Port efficiency

Steveco’s sales director Ville Kuitunen pointed out on LinkedIn last week that none of the ports owned by Finnish municipalities load or urload ships in the night shift.

When I read academic studies on port efficiency, almost all the studies are about container ports, and usually the speed of container handling. This is a narrow perspective: the ports are very different, some do not handle containers at all, and the goals of the operation may not even depend on this single operational activity.

In a recent article, Professor Jing Zhang and his research partners analyzed almost three hundred studies measuring the efficiency of ports. They divide the efficiency of ports into three categories: efficiency from the port’s own point of view, efficiency from the port user’s point of view, and efficiency from a societal point of view. By far the majority of the studies found deal with the port’s efficiency from the port’s own perspective.

Port efficiency from the port’s point of view

Efficiency from the port’s own point of view means how much the port handles cargo in relation to its investments, i.e. the use of machines or personnel. The port’s own efficiency is measured by tonnage or units, revenues or profit. These are the indicators that you can see in the ports’ annual report, and they report to their owners, i.e. usually to the municipality.

A significant moment for me when thinking about the port’s productivity was when almost 30 years ago we conducted interviews about the effects of a small Finnish port on its stakeholders. I was given the task of interviewing municipal decision-makers. One of them said that the role of the port is to generate rental income for the municipality. The bigger the port area is, the more rental income you get from it, i.e. the more important the port is to the municipality. It doesn’t matter what happens in the port: how many ships arrive, what services are offered and what the customer satisfaction is. After this call, I probably could have been blown away with a feather. Later, I have come across a similar comment several times when talking with municipal decision-makers, and sometimes also with port managers.

Port efficiency from the user’s point of view

From the user’s point of view, the efficiency of the port is the speed of cargo handling and ship turning. The less time a ship or truck is waiting in port, the more service rounds it can do in a year and thus generate profit for its owners. Especially recently, when the price of fuel has risen – and it is expected to continue to rise – ships have tended to sail slower at sea than before. In this case, the speed of loading and unloading, and the minimization of waiting times have become increasingly important.

I personally notice this every week when my Tallinn ship spends only 45 minutes in the West Port instead of an hour. This 15-minute time saving is significant on the short trip from Helsinki to Tallinn. The ship is able to travel more slowly and save considerably on fuel costs.

Steveco’s sales director Ville Kuitunen raised a significant point on LinkedIn last week. None of the ports owned by Finnish municipalities handle ships in the night shift. Ships have to wait hours at worst for cargo handling. This naturally causes shipping companies a significant loss of earnings. They don’t make it to their next sail when time is wasted waiting.

An effective example from recent history

The speed of loading and unloading is also significant from the port’s point of view. I personally had my biggest learning experience on the matter already two decades ago: it had been decided to move the port of Sompasaari in Helsinki to Vuosaari, but the construction project went beyond the schedule. All the calculations showed that Sompasaari’s capacity was full and it would not be possible to transport any more cargo through it. Still, the port’s cargo volumes increased by a few percent from year to year.

How was this possible? When there was no space, the goal was to get the cargo out of the port as quickly as possible. Bulk cargo moved to large units: trucks and trailers. The truck drivers were informed by text message when their trailer had been taken out of the ship and was available for pickup. The driver arrived exactly at the right time at the port gate, picked up the trailer from the agreed place and drove out. At best, this happened in seven minutes without waiting. The port of Sompasaari did not have to limit the number of ships passing there due to the lack of space in the port yards. Now, 20 years later, the same efficiency is still not possible in the port of Vuosaari – with modern equipment.

The efficiency of the port from a social point of view

From a social point of view, the port’s efficiency can be measured in terms of staff well-being, energy consumption or traffic volumes. Or how well the port serves industry or consumers. Several ports have made various regional economic reports, which state that ports have a significant impact as a source of employment and as a supplier of industrial or consumer demand. Taxes generated by the port directly and indirectly are also considerable.

Recently, there has been a lot of talk about the operation of ports as both a digital hub and an energy hub. How does the port provide information to the different parties in the transport chain and thereby improve the operation of the entire transport chain?

In the ongoing fight against climate change, ports play a very important role. They will be responsible for the import, export and distribution of new carbon-free fuels for both ships and trucks.

At the moment, the key issue in the development of ports is probably also whether they will be able to provide sufficient charging infrastructure in the future when both sea and land-based fleets are electrified. Is the municipality around the port ready to build the required electricity networks?

What about the port’s efficiency from the point of view of the residents of the surrounding area? Could the port also be useful from the comfort point of view? Yes, that’s what I discussed in my June blog.

The article was previously published in Finnish in Navigator Magazine, an online magazine for maritime professionals, on November 1st, 2024.