Prepared by: Hutchison Port Holdings Limited 1
Elevating Sohar Port to New Heights
GCC Supply Chain & Logistics Conference 2015 16 April 2015
Eric S.C. Ip, Group Managing Director
Hutchison Port Holdings Limited
Prepared by: Hutchison Port Holdings Limited 2
Hutchison Port Holdings Limited (HPH)
The world’s leading port investor, developer and operator
The network of port operations comprises 319 berths in 52 ports, spanning 26 countries
The HPH port network handled a combined throughput of 82.9 million TEU worldwide in 2014
Offers a wide range of transportation-related services
Hutchison Port Holdings The world’s leading port investor, developer and operator
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Hutchison Port Holdings Network of port operations comprises 319 berths in 52 ports, spanning 26 countries
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Changing Needs
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Age of mega alliances …
Alliances and vessel sharing agreements driven by practical needs:
Mega vessel dilemma – order mega vessels or risk losing market share Partner up to fill vessels – alliances have 95% of market share on major East-West trades Expanding service coverage – access wider network that would be hard to accomplish alone Sharing resources, costs, risks
Source: Alphaliner, by capacity deployed
Market Share on Major Trades
2M, 16%
O3, 13%
CKYHE, 35%
G6, 31%
Others, 5%
TRANS-PACIFIC
2M, 41%
O3, 8%CKYHE,5%
G6, 36%
Others, 11%
TRANS-ATLANTIC
2M, 36%
O3, 21%
CKYHE, 23%
G6, 19%
Others, 1%
EUROPE-FAR EAST
Prepared by: Hutchison Port Holdings Limited
770
670
570
350
450
550
650
750
10k 14k 20k
Slot
Cos
t ($/
TEU
)
Nominal Vessel Size
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… and mega vessels
Cost savings a prime driver:
Upsizing to realize economies of scale & reduce operational costs
Increasing number of shipping lines joining the 18,000+ club
Even for vessel orders above 10,000+ TEU, 13 out of top 20 shipping lines currently have deliveries coming in the next few years. All except two of top 20 will ultimately have these vessels after current orderbook is fulfilled.
Source: Internal estimates
-13%
-15%
Asia-Europe
18,000+ Club
Source: Alphaliner, news sources
>100 vessels in place/on order
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64%60%
56%56%
53%
23%
21%
23%
25%
26%
13%
18%
21%
19%
21%
0
5
10
15
20
25
2002 2006 2010 2014 2018
(Mill
ion
TEU
)
Middle East Imports Middle East Exports Intra Middle East Trade
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The attractive growth rates of the Middle East market …
Robust past growth, with a strong outlook:
Strong import/export and intra-
regional growth above world average, and expected to continue
Becoming an increasingly important component in the vital Asia-Europe corridor
Middle East Volumes
Source: Seabury
+10%
+8%
CAGR
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… drive vessel cascading in the region
20%
14% 14%
9% 8%5%
3%
7%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
(TEU
)
CAGR (2012-2014)Average Vessel Sizes (Middle East trades)
Source: Drewry
Cascading of larger vessels in the Middle East region:
Typical vessels calling the Middle
East region grew 50-60% in the past five years.
Largest vessel calling Port of Sohar is 9,200 TEU, while 14,000 TEU vessels have also started to reach Middle East transhipment hubs.
Vessel sizes grew on average +7% over the past two years alone, with most Middle East-related trades seeing high single to double-digit growth.
2,500 – 5,000 TEU
8,000 TEU
4,000 – 7,500 TEU
14,000 TEU
2010 2015
Typical
Largest
+50-60%
+75%
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Challenges to Terminals
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Higher peak requires more supporting resources
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Source: Internal simulation
Bigger vessels bring higher fluctuations …
Workload (Quayside) by Vessel Type
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Bigger vessels resulting in higher peak workload, which require new and upgraded facilities to maintain smooth cargo flow:
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… and require more terminal investment and expertise
Facilities requirement Post-Panamax - 9,000 TEU 10,000 - 18,000 TEU
Deeper and longer berths
Berth Length: 350 m 450 m
Draft: 13-15 m >15-18 m
Higher and longer cranes
Outreach: 15-17 rows across 18-23 rows across
Lifting Height: >32-43 m >43-52 m
Yard storage capacity Peaks can typically be accommodated with existing yard space
Around 30% more capacity required to accommodate higher peak factor
Berth productivity >75-120 MPH >120-200 MPH
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11
23
Cross-section diagram of
container vessel 8
10
17 18,000 TEU 9,000 TEU
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But … terminals are just one part of the supply chain
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Shipping lines
Terminal operators
Government
Port Authorities
Logistics Providers
Shippers & Consignees
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An integrated multi-player approach is required
Enhancing cooperation and integration to efficiently distribute cargo
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Automation – automated equipment & gate operations Mega Vessel – new peak workload
Capability – new and upgraded facilities to handle the largest size of vessels
Capacity – ample yard capacity
Connectivity – well connected inter-modal facilities and superior infrastructure (e.g. rail, canal, roads)
Intermediary Buffer – availability of intermediary logistics facilities (e.g. depot, CFS, free trade zone etc) and logistics services
Distribution Channel – low costs and high reliability
Regulatory – simplified customs procedures with sophisticated technology
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The elements that shape the port
Shipping Lines
Terminal Operators
Information flow – port community system connecting all players
Government & Port Authorities Shippers &
Consignees Logistics Providers
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HPH’s vision for Oman International Container Terminal
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Terminal C A modern and efficient gateway port
Oman’s gateway port:
HPH has achieved its mission to consolidate Muscat and Sohar cargoes and to develop Sohar Port into a modern and efficient gateway port for the North Batinah and the Sohar Freezone
Development of Terminal C is being fast tracked to bring facilities up to full capacity to meet the future needs of Oman
… but we don’t stop here
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Expanding hinterland and building bigger base Building upon the world class infrastructure and network being established in Oman
Source: GPCA / A.T. Kearney
Rail
Source: Sohar Port and Freezone
Road
Source: Sohar Port and Freezone
Sohar Freezone
Expanding our reach:
To take advantage of the world class road and rail network being established by Oman, we envision OICT as an integral part of Sohar Industrial Park and Freezone’s rapid development and one of the key gateways for origin/destination cargoes in the GCC.
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Ambitions for Terminal D A transhipment hub serving the needs of the region when a strong base has been built up
A modern transhipment hub to serve future needs:
Joint vision of HPH, the Sultanate of Oman
and Sohar Port to develop Terminal D as a modern, automated transhipment hub.
Potential to serve container vessels of 20,000 TEU class.
Autogate Operations Remote-controlled QCs Remote Control Center Automated Stacking Cranes
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Elevating Sohar Port to New Heights …
Increased integration and cooperation amongst key stakeholders to jointly develop efficient and competitive supply chain solutions for GCC
… And more
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Our Mission
To be the global market leader in port development, operations and logistics services
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