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Terminal and intermodal costs creeping up on container lines

Terminal and intermodal costs creeping up on container lines
Terminal handling charges and intermodal transport costs are taking up more than 50% of a vessel’s single voyage operating cost, according to president of APL Kenneth Glenn, as oil prices fall and ports raised charges.

“Over 50% of our cost base is from terminal handling and intermodal costs. While vessel and voyage costs are declining due to continuing investments in more efficient ships, land costs especially in the US are increasing,” Glenn told delegates at the Sea Asia 2015 conference held in Singapore last week.

He added that while declining fuel price could be temporary, trucking and landside costs are increasing.

Bunker costs had been a headache for shipowners over an extended period of time, when fuel bills have been known to take up to 70% of a vessel’s voyage cost. Glenn shared that under the present environment, vessel ownership and operating costs, which include bunker bills, take up roughly one-third of a vessel’s operating cost.

Lars Mikael Jensen, ceo, Asia Pacific Region, Maersk Line, said that “there is no doubt that terminal expenses globally is a huge cost”, and close collaboration with the terminals “is very important in order to gain efficiency.”

Jensen highlighted that ships have gotten more efficient over the years but there is still room for greater efficiency and innovation to improve on at the terminals.

“There is no doubt that labour cost in North America is higher than in Asia. As the terminals are labour intensive, this obviously has an impact on the cost that you pay in North America compared to say Vietnam, Thailand or China,” he told Seatrade Global.

Tan Chong Meng, group ceo of PSA International, explained that as ships increase in sizes and throughput rises, port operations have become more complex, not to mention the lengthier time needed by ports to revamp their systems to meet demands of increasing vessel and cargo flows.

“We are equally concerned about those costs,” Tan said. “The inventory per throughput goes up, so this raises complexity. And due to the growing number of shipping alliances, the number of incoming and outgoing vessels also increases.”