As Global Commerce Increases, Seaside Cities are Launching Outsized Expansion Projects to Maintain Their Competitive Economic Advantage
Port of Rotterdam, the Netherlands
BY SARAH FISTER GALE
Ports are often the economic epicenter of a city or town, linking urban commerce and production to vast shipping routes and the global trade economy. But as cargo ships get bigger and the technology to manage them advances, ports have to adapt or risk losing traffic to nearby competitors. For local governments around the globe, that means prioritizing projects to expand and modernize existing ports.
“Most countries realize that there is an urgent need to modernize and upgrade transportation infrastructure to remain competitive—and they are starting with ports,” says Raúl Ferro, chairman of the Latin American Ports Forum, Santiago, Chile. The flurry of global port projects hit US$459 billion last year, according to the most recent Timetric report. Asia Pacific led the pack, investing US$165.1 billion in port projects, followed by the Middle East and Africa.
Yet while the need for bigger, better ports might be obvious, “managing these kinds of projects is quite challenging and complicated,” says Emre Oruklu, senior project manager, ports and marine, for global engineering firm AECOM, Dubai, United Arab Emirates. That's because these projects often touch multiple elements, including sea walls, navigation channels, shipping berths, terminals, cranes, utilities, and the roads and rail that connect the port to the city. Along with juggling multiple project elements, project leaders have to manage a fleet of stakeholders, including the port authority, regulators and multiple contractors.
Whether a port project involves simple dredging, advanced technology or a greenfield development, establishing clear and defined requirements from the outset is vital to staying on track, Mr. Oruklu says. “These projects require immense investment, and every day you are delayed is money lost,” he says. But when project owners take the time upfront to clarify their expectations, set realistic timelines and address the sink-or-swim risks, they will be best positioned to meet their goals. “The more time you spend clarifying requirements before the project starts, the faster the project will go.”
Today's port expansions don't just include dredging channels and adding berths. Port projects increasingly incorporate complex new technologies, featuring automation, internet of things (IoT) sensors and data management platforms to better manage traffic, increase efficiencies and reduce overhead.
In the United States, for example, California's Port of Los Angeles and Port of Oakland are implementing separate projects to integrate datasharing platforms in their operations that will allow terminal operators, truckers and other port users to jointly track cargo status. And the Port of Rotterdam in the Netherlands is in the midst of a multiyear project to install sensors on buoys in the North Sea and along the port's quay walls to track weather and shipping traffic to make better use of limited space and berths.
“New technologies bring a lot of efficiency to the port—but they add a lot of complexity and risk to the projects too if an effective coordination between the design team and the operations team is not well set,” Mr. Oruklu says. Most port authorities have limited experience with advanced data platforms and sensors, so integration of the advanced equipment into the overall infrastructure design of the port is challenging. “The client knows they want these systems, but their requirements may not be clear,” he says.
—Emre Oruklu, AECOM, Dubai, United Arab Emirates
This uncertainty can add time and cost to projects, as designs are revised to accommodate additional data and power networks, cameras, radio frequency identification systems, automated gantries and changes in infrastructure. Operational requirements have to be clearly defined at the initiation of the project in the project charter, as even small changes can have a far-reaching effect, he says. For example, on a recent port project, the client wanted a mobile crane to load trucks, which required new pavement and strengthening of the quay wall structure to handle the weight. “But we learn lessons from these projects and apply them on the next one,” he says.
Mr. Oruklu often will bring the same teams onto new projects so they bring that experience to the table. His team also uses past designs as a roadmap for future port projects, which can shave time from the design process and help them more accurately quantify cost and schedules. “This is how we achieve efficiencies over time.”
Port of Los Angeles, California, USA
PHOTO COURTESY OF PORT OF LOS ANGELES
Stakeholder management made a difference during a project at the Port of Oakland in Oakland, California, USA, too. Pia Franzese, a senior maritime project manager at the port, recently oversaw a nine-month implementation of the Oakland Portal web platform, which provides all of the port's stakeholders with information about vessel schedules, terminal updates, location of empty containers and other data to help them improve the efficiency of their operations.
The idea for the portal project came from the Port Efficiency Task Force, a group of transport operators, customers and port authority leaders who meet regularly to address problems in port management and discuss how to solve them. Members of the group had regularly complained about out-of-date or incomplete data and difficulties finding and accessing information. “We listened to what our customers wanted,” Ms. Franzese says. “And having the group identify the problem first made it easier to secure buy-in for the platform.”
The portal project, which went live in May, is one of several technology improvements the port is implementing. Other endeavors include the Freight Intelligent Transportation System (FITS) program, which is a suite of projects that spans improving fiber optics, upgrading camera systems, improving Wi-Fi, and automating traffic management and signage. The FITS program is still in the design phase, but Ms. Franzese notes that buy-in should begin well before execution. “It's important to talk about these projects in terms of how they benefit your stakeholders,” she says. “If they see the value, it becomes a solution to get excited about.”
—Pia Franzese, Port of Oakland, Oakland, California, USA
The popularity of automated systems and data tracking is helping many ports deal with an age-old problem: lack of space, says Hele-Mai Metsal, head of the development department at the Port of Tallinn, Estonia's largest port. “When you implement IT systems together with infrastructure upgrades, you can make better use of your existing footprint,” she says.
—Hele-Mai Metsal, Port of Tallinn, Tallinn, Estonia
PHOTO BY OLIVER MOOSUS
That can help ports accept more cargo without taking over additional land. In May 2018, Ms. Metsal's team completed a three-year, US$3.7 million project to implement an electronic, universal check-in system for both entrances of Old City Harbour in the Port of Tallinn. The system uses real-time data from all four shipping clients in the port to guide drivers through the harbor check-in, vessel unloading and exit. This tech upgrade eliminates the overcrowding and traffic jams that used to be caused by trucks queueing early.
Port of Oakland, California, USA
Old City Harbour in the Port of Tallinn, Estonia
PHOTO BY TIIT VEERMAE / ALAMY STOCK PHOTO
“We couldn't make the harbor bigger, so we needed to use the existing land more efficiently,” she says. With the new system, trucks are guided to the loading area based on the traffic schedule, allowing them to arrive on time. “It frees up parking areas for new uses,” she says.
Selling the project plan to stakeholders wasn't easy, though. “In the beginning, no one understood the value it would bring,” she says. So Ms. Metsal spent much of 2015 focused on generating buy-in: making presentations and sharing case studies of smaller regional ports that were able to improve traffic flow with similar systems. A preliminary cost-benefit and socio-economic analysis predicted that the overall time saving will be up to 320,000 hours per year based on drivers spending at least 10 minutes less in the harbor area. “That's the main goal,” she says, “to improve the experience of our end users by making their idle time in the harbor area shorter.”
Port clients initially raised concerns about data security and were hesitant about sharing even minimal data to make the system work. “The data used by the system includes information about their customers,” she says. “It is their currency, and they watch over it carefully.”
Ms. Metsal addressed that hesitation by giving demonstrations on the system's data security features and answering questions about how the platform would be managed by the port. Eventually all of the stakeholders recognized that unless they dealt with the traffic problem, they wouldn't be able to increase capacity. “The city wasn't going to let us build more parking lots, so we needed to become more efficient,” she says.
Ports typically bump up against city centers and transportation infrastructure, and “whenever you want to expand a port you have to take into account all of these partners and how the expansion will impact them,” Ms. Metsal says.
PHOTO BY OLIVER MOOSUS
Along with taking over local land, harbor expansion projects can have a knock-on effect for road and rail traffic, creating new traffic jams and related sound and air pollution as harbors bring in more cargo from bigger ships at a faster rate. That's causing regulators to pay close attention to the impact of these projects, Ms. Metsal says. “Every port project takes longer and costs more than it might have in the past, because of environmental regulations alone.”
Project owners also need to work with urban planners to integrate their project plans with broader transportation investments. Otherwise all that extra cargo will have nowhere to go. In many cases, harbor projects are conducted in tandem with urban development and infrastructure initiatives. For example, the Port of Savannah in Georgia, USA broke ground on a US$127 million project earlier this year to build the Mason Mega Rail Terminal and 10 new rail lines as a way to increase rail capacity to handle the anticipated surge in container shipping. When it's completed next year, the terminal is expected to cut rail time to Midwest cities by 24 hours and remove 200,000 big-rig trucks from the state's freeways, while reducing traffic congestion and wait times in the harbor.
And in April, the Canadian government announced plans to invest US$14.6 million to build an additional 6 kilometers (3.7 miles) of rail track at the Port of Montreal to reduce wait times as the amount of cargo the harbor receives expands. This investment is critical to supporting the increased traffic that will result from ongoing port expansion efforts, as well as future plans to build a second port across the river.
“The Port Authority recognized a long time ago that our real estate would run out, and we would need more shoreline to expand,” says Daniel Dagenais, vice president of operations, Port of Montreal, Montreal, Quebec, Canada. But unlike most ports that struggle to eke out a few acres on adjacent land, the Port of Montreal made a decision 30 years ago to acquire 468 hectares (1,156 acres), including 4 kilometers (2.5 miles) of shoreline on the south side of the St. Lawrence River in Contrecoeur, Quebec. “Finding available shoreline is rare, and getting 4 kilometers close to navigation channels and connected to highways and rail is unheard of today,” he says.
The Port of Montreal has held onto the land since the late 1980s, but as part of every annual planning process the leadership team assesses the capacity of the original port and whether they can make process, mechanical and equipment improvements to increase capacity. Once they determined that they were within 10 years of exceeding their throughput capabilities, they began planning development of Contrecoeur. When completed, the new facility will accommodate 1.15 million twenty-foot-equivalent units (TEUs) of cargo, bringing the Port of Montreal's total handling capacity to more than 3 million TEUs. “It was a visionary move that is now paying off,” Mr. Dagenais says.
Ports of Call A snapshot of port projects around the world:
1 PORT OF LONG BEACH, CALIFORNIA, USA
In March 2018, the Port of Long Beach launched a pilot project to test GE Transportation's Port Optimizer cloud-based data-management software. The portal is expected to help the port ensure efficient container movement as volumes increase.
Security controls at the Port of Long Beach, California, USA
2 PANAMA CANAL AMADOR CRUISE PORT, PERICO ISLAND, PANAMA
In October 2017, Panama Maritime Authority launched a US$165 million project to build the Amador Cruise Port on Perico Island. The project, built by China Harbour Engineering Co. and Jan De Nul in Belgium, will feature two docks able to berth two 5,000-passenger cruise ships simultaneously. The project is slated to be complete in 2019.
3 TEMA PORT EXPANSION PROJECT, GHANA
The US$1.5 billion expansion of Ghana's Tema Port began in 2016 and is the largest port investment ever supported by the World Bank. Once complete, in late 2019, the expansion project will triple capacity of the Tema Port, expand trade flows and enable the port to accommodate the largest container ships in the world.
4 PATIMBAN PORT PROJECT, INDONESIA
The Japanese government is funding a US$3 billion project to build the Patimban deep seaport project in Subang Regency, West Java to ease congestion at the nearby Port of Tanjung Priok in Jakarta and bolster regional commerce. Construction began in early 2018, with fast-track completion of phase one by March 2019. The port will be fully operational by 2027.
A Canadian port team won over residents by adapting to their feedback.
In 2014, leaders at the Port of Montreal realized it was time to start developing the land it had acquired 30 years prior, in Contrecoeur, Quebec, Canada, to accommodate growth at the port. The US$750 million project seemed straightforward enough: greenfield construction of a new port featuring two berths, a container handling area, an intermodal rail yard, a truck entry portal connected to the road network and support facilities. Construction is expected to begin in 2020, with the terminal slated for commission in 2023.
Yet the land was undeveloped and sits at the edge of two quiet communities with little commerce or traffic. To move forward, the port had to win over the Contrecoeur community and neighboring Verchères area.
“It's a bucolic setting, and we knew that building a port would change that landscape forever,” says Daniel Dagenais, vice president of operations for the Port of Montreal and leader of the project. So the first the step the project team took was talking to their neighbors.
Since 2014, Mr. Dagenais’ team has been holding public meetings in the community with residents, environmental groups, local authorities and anyone else who wanted to learn about their project plans or share feedback. “We were honest from the start about what we were planning,” he says. “We want to build large infrastructure that will have an environmental and community impact. We never hid that fact.”
—Daniel Dagenais, Port of Montreal, Montreal, Quebec, Canada
Some members of the community were understandably concerned, but his team won them over by sharing data about why the project was warranted to maintain economic growth in the region and how it would benefit the local municipalities. “These communities have seen a big exodus of young people who go to school in Montreal and never come back because there are no jobs,” Mr. Dagenais says. The port project is expected to generate 5,000 jobs, plus 1,000 more jobs once it's operational. It also will attract related vendors and commerce, all of which will bring more jobs and economic growth.
Contrecoeur, Quebec, Canada
PHOTO COURTESY LOGISTEC
The feedback the project team gathered sparked significant changes in the original project plan. “The plan we started with four years ago and the one we have today look like two totally different projects,” he says. Based on feedback, they moved entry and exit points, added a sound berm hill with a bike trail and changed the order of construction so it would start nearest the residential areas and move away rather than the reverse, after studies showed that would lower environmental impacts.
Mr. Dagenais’ team also committed to doing substantial environmental remediation to protect endangered species in the area, which meant further changes to the project plan. For example, an early environmental review showed the endangered copper redhorse fish had a feeding area located in a phase-one build zone. “In response to a risk assessment associated with attempting to build over the protected area in phase one, we came up with a simple and effective solution to invert phasing,” he says.
They decided to complete phase-three construction elements first, which allowed them to avoid disturbing much of the feeding area. They then created 2 square meters (22 square feet) of new feeding habitat for every 1 square meter (11 square feet) of the endangered area they disturbed to mitigate the remaining risk outside the construction zone. Mr. Dagenais notes that no one has recorded seeing a copper redhorse fish in the area since 2008, but the land is still regulated as a feeding ground for the endangered fish, so they committed to remediation rather than fighting the regulation. “The burden is always on the project owner to demonstrate no harm,” he says. And committing to extra remediation steps is another way to show the port's commitment to the community.
All of these efforts seem to have worked. His team shared the final draft of their project plans with regulators in March, and one environmental regulator remarked that the planning process was a “master class in social responsibility.”
Mr. Dagenais attributes the project's early success to good due diligence and including many voices in the process. “Sound decision making is based on good data and advice, and we surround ourselves with competent professionals to support our project,” he says. “We are port experts, and that means we know our limits. We believe in strong partnerships and look for vendors, suppliers that have similar values.” PM