KEYNOTE SPEECH BY MR ANDREW TAN, CHIEF EXECUTIVE, MARITIME AND PORT AUTHORITY OF SINGAPORE ON THE "NEXT GENERATION PORT 2030" AT THE SMI FORUM, 22ND OCTOBER 2015, 0930AM, THE STAR GALLERY

22 October 2015

Mr Teo Siong Seng, Chairman, SMI

Mr Heng Chiang Gnee, Executive Director, SMI

SMI Governing Council Members

Distinguished Guests

Ladies and Gentlemen

Introduction

Good morning. It is my pleasure to be here today to share the Maritime and Port Authority of Singapore (MPA)'s plans for the Next Generation Port (NGP) 2030 and prospects for maritime R&D for Singapore.

Strategic Landscape

We have seen an unmistakeable shift in the global economic centre of gravity towards Asia, with the rise of China and India and growth of intra-regional trade in South East, East and North Asia. Accompanying this shift has been the growth of seaborne trade. According to the latest UNCTAD Review of Maritime Transport 2015, the developing economies' share of world container port throughput increased to more than 70% in 2014. With Asia accounting for about 70% of global container throughput handled by the world's top 30 container ports, it is therefore not surprising that nine of the world's 10 busiest container ports are in Asia.

According to IMF, global economic recovery is expected to continue in the medium term. Around 80 per cent of global trade by volume and over 70 per cent of global trade by value are already carried by sea and handled by ports worldwide. While we may face some headwinds in the near term, as more emerging economies become intertwined in the global system, we can expect that economic growth will be driven by growth of the middle classes in these major developing economies.

Key Structural Changes in the Maritime Industry

In recent years, the maritime industry has undergone significant structural changes. Vessel capacity grew at an accelerated rate: from the 6,000 TEU ships in the mid-1990s to 10,000 TEUs in the mid-2000s to the current 19,000 plus TEUs capacity. Shipping lines are acquiring bigger ships for long-haul route to exploit economies of scale, by lowering the unit cost. Based on current ship orders, these ultra large container vessels are here to stay and are only expected to get even bigger in the decades ahead.

As the number of mega vessels grows, filling up these ships have become critical especially during this period of excess capacity and depressed freight rates. Shipping lines have therefore formed vessel sharing agreements to share resources to reduce operating costs, maximise slot utilisation, maintain regular sailings and schedules, extend their geographical reach and strengthen their bargaining power. These arrangements have evolved into the big four mega alliances today, namely, the G6, CKYHE, Ocean Three, and 2M. These four mega alliances are expected to dominate the major East-West trade routes in the foreseeable future with 98% of their deployed capacity on the Far East - Europe trade[1].

Major Port Developments

In response, regional hub ports are taking steps to upgrade and build new facilities and improve their service levels to ensure that they continue to be relevant and competitive to attract the mega alliances. Let me share some of these major port developments.

Next door, the Port of Tanjong Pelepas (PTP) in Malaysia has grown from two shipping lines in the early 2000s, to now serving 26 shipping lines including Hanjin, CMA-CGM, 'K' Line, and CSCL. In the past two years, PTP has expanded its annual handling capacity by 25% and purchased new equipment to handle Maersk's Triple-E mega-vessels. To enhance efficiency and environmental friendliness of the port, PTP is in the midst of converting all their RTGs to electric operation. We understand that PTP has plans to deepen its navigational channel and to increase its capacity to 15M TEUs in the next five years.

Over at Port Klang, its two main terminal operators, Westports and Northport, are embarking on upgrading plans. Westports plans to add capacity to enable it to handle up to 16M TEUs in the next 10 years. Northport will upgrade its current facilities to handle ultra-large container vessels and increase its container handling capacity to 5M TEUs in the next three years. Plans have also been unveiled for a new third terminal at Port Klang with an annual capacity of 30M TEUs to meet the demand in transhipment containers.

Further afield, Yangshan Port, which is part of the Port of Shanghai has 16 container berths handling over 15M TEU in 2014. Its new Phase 4 development will be equipped with Automated Guided Vehicles or AGVs to reduce manpower needs and increase yard productivity. In the longer term, Yangshan Port is expected to gradually gain market share and to be developed as a transhipment facility. However, the port faces tough competition from the nearby Port of Ningbo-Zhoushan, which is also developing its transhipment potential.

In Korea, the New Port of Busan is already deploying automated yard cranes in about 60% of the port. Development plans include an additional 16M TEU capacity, deepening the navigational channels and getting ready LNG bunkering facilities by 2018. Busan has also announced their intention to build a new mega-terminal capable of handling vessels up to 24,000 TEUs in size.

In Europe, the Port of Rotterdam is a pioneer in automating container terminal operations. For its new container terminals at Maasvlatke II, the Port of Rotterdam Authority has set requirements on the terminal operators in terms of sustainability and efficiency. As a result, the new APM's Maasvlakte II terminal is the world's first container terminal to use remotely-controlled Ship-to-Shore quay cranes, in addition to AGVs and Automated Rail-Mounted Gantry Cranes, and has claimed to be a zero-emission container terminal. To reduce the waiting time between the AGVs and the cranes, the AGVs used are a new generation of Lift-AGVs, which allow the quay cranes to place the containers onto the wharf for the AGVs to pick up later and for the AGVs to place the containers at the sea-side ends of the container yards for the yard cranes to pick up later, thus freeing the equipment to continue with it next work cycle. The Port of Rotterdam Authority's sustainable port development strategy also involves setting up a network of electronic noses (eNoses). These are compact instruments that measure changes in air quality and send the information wirelessly back to a central control room. By 2016, more than 250 eNoses will be deployed at various locations around the port.

These examples illustrate that hub ports globally are transforming themselves and investing in new infrastructure and technologies to enhance their efficiency and effectiveness. Singapore cannot afford to lag behind these developments and as we plan ahead, we too need to rethink our approach to port development.

Preparing for the Future

Since the 9th Century, the Port of Singapore was already a major trading hub along the Maritime Silk Road, and by the early 20th Century it was one of the most important ports in the region. In the 1970s, the Port of Singapore made a visionary decision by building the container berths at Tanjong Pagar to be the first container terminal in Southeast Asia. This was followed by the development of Keppel Terminal and Brani Terminal in the 1980s and the 35M TEU capacity Pasir Panjang Terminal from the late 1990s onwards. The Port of Singapore is now the busiest port in the world in terms of gross tonnage, the top transhipment container port in the world, a top bunkering port and a major marine and offshore engineering centre, among others.

Our current advantages of a strategic location, good connectivity (connecting to more than 200 countries and 600 ports) and high service levels have contributed to the current successes but may not be a guarantee that the Port of Singapore will remain competitive in future. We also have challenges that other ports may not have, such as land and sea space constraints, higher costs relative to the region and manpower constraints. At the end of the day, the container terminal is part of a larger international maritime logistics supply chain. We cannot just deliver world-class service to shipping lines in isolation. To stay relevant over the next 10, 20, 30 or even 50 years, we need to deliver world-class service to all our customers - which is why we have put in place the Next Generation Port 2030 initiative or NGP 2030. MPA as a port regulator, planner and promoter, will need to work closely with our stakeholders to drive these efforts.

As a vision and goal, the NGP 2030 will allow us to utilise a new generation of technologies to increase efficiency and productivity, intensify land-use in the port, improve safety and security, raise the level of sustainability and interestingly, how we can build a port that is more community-oriented and accessible to the public.

Among the major components of the NGP 2030 is the next generation Tuas Terminal. Tuas Terminal will be developed in four phases and when fully developed, it will have capacity to handle 65M TEUs, making it the largest single mega container terminal in the world. Tuas Terminal will consolidate all container terminal operations and port-related logistics and services at one location and will be designed to handle large ultra large container ships larger than the largest mega container ships that are currently in operations. We are looking to deploy advanced port technologies, such as Automated Guided Vehicles (AGVs), automated yard and quay cranes. PSA Corporation is already undertaking R&D and test-bedding of the AGV and the AGV-operational system, but we are also exploring R&D into other container terminal technologies and new operating concepts.

To break the current berth capacity ceiling, one potential idea we are exploring is to use a two-tiered container terminal which will significantly increase the yard storage capacity and quay crane productivity. Another possibility is the use of Automated Storage and Retrieval System for containers to further increase the yard storage capacity. With automated container terminal systems, that opens up the field of R&D into wireless communications to integrate the systems into a fully automated mega intelligent container terminal.

The Tuas Terminal site is a green field location, a blank slate for new land-use concepts to be tested, evaluated, and integrated with the container terminal. We should not restrict ourselves to traditional port layouts. One of these new land-use concepts is to develop a platform above part of the container port on which port-related and industrial developments, such as container freight stations, logistic hubs and other facilities, can be developed to intensify land-use. The aboveground space development over part of the new mega container port could create significant land area for the development of a cluster of maritime and port business activities, including amenities and possibly commercial-residential areas for those working in the area to form a component of the future Tuas Maritime Hub. Another new land-use concept leverages on the space under the mega container terminal. Instead of being reclaimed, a mega-size underground space development could be designed and built for storage of high value-added items.

We also want to leverage more on technology to complement existing human capital and skill sets. At the core of the NGP will be an intelligent port capable of managing the future marine traffic in the port and the increasing ship sizes. Datasets of the future will be too large and complex for people to go through manually. For instance, to detect suspicious, anomalous, or non-compliant activities would be extremely tedious for a human operator. Advanced sense-making systems, if implemented, can process and mine this vast amount of data to extract useful information for decision and policy making and even contingency purposes.

Sharing of real-time information between different security agencies and with ships and terminal operators will facilitate a common operational picture of the port and supporting facilities and coordination of action. To enable the sharing, we are currently testing out the potential to collect real-time information from multiple smart sensors and sources, such as smart buoys and beacons, radars, CCTV, unmanned aerial, surface and underwater vehicles and satellites. The potential for R&D into the use of big data, sensor-integrated smart systems and modelling and simulation is significant.

Other potential R&D and test-bedding areas are autonomous platforms that can be deployed in the air, on the water surface, or underwater to reduce manpower requirements, minimize risk and at the same time perform the job even more effectively and efficiently. Such as Unmanned Aerial Vehicle for port surveillance and delivery to ships. MPA has supported the R&D efforts of a local company to develop prototypes of a 'marine-ised' version of UAV that will be waterproof, take-off and land on water, and could withstand the strong wind conditions at sea. The "Water Spider" UAV platform could eventually be developed into a full system comprising a launch vessel, which can also be unmanned eventually, sensors technologies as the payload, command-and-control system to control a fleet of UAVs (swarm technology), and backend image processing algorithm to positively identify and continue to monitor the oil spills 24 by 7. This is much more efficient compared to current mode of operation where helicopters can only be deployed many hours after activation and the monitoring is manual and only possible in the day.

Unmanned Surface Vessels for contingency support, such as oil spill combat, and possibly for ferrying people and cargoes with minimum crewing level, and autonomous underwater vehicles and remotely operated vehicles for activities such as hull cleaning to reduce risk to divers who currently carry out such hazardous duties, should there be interest from the industry.

Under the Safe and Secure Port component of NGP 2030, we will require a new generation Vessel Traffic Management System to be developed to meet future trends and challenges, covering surface and above surface domain situational awareness. One useful application is to integrate with modelling & simulation systems to predict any incident within the port waters and to simulate mitigation measures in advance to avoid such incidents. Also, any potential congestion hotspots within port waters will be forecasted in advance and each ship's routing plan will be analysed to anticipate and avoid incidents by providing early warning to ships.

The use of clean energy, especially LNG as a ship fuel, will be a key development in the NGP 2030 to develop Singapore into the LNG bunkering hub. To spearhead this, MPA has already implemented several initiatives, such as providing $12M funding under a LNG pilot programme to provide incentive for companies to build LNG-fuelled vessels and called a Request for Proposals for companies to develop an end-to-end LNG Bunkering supply solution, including LNG infrastructure, to support LNG bunkering. A study is being undertaken with one of our local universities to identify suitable sustainable technologies and processes that can be implemented in future. Over at the Tuas Maritime Hub and Tuas Terminal we will look to tap and use renewable energy, such as solar energy and electric power. As the use of clean and renewable energy is still in its early stage, there are R&D and test-bedding opportunities, such as developing battery storage and faster charging, energy management and optimisation.

Finally, we will also be planning to create more community spaces around the port for the public to appreciate the importance of the port and also understand its operations. For as long as we can remember, our port has always been right in the heart of the city. But when it moves to Tuas, that link between our port, our connectivity, and our economy may be weakened. Hence, we will need to find new ways to strengthen these linkages.

Conclusion

Getting us from where we are today to 2030 and beyond requires more than simple conceptualization, planning, and coordination of the various activities and projects. It requires a bold vision and more importantly, the ability to integrate complex systems and deliver on the performance standards. A NGP 2030 development roadmap is being developed in close consultation with our stakeholders. PSA is already embarking with MPA on several port automation R&D projects and test-bedding their operations in the Pasir Panjang Terminal in preparation of building a fully automated Tuas Terminal. MPA has partnered the local universities and A*STAR to conduct R&D in several areas, such as new container terminal concepts, modelling and simulation and autonomous systems. With the industry, for example with M1 we are enhancing the network coverage in port waters, and tapping on IBM's domain expertise to develop sense-making capabilities and tools.

We are also collaborating with Classification Societies such as American Bureau of Shipping (ABS) and ClassNK on concepts to improve ship safety and port sustainability. Some also involve overseas partners, such as with the Research Council of Norway (RCN) on an e-navigation project, and through a MoU signed earlier this year, we are working with the Port of Rotterdam on new developments in green shipping and port optimisation.

The NGP 2030 is a major initiative to chart the course of the future Port of Singapore. By harnessing technology, by our willingness to experiment, and by learning from others, we will push the boundaries of what defines a port. We have come a long way but the challenges which we face today and in the years ahead are no less compelling than those which we have met and overcome now and in the past. This initiative should not only fire up the imagination of our research and engineering community but more importantly, provide opportunities for the next generation of scientists and engineers to prove themselves and make Singapore truly exceptional.

Thank you.

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[1] Alphaliner Monthly Monitor, May 2015.