Upgrading of port infrastructure 0 comments

(P.S: Sorry for any disturbances the advertisements above may have caused you)
World trade has recovered spectacularly in line with economic recovery since 2003, in particular in the Asia-Pacific, where basic materials move from resource-rich countries like Indonesia, Australia and South America, to rapidly developing behemoths like China and India. Consequently, the demand for container ships and bulk carriers has raised charter and freight rates spectacularly, and sparked investment on new ships that are expected to come on stream in 2006.

Yet if we consider the supply chain, it appears that there might be an impending need to upgrade or augment the port infrastructure which will handle the first (export) and last mile (import) of the transport process. Already, there have been numerous cases in China over the past year where bottlenecks formed at the ports with ships waiting to unload. Even the US faced such problems last year. This has highlighted the erstwhile underinvestment in upgrading port infrastructure which I am not sure is being addressed adequately even now given the large number of new ships being commissioned next year and with the economic recovery continuing.

Furthermore, there is a trend of ships growing larger in size. For example, for container ships, previously we had Panamax container ships, and then we had Post-Panamax, then now even the Super Post-Panamax. This tendency towards larger vessels can also be seen in the aerospace industry with Airbus introducing the huge A380. The reason is that the unit cost of transportation goes down due to economies of scale. This trend is likely to continue due to rising oil prices putting more pressure on shippers to be more cost-efficient in fuel usage. As ships increase in size, the port infrastructure such as cranes and shipping berths might have to be upgraded/replaced to handle these larger ships.

Anchored by booming demand throughout the supply chain for its services and overworked due to tight supply, port infrastructure might well be due for further investment sooner rather than later.