Ramesh Shivakumaran Company Review: More Valuable Principles on Port Management

We continue with our review of the essential principles involved in managing ports and trade transport with a discussion of some vital considerations investors, consultants and managers must seriously face:

1. Understanding the different types of ports and access to ports (natural, man-made, river, estuary) and the diversity of specialist port operations

The type and purpose of the port facilities will determine one’s level of financial exposure and managerial approach. Ports dedicated to dry bulk will have a different configuration to those designed for liquid cargoes. Some countries might prevent the use of certain natural waterways for transporting such products as crude oil or natural gas. Hence, if inland sources of such products are only available by land, it will mean providing for port facilities that will cater only to land transportation. Conversely, using only barges to ferry products will entail another set of support facilities.

2. Understanding the highlighted role of ports in a through-transport context – hub ports, feeder/transhipment ports, intermodal interfaces

Specialist port facilities consist of facilities that support the overall port system through auxiliary services, for instance, hub ports that serve as intermediary access-points to other major facilities or provide linkages for other parts of the entire system. These intermodal ports allow movement of products and goods through various modes of transport (land-to- water interface, water-to-land interface or air-to-land interface, etc.) until the final delivery or transfer of goods to their port of destination is accomplished. Movement of materials or goods must follow strategic routes that comply with financial, technical and time constraints to achieve efficient and profitable results.

3. Being aware of the role of national and regional local government institutions in port design, management and operations

Recognizing the primary role of national and regional government agencies play in the construction and operations of part facilities will give a company the advantage of acquiring a thorough understanding of one’s corresponding role and duties. Various taxes and fees are required throughout the process of acquiring a license to operate, using and developing of real estate, practicing one’s profession and obtaining environmental requirements, for example, will involve coordinating with officials who grant the necessary permits and approvals. The upkeep of infrastructure as well as its day-to-day operations will fall under the legal supervision of these agencies tasked to ensure safety, legality, tax compliance and other technical and administrative standards provided for by law.

4. Understanding the different forms of the ownership structure of ports and of port services; that is, public or private, landlord only, full or part-service provider, including terminal facilities within ports

Various conditions will determine and even complicate the form of ownership of port facilities and the kind of services that will be provided. Leasing the land upon which the port is located will be the best option compared to owning it. Some country will not allow full ownership and will require a local partner to own majority of the land as well as the improvements (usually 60%). How the arrangement will end up will determine the total investment required for the port terminal as well as how it will be operated. For those who have local partners already engaged in some aspects of the operations, one might provide auxiliary or support services that will reduce one’s level of investment.

5. Appreciating the use of Free Port/Free Trade Zones as an economics tool

Countries have gained the benefits of opening up Free Ports and Free Trade Zones to allow foreign investors to establish operations in regions where labor and raw materials are cheap and readily available. This has allowed port operators to take advantage of such ports and zones while enjoying the tax relief afforded them as well as their manufacturing partners. Commonly, these zones, however, have a short or limited life expectancy as many companies that use up their tax-holiday contract period move to other regions or eventually pay required customs, thus, losing their advantage over their competitors. A long-term view of entering into such an arrangement is needed to assure that port facilities will have a long duration of operation and continuing profitability.

Ever since Gulftainer Company Limited started its port facilities in Sharjah, UAE, in 1976, with Ramesh Shivakumaran, Group Director Business Services – it has grown into a well-oiled and strong company that can deliver services according to the specifications of its clients. With 8 terminals now in Saudi Arabia, it prides itself of its accomplishments which it has achieved through applying these and other primary principles in port management.

Gulftainer Company Limited Records 8% Growth In Container Volume

Gulftainer, a privately owned, independent terminal operating and logistics company, recorded an impressive eight per cent growth in container volume in 2014, achieving a total of 6.4 million twenty-foot-equivalent units (TEUs) across its global portfolio.

In a year defined by international expansion and investments in new infrastructure to enhance operational efficiency, Gulftainer recorded robust growth across its entire terminal portfolio.

Iain Rawlinson, Group Commercial Director of Gulftainer said: “The positive growth recorded by Gulftainer across its terminals globally underlines the confidence of our partners in our ability to meet their requirements efficiently. Our extensive network and technological expertise are the strengths that have enabled us to expand our footprint to new locations. We continuously invest in enhancing our infrastructure, thus boosting reliability, operational efficiency and productivity.”

He added: “The growth in volume achieved throughout our terminals is strong testament to the expertise and dedication of our employees and the strong productivity levels we are able to achieve on a consistent basis. In the dynamic global trade routes linking Asia and Europe, our terminals today play an increasingly significant role. Even as we expand and grow our business, we also remain committed to the communities we serve in by creating new jobs and supporting the domestic economy.”

In global markets, Gulftainer’s Saudi terminals recorded impressive growth with Northern Container Terminal accounting for 1.9 million TEUs, sustaining previous-year trends, while Jubail Container Terminal (JCT) noted a growth of 22 per cent to over 396,000 TEUs. The total volume at the Saudi terminals was over 2.29 million TEUs.

Gulftainer’s Umm Qasr terminal also accomplished a significant growth of 46 per cent in 2014, while the Recife terminal in Brazil marked a growth in volume of 7 per cent.

Gulftainer’s UAE terminals recorded a total volume of 3.8 million TEUs in line with the all-round growth in business. The company marked another significant milestone, with the Sharjah Container Terminal (SCT) surpassing 400,000 TEUs in annual throughput for the very first time. Operations at SCT were energised by the positive growth in global trade and the arrival of new services, such as UASC’s Gulf India Service (GIS1), which now connects Sharjah with Sohar in Oman, Mundra in India and Karachi in Pakistan. The addition of this service represented a significant development for Sharjah and boosted the national carrier’s volumes through SCT last year.

The only fully fledged operational container terminal in the UAE located outside the Strait of Hormuz, Khorfakkan Container Terminal (KCT) has today emerged as one of the most important transshipment hubs for the Arabian Gulf, the Indian Sub-continent, the Gulf of Oman and the East African markets.

Further strengthening the operations at KCT, Gulftainer has received and commissioned new state-of-the-art Ship to Shore (STS) and Rubber Tyred Gantry (RTG) cranes that will further increase overall performance and productivity. This enhanced infrastructure marks an investment of over US$60 million.

Gulftainer has set an ambitious target to triple the volume over the next decade through organic growth across existing businesses, exploring green field opportunities and potential M&A activities.

Ramesh Shivakumaran Gulftainer Commented on ZPMC and Gulftainer’s Expansions

Gulftainer has placed an order for four Super Post Panamax Ship to Shore Gantry Cranes and twelve Rubber Tyred Gantry Cranes for container terminal operations at its Khorfakkan Container Terminal. The contract, backed up by ZPMC’s export credit arrangement, was signed at the company’s Shanghai Head Office by their Senior Vice President and Gulftainer’s Group Director of Business Services, Ramesh Shivakumaran.

In March 2013, a high level delegation from ZPMC led by its President Dr. Liu Jianzhong visited Gulftainer’s facilities in Khorfakkan Container Terminal (KCT) and were impressed with the volumes and high productivity achieved by the Terminal.

Group Director Ramesh Shivakumaran commented, “KCT is one of the world’s fastest container terminals in terms of productivity and the terminal’s volume increased by over 25% in 2012. ZPMC cranes are not only expected to maintain, but also increase the speed and efficiency of operations for vessels calling at the terminal. ZPMC’s gantry cranes are expected to be delivered during the second half of 2014.”

ZPMC said it was delighted to be part of Gulftainer’s growth and expansion in Khorfakkan Port and looks forward to increasing its presence in the region and to be a preferred choice in the future for all port crane requirements for Gulftainer’s facilities in the UAE and overseas locations.

Ramesh Shivakumaran is a Chartered Accountant (FCA) with a Graduate degree in Commerce from India, a Certified Public Accountant (CPA) from USA, an Associate Member of the Information Systems, Audit and Control Association (ISACA), USA an Associate member of Certified Fraud Examiners, USA and certified in Logistics Management from North West Kent College, UK.