Shared values measured in millions
- The Hub Partnership Programme was rolled out in Algeciras, Spain (covering Tangier) in 2013. Subsequently, it was introduced in the ports of Rotterdam, Singapore and Tanjung Pelepas in 2014.
- In 2014, the total savings generated from the programme to the Group was USD 70 million. In addition, the ports of Tangier and Algeciras have increased their container handling capacity by 20% each (with no investment).
- This year, the expectation is to save more than USD 80 million.
A unique partnership between Maersk Line and APM Terminals has changed Algeciras, Spain and Tangier, Morocco from a story of operational liability to one of success.
“Both terminals and shipping lines are focused on lowering costs, and with competing business interests it is difficult to find that acceptable middle ground”, says Alberto Fernandez, a vessel berth planning coordinator for Maersk Line in the port of Algeciras, Spain.
“That’s why what our two companies have built in Algeciras is so exciting”.
Costly status quo
The port of Algeciras, Spain and the port of Tangier, Morocco are two of Maersk Line’s European ‘hub’ ports. More than 35% of Maersk Line’s annual cargo volume passes through Algeciras alone, and most of these vessels visit Tangier immediately prior to this. It means the performance of these adjacent ports is critical to the performance of Maersk Line’s entire network.
However, until recently, that performance was not good. Berthing plans gave rise to long negotiations and container loading and unloading operations in the ports were barely meeting productivity expectations, and sometimes failing to do so.
The inefficiency was costing APM Terminals in terms of productivity and inflicting big costs on Maersk Line: With APM Terminals unable to handle the container volumes coming in to its terminals in Tangier and Algeciras, Maersk Line was left paying the nearby port of Malaga EUR 30 million per year to handle the overflow.
“The situation was costing both companies too much time and money”, says James Wroe, Head of Marine Operations for Maersk Line and the Head of the Hub Partnership Programme. “Basically, we agreed to a ‘we need you, you need us’ situation in these ports, and following on from this we began looking for a better arrangement together”.
Combining organisational insight from other industries with modern technology – the Hub Partnership Programme is that better way.
“The first step was to merge our Operations teams in one office. Terminals and shipping lines don’t have a precedent for this ‘co-location’, but we looked at other industries like airports and airlines and the huge success they’ve had from getting physically closer and decided we needed to try”, says Wroe.
The benefits for communication were immediately clear to the Operations personnel in both teams. For example, Fernandez and his berth planning counterpart in APM Terminals, Emilio Checa, no longer needed to waste time with multiple emails and phone calls in order to agree on berthing plans. Since they were now seated back-to-back, news about delays or other issues was resolved by turning around for a quick chat.
“Berth planning requires flexibility. Communication delays combined with a lack of shared information made it a slow process prone to errors”, says Emilio Checa from APM Terminals.
“It could take up to a day to make a plan for the coming week. Now it only takes an hour or two. And my work is a lot more fun, too. I actually like Alberto now”, he laughs.
Once physically together, an onsite IT team applied the technical magic. Previously, the Operations teams did not share any systems or data. Therefore, they did not have an overall view of the port operations and no real understanding of one another’s situation.
By interviewing and shadowing both teams, the IT team created a joint system, whereby all data could be shared and visualised. New forecasting and decision-making tools replaced Excel spreadsheets, allowing the teams to make instant calculations for different ‘what if’ vessel and container-yard scenarios, together.
“If you are a terminal operator and you ask a vessel operator if his vessel is in a hurry, the operator will always say ‘Yes’”, says Carlos Arias, Head of the South Europe Liner Operations Cluster (SEULOC) in Maersk Line. “What we have now is a joint operating system where we can see where the buffers really are, what bunker costs will be if we do this or that, and thereby make the best decision for the Group. With the Hub Partnership Programme we now have shared objectives and goals, along with common challenges and obstacles to overcome”.