Global giant sails into PNG

THE world’s largest container shipping company is muscling into Papua New Guinea. Yet overcoming the infamous delays in PNG’s ports will not be an easy feat.
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Published in the *October 2011 PNG Report magazine

Last month* the Australia Papua New Guinea Business Council estimated that the rate of container discharge in PNG's ports was more than six times slower than in Singapore.

But this is only one of the inefficiencies it identified, as productivity is also hindered by other delays with customs clearance, quarantine processes, the slow transmission of documentation and problems moving cargo from the port to targeted destinations.

Ultimately the ongoing issues at the nation's ports create additional costs to PNG businesses, impact the country's growing export industries and can even add to inflation because many critical goods are imported into PNG.

While the APNG Business Council will continue to lobby for more improvements, container shipping giant Maersk Line has identified another business opportunity.

Maersk has recently started a fortnightly service to PNG that connects to its global network through the Malaysian port of Tanjung Pelepas to Port Moresby, Lae and Madang.

This move is targeting both dry and refrigerated containerised cargo demand. Maersk expects there will be significant growth in PNG's container market over the next five years.

"Maersk Line is world renowned for delivering cargo on time and our goal is to bring the same service integrity to PNG as we have to the rest of the world," Maersk business development manager Len Phillips told PNG Report.

"We aim to provide the most reliable sea freight operation in the market, allowing importers and exporters to control their supply chain and reduce their inventory cost."

On the timing of Maersk's market entry, Phillips said a lot of opportunities were opening up for importers and exporters, driven by the resources boom and PNG's reputation for pristine food stuff production.

Maersk is not deterred by the challenges of operating in PNG either.

"Over the last few years, Maersk Line has been through extensive shipping development in areas outside the traditional global shipping lanes," Phillips said.

"Most of these areas offer unique logistical challenges similar to PNG and the solution usually takes the combined efforts of all players in the supply chain.

"The large project developments happening in PNG at the moment have placed a strain on the industry. Maersk Line will continue to work with all players in the logistics field to improve the services across the board for importers and exporters, by creating partnerships that will benefit the market as a whole."

While he recognised that ports in PNG were investing more capital to help overcome ongoing issues, Phillips said more could be done by all players in the country's supply chain.

"Port delays do add costs to shipping operations, and improvements in getting vessels to transit through ports allows lines to look at servicing more ports in a vessel rotation," he said.

"The ongoing benefits for all parties come in the cost savings created by service integrity and the increased robustness of supply chains."

State-owned PNG Ports Corporation did not seek to comment on ports issues to PNG Report but it is modernising facilities with the introduction of international-standard rubber tyred gantry cranes at its major ports in Lae and Port Moresby.

The 31.75m high gantries will vastly improve container stacking, which was previously limited to just three containers high courtesy of a fork lift.

PNG Ports chief executive officer Brian Riches said the gantries, with three planned for Port Moresby, would more than double the present storage capacity.

An international terminal operating system will also be introduced to Port Moresby, which will finally replace the manual recording processes previously used for all international cargo.

While these welcome steps will reduce truck transport costs and will yield delivery improvements, further port productivity gains could largely rest on the decisions of the new coalition government led by Prime Minister Peter O'Neill.


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