Coventional or automated? : a comparative analysis of straddle carrier options for CentrePort Wellington

Abstract

In recent decades the role of ports within supply chains has changed considerably. No longer do ports operate in isolation from other parts of the chain. Modern ports are now an integral link within these competing chains, and play an important role in ensuring cargo owners benefit from improved efficiency and reduced costs. In order to compete in these supply chains, ports must reduce their own costs and continuously seek productivity improvements. The automation of processes within ports, and in particular container terminals, is seen as a valuable tool for achieving this outcome.

It is an opportune time for CentrePort to fully evaluate the introduction of automated container handling equipment. CentrePort's existing straddle fleet requires replacement given their age and increasing costs of maintenance. The benefits of automation outlined in this paper suggest that this technology could have considerable advantages for CentrePort, both in terms of labour savings and other operating costs when compared to conventional straddles, although these savings must be traded off against higher capital costs.

Financial analysis shows that the volumes at which automated straddles are more cost effective for CentrePort than conventional straddles are approximately 100,000 twenty foot equivalent units (TEUs) per annum and above, over a 15 year period. CentrePort currently handles 80,000 TEUs per year. Achieving an annual TEU throughput above 100,000 in the short to medium term will rely on the port's ability to aggregate cargoes from outside its traditional cargo catchment areas, which has a high level of risk associated with it. If CentrePort is unsuccessful in this aggregation strategy, and cargo volumes continue to grow at economic growth rates only, it can be argued that the company should look to alternative strategies for its straddle replacement in the short to medium term. This may include purchasing new conventional straddles that could be automated retrospectively.

Sensitivity analysis shows that the containment of capital costs associated with introducing the automated technology would be critical to their financial success at Wellington. Initial findings suggest that adoption of this equipment is practicable; however ensuring the automated straddle technology can be adapted to the unique operational characteristics and infrastructure constraints of CentrePort's container terminal, and introduced without causing major disruption to port customers, will require further research.

The technology supporting the automated straddles continues to evolve and, as such, accurately quantifying the benefits associated with their introduction is difficult at this point in time. It is however recommended that this study is used as a basis for further detailed cost benefit analysis to confirm the validity of the assumptions tabled in this research. If CentrePort is able to secure additional volumes, and realise the operating cost savings this technology offers, the company would be considerably better positioned for the future. CentrePort would have the ability to change many of its historic and uncompetitive work practices and agreements, and address issues regarding its aging workforce. Combined with the assistance of proactive human resource management strategies in the future, CentrePort could position itself to be among the most efficient and cost effective ports in the world using this technology.