Eco-friendly co-operation exerts trade pull

Mark Yong of BMT Asia explains: “Ports are going to have to get involved with more initiatives such as looking at the Environmental Ship Index, and linking that with solid financial incentives for cleaner ships.

“If you have one port in a group pushing for a certain standard, and in negotiations with a shipping line to get this off the ground, it doesn’t serve anyone’s purpose in the longer term for another close by to break ranks and start offering something else.”

Pragmatically, even if they are two “environmentally friendly” offers, it could lead to all sorts of problems with lines cherry picking and playing off the two against each other.

Art Wong of Long Beach agrees, and says that since Los Angeles is Long Beach’s next door neighbour, “it just wasn’t practical to keep separate. Our air and waters have no real divide, and since we share many of the same customers we couldn’t set competing standards. It would have put us in the situation where lines could pitch us against each other.”

However, for many years, this is just what they did, so what changed things? “As time went on, it became clearer and clearer that our – combined – environmental impact was growing,” he says. And this, in eco-aware California, makes for news.

Even though Mr Wong says there was a cultural and philosophical step to overcome “which took very clear direction from the top”, co-operation between container terminals is becoming increasingly important. Many places are getting together, with the ‘green’ umbrella being used as just one of a number of commercial incentives used to attract business.

For example, the North Adriatic Ports Association (NAPA) is making the most of its eco-friendly co-operation, and also thinks that the combined power of its five ports together will exert a huge trade pull into the area.

Additionally, just on the horizon is an idea currently being worked on by the port of Argentia in Newfoundland as well as others on the Canadian east coast region. They are each looking to gain hub status for US traffic from the Far East, avoiding both the huge financial and environmental burden of the trucks that presently carry goods from the deepwater ports in the west. If the smaller ports can co-operate in a feeder chain into Canada and all the way down the US east coast, the benefits of providing regular traffic from a deepwater hub should make this an attractive proposition for all concerned.

Despite this, it can be hard to get ports to fall into line with each other even if there’s a good reason and overall savings, explains Steve Wray of Ocean Shipping Consultants.

Gdansk (DCT) and Gdynia (BCT) are an example of two neighbouring ports that would do well, in his opinion, to co-operate. “The problem is, as always, that they both have their own commercial agenda and bottom lines to consider. This despite the clear advantages of being able to share the hinterland connections and lower their overall environmental impact, which would reduce costs. It would mean Gdynia settling for the smaller size ships and, to an extent, giving up on its ‘big dreams’ of becoming a deepwater port, but obviously saving huge amounts of money by, for example, not having to pay so much for dredging.”

He adds, although some initiatives, (like NAPA), are very clear winners for the smaller ports, “who can jump on the shirt tails of the deepwater neighbours by providing an alternative feeder service”, it can be much harder to co-ordinate the ambitions of a group of deepwater ports “all who have a very good reason for trying to take as much market share as possible, despite the potential benefits of co-operation”.

However, it’s not just a matter of breaking down the walls, imaginary or not, between ports. “A lot of people either talk about running ships, or running the ports, isolating the two,” says Dr Yong. There is co-operation, but there’s not much open discussion about how it’s arrived at, he adds. In fact, ports and lines are definitely a bit cagey on the subject of negotiations, and though understandable, this reticence doesn’t always help when carving a new way forward with environmental standards.

Ports often point to the shipping lines as the ones holding them back from tackling the market with more green initiatives, reasoning the lines won’t stand for more of a burden than they can get away with. However, it’s not always the case. Maersk, for example, has taken the bull by the horns. “They have gone for low sulphur fuel while putting into Hong Kong and New Zealand on a voluntary basis, in effect saying that ‘while you are still talking, we are getting on and doing something’,” explains Dr Yong.

As to whether Green co-operation will win through, Dr Yong is optimistic. “My personal opinion is the direction is there, the trends are in place,” he says. “There’s consumer pressure in the mature markets, and although to be honest there is less pressure at the moment in Asia, stakeholders will eventually make it happen, and I think this will overcome the ports’ natural barriers to co-operation.”

But he adds that it’s sometimes not only ports but entire regions that need to work collectively – even though there is a lot of resistance. “Some of the ports in the Baltic area are feeling a bit hard done by. The region has gone ahead and put in place low-sulphur rules and now they are wondering why others aren’t following suit.”

[ This article was first published on www.portstrategy.com, United on the green, 16 May 2011 ]