Full steam ahead
IMAGE COURTESY OF AVENBEDRIJF ROTTERDAM N.V., PROJECTORGANISATIE MAASVLAKTE 2
miles (2.9 kilometers) of quay, and 6.8 miles (11 kilometers) of roads and railways into the Maasvlakte 2 area. It was completed in May 2013 at a cost of US$2 billion.
“We are right on schedule, and we finished the first phase of the project 10 percent below budget,” says Mr. van der Plas.
The project's success thus far can be attributed primarily to the project team's diversity and continuity, Mr. van der Plas says. “We tried to make the team in such a way that we have all kinds, styles and knowledge. And we still have many people who've been with us for the last eight to 10 years, which means we all know the history of the project.”
The project also benefited from proactive stakeholder management. At its outset, Maasvlakte 2 faced considerable criticism, mostly from environmental advocates concerned that the project would displace wildlife and increase air pollution.
“We invested very early in stakeholder management so we could address complaints and worries in our design. If there was impact, we tried to mitigate it,” explains Mr. van der Plas, whose team published a 6,000-page environmental impact assessment prior to construction. At Maasvlakte 2, terminal operators must meet strict sustainability standards. “Now, after 10 years, there are hardly any detractors left.”
Like other transportation megaprojects, Maasvlakte 2's ambition exceeds project completion. “The success of this project is much more than time and budget,” Mr. van der Plas says. “The real success of this project is if the Port of Rotterdam in 20 years' time is considered the most sustainable port worldwide.” PM
Steady growth in maritime shipping is spurring new investment in port projects around the world.
Rotterdam isn't the only city working to build a bigger, better port. A rise in global shipping combined with an anticipated increase in ship size has ignited a flurry of port projects the world over.
In fact, shipping-container traffic moving through ports more than doubled from 2000 to 2010, according to Nripesh Kumar, director, capital projects and infrastructure practice, PwC India, a PMI Global Executive Council member, Delhi, India.
“As a result, the port sector saw massive investments with significant new port capacity being built in key trade lanes and within key trading regions,” he says.
PwC estimates the sector attracted more than US$150 billion in investment for 700 deals in the last decade, though the firm expects the future project landscape to be somewhat uneven. “European growth remains weak; growth within Asia is expected to be higher and likely to reach close to pre-crisis levels over the next five years or so,” Mr. Kumar says. “Similar trends are visible in other regions.”
THE PANAMA FACTOR
In many cases, growth in port projects is being triggered by the need for bigger, deeper terminals to support the new generation of mega-ships—up to 1,200 feet (366 meters) long and 49.9 feet (15.2 meters) deep—that will be coming through the retrofitted Panama Canal.
“The Panama Canal expansion project is influencing projects on both sides of that country,” says Jürgen Sorgenfrei, PhD, director of consulting services, supply chain solutions, IHS Global Insight, Frankfurt, Germany. “The most important impact is the widening of the canal to accommodate bigger vessels.”
Many shipping destinations are pushing expansion projects through in order to support these supersized container ships. Outside of London, England, for example, Felixstowe, the United Kingdom's biggest container port by capacity, announced plans to extend one of its berths to accommodate simultaneous passage of two extra-large container ships. Work on the 11-month project is scheduled to start this year.
“Handling … large container ships will become a must for European ports if they want to compete,” Lars Jensen, CEO of Copenhagen-based SeaIntel Maritime Analysis, told The Wall Street Journal. “In the next few years only ships above 12,000 TEUs will operate in the main Asia-to-Europe trading route.”
Bigger vessels moving through a widened Panama Canal also open up the possibility for new shipping destinations, says Paul Levelton, director of global infrastructure advisory, KPMG, a PMI Global Executive Council member, Vancouver, British Columbia, Canada. “Everyone is trying to position themselves as the preferred port of container trade with ships from Asia,” he says. “But only hubs that can handle a 50-foot [15-meter] channel depth are in competition.”
As a result, harbor-dredging projects are on the rise, including five U.S. projects that have been allocated US$1.4 billion from the Water Resources Reform and Development Act in October. The harbor-dredging projects span from Savannah, Georgia to Port of Canaveral, Florida and Freeport, Texas.
Costa Rica, another country scrambling to accommodate bigger ships, is preparing to begin construction on a US$1 billion deep-water megaport project in Moín. “With the amount of investment that goes into Moín, we fully expect it to be a first-world port at the completion of construction,” Marco Vargas, a former member of President Laura Chinchilla's Cabinet and a former transportation minister, told the Tico Times. “This is a project that has been delayed for many years, and we expect it to finally begin taking shape.”
China is also driving port infrastructure upgrades. Its ports have seen strong project investments over the last decade, which has led to the emergence of new global port operators, including China Merchants, Shanghai International Port Group and Cosco.
“Handling … large container ships will become a must for European ports if they want to compete.”
—Lars Jensen, SeaIntel Maritime
Analysis, Copenhagen, Denmark
“In many parts of Asia, port projects have been going strong for years,” Dr. Sorgenfrei says. “Especially in the more developed countries, like Malaysia and China, where the work never stopped.” New operators are also launching port projects in key regional markets to expand their reach, Mr. Kumar says. “China Merchants is one of the key players driving investments in the African port sector and other emerging economies.”
Australia is making steady investments in port projects, though progress is slower than it was prior to the recession, says Mr. Levelton. “Port projects to support mining operations are dropping off, but in the container sector many projects in Melbourne and Sydney are underway,” he says.
In the Middle East, the value of projects relating to ports in the Gulf region is US$30 billion, with US$8.6 billion worth of projects in the United Arab Emirates alone, according to project-tracking company MEED Projects. Some of the largest projects are taking place at container ports, to support shipping lines through the Arabian Gulf.
Mr. Kumar anticipates a surge of new port projects in Africa and Latin America over the next decade, as well as renewed activity in the bulk sector.
“Projects with a clear business case and strong promoters are likely to find access to banks and other funding easier than marginal projects with weak support,” he says. “Therefore, projects in emerging markets are likely to continue to face funding constraints and will have to rely on strong promoter support.” But if they can find that, it should be smooth sailing ahead.
—Sarah Fister Gale
PM NETWORK MARCH 2014 WWW.PMI.ORG
MARCH 2014 PM NETWORK
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