Wednesday 24 June 2015

42 years, 500 million TEU containers, one PSA

The growth of Singapore's container port and its port operator PSA is part of Singapore's history. Like the nation, PSA is broadening its global imprint.
By Tan Chong Meng, Published The Straits Times, 22 Jun 2015

HAVE you ever wondered why the container is measured in Twenty-foot Equivalent Units (TEUs), while the ships that carry them are measured in metres?

You are right if you guessed it was an American invention. When Malcom McLean first invented the container in the 1950s, he could not have anticipated that it would become one of the most powerful forces of change in the world. The first shipment, on a vessel named the Ideal X, carried only 58 containers from Newark to Houston in April 1956. The gains in labour, space and speed were huge and immediate.

Today, the largest ships plying the oceans have a capacity of approximately 20,000 TEUs, roughly 300 times that of Ideal X. If we were to line up one mega-vessel's full load of containers end-to-end, the resulting line would stretch over 120km!

In fact, I consider the container as among the top five forces that have transformed our world in the last five decades - and it isn't just because I happen to be in this industry. I believe that its credentials measure up well against other transformational forces like globalised financial systems, proliferated air travel, game-changing information systems and pervasive mechanisation with related energy dependence.

Very much unchanged since its invention, the humble container paved the way for an explosion of international trade. Today, more than 60 per cent of sea-borne trade is containerised, and it has been estimated by the Economist Intelligence Unit that the container has done more for global trade than the most comprehensive of trade pacts.

It changed the face of global manufacturing, and enabled Singapore to carve out its role in international logistics. All of this is perhaps clearer in hindsight, but in the 1960s, when Singapore was a nation still in its infancy, it was far from clear that this phenomenon would change the world.

A bold and visionary start

SO IT was with great foresight and vision that Mr Howe Yoon Chong, chairman of the then Port of Singapore Authority, made the decision to build a container handling terminal during those early days.

Like the man himself, the move was bold and unconventional. It called for a World Bank loan, and the guts and gumption to act against the advice of international port experts then. His strategic decision paved the way for mechanisation, with a strong dose of Singapore-style efficiency and labour effectiveness.

Then on June 23, 1972 - 43 years ago from tomorrow - Singapore welcomed its first container vessel, the MV Nihon, and the rest, as they say, is history - the history of PSA and of Singapore.

We have in our midst still a number of PSA's long-serving pioneers who handled this vessel and witnessed the entire history, from first box to taking first place in international container transhipment.

Mr Martin Verghese, 71, unloaded Singapore's very first container. Having now spent 52 years at PSA, Mr Verghese continues to impart his experience and knowledge to a new generation of port workers in his role as an associate trainer at the PSA Institute.

Industry veteran Toh Kok Tia, 70, was a work supervisor at the time of MV Nihon's call. A firm believer in self-development, Mr Toh accepted a sponsorship by PSA to pursue a Diploma in Shipping and Port Management. He too is now an associate trainer with the institute.

Containerisation, mechanisation and stalwart pioneers propelled our early years. With the dedication of our stalwart frontrunners, we never looked back since MV Nihon. Our adolescence as a port began in the 1980s, and in 1982, we hit the one million TEU mark, helping Singapore become become the world's busiest port by shipping tonnage.

Like most adolescents, there began, what would become abiding, a fascination with technology.

Over this period, PSA introduced Portnet®, the maritime world's first real-time business- to-business portal while computerisation was still a concept to many.

This allowed the shipping community to apply for berthing spaces and marine services. Paperless, collaborative and dynamic, the streamlined connectivity it provided was a clear pace-setter in the port industry.

Over time, the services increased and today it connects all the main port users to form a tightly integrated port community. Almost a decade later, major ports like Hong Kong and Rotterdam followed suit.

Automation and globalisation

BY THE year 1990, we reached 5.22 million TEUs, a number significant in that it made PSA the world's busiest container port.

The 1990s through to the early 2000s were fecund years, with rapid growth and internationalisation into China, India, the Middle East and Europe. The port in Singapore expanded as well, with the construction of the first two berths of Pasir Panjang Terminal.

This new terminal offered an opportunity for us to pioneer early yard automation. Two key innovations of the period were remote-controlled bridge cranes and the flow-through gate. The remote-controlled cranes allowed one operator to manage four cranes, while the flow-through gate system was able to securely verify each truck or container at the terminal gates within 25 seconds.

Then we rode the wave of global manufacturing expansion, driven by China, which saw double-digit, year-on-year growth in container handling in the 1990s and well into the early 2000s.

Riding on this tidal wave of container-handling growth, PSA embarked on international port ownership and operation, and today ranks as the largest international port group, based on equity-weighted container volumes handled. PSA now has about 40 terminals in 16 countries serving every major trade route, with links to all continents and countries. Working alongside our customers, we strive to make the world smaller and the world economy bigger.

Blank canvas of the future

THE container-handling industry is now in the midst of unprecedented change, with the upsizing of container ships and the consolidation of shipping liners. As a result, we will see the inevitable obsolescence of old terminals.

Singapore and its port too will have to adapt. As its own population grows, the need for commercial, residential and waterfront land in the city also increases.

So by 2027, the container terminals in the city, next to Shenton Way and on Pulau Brani, will be vacated. By 2040, the terminals in Pasir Panjang will follow suit.

In their stead, the Singapore Government is developing a new mega-port at Tuas, on the western coast of the island. Eventually, all container-handling facilities will reside there, to handle a whopping 65 million TEUs yearly. It will be the first of its kind and scale in the global port industry - in time to meet rising demand in the Strait of Malacca which we envisage will double over the next two to three decades.

Tuas is our future. Today, it is a vision, symbolic of the far-sightedness Singapore is reputed for. Soon, it will be a reality.

It is our aspiration that this future port will continue to put our nation on the map as a global port city. Being a large integrated facility, there is scope for maximum connectivity within the port itself, with minimum transit costs.

Most importantly, it is a blank canvas upon which we can perfect ourselves, to gather the best of our current practices, to tackle the challenges facing the future port industry and to find the associated solutions. Furthermore, the entire Tuas development project will span a couple of decades. Hence, we can learn and innovate along the way.

For example, Tuas gives us an opportunity to assess the best of automation technologies, learn from prior projects, and understand and manage the associated risks. One key driving force for automation is the potential shortage of local residents who are willing to work in the port, a local labour shortage that can only be felt more sharply with a greying population. But automation itself is not without its economic and operational risks.

It is our aim that over time we can hone the automation capability to reach a sweet spot, where we can achieve consistently high performance under varying operational circumstances, overcoming ever-increasing constraints on space, time and labour.

Not neglecting the green agenda, the new mega-port would be run with energy sustainability in mind, facilitated by the use of alternative, renewable sources like solar, and machinery that allows for energy recovery.

Pushing for game changers

BEYOND building on current best practices, we must also continue to challenge our assumptions and push for game changers, especially in fast-mutating areas such as security and information flow and planning.

Two years ago, an eye-opening security breach was reported in Europe. Drug traffickers used cyber infiltration to hack, track and direct movements, leading to the disappearance of entire boxes from the port.

This incident begs the question: Has the battleground shifted from physical to cyber security? We must ensure that our focus is not directed only at protecting against traditional threats.

We may also need to reinvent the traditional barrier of a physical gate, using new technologies capable of detecting and tracking people, vehicles and containers.

In future, mega-ships and liner alliances will be commonplace, and with that comes an exponential increase in the scale and complexity of port operations.

To cope with this, better information flow and planning between ports and shipping lines will be required.

Currently, container stowage planning, a vital process tackling this complexity, is still largely done in sequential, back-and- forth iterations between the planners from liners and ports.

To use a gaming analogy, we are still hooked on turn-based Pac-Man while the rest of the world enjoys the simultaneous "war zone" of MMORPG (Massively Multiplayer Online Role Play Games).

Is parallel planning then a possibility? This could take the form of simultaneously assessed planning screens, linking planners from liners and ports, assisted with appropriate algorithms and artificial intelligence.

This approach, if successful, should generate better operational plans that enable improved speed and productivity in the use of ship and port resources.

As Singapore celebrates 50 years of nation-building, PSA also celebrates the milestone achievement of being the first port in the world to have cumulatively handled 500 million TEUs. It has taken us 42 years to get here, and we expect to reach the one billion cumulative TEU mark in 15 years, the result of our changing and growing world.

For Singapore to continue leading the way in the design and development of future ports, we need to muster the same blend of guts, gumption and grit shown by our industry forefathers and the pioneering generation, who thrived on the opportunities and challenges of their time.

To stay ahead, we must continue to nurture the positive attitudes, professionalism and commitment of our people. Because of this, PSA is a leading voice in our industry. It is only befitting that we forge ahead into the next 50 years with the high standards and goals that reflect Singapore's track record of punching above its weight.

Tan Chong Meng has been been the group chief executive officer at PSA International since October 2011. An engineer by training, he was with the Royal Dutch Shell Group for 20 years, working in the United States, Europe, China and Singapore, holding various senior leadership positions in management, sales, marketing, trading, refinery operations, customer service and mergers & acquisitions.

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