Container chain will handle bigger ships: Scurrah

By: Rob McKay


DP World Australia boss says trend is under way but sector will rise to challenge

Container chain will handle bigger ships: Scurrah
Paul Scurrah foresees initial teething pains

 

The Australian container supply chain is definitely coming under increasing pressure as more higher-capacity containerships call but stevedore chief Paul Scurrah believes it can overcome the challenge.

As DP World Australia (DPWA) MD and CEO, Scurrah has a direct exposure to such issues, with his firm the link between global container shipping and the landside container logistics sector.

This situation hit home in recent weeks, with ship bunching episodes in Melbourne and Perth testing its terminal systems and the patience of those with carriage, responsibility and control of the containers themselves.

Ship bunching is a function mostly of containership sailing patterns and interruptions and the ship arrivals were impacted by weather and other maritime events outside the company’s control.

Given the tightly interrelated nature of full and empty container handling between stevedores, transporters, freight forwarders and container parks, any disruption can see punitive container demurrage bills flying around outside the terminal gates.

Such issues are magnified in the peak season lead-up to Christmas.

Scurrah insists DPWA throws extra resources at shifting the extra loads on the rare occasions when things go wrong.  

"It shouldn’t surprise anyone in our industry that scheduling and operational challenges occur for various reasons and particularly this time of year volatile weather is less predictable and that played a role recently," Scurrah says.

"Delivering perfection is one of those things I don’t think everyone expects – what they do expect is, when these challenges are onus, the effort to recover … is of the highest quality."

Still, the fact of ship bunching is exacerbated by their growing size.

Unofficial Port of Melbourne figures put average ship capacity in twenty-foot equivalent units (TEU) in 2004-05 at 1,500-2,000 TEU, while in 2014-15, 52 per cent of ships calling were 4,000-5,000 TEU.

"There’s no doubt what’s happening in the shipping industry globally [will have] a flow-on effect to what happens in our market," Scurrah says.

"Larger vessels than our market can support are being forced into our market."

This is because it’s better for container shipping lines to use higher capacity ships that are cheaper to operate than older, smaller ones.

In their shoes, Scurrah would do the same but he does not believe the hurdle is insurmountable.

"As an industry here, we are geared up to handle it," he says.

"But as it’s happening fairly rapidly and we are seeing a fairly steep increase in larger vessels, here are inevitably going to be a few teething pains.

"But I don’t think they are going to be permanent. I think our equipment is capable and our processes will adapt pretty quickly."

That said, he sees a demand and terminal capacity barrier against ships of more than 8,500 TEU "for quite some time" and even then they will only be 10-15 per cent of all visiting ships.

Added to that, with the Australian Competition and Consumer Commission’s Container stevedoring monitoring report 2015-16 report noting that stevedore revenues are at a 17-year low, "there is really no business case that any of the stevedores can put forward" to invest in larger equipment.

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