminals , PTP is the largest relay port in the Gemini Asia – Europe hub-and-spoke network that aims to redefine the concept of container shipping by proving that consistent reliability via transshipment .

Gemini ’ s success in achieving much higher schedule reliability versus current industry performance will hang on the performance of hub ports such as PTP , as well as Tangier , Morocco ; Algeciras , Spain ; and Rotterdam , Netherlands , to consistently orchestrate handoffs between feeder and line-haul services without delays .

Doing so will be nothing less than a requirement to convince a shipping public long used to direct port-to-port services and skeptical of the cost , time and lack of visibility associated with transshipments that a transshipment-based network can , in fact , solve the problem of schedule reliability .

Reliability has taken a hit as the industry has absorbed successive shocks such as the COVID-19 pandemic and the Red Sea diversions — and potentially an East Coast port strike — and as carrier alliances have learned to use blank sailings to manage short-term capacity .

For shippers , current global schedule reliability of around 55 %, according to research and advisory services provider Sea-Intelligence , is a constant grievance amid historically elevated freight rates , contributing to issues including higher inventory costs , longer lead times and less reliable forecasting . All those issues would be significantly mitigated if consistently reliable ocean service — a fixture of bygone days in the industry — were to be restored .

The Gemini partners are telling the market the problem is solvable .

The solution , Gemini says , is operating highly utilized shuttles between origin ports and hubs that , due to only a two- or three-port shuttle rotation , can avoid the cascading delays that occur on traditional line-haul Asia-Europe rotations with up to 15 port calls , where a setback at any one port can throw the entire service off schedule .

But the idea only works with hub ports like PTP performing to perfection , or nearly so .

With 10 linehaul and 10 feeder calls each week for the Gemini Asia – Europe network via the Cape of Good Hope , according to Maersk , there can be no risk of a scenario like the backups that occurred in recent months at other Asia regional transshipment hubs such as Singapore ; Port Klang , Malaysia ; and Colombo , Sri Lanka .

That ’ s no small feat to achieve at PTP , one of the world ’ s largest terminals , with one of the world ’ s longest continuous quays , and with 58 cranes — rising to 66 by the end of 2025 — that is knocking on the door of Yantian International Container Terminal to become the world ’ s largest single terminal within a few years .

But the PTP team is confident , thanks in large part to an operating philosophy that feels unique in the world of marine terminals .

Called Safe Operating Capacity ( SOC ), it boils down to a hard-and-fast rule of not accepting into the terminal volumes beyond which the terminal deems there to be a risk of a productivity slowdown . That includes building assumptions of peak and slack periods into threshold limits for volume , lifts and yard capacity . That stands in contrast to the mainstream terminal policy of accepting whatever volume carrier customers bring .

“ Each customer is allocated a specific number of yard TEU slots based on their contractual volume , and we work closely with them to ensure this SOC is not exceeded ,” PTP CEO Mark Hardiman told the Journal of Commerce during a recent tour .

The SOC approach “ safeguards terminal productivity , protects shipping lines , and ultimately benefits global consumers by preventing cargo levels from negatively impacting yard performance ,” Hardiman added .

The approach has paid dividends in allowing the port to avoid the worst of recent bouts of industry congestion , a fact confirmed by ocean carrier executives familiar with PTP ’ s operations .

“ It is indeed accurate to say that PTP experienced no congestion during both the COVID-19 period and in 2024 ,” Hardiman said .

PTP also is a laboratory for technology innovation , originating ideas that are developed by terminal systems company Navis , proven as viable at PTP and rolled out to other Navis customers . Led by COO Joe Schofield , PTP has developed numerous innovations that shave seconds or minutes off the time needed to move containers around , making it highly efficient .

The terminal will be put to the test as the Gemini network is rolled out . PTP forecasts volumes will grow from 10.5 million TEUs in 2023 to 16 million TEUs by 2026 , an accelerated growth rate versus recent years .

email : peter . tirschwell @ spglobal . com

46 Journal of Commerce | October 7 , 2024 www . joc . com