Ports the lifeblood of the economy

Editorial, Normal

The National, Monday August 5th, 2013

 THE success of any economy is dependent on efficient sea port operations.

Imports and exports are moved through the sea ports. 

Trade and commerce flourish on optimal operations of sea ports.

While all maritime provinces boast a wharf, only Port Moresby, Lae and Kimbe port operations are profitable, the PNG Ports Corporation Ltd says.

The others are unprofitable but PNGPCL has to operate them nonetheless. The lack of development of these very important bits of infrastructure since independence is now showing.

Port Moresby and Lae ports have been operating efficiently but quite clearly that has been hardly enough. With major resource developments going on in many parts of the country, the pressure on these ports is enormous.

The corporation reports that this is further exacerbated by the fact that bigger vessels are arriving here as shipping companies’ realise the economies of scale associated with delivering larger volumes of cargoes.

Demand has far outstrip­ped capacity so PNGPCL has had to take important decisions to increase quay space and further increase efficiency in Lae and Port Moresby.

The US$154 million (K334 million) tidal basin development project in Lae is part of this expansion. 

Work is under way to increase quay space in Lae and huge mobile cranes have recently been bought for Port Moresby and Lae ports.

This has resulted in an increase in productivity for vessel loading and unloading and improved ship turnaround times.  

Reducing vessels’ waiting time is excellent PR because its saves costs. The purchase and deploy­ment of mobile cranes and the rubber-tyred gantry cranes allows temporary breathing space, reducing costs to importers and allowing for construction of further quay space to be undertaken with minimal impact and maximum gains.

We understand PNGPCL and Nawae Construction Limited have en­tered into a contract for 

the extension of Berth 3 at Lae Port.

In principle, if larger berths are available, more vessels can use the port in any given period.  

Annual vessel calls will be higher and the corporation will bank more fees.

The existing aggregate berth length in Lae port is 480 metres, which will increase to 597 metres on the completion of the extension to berth 4a.  

On average, there are 55 vessel calls per month for vessels relevant to berth 4a for international and coastal shipping combined.  

PNGPCL estimates that a 24 per cent  increase in berth length would provide for a 24 per cent increase in vessel calls. In numeric terms that is an extra 156 vessel calls annually.

Revenue for Lae in 2011 was K84.75 million from 883 vessel calls, an average of K96,000 per vessel.  Applying this average to 158 more vessels per annum, the corporation is looking at adding another K15 million  to its bottom line.

Although not a direct cost to PNG Ports, the time vessels wait at anchorage due to unavailability of a berth is a cost to shipping companies which is ultimately passed on to customers, or is charged temporarily, such as the port congestion charge about to be introduced by shipping companies in Lae.

Plans are under way to relocate Port Moresby wharf across the bay to Motukea. This will be a major capital infrastructure commitment but it is a necessary cost to create space in anticipation of an increase in revenue. It is incumbent upon governments to ensure that ports in every province are properly maintained and operated efficiently in order ease the strain on Port Moresby and Lae.

Ports such as Rabaul, Madang and Wewak should be expanded.

Lae and Port Moresby bear an unfair burden, while other ports are under capacity or simply do not have the infrastructure to cope.

Madang and Rabaul have natural deep water harbours. There is no reason why they should not be developed.

Lae port is being used as a transit point for other ports. Cargo meant for smaller ports are off-loaded and stored in Lae for transfer to smaller ports. 

If that responsibility could be taken up in Madang which is far more central, Lae’s port would be freed up to grow revenue.