The top terminal operators globally account for approximately 30% market share in the world. According to Port Technology (2014), the world’s top five terminal operators by market share percentage are PSA International (market share for its global port projects was recorded at 8.7%), Hutchison Port Holdings (HPH) (7.0%), APM Terminals (5.5%), DP World (5.1%) and China Merchant Holdings International (3.6%). Transnet Port Terminals CE, Nozipho Sithole, offers her insight on what factors are key to becoming an international terminal operator of choice.
Although South Africa has a sophisticated logistics industry, making use of some of the latest global trends in the field, we still have a long way to go before we can claim to be one of the top five port logistics services globally. There are a number of internal and external contributing factors that make the global leaders in our field stand out from the rest.
According to RREEF (2009) there are two factors that influence the choice of terminal operator: port specific and macro-economic variables. And when you drill down further, various studies in the area of ‘port choice’ have indicated that the main factors that emerge for terminal operators of choice are efficiency (as the most important factor) followed by cost, location and technology. However, they tend to differ in relative importance. Other factors that may influence the use of a specific port and/or terminal operator includes the economy, industrial patterns, globalisation, trade, warehousing and/or intermodal agreements, fuel charges, taxes, inventory practices, shipping alliances, warehousing, economic regulation, government subsidies, environmental and safety policies, weight limits technology (Tongji; 1996) and private participation (Tongzon and Heng; 2004).
Shipping lines especially pay more attention to operational efficiencies when selecting port and terminal services. And when shipping lines do have a clear preference for a terminal operator, the effect will be increased volumes and a higher level of connectivity. However trade growth and GDP growth also plays a factor; as all four countries illustrated in graph 4 have a 90% plus correlation between liner connectivity and GDP over the period under consideration.
The Chinese ports’ five-part strategy that led them to become best in class also reveals key learnings about what makes for a top terminal operator. They believe the key areas for improvement include increased efficiencies (which will lead to lower costs leading to even lower prices for customers); the application of technology and innovation in the port terminal environment, linking to other stakeholders (as well as customers, with market demand factors and having access to data and understanding the data also playing an important role); the location of current terminal operations and future global terminal operations; and finally - market and customer flexibility.
Looking at today’s criteria for winning best terminal operator awards – there are some obvious similarities in what makes these companies best in class, along with additional factors that seem to carry more weight for some than others. CEO of the winning company of this year’s Asian Freight, Logistics and Supply Chain (AFLAS) Awards in Singapore put their success down to their focus on “enhanced capacity, greater efficiency, innovation and eco-friendly operations” at their port. A minister of tourism however stated that this achievement was also possible thanks to the synergy and effective co-operation between government and the winning terminal operator.
So in short, what does it take to become one of the ‘Top 5’ terminal operators globally? I believe that what is required to become a market leader is reliable, cost-effective service (a culture of doing what you say you are going to do), applying technologies that enhance asset utilisation, safety, customer service, supply chain collaboration, and leadership or people dedicated to serving customers. The good news is that all these principles are within our own control. With a high-performance culture and a comprehensive strategy in place customer service and market share can be improved to the standard of those terminal operators enjoying the benefits of the ‘Top 5’ status. External factors that are beyond our control include low levels of economic growth, a stable economy, positive industrial patterns, changing weather patterns and increased foreign direct investment, poverty and crime levels. We take these into account in our plans as we strive to achieve best in class standards in areas where we do have control.
There’s no denying that we as terminal operators are at the centre of the logistics chain and when our customers are satisfied, business thrives -and so in turn does the rest of the value chain. TPT’s vision is to be among the ‘Top 5’ in five years to catalyse the positive growth needed in our country.
