Size does Matter!

Over the years the size of container vessels has increased considerably. This trend started during the late 1980s when the first Panamax-vessels were put in operation.

Panamax¹ refers to the maximum size of a ship that would be able to pass through the Panama-Canal, one of world trade’s most essential infrastructures. However, it was during the 1990s when the size of containers vessels grew to giant proportions (see table 4.4). The post-Panamax generation was introduced in the mid 1990s, resulting in con-siderable changes in the global trade links. Ships on the Europe- Far East trade link in-creasingly made use of the Suez-Canal instead of the Panama-Canal. At the same time, cargo from Asia bound for the United States concentrated on the U.S. West Coast, with a continental land bridge transporting it to the markets in the U.S. Midwest. Nowadays there are even super-post-Panamax vessels in operation, but a number of them are used mainly by the Asian shipping lines to service the Europe-Far East link. But the end is not in sight as the industry is already talking about the next generation, the so called Malaccamax: the maximum size for a vessel to pass through the busy, but narrow Straits of Malacca between Singapore and Sumatra.

1^st Table 4.5: Growth of Containerships (Source: provided by Port of Rotterdam, 2006)

Besides re-arranging trade links, the ongoing enlargement of ships also challenged ports and terminals operators to provide the right infra- and superstructure. The extraordinary dimensions of container vessels dictates that ports need to invest considerably in deep-ening and widdeep-ening their channels, if they still want to be used by trans-oceanic carriers.

1The critical maximum vessel dimensions on the Panama Canal are 32.31 m wide and 294.13m length overall and a draft of 12.04m (Notteboom, 2004). After a referendum-approval in October 2006, the Pana-manian government is going to expand the Canal in such a way to make it accessible for the next generation ocean-going vessels.

Besides deeper and wider channels, ports need to invest in longer quays, and in the hin-terland transportation systems in order to move efficiently and cost-effectively the grow-ing number of containers out of the port. On the latter aspect, ports are highly dependent on the (political) willingness and (financial) possibilities of other actors, particularly railroad companies and government departments, since ports do not have jurisdiction over infrastructure outside the port area nor the capital to upgrade it. The (private) ter-minal operators also are confronted with the scale enlargement of the vessels. They need to invest in higher cranes and in handling equipment to ensure the more rapid handling of containers. The larger and more fuel-economic vessels created substantial reductions in cost per TEU of capacity provided (Notteboom, 2004, p.88).

Shipping Company/ Country of 1 Maersk-Sealand, Denmark 389 1.047 95 502 2 Mediterranean Shipping

13 Hapag-Lloyd, Germany 56 215 8 69

14 “K”-Line, Japan 74 214 15 111

15 ZIM, Israel 93 211 13 66

16 Mitsiu OSK Lines (MOL), Japan

67 205 18 114

17 CP Ships, Canada (part of Hapag Lloyd since dec. 2005)

Table 4.6: Top 20 container carriers in the world (Source: Mainport News, no5, 2005, p5)

4.5 ‘Post 9/11’: Security and Regulation.

The security of seaports and logistical chains has been a major political concern since the terrorist attacks of 11 September 2001 on the World Trade Center in New York and the Pentagon in Washington. Though the terrorists made use of airplanes to launch their attacks, policy-makers and specialists quickly became aware of the vulnerabilities of the maritime sector for acts of terrorism. Already in 2000, the American battleship USS Cole was attacked by terrorists in little boats in the port of Aden (Yemen), leaving 17 American marines dead. Two years later the oil-tanker ‘Limburg” was attacked, again before the coast of Yemen, destroying 90,000 barrels of crude oil. During a suicide at-tack in March 2004 in the Israeli port of Ashdod, 10 persons were killed, when terrorists entered the port through a container.

Seaports are potential targets for terrorists, since they are located near large urban cen-ters and major industrial complexes such as petro-chemical refineries. A successful at-tacked launched in a port with a Weapon of Mass Destruction could make numerous victims. Secondly, ports and containerized traffic are crucial for the world-economy, and a successful attack would have enormous economic costs, e.g. increased fuel prizes and insurance rates or delays in supplies. Containers can furthermore be used to smug-gle terrorists and weapons into the country, or be used as a weapon itself: less than 10%

of containers are actually opened and carefully checked by the appropriate authorities.

According to the American think-tank Brookings Institution (2002), a successful terror-ist attack with a WMD hidden in a container has the potential to make as many as 1 million casualties and would have an economic cost of nearly a billion dollars per day.

This is the worst-case scenario, but the threat is serious enough for the international community led by the United States to pose new forms of regulation to improve the security of ports and logistical chains.

The American Department of Homeland Security (formed after ‘9-11’ and includes the US Coast Guard and the Customs Department) has taken the lead in imposing new regu-lation in the form of the Container Security Initiative (CSI) and the Customs Trade Partnership Against Terrorism (C-TPAT). The first regulation encompasses a range of measurements, most notably ‘pre-screening’ of cargo before it reaches U.S. seaports. In order to do this, the Department of Homeland Security approached a number of foreign ports to participate, which implied that they must allow American inspectors into their jurisdictions. Participating ports are furthermore obliged to map and submit their exist-ing security situation to the U.S. Customs. Not participatexist-ing will have serious conse-quences, since the port would then not be allowed to handle ships and cargo bound for the United States. This is why the European Commission initially expressed its concerns about the bi-lateral agreements between the United States and some European seaports.

The issue was resolved in April 2004 when the EU and the American government agreed on the implementation and coordination of port security instruments and

initia-tives such as CSI. In 2005 some 37 ports worldwide were participating in CSI, includ-ing the major ports such as Rotterdam, Antwerp, Dubai, Sinclud-ingapore and Hong Kong.

The Customs Trade- Partnership Against Terrorism is another anti-terrorist initiative taken by the American Department of Homeland Security. Whereas CSI is directed towards foreign ports, C-TPAT is aimed at the security of the entire global supply chain.

It involves a voluntary cooperation between all kinds of private parties involved in the international transport of goods (e.g. shipping lines, importers and exporters, terminal operators, truck companies, shippers and their agents) and U.S. Customs through the exchange of information. Firms participating in C-TPAT need to submit the physical (e.g. gated storage) and procedural (e.g. the registration of personnel and cargo owners) security measures, which they have implemented to the US Customs, who can grant the firms certificates. The certificates provide firms with some incentives such as less in-spection at the American border. In 2005 some 7400 companies are associated with C-TPAT.

The United Nations’ International Maritime Organisation (IMO) has also taken action to improve supply chain security, in addition to the rather one-sided initiatives taken by the American government. The International Ship and Port Facilities Security Code (ISPS) has been created in December 2002 as an additional regulation (XI-2) under the 1980 International Convention for the Safety of the Seas (SOLAS). The ISPS has been adopted by the member states of IMO in 2004. The code forms a standard set of security measures to which individual ports and shipping lines need to comply if they want to be internationally recognized as responsible agents. This was followed by actions of the World Customs Organisation, an intergovernmental organization of custom departments from 166 countries. In June 2005 it launched the “Framework of Standards to Secure and Facilitate Global Trade”, a list of 17 actions that national custom departments at a minimum can do to secure the global supply chains and ports, while taking into account the interests of international trade. We witness an increased global political concern for the security of ports and supply chains, resulting in new forms of international regula-tion.

Addressing an international agenda is one thing, implementing it is another. Even in the United States, where the federal government has taken the lead in mobilizing agents and coordinating appropriate actions, and where the political momentum for investments in port security was most evident, there are still conflicts between state agencies about financing and implementing the security agenda. For example, in 2004 the port of Los Angeles addressed the lack of financial support for port security measures to the state and federal governments (UNCTAD, 2004). Also outside the U.S. there remain ques-tions about effectiveness of the measures. We can seriously question the capacity to

secure appropriate security actions in some vulnerable regions such as the Middle East, India, the Caribbean and Southeast Asia (Jacobs, 2006).