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Singapore has bold plan to relocate container terminals.

   Port planning doesn’t get more audacious than this.

   Singapore, home to the world’s second largest container port, is simultaneously undertaking a huge expansion of its Pasir Panjang Terminal, while making plans to eventually relocate container operations to Tuas at the western edge of the country, an industrial zone about 10 to 15 miles from where the terminals are today.

   According to a website maintained by the National Library of Singapore, the name Tuas can be traced to a “fishing method used in the past, when coastal Malays floated coconut fronds and leafy branches, kept close together by the rising tide. A large net was spread and suspended below. The shade provided drew in the fish. More and more fish were attracted until at a given signal, the net was hauled up by the fishermen in their boats. Levering or hauling up is menuas in Malay, from which comes tuas.”

   If the government’s plan works, Singapore expects to continue catching larger amounts of container traffic in years ahead.

   Last year the port handled 32.6 million TEUs, a 2.9 percent increase over 2012 according to Lui Tuck Yew, Singapore’s minister for transport.

   According to Seatrade, that is just behind the 33.6 million TEUs handled by the Port of Shanghai last year.

   Singapore has a population of 5.3 million, so about 85 percent of the containers that arrive in Singapore are transshipped, said PSA Singapore, the national port authority. Singapore is the place where containers are transferred from one ship to another — either through “hub-
and-spoke” arrangements that connect mainline containerships to feeder vessels or “cross strings” between two mainline operators.

   As the world’s top transshipment hub, PSA said Singapore is connected to 600 ports in 123 countries, with daily sailings to every major port of call in the world.

   The U.K.-based port analyst Ben Hackett said much of the feeder cargo moving through Singapore goes to and from countries in Southeast Asia such as Indonesia, Thailand, Myanmar, and Cambodia, as well as more distant locations such as eastern India and Australia. Some of the cargo not transshipped moves by truck to and from Malaysia, and he also noted some cargo that comes off the terminals is assembled into new products, repackaged, or otherwise manipulated before being returned to the container terminals.

   During a speech in March, Josephine Teo, Singapore’s senior minister of state for finance and transport, said “to provide premier connectivity and service levels, we continue to invest in port infrastructure well ahead of demand.

   “We are expanding Pasir Panjang Terminal to increase our handling capacity to 50 million TEUs per annum and the first set of new berths will be ready later this year. In the longer term, we plan to consolidate our container port operations at Tuas with a capacity of up to 65 million TEUs,” she said.

   Almost all of the containers in Singapore — 32.2 million — are handled by terminals operated by PSA Singapore. (A small portion, or about 340,000 TEUs in 2012, was handled by the private Jurong Terminal.)

   PSA’s terminals include Tanjong Pagar, Keppel, and Brani, as well as the Pasir Panjang Terminal 1 and Pasir Panjang Terminal 2, which the company said “function as one integrated facility, handling large-scale, complex transshipment arrangements efficiently and seamlessly.”

   Lui has said the decision to develop phases 3 and 4 of Pasir Panjang Terminal (PPT) to meet future growth in container volume dates back to 2004. PSA Singapore Terminals will take ownership of the land at PPT Phases 3 and 4 in stages and spend some 3.5 billion in Singapore dollars ($2.8 billion) on “best-in-class infrastructure and the latest port technology” including an automated container yard and unmanned rail-mounted gantry cranes that will be supported by computer systems.

   He noted those features “will enable PPT Phases 3 and 4 to serve the next generation of containerships, increase productivity and also promote environmental sustainability in our port operations.”

   Lui said when fully completed with 15 berths by 2020, PPT Phases 3 and 4 will increase total port capacity to 50 million TEUs.

   “This will strengthen Singapore’s position as the world’s largest transshipment hub,” he said in a 2012 speech when he announced the launch of the Pasir Panjang project.

   In April 2014, the Maritime and Port Authority of Singapore (MPA) and PSA Corporation (PSA) agreed to increase from $20 million to $50 million funding on development of next-generation technologies for future container terminals at Pasir Panjang and Tuas.

   “Shipping will continue to be the lifeblood of Singapore’s economy far into the future. We therefore take a very long-term view of the Singapore Port and its growth,” he said.

   Port leases for the so-called “city terminals” — Tanjong Pagar, Keppel and Brani — will expire in 2027.

   Lui said with this in mind, the government decided to go forward with building the consolidated port at Tuas.

   In a speech at Singapore’s “National Day” rally last year, Prime Minister Lee Hsien Loong said the new port in Tuas will be “bigger, more efficient, almost double the present capacity.” His speech, accompanied by a slide presentation, showed how the country plans to construct a large terminal on reclaimed land on the western edge of the city, an area now referred to as the “hockey stick” because of its distinctive shape.

   When Tuas is completed, Lee said Singapore will be able to “stay the hub port and make sure the business stays here.”

   Lui said he expects the first berths at Tuas to open in about 2022.

   And in 2027, when the city terminal leases expire and container operations are relocated to Tuas, Lee said “you will free up the prime land in Tanjong Pagar,” where the country’s container terminals are today, “and there we can build a Southern Waterfront City.”

   He said the relocation of the terminals, which would include the Pasir Panjang Terminal, will free up 1,000 hectares, or 2,471 acres, for development.

   The area is located near the city center and considered prime real estate in Singapore. The Brani terminal is across from Sentosa, an island resort.

   Teo said the outlook for Singapore cargo growth is bright, noting that according to IHS “Far East-Europe seaborne containerized trade will grow at 4.6 percent per annum from 2014 to 2016, while intra-Asia seaborne containerized trade is expected to grow at 5.8 percent per annum from 2014 to 2016. As a result, Asia’s share of global seaborne trade is expected to increase to more than 40 percent in the years ahead.”
The increasing size of containerships and the need to keep them as full as possible appears to bode well for the future of transshipment, Hackett said.

   Tuas’ proximity in the western part of Singapore also brings it close to a bridge, the Malaysia-Singapore Second Link, which could help reduce truck traffic in the center city.

   On the other side of the Second Link is the Malaysian port of Tanjung Pelepas, which handled 7.7 million TEUs in 2012 and announced plans of its own last year to boost annual handling capacity by 25 percent to 10.5 million TEUs. It said new berths will enable it to work Maersk’s new 18,000-TEU “Triple E” ships.

   But Hackett said Singapore’s reputation for efficiency and organization, its tax rules and laws make it more attractive to shipping companies than many other countries in Southeast Asia.

   However, longer term, Singapore may face challenges to its business from regional ports such as Jakarta in Indonesia because of their growing populations.

   “The real big picture question is: What is the direction that the Asian container trade is going to go?” said Paul Bingham, an economist at CDM Smith. “Will the model of using Singapore and Hong Kong as monster transshipment hub ports continue? Or, will you see more of the development of coastwise ports directly tied to some of the production or import areas,” for example in China, Korea or Vietnam?

   “I don’t know the answer to that, but I do know the topography and the geography of Asia is such that there’s still likely to be that practice of the intra-Asia feeder trades for a long time and the question is whether they continue to call Singapore and Hong Kong or evolve to calling other ports that are not just transshipment ports,” Bingham said.

This article was published in the May 2014 issue of American Shipper.

Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.