Twenty-foot-long shipping containers – red, blue, gray, dark green – are stacked six-high along the road running through Shanghai’s Yangshan deepwater port. Towering Zhenhua-brand cranes lift the boxes off barges, while other heavy movers – rubber-tired gantry cranes and reach stackers – arrange them in rows on the spread or load them on the back of trucks.
Shanghai is poised to overtake Singapore this year as the world’s busiest port, handling a projected 30 million standard twenty-foot container units (TEUs) annually. Shanghai’s port – which consists of 42 container terminals at either Yangshan, the newer deepwater facility in Hangzhou Bay, or Waigaoqiao, at the mouth of the Yangtze – saw over 26 million TEUs pass through in 2007.
Popular but problematic
Unfortunately, while TEU throughput is the most popular way to compare ports, it has little else to recommend it.
“[TEU throughput] is a useless piece of information,” said Kieran Ring, chief executive of the Global Institute of Logistics, a non-profit foundation that researches best practices in logistics. “It’s like my car is bigger than yours, but it doesn’t say which is more comfortable or more fuel-efficient.”
There is a basic problem with using TEU throughput to measure port activity: Ports do different things. The Shanghai-Singapore comparison is a prime example. Shanghai largely exports Chinese-made goods that are trucked to the port terminal and loaded on to a barge.
In Singapore, however, around 90% of port activity is transshipment, where smaller feeder vessels gather cargo from shallower terminals around Asia to be transferred onto massive transoceanic ships bound for international ports.
Transshipment results in double-counting because two separate “moves” are performed by quayside cranes – once when unloading and again when loading. Put another way, of Singapore’s 27.9 million TEU throughput last year, only about half that number of individual containers may have passed through its port.
The larger problem with TEU throughput comparisons may be the “bigger is better” logic itself. For shipping companies, calling at the world’s busiest port may be less than ideal.
“If you have a massive TEU throughput that could mean there’s a good chance that you’re going to have to wait for a berth,” said Lee Perkins, CEO of China Intel Group, a logistics consultancy.
Instead, shipping firms may look at berth waiting times, port fees and customs processing. The efficiency of quayside cranes, measured by “moves-per-hour,” is another key metric, according to Simon Ng, a PhD candidate in port development at Hong Kong University of Science and Technology.
A universal standard
One reason TEU throughput has remained the default metric for comparing ports is that, while there are plenty of ways to measure individual aspects of port activity, there has been no attempt to unify them so far.
“The big question is: How do you rate all these factors?” Perkins said.
In February, Ring’s institute and German certification society Germanischer Lloyd launched the Container Terminal Quality Indicator (CTQI), in an attempt to answer that question. It’s an index of 80 measurements to assess terminal operators’ efficiency, acting like an audit of a terminal’s infrastructure facilities, operational standards, ship productivity and other operations. Terminals are certified if they score better than 50%.
Although CTQI’s chances of being adopted globally are by no means certain, Ring says it is the industry’s best shot at a universal standard. “Because CTQI is the aggregated best practice of the best operators in the world, it’s probably a more comprehensive system than anyone has.”
No matter how Shanghai may fare on the new measuring system, at least some shippers are satisfied for now.
“[Shanghai’s port] is world-class, from a service perspective,” said Steve Schollaert, president of Neptune Orient Lines’ terminal operations.