Hutchison Ports aims to take half of Thai traffic

May.08 2018

Hutchison Ports Thailand will invest 20 billion baht in Terminal D at Chon Buri's Laem Chabang commercial port in a bid to serve close to 50% of port traffic in the country in the next 5-6 years.

The three-phase project is scheduled to be completed in 2023-24. Once the project comes online, Terminal D will be able to accommodate 3.5 million twenty-foot equivalent units (TEU), which will represent a 40% capacity increase in Chon Buri's Laem Chabang port, the largest in the country.

Hutchison Ports Thailand, a subsidiary of the Hong Kong-based conglomerate Hutchison Group, already services close to 33% of the country's 8.3 million TEU a year. The company operates terminals A2, A3, C1 and C2 at Laem Chabang commercial port, operating close to the maximum capacity of 2.9 million TEU.

The addition of terminals D1, D2 and D3 will help the company corner 50% of the market, assuming they operate at full capacity.

"We should be operating at full capacity even in the years immediately after the opening, according to our projections," said Stephen Ashworth, managing director of Hutchison Ports in Southeast Asia.

The company logged a 16% volume increase last year and has achieved an average growth of 14% in the last six years, which would put it on the 6.4-million-TEU ballpark in the next five years.

The company's growth in Thailand has far outstripped that of the market, which increased from 6.5 million TEU in 2011, to 8.2 million TEU in 2016, an average annual growth rate of 4.7%, according to data collected by the World Bank.

The port plan was designed before any concrete plans for the Eastern Economic Corridor were announced, but Mr Ashworth said the development of the EEC will tip the projections for the port only slightly.

"We would have reached capacity even if the EEC did not turn out as expected," he said.

The completed project will include 1,700 metres of berths, 43 yard cranes and 17 remote control quay cranes able to handle some of the largest ocean-going vessels.

The initial phase of Terminal D, expected to be operational by mid-2018, will comprise 400m of deep-water berths, three super-post-Panamax quay cranes and 10 supporting electric rubber-tyred gantry cranes.

By mid-2019, phase 1 of Terminal D will be completed, representing a total of 1,000m of berth, six quay cranes and 20 supporting electric rubber-tyred gantry cranes.

The added capacity will allow Laem Chabang to serve larger vessels used in transpacific trade, making the port a potential for international shipping lines.

"Where smaller vessels once arrived at Laem Chabang port after picking up containers from much larger 'mother' vessels at the transshipment hubs of Singapore and Malaysia, we now have shipping lines requesting direct access to Laem Chabang, deploying much larger deep-water vessels that are larger than 350m in length," he said.

A number of international stakeholders have expressed interest in developing Chon Buri into a shipping hub, according to the executive.

"Alibaba plans to team up with the Customs Department to make the clearance processes digital to service shipments between Thailand, China and our neighbours."

Smaller neighbouring countries like Singapore (31 million TEU), and Malaysia (25 million TEU) still carry the bulk of the region's containers, which suggest at least some of those containers could be handled in Thailand once the infrastructure is in place.

Terminal D will be the first port in Thailand (and one of the first ports in the world) to use remote-operated cranes, which Mr Ashworth said will allow them to serve ships up to 20% quicker. Some of the company's Middle East facilities are already using the technology.

The port will also integrate a mobile application for port users and e-tracking systems.

These technologies allow ports around the world to handle larger cargo volumes in the same amount of space at a lower price.

In Germany, for example, the port at Hamburg plans to double its capacity, but not space, by 2025 through smart port technologies, according to consulting firm Boston Consulting Group. GPS monitoring systems that track traffic and machinery use, like the ones planned for Singapore's port can reduce costs by up to 10%, according to the consulting firm.

The executive parried insinuations that the model was meant to slash the workforce, a trend that has already gained traction in a host of industries in Thailand, from manufacturing to telecom and banking.

Terminals A and C will still be operated under the traditional labour-intensive model for the foreseeable future, he said.

"In fact, we are hiring. We need people to remote-control the cranes, people to conduct the training, and people to handle the increase in traffic."

Mr Ashworth declined to comment whether the company would bid on the auction of the 141-billion-baht third expansion phase of the Laem Chabang port in October.

"We are looking to analyse the project on its merits," he said.

The megaproject, expected to be in operation by 2025, would expand the port's capacity from 7.7 million TEU to 18.1 million TEU per year, and will include a railway network linked to the port.

Hutchison Ports will be adding Terminals D1, D2 and D3 at Laem Chabang Port, which is the largest port in Thailand.

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