Demand varies widely port by port, but cranes will need to get bigger and faster if they are to keep up with the expansion of container ships. Myra Pinkham reports.
While the downturn of the US economy has had some impact on North American port crane business, particularly on the West Coast, business remains quite strong and is expected to just get stronger with several ports stepping up expansions in anticipation of increased traffic through the Panama Canal in upcoming years.
As Hal Vandiver put it in the May/June issue of OCH, the overall overhead material handing industry, including cranes, hoists and monorails is still growing at double digit rates in the United States. “This is largely due to expansion at the ports,” says the executive vice president, business development at the Material Handling Industry of America (MHIA).
Crane demand, however, varies widely port by port, says Andy Newell, vice president of Konecranes Americas, Atlanta, Georgia, observing that while some ports, such as Savannah, are booming, and adding new cranes, there are other ports where container traffic has declined.
“About a year ago I would have definitely said that business was really booming,” Newell says, but while business is still strong, he says there is not as much rubber tired gantry (RTG) crane activity this year as in the last several years. “However we’ve seen an increase in interest in our rail mounted gantry (RMG) cranes, especially within intermodal facilities.
Globally container traffic is growing at a 9.5% compounded annual rate with world trade growing by about 7% this year, says John Vickerman, president of ports and intermodal consultant Vickerman Associates, Williamsburg, Virginia. He says that even with the US downturn (which might or might not be a recession, depending on who you are talking to), North American container traffic is growing at a 6.85% compounded annual rate.
Things are, however, slowing down a little during the past six to nine months, says Cullen Ketcham, market manager for port and container handling – Americas for Conductix-Wampfler, Florence, Kentucky, especially as far as import shipments, but even with that other factors are resulting in continued strong crane orders.
Demand for port cranes tends to be tied to the volumes going through the ports, says Paul Bingham, managing director of global trade and transport for Global Insight, Washington. “Trade has being growing fast, along with the general economy, for a number of years,” he declares. This year for the first time in several years there has been some disruption to this trend with import volumes declining due to weak consumer demand and the weak US dollar. This decline, according to John Martin, president of Martin Associates, Lancaster, Pennsylvania, is particularly pronounced on the West Coast, given a recent trade shift.
Imports, Bingham says, have declined by at least 6%, and even more than that out West. But, by contrast, exports are booming, seeing double digit increases, albeit form a very low base. “They are using some of the empty container space, making the inbound and outbound traffic more in balance, although at most ports they aren’t totally in balance yet.
At some ports, however, exports are so strong that some is being turned away. That is the case at the new Prince Rupert (British Columbia) container terminal – its first container terminal. “We are maxed out most weeks for exports,” says Barry Bartlett, spokesperson for the Prince Rupert Port Authority, who says that while not all the containers are filled outbound (at its last outbound call 40% were), the weight capacity of the vessels are generally maxxed out. Outbound shipments tend to be lumber, logs, aluminium ingot and other metals, which is heavier than the inbound shipments, which are largely finished goods. It is true that Prince Rupert is somewhat a unique situation as it has no real local market and the vast majority of the containers go to the Chicago/Memphis area. However, other ports also report significant increased exports. Joe Harris, spokesperson for the Virginia Port Authority, observes that while traditionally its ports have 50/50 imports and exports, at last count its exports jumped up to about 56% of its traffic.
Vickerman says that the slowing of growth in container traffic (or decline in traffic in some cases) is most likely just a hiccup that “blip” is overcome the growth of shipments in the North American market will continue upward. “The biggest economic engine in the world continue to be the United States and Canada and that will continue to be the case at least through 2040, at which time Asia, primarily China and India might take over, which will be a major global trade shift.”
And demand for cranes might not be impacted at all by this “short-term disruption,” Bingham says, stating that some ports are buying cranes now anyhow. “It is not necessarily to meet current demand, but to meet the demand that will come when the economy rebounds in the next year and half to two years, especially given the long lead times for equipment. They can’t always wait to place an order. They need to have the foresight to know that they will need the capacity for the new larger vessels and the density of volumes when they need it. They want to be where they need to be when there is a need to move that cargo.”
Richard Cox, general manager of equipment and facilities engineering for the Georgia Port Authority, observes that Savannah, which is now the fourth largest container port in the United States, has been experiencing a 16-17% growth in container traffic a year. “In order to handle the higher throughputs we needed more cranes.” It is currently installing four 480 foot long Super Post Panamax cranes that were designed in Finland and fabricated in China by Konecranes LLC and has four more cranes on order. These cranes have the capability of loading and unloading freight from 22 container wide Super Post Panamax vessels.
Not only are these cranes 20 feet taller than previous generation cranes, which were used for 17 container wide vessels, but they are also faster and heavier, says Cox, who notes that the port bought these cranes partly because of current increases in demand, “but also to get ahead of the curve; to make sure we are prepared for the future.”
The Jacksonville (Florida) Port Authority has just installed two new Post Panamax cranes with a 19 container reach, manufactured by Mitsui Engineering & Shipbuilding Ltd., for its new TraPac container terminal opening at the end of the year. Port Authority spokesperson, Nancy Rubin, says this investment has been prompted by the widening of the Panama Canal (a project that is expected to be completed 2014). She explains that once the canal is widened it will open up the East Coast to Post Panamax ships. “Currently the West Coast is the destination of choice, but soon the East Coast will look better and better.”
The widening of the Panama Canal is one of the reasons that container vessels are getting wider, says Aaron Ellis, spokesperson for the American Association of Port Authorities, who observes that Panamax ships (ships narrow enough to go through the Panama Canal in the past) are about 106 feet wide. By comparison, Post Panamax ships are 160 feet wide with Super Post Panamax and Ultra Post Panamax ships being even wider.
“Just two years ago we thought that the largest ships would be 9,000 TEU vessels, but Maersk Lines is already running a 14,000 TEU container ship and I think that ships will get bigger – up to 18,000 TEU,” says Vickerman, who observes that some of the bigger ships are about 26 containers wide – a width that was unheard of a few years ago. “I think they will extend beyond that, and when they do the ports will need bigger, faster cranes to load and unload them.”
Ellis says the widening of the Panama Canal “is arguably the biggest navigation program in the world and will change the shape of shipping.”
It is the “dramatic” increase in the size of ships that caused the Charleston (South Carolina) Port Authority to buy four Super Post Panamax cranes from Zhenhau Port Machinery Co. (ZPMC), Shanghai, China – which is by far the largest producer of ship to shore cranes (accounting for about 80% of all sales according to Ketcham), as well as increasing its number of RTGs (which it bought from Konecranes) to stack the containers in the container yard, spokesperson, Alison Skipper, declares, adding that the Super Post Panamax cranes replaced its Panamax cranes, which were decommissioned and sent to Algeria to be used there.
Harris says that the Virginia Port Authority has ordered three Post Panamax cranes, but that was related to a berth expansion program that was part of its long term master plan and not directly related to the widening of the Panama Canal. He explains that about 10% of the trade for Virginia’s three marine terminals is from the Suez Canal, and that trade is growing. “A lot of the vessels using that waterway are large vessels. We have the equipment and we have the deep water to accommodate them. We are the deepest port on the East Coast.”
That is not to say that Virginia is ignoring the potential that the widening of the Panama Canal could bring. “We are preparing for that as well, but that is a 10-year long project. We want need to be able to service the trade from the Suez Canal immediately.“
Virginia has also begun preliminary engineering work for a fourth marine terminal, the first phase of which is to be completed in 2015. “We will be purchasing more cranes over the next 10-12 years for that terminal,” says Harris.
Ports making crane purchases are not limited to the East Coast. That is clearly true at Prince Rupert, which installed three Ultra Post Panamax cranes, which it ordered from ZPMC – for the first phase of its container terminal. Bartlett says that further cranes will likely be required for an expansion of that terminal, which is still in the planning stage and is expected to be completed by 2013.
The Port of Prince Rupert, he says, has created the first new trans-Pacific trade corridor in over 100 years, which gives it a large strategic advantage. “We can get product from Asia to the United States faster than other port,” he maintains.
Bartlett says that he believes that the current US economic downturn is “just a blip” and that the import congestion of two to three years ago is destined to return. “Most predictions are for imports from Asia to increase 300 percent by 2020 and it seems to me that with more product coming through the port, it will require more cranes,” he says.
The Port of Portland (Oregon) has also been “bucking the general trend” of the West Coast, last year seeing a 23% growth in container traffic and has, in response, installed a new Post Panamax crane from ZPMC, which, while operational, is still undergoing testing, says spokesperson Josh Thomas. He says the port doesn’t have any more cranes on order at this time, but he doesn’t rule it out for the future. “It is all about having the right tools for the job,” he says.
“I don’t see demand for cranes from North American ports slowing down anytime soon,” says Conductix-Wampfler’s Ketcham. Global Insight’s Bingham agrees, stating, “despite high fuel prices, global traffic is inevitable. As the GDP of emerging nationals increase, trade will grow and demand for equipment to handle that increased freight will grow as well.”
