Comparison Of Port Of Melbourne And Port Of Hong Kong

Write a report on the port of Melbourne and Hong Kong.

Overview of Port of Melbourne

More than a century ago since the British settlement to Australia, large ships were unable to navigate through the Yarra River, therefore, The Port of Melbourne was suggested in 1879 by John Coode who recommended the development of a canal to improve access to ships. The construction of the port was completed and opened in 1889.

The Port of Melbourne is located in the west of Melbourne. The port has two international container terminals which are located at Swanson Dock and Webb Dock. The Port of Melbourne handles containerized and non-containerised products including break bulk commodities. The port has 30 commercial berths and occupies 500 hectares of land and 21 kilometers of waterfront (Port of Melbourne 2018).

The Port of Melbourne is the second largest container port in Australasia behind the Port of Sydney that manages over 2.93 million TEU’s annual which represents over 7200 containers and approximately 1200 motors vehicles per day on average. There are more than 40 commercial shipping lines which call in at the Port of Melbourne.

In 2017 the Melbourne Port handled 1,246,493 million loaded import  TEU’s , 897,901 loaded export TEU’s, 109,116 empty imports and 443,553 empty exports totalling 2,697,063 million TEU’s in 2017. In 2008 total trade revenue tonnage was 2,256,984 million therefore 2017 represent a 19.5% increase. In 2008 the Port of Melbourne managed 75.7 million revenue tonnes of input and export cargo and in 2017 had 87.5 million revenue tonnes.

The port of Hong Kong was controlled and operated by the British in 1841 and is currently operated by The Government of Hong Kong Special Administrative Region. The construction of the first three terminals began in 1970 and has continued to expand to nine terminals (Marine Department 2018).

The Port of Hong Kong is located in the Pearl River Delta in the South China Sea. The Port is a modern, well-equipped deep-water port serving two main types of maritime transport, ocean-going vessels and river-trade vessels from the Pearl River. In 2017 the Kwai Tsing Container Terminal handled 17.2 million TEUs or 75% of the Hong Kong Port total container throughput. It has 24 berths which occupy 279 hectares of land and includes container yards and container freight stations (Hong Kong Maritime and Port Board 2018). There are approximately 73 ocean vessels and 435 river vessels on average each day that uses the port. There are five individual container terminal operators in Hong Kong such as Hongkong International Terminals Limited and Modern Terminals Limited.

Overview of Port of Hong Kong

The Port of Hong Kong is currently recognized as the 6^th busiest container port in the world handling 20,760 million TEU’s in 2017 ((Hong Kong Maritime and Port Board 2018). In 2008 the Port of Hong Kong handled 24,248 million TEU’s indicating a 14.4% decline over this period of time.

A common challenge encountered by both ports is one of inter-port competition. As the PoHK faces competition from regional rivals in Asia, the PoM faces competition from inter-state and Trans-Tasman ports. This shared trend of inter-port competition for both ports will be explored and individual causes discussed below.

There is increased competition from other ports in Australia such as Brisbane and Sydney. One key reason for this is the lack of rail terminals at the port and inland. Port Botany in NSW has growth exceeding Melbourne. Port Botany has many dedicated freight rail lines servicing major growth corridors in outer Sydney. Melbourne has a lack of intermodal hubs inland, this is where containers are passed on from trains to trucks to get to there final destination. Port Melbourne processes 200,000 TEUs more than Sydney, however, the city only has 3 intermodal hubs, compared to Sydney which has 5. There has been a lack of investment in Victorian Freight Rail in the past decade, however, the Murray Basin Project hopes to change this and will be discussed in our recommendations.

The Port of Melbourne has a size restriction. After the completion of the Panama Canal, container ships dramatically increased in length and depth, causing challenges for access to Australian Ports. Currently, Melbourne can only take ships up to around 8000 TEUs, while new ships are coming at sizes close to 12,000. At the port’s current size, only 2 ships can be handled at a time. Due to the size of the Yarra River, and obstacles like the West Gate Bridge, there is a certain market that can’t access the southern coast of Australia. Unfortunately, due to this limitation, there has been increased competition from the Port of Brisbane, and Tauranga port in New Zealand, which leads access to South America. The Port Of Brisbane has the ability to take larger ships such as the Susan Maersk and this creates more competition for Melbourne. Maersk now bypasses Australia and hubs in Tauranga for this very reason. Larger ships offer greater Economies of Scale, and doubling the size of a ship could lead to savings of $145 per TEU. Sydney can already support up to 10,000 TEUs, so for Melbourne to be able to compete in that climate, something needs to be changed to allow larger ships access.

Competition between Ports

While Hong Kong’s port is the world’s sixth busiest, there are signs the worlds container shippers are selecting elsewhere (Heaver 2017). As economic reform in China turned the Pearl River Delta (PRD) into a major export-oriented manufacturing hub, this provided business opportunities for Hong Kong it also spurred the development of competing for port facilities in the PRD (Loughlin & Pannel 2010). Declining throughput and regional pressures have seen the Port of Hong Kong (PoHK) lose it regional dominance. As throughput is decreasing by 1 – 3 percent every year,  there are predictions the ports business will shrink by 50 percent in 10 years (Heaver 2017). Former challengers Shanghai and Singapore are now the world’s first and seconds busiest ports, each handling more 150% of Hong Kong’s yearly throughput (Rivett-Carnac 2016). This trend of competitor port rise against PoHK decline can be attributed to two key concerns;

As competing ports in the region are reducing Hong Kong’s market-share, improvements from neighboring Southern Chinese ports are straining Hong Kong’s once held competitive advantage (Figure 1). Hong Kong traditionally prospered as a ‘gateway to China’, but mainland investment and liberalization of trade policy have enabled direct services to China bypassing Hong Kong as a direct-shipment port. Chinese ports are closer to major manufacturing supply chains, and with rapid development and convergence of quality service, possess the capacity to satisfy and grow to international demand (Park 2017). While PoHK still operates an elaborate cargo-documentation paper-system, streamlining through an online platform at Shenzhen and Singapore have improved efficiencies and helped heighten rival port competitiveness (Heaver 2017). A principal competitive weakness for PoHK is significant differences in road haulage costs and Terminal-Handling-Charges (THCs) (GHK 2004). Due to regulatory controls, cross-boundary costs to/from Hong Kong are far greater than in South China and THCs substantially higher than at Shenzhen ports (Table 1) (GHK 2004). As government support has idled, aggressive and decisive support from Singaporean and Japanese governments has fostered significant port economic growth through subsidized development (Knowler 2015).

Terminals at the PoHK are faced with a limited availability of berths and ground slots (Whelan 2015). With the emergence of mega-vessels occupying added berths, capacity is stressed escalating traffic congestion and reducing productivity as vessels stay longer with fewer moves per call (Knowler 2014). With transhipment volume increasing nearly 10% in the past years, a lack of barge berths can’t support demand disrupting connections with in-forwarding vessels (HKCTOA 2018). Limitations in yard-space constrain the handling of the 17 million TEU’s moving through Hong Kong terminals each year (Knowler 2014). At present, the main terminal has 50 percent less yard storage area than the international norm (TBH 2015). Land provisions to support growth and operational efficiency have not been capitalized. Infrastructure development and expansion has been delayed by government unresponsiveness and these capacity inefficiencies are driving carriers and cargo away from Hong Kong (Millar 2014).

Challenges Faced by Port of Melbourne

Dry Ports- Transport modes such as seaports and dry ports are required to be efficiently developed in the Port of Melbourne to promote intermodal access. These dry ports in hinterland regions are recognized to promote intermodal transport and accessibility and further offer transfer as well as transshipment functions with customs clearance services (MarinteTraffic.com 2018). Dry port efficiently provides services to Port of Melbourne for successful Management as well as temporary storage of containers and bulk cargoes which entered or leaves the dry port by any mode of transport including inland waterways (Portofmelbourne.com 2018).

Murray Basin Rail Project- Planning process may be incorporated to bring the corridor into operation if requires increase and further facilitate the regular functioning of developments in conjunction with South Australian and New South Wales authorities.

Port Expansion- Alternative port expansion concepts can be utilized by Port of Melbourne in order to overcome these areas of challenges and further reduce the need for land repossession works (Portofmelbourne.com 2018).

Second Port- Infrastructure Australia must consider the establishment of roadways and rail linkages across the regions pertaining to Melbourne Water’s Western Treatment Plant that is identified as a safeguarded location for birdlife (Portofmelbourne.com 2018).

Conventional Port Planning- Conventional port planning can be typically executed from maritime perspective whereby the significance is positioned on well constructive maritime accessibility, deep draught as well as land availability on the quay. Port of Melbourne recognize that hinterland connectivity cannot be a vital determinant of port planning (MaritimeTraffic.com 2018). Thus in order to circumvent the deficiency of suitable inland waterway vessels, Port of Melbourne must consider a viable option for hinterland connectivity in order to improve the efficiency level of the port and reduce severe traffic congestion around the port with extensive logistic expenses as well as underutilized infrastructure possessions.

Strategic Design- Port of Melbourne has been based on the expansion of the existing ports which may have and constructive effects such as the coastlines may depart and the morphological procedures along the coast maybe immensely disturbed (Victorian Ports Corporation - Melbourne 2018). The efficient process of strategic design to mitigate size restrictions can be presented by two-step procedure which involves a conditional forecast of the demand for capacity issues followed by the determination of the development of port expansion strategy in order to access the Australian ports.

The first recommendation that can be made to the Port of Hong Kong (PoHK) is that they move from cargo documentation paper systems to an electronic online platform. Through the implementation of an electronic document management platform the port will be able to streamline and improve the efficiency of all documentation handling and verification-based activities involved in the import, export, and transshipment of freight such as shipment verification, cargo manifests, electronic delivery order, booking reference, and electronic shipping notes (Sprague 1995). Due to these streamlined cargo documentation activities, several benefits result for the Port of Hong Kong, such as a decrease in administrative burden and administrative cost because of the simplicity and accessibility that comes with an electronic system. As well as an increase in the effective and efficient running of the port due to these streamlined administrative processes, both of which coincide in a reduction in lead time and the lowering of materials handling costs (Johnston & Bowen 2005). The combination of these benefits results in a cost and time reduction in the management and movement of all freight through PoHK and can be used and marketed as a competitive advantage that PoHK has over their neighboring ports in the area.

The best way to overcome the insufficient capacity of the port of Hong Kong is to push for the development of land provisions and put pressure on the government for future development. However, while the development of new land is already underway for PoHK due to construction setbacks and a lack of support from the government there is a need to find solutions to address the issues of insufficient capacity and overcome the problem in the meantime (Millar 2014). Therefore, the most practical solution is to optimize port capacity, through the development, implementation, and construction of projects such as, an on-dock rail terminal, the demolition of quarries and reconfiguring of berths to increase quarry lines, create new births and allow for room to implement new Ship to Shore cranes. Through the implementation of such projects, it is possible to optimize current port capacity while also keeping costs to a reasonable level (Infrastructure Victoria 2017). It is also beneficial because if PoHK already has an optimal layout, port structures, and projects in place as new land provisions are developed they will be able to create a capacity optimized port from the beginning thereby relieving the current and future burden of insufficient capacity that PoHK may face.

Conclusion

The above report explains the background of the port of Melbourne and Hong Kong. It can be concluded from the report that both the ports face the common challenge which is inter-port competition. The port of Melbourne faces the competition from interstate and Trans-Tasman ports whereas the port of Hong-Kong faces competition from regional rivals in Asia. The competition of the Melbourne port was discovered with the help of intermodal access and size restrictions and capacity issues. The competition of the Hong Kong port was explored by analyzing competitive disadvantage and insufficient capacity. At last, the Melbourne airport is recommended to make use of transport modes such as seaports or dry ports to promote intermodal transport, accessibility, and successful management. Additionally, the expansion of the port can be done to overcome the challenges faced in the areas and reduce the use of land. It is also recommended to execute conventional port planning and make expansion as per the strategic design. The Hong Kong port is recommended to move to the electronic online platform from cargo documentation paper systems. The port can overcome the insufficient capacity problem by optimizing capacity.