June 24, 2018

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Centre of activity: APM Terminals Bahrain

Mark Hardiman, APM Terminals Bahrain
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In June 2017, 17 shipping container terminals run by APM Terminals was hacked, including two in Rotterdam and other 15 in different parts of the world. APM Terminals is part of Mærsk Group, operating a global terminal network of 72 operating port and terminal facilities and 140 inland services operations, employing 20,600 people across five continents.  Headquartered in The Hague, Netherlands, APM Terminals ranks third globally in container throughput by equity-weighted market share.

In 2006, APM Terminals formed a joint venture with YBA Kanoo Holdings to operate the port establishing APM Terminals Bahrain.  It’s multi-purpose facility is designed to handle one million twenty foot equivalent unit (TEUs), providing state-of-the-art logistical solutions. Container operations commenced 2009 after the Khalifa Bin Salman Port (KBSP) was built on reclaimed land at Hidd, west of the capital of Manama, replacing the older Mina Salman facility. The port currently features four STS cranes with a container outreach of 18 rows, capable of handling vessels of 10,000 TEUs capacity with an annual throughput capacity of one million TEUs.

Mark Hardiman, managing director for APM terminals Bahrain, remarks: “The operations in Bahrain is on a concession basis from the Government. We have a 25-year concession from the Bahrain Government to operate the port.”

When APM Terminals was hit by a large-scale cyber-attack on its systems, including those of the KBSP’s operating company, Hardiman mentions that the operator has taken all precautionary measures and procedures and activated the alternative contingency plan to deal with the current situation. “It was a large-scale cyberattack that affected the whole group. What we did in Bahrain was to set up a very good contingency plan and revert to manual operations until we got our systems back and running. We were quite well-versed and as a result, never delayed any vessels. Yes, there was a bit of a delay in getting the gates operational but that was only a day and half to lose.

Mark Hardiman

“We saw a bit of a reduced productivity due to the manual operations as compared to the system-driven ones, but atleast we were able to keep things up and running. There was delays to the cargo, but it was minimised with what we had at that point of time. It was an unfortunate event but it’s the kind of world that we live in now. Cybersecurity is paramount for everybody.”

The operating company coordinated with the Ports and Maritime Affairs and set up a work team to conduct the port’s operations, according to the alternative plan, he said, adding that work went on normal at all berths regarding the reception of ships carrying general cargo and container ships, as well as the handling of cargo to and from those ships.

In June 2017, the operator marked a milestone with the arrival of the largest container ship ever to call the KBSP). Orient Overseas Container Line (OOCL) Singapore had an overall length of 366.469m and a capacity of 13,208 TEUs.

Hardiman remarks: “It is the biggest that we have handled so far. There are bigger vessels in service, but this was our biggest one. At the moment, we are running up to 40-50% of our vessel capacity, so there are no plans to upgrade currently. Obviously, the dynamics of the shipping industry has changed.”

Commanding bigger capacity is not commercially justified, and hence Hardiman points out that they will settle with the current capacity for some time now. “We have got the biggest vessel now and my feeling is that we will settle with that for some time now. From the commercial side as well, it doesn’t justify for the shipping lines to bring in bigger vessels because it is not economical if they are empty. At this point, there are no plans of doing massive expansion.”

In April 2017, APM Terminals Bahrain announced plans to launch a new general cargo terminal operating system (GC-TOS) to optimise operational efficiency and customer experience. The new system, which will initially focus on digitising KBSP’s maritime services followed by general cargo and billing, will be key to driving greater transparency and turnaround times, resulting in faster and efficient cargo flow at the Kingdom’s world-class commercial port.

The implementation of the GS TOS is a critical first step by APM Terminals towards digital transformation to improve the management data between the port, cargo owners, shipping lines and other stakeholders. With this, the planning capabilities of the port will get enhanced through a centralized information portal including cargo booking and movement, documentation, pre-arrival notifications to name a few. This will further facilitate immediate improvements in terminal productivity and customer service.

Hardiman says: “The rapidly changing maritime landscape calls for continuous investments and transformations in port operations and logistical solutions, to satisfy customer requirements and growing general cargo volumes. Integrating digital solutions into our trans-shipment operations will help catalyse the collaboration and coordination among the many stakeholders and help us to manage activities at the quay, yard and gate.

“Most importantly, it will maximise efficiencies for the entire supply chain providing stakeholders real-time data and insights, transparency and reliability; creating business value for them. This will further increase port’s competitiveness helping KBSP achieve its ambition of becoming the region’s leading trans-shipment centre of the Upper Gulf.”

Hardiman opines that 2017 was a comparatively good year than 2016. “2017 has been good. We had a bit of a disappointing 2016 but we had a good 2015. In 2015 – 2016, the container volumes grew marginally, around 2-3%, which was actually not bad. In 2017, we had about 7% increase from 2016.

“The big hit that we took in 2016 was from the general cargo side because we are not handling only containers but other things as well. We witnessed a 45% drop in the general cargo volumes from 2015-2016. In 2016-2017, we had around 25-30% increase in the same.”

He also adds that owing to the major number of infrastructure projects that are underway in Bahrain including the BAPCO Sitra Refinery expansion project, Alba Line 6 expansion project, and the cargo coming in for the new Mondelez factory, have stimulated containerised and non-containerised volumes for the operator. “We have a lot of cargo in the yard coming in for these projects and it has been good for us.”

In 2018, Hardiman predicts that there will be probably a good amount of consolidation among the shipping lines. “We might see some changes in the market dynamics and the trans-shipment volumes. There is a lot of overcapacity in it.”

Hardiman mentions that it has been a challenge to compete in the trans-shipment market. “We try to capture some of the Northern Gulf. It is a challenging market due to the overcapacity. The issue with Bahrain is that we are little bit further into the Gulf. What we are try to do is focus all our efforts on the target volumes that we are looking for.

“Our value proposition is very much around the fact that we are a bit closer to Kuwait and Iraq, so the time for a feeder vessel to go from Bahrain to Kuwait is less than to turn around and come as compared to go to Southern Gulf and come back.”

In 2017, the operator had announced plans for an Initial Public Offering (IPO), but Hardiman says that it didn’t materialise because of the challenged local market. “The situation was not very conducive for the IPO. We have been in discussion with the Bahrain government to fulfil the obligations that we have as APM Terminals Bahrain in a different way. We are in the process of finalising the deal around in Q1 2018, but not in the form of IPO.”

Hardiman says that there will be probably mid-single digit increase in terms of container volumes. He concludes: “There will be an increase for both containerised and non-containerised volumes. We are very optimistic about 2018. The infrastructure projects are stimulating the economy, which in return, means improved volumes for us.”

 

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