Strategy at Seaports Is Key to Handling Capacity Challenges

Strategy at Seaports Is Key to Handling Capacity Challenges

By Candace Gibson

On any given day, the hustle and bustle of a seaport is devoted to the purpose of bringing in vessels, loading and unloading cargo/passengers, provisioning the vehicle and getting those vessels back out to sea as quickly as possible. The premise sounds simple enough, but providing sufficient capacity in a challenging global competitive market is a complex issue.

Seaports must develop strategies and evolve their infrastructure to accommodate growing volumes of cargo and passengers, as well as oversized or special types of cargo. They must build collaborative relationships with the municipality in which they operate to fulfill their obligations as an economic and community steward – not to mention finding common ground with surrounding businesses and environmental interest groups. And, of course, seaports have to maintain tenant contracts and seek new agreements to guarantee their financial success. What this all means is that seaports, regardless of size, are establishing themselves as solutions-focused, unique entities with offerings beyond receiving or exporting cargo.

“If you’ve seen one port, you’ve seen one port,” sums up Blair Garcia, vice president-director Ports & Marine Division, Parsons Brinckerhoff. The images of a delicate snowflake and a seaport filled with large vessels and cargo couldn’t be more disparate, but allow the comparison. Every seaport’s ultimate customer is the beneficial cargo owner. While every seaport aims to work as quickly as possible, they all offer something uniquely different. Location. Storage availability. Customer service for high-end clients. Safety. Access for cruise or ferry passengers. Each seaport addresses capacity challenges differently. And their response is what guarantees success.

In an industry where vessels are getting bigger, and economic ebbs and flows constantly alter the volume of cargo, ports are expected to adapt. Acquiring water and land is not an easy feat, so ports must find other ways to handle increased capacity, both in terms of the ships bringing in the cargo and the cargo itself. As for the challenge of getting the cargo out of the port? That depends on what entity is transporting it: rail, truck or perhaps even a smaller sea vessel. For cargo that can’t be unloaded as quickly — bearing in mind that a large liner could take hours or even days to unload — the port must find an interim space for large, valuable, perishable or multitudinous cargo.

One answer to capacity challenges is deepening or widening a seaport’s navigation channels. Getting funding for these projects can be a decades-long endeavor. When seaports are approved for project funds, the secondary challenge is ensuring that those funds are used for their intended purpose. A more immediate (and make no mistake, there is nothing truly “immediate” about altering port infrastructure) solution is reforming the facilities, equipment and operations of the port itself.

Garcia’s work as a planning and engineering consultant involves him in both the preliminary and master planning of port facilities, he explains. Investors considering the purchase of port assets rely on Garcia and experts like him to explore the infrastructure, equipment and operations of a port and to determine how it could run more efficiently and effectively. In part, that requires reassessing how the current space is being utilized. It also means considering what new facilities and added cargo-handling equipment could improve those utilization rates.

A port makes plans based on the clients it is serving and what markets it is casting its eye toward for the future. Financially healthy ports are always considering ways to handle capacity challenges and promote productivity. Keeping the existing contracts and capturing new ones depends on efficient solutions for limited space — and no port would admit outright its space is limited, of course. Beneath the placid surface of the sea, there is a flurry of activity devoted to improving the long-term vision of a port without disrupting its current operations.

Conversing with Garcia, it becomes clear that assessing efficiency at ports means determining the purpose of every component part. Does every physical structure serve its purpose to store cargo or corral passengers? Does every operational guideline serve the purpose of loading and unloading ships? Does every crane, forklift or other piece of equipment contribute to cargo-handling? Do the port’s finances weigh equally its operational costs and its future ventures?

Randa Coniglio, president and CEO at Port of San Diego, offers an example of this assessment in action. The Port of San Diego comprises two terminals: the National City Marine Terminal and the Tenth Avenue Marine Terminal. “At Tenth Avenue, we have some very outdated infrastructure,” Coniglio says. She explains that under-roof storage areas were necessary when San Diego imported paper for newspapers, but now, most of the port’s cargo needs open space. The Port of San Diego has a $10 million TIGER Grant that will be used in part to demolish these obsolete sheds. Not only will the demolition create more space for roll-on/roll-off cargo, it will also continue to distinguish this port as a destination for unique cargo — the kind that does not fit on pallets or into crates or containers. “San Diego is known to be able to handle specialty cargo,” Coniglio says. “We’re always looking for areas to handle those items, and we’ve developed operational expertise and a high level of customer service to deal with this.” Some of these specialty items include windmill blades, ship propellers, yachts and even fermentation tanks for local breweries.

Growth is exciting to seaports, but it also connotes congestion. Depending on a port’s tenants, cargo volume may expand more quickly than the port can respond. Accommodating volume goes beyond storage space; it also requires the manpower to fuel the cargo-handling process and ensure controlled, well-timed efforts to transport the cargo away from the port. Any broken links in the chain of efficiency mean delays ushering in the next vessel, and the inefficiency compounds from there. Timeliness matters because, as Garcia points out, the majority of freight coming into the United States comes through seaports. Smooth operations at a port have a ripple effect: other businesses get their goods on time and their operations continue smoothly, too.

Despite the importance of U.S. seaports, parties competing for land and water occupied by the ports are not always willing to concede property without a fight. In San Diego, Coniglio is well aware of this kind of capacity challenge. “There are competing demands for the valuable waterfront property in San Diego,” she explains. “Hoteliers and municipalities want it for revenue-generating businesses and public access. We can’t grow more in terms of acquiring more land, so we have to deal with the limited footprint that we have.” San Diego is just one port striving to thrive symbiotically with nearby — very nearby — hotels and tourism. A new high-rise luxury hotel offers a view of port activity from its windows, and in a nod to the Dole Fresh Fruit Company, a major port tenant, the bar serves a banana-flavored cocktail.

The forward-thinking port that can balance multiple parties’ interests and see itself as an expert in strategy in addition to being an expert in cargo-handling will succeed when faced with capacity challenges. Garcia emphasizes that a port’s strategic planning to capture and serve its customers, also relates to master planning, “where you quantify the strategy into equipment, infrastructure and operating improvements.” As ports prepare spatially and financially for these capital investments, they might allow 20 or 30 years for such a plan. “Then, they go back on an annual basis to review, evaluate and update the plan, or adjust their direction or course.” Ultimately, a steady eye on port operations and an honest assessment of how nimbly those operations can be improved make all the difference when a port is called upon to handle exceptionally large, exceptionally numerous or exceptionally unusual cargo.