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Port investment heralds the future of global commerce

Manno river vehicle The Tuas Mega Port has five new berths on a large stretch of reclaimed land on the western tip of Singapore. Unmanned cranes loom overhead, surrounded by camera-equipped drones. The berths are the first of 21 berths due in 2027.When it is completed in 2040, the complex will be the largest container port on Earth, boasting PSA International, its Singaporean owner.

trade winds blowing east

Global port container throughput, TEU*, billion

Source: Drewry Maritime Research

Tuas is a vision of the future in two dimensions. It demonstrates how port operators around the world are deploying ingenious technology to meet their service needs and address obstacles to new facility development ranging from lack of space to environmental concerns. What’s more, the investment in the city-state, which cost an estimated $15 billion to build, is part of a wave of huge bets by the wider logistics industry on the growing importance of Asia, especially Southeast Asia.this International Monetary Fund The five largest economies in the region – Indonesia, Malaysia, Singapore, the Philippines and Thailand – are expected to be the fastest growing bloc in terms of global trade volumes between 2022 and 2027. The result is that the global business landscape and its blueprints are simultaneously redrawing key nodes.

Globally, seaport expansion is getting tougher, said Jean-Paul Rodrigue, a professor of transportation geography at Hofstra University on Long Island. There is very little space for a suitable location. Critics of development, especially environmentalists, are not. A major port expansion project in Piraeus, Greece, was struck down by a court last year for failing to provide a proper assessment of its environmental impact. One in the Mexican state of Veracruz was also pulled over for environmental reasons.

One solution is to improve the efficiency of existing logistics networks, not just expand them.in april PSA complete purchase UNDP International, a US-based freight forwarder specializing in supply chain management, for an undisclosed amount (its former private equity owner was reportedly looking for $1.5 billion).past two years DP UAE port operator World acquired two supply chain specialists: South African Imperial Logistics for $890 million and US firm Syncreon for $1.2 billion.

Maasvlakte harbor, Rotterdam

Image: Jean-Paul Rodriguez

However, streamlining your supply chain can only get you so far. At some point, new capacity will be required. One way to achieve this is to reclaim land from the sea. It required a feat of civil engineering — and it was expensive. The Maritime and Port Authority of Singapore spent about US$1.8 billion on land reclamation for the first phase of the new Tuas facility. The massive Maasvlakte extension, whose second phase opened in 2015, has cost the Port of Rotterdam so far, An enterprise jointly owned by the Dutch government and municipalities, it is worth about 2.9 billion euros ($3.1 billion).

Many ports are too deep for land reclamation to be viable. So some people decided to build upwards. Stacking more than six containers together is impractical in a traditional setup, requiring constant movement of boxes to find the right one, even when stacked high. Mathias Dobner, chief executive of BoxBay, a joint venture between the two companies, said shuffling the cards could take more time than actually moving the containers around ports and onto ships DP world and Short message Group, an engineering company. In BoxBay’s “high-bay” storage system, each container sits on a separate rack from which automated cranes can remove them individually.at Jebel Ali Port in Dubai, by DP World, this allows containers to be stacked 11 high.

Schematic diagram of the “elevated” container system in operation

Video: BoxBay

Another option, if you can’t afford to build or expand, is to build elsewhere. This explains the growing popularity of inland “dry ports”, where cargo is put into containers ahead of time, ready to be loaded on board when it arrives at the dock, rather than being stored for days in the port itself. This also relieves road congestion at the terminal. In the Mojave Desert, about 150 kilometers (90 miles) off the coast of California, investment firm Pioneer Partners has secured land and permits for such a facility to ease traffic at the deeply inefficient ports of Los Angeles and Long Beach.

2016 PSA A joint venture with a Chinese state-owned railway operator to operate a network of dry ports in China. Manufacturers load trains at one of 13 inland rail terminals for shipment to the coast. Some of these piers are far from any shoreline. Urumqi in Xinjiang province, one of them, is the furthest from the sea than any other city in the world, some 2,400 kilometers from the Bay of Bengal. In 2022, the World Bank’s private sector IFC signed an agreement with another Singaporean logistics company to YCH group, and Ton&Ton Vietnamese conglomerate Group is to develop a $300 million inland container yard in Vinh Phuc in northern Vietnam. Dubbed the Vietnam Superport, the project will begin operations in 2024, bringing some welcome relief to a country whose exports are growing much faster than inland logistics investments.

The development of all dry ports in Asia points to the second force reshaping the port business: the eastward shift of the center of gravity. For decades, Asian trade has tended to be one-way. Containers laden with goods made by cheap labor on the continent head to advanced economies and return largely empty. In the late 1990s, more than 70 percent of Asia’s exports by value went to the rest of the world. A quarter of a century on, thanks in part to those trade flows and more complex supply chains, Asian economies have become big markets. Today, nearly 60 percent of Asia’s exports go to the region.

The logistics industry is like PSA Partnering with Tuas is a long-term bet that this share will grow. In the midst of the e-commerce pandemic, logistics investments are everywhere. In Asia, they swell. CB Richard EllisThe real estate consultancy predicts that Asia (including China) will account for 90% of the growth in global online shopping between 2021 and 2026. This will require as much as 130 million square meters of new logistics real estate.

An investment boom in warehousing warehouses and distribution and fulfillment centers has already begun in the region.last year GLP certificationA Singapore-based investment firm focused on logistics real estate announced a $1.1 billion fund focused on Vietnam and a $3.7 billion fund focused on Japan. Its sixth China fund, worth $1 billion, closed in early November. India could get a boost as global manufacturers look to shift production from China to other regions. The ports business of India’s wealthiest tycoon Gautam Adani operates the country’s largest, Gujarat’s Mundra Port, along with 12 other ports and terminals in seven Indian states. Their combined annual cargo volume has surged from 200 million tons three years ago to 300 million tons by 2022. Mr Adani’s target is to reach 500 million tonnes by 2025.

Construction of Mundra Port in Gujarat

Video: NASA Landsat; Google Earth Engine

Investments by shipping giants point in the same east direction. Global shipping rates plummeted in October as the impact of pandemic-era bottlenecks eased, with Mediterranean Shipping CompanyOcean Freight Center), the world’s largest Total capacity, five new intra-Asia services announced.three months ago Ocean Freight Center A $6 billion joint venture with the Ho Chi Minh City government has been announced to build a port there by 2027. After completion, it will become the largest port in Vietnam. In August, MSC’s biggest competitor, AP Moller-Maersk, completed a $3.6 billion acquisition if Logistics, a Hong Kong-based company focused on intra-Asia trade. The deal brings 223 warehouses and 10,000 employees across the continent under the Danish shipping giant’s banner, with a clear focus on Asian consumers.

When seaborne trade boomed in the last century, investments in logistics reflected shifts in global production and consumption patterns. They did it again. And this time, the future looks leaner, smarter — and more oriental, too.

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