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Report:
Shipping Cities and their
Interdependencies
MND Auditorium, Singapore
18 June 2015
Contents
2
Video Link
2
Post Event Summary Report
7
Highlights from Q&As
9
About the Speakers
10
About the CLC Lecture Series
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Click here to view the full
lecture video
Shipping Cities and their
Interdependencies
MND Auditorium, Singapore
18 June 2015
CLC Lecture Series: Shipping Cities and their Interdependencies with speaker Olaf Merk
“The risk of transhipment is to simply move a few boxes without
creating much local value.” Olaf Merk, OECD’s Administrator of Ports
and Shipping, International Transport Forum and former Administrator
of its Port-Cities Programme, made a case for how cities could benefit
more from shipping. On 18 June, speaking to a Singapore audience
comprising shipping executives, civil servants, academics and students,
Mr Merk shared a number of studies on regulation and governance of
ports, maritime services and port cities, including examples and analyses
from the OECD recent title, The Competitiveness of Global Port-Cities.
Mr Merk highlighted how the relationship between port cities faced
a dearth of research. First, there was little literature on ports. Second,
ports as a natural interface between cities had not been widely
acknowledged nor discussed. Much more reflection would be needed in
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order to understand the relationship between ports and their cities, as
well as between cities through their ports.
Spatial, economic and
spiritual realities
Describing how ports have historically been the sites of thriving cities,
e.g., Amsterdam, Mr Merk positioned the role of ports as one of the
interfaces between shipping and cities. In many instance, shipping has
structurally defined the outlook of cities — where there are spatial,
economic and spiritual realities that have set in for many port cities.
Spatially, a port city could be natural or man-made. For instance,
Singapore as a major hub was first due to its geography. In the case of
Amsterdam, it is an example of a city that has taken on the shape of
shipping. The spatial characteristics of a port city include road structures
directed to ports, and urban plans that revolve around a desire to
accommodate shipping.
In many instances, ports have moved away from the city towards the
sea. This is in part due to the economic reality of cities. Trading hubs
like Amsterdam and Singapore often progress to a second stage of
the industry. Beyond shipping, and increasingly seen in large cities, the
move is towards banking and finance.
Speaker: Olaf Merk
Engagement in merchant shipping has also historically brought in the
cultural sector, such as the enjoyment of the arts — highlighting a
stronger focus on for what Mr Merk called “spiritual realities”. “It is, in
a way, an agglomeration of values… a vehicle of mentalities and even
spirituality,” he said, citing Joel Kotkin’s elements of great cities, i.e.,
personal safety, economic possibilities and sacredness. In port cities, it is
shipping that shapes this nature. By linking the city to a larger context,
Mr Merk said port cities were “generally more entrepreneurial, more
cosmopolitan and more free-minded.”
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How can cities benefit
from shipping?
Mr Merk shared three ways in which cities could benefit from shipping:
trade and services cluster, industrial development, and waterfront
development. All ports need maritime services, and these include legal
services, engineering, ship classification and financing, to name a few.
Citing Jane Jacobs on how waterfronts should be used for enjoyment,
Mr Merk described how these have become more spectacular, and give
cities a definite edge in their liveability.
Illustrating the benefits in the figure below, Mr Merk said Singapore
was in the centre of these overlapping benefits. This was quite an
achievement because some economic functions were hard to combine,
he said.
Rotterdam, on the other hand, could be considered a typical port
industrial complex with large industrial activity related to the port,
particularly a petrochemical sector. Nonetheless, it has also developed
into one of the leading European maritime clusters.
The port of Los Angeles and Long Beach, an industrial complex, has
managed to develop successful waterfronts, with cafes, restaurants,
museums, an aquarium, craft markets and marinas. Dubai presents yet
another model — from transhipment port to global logistics cluster, to a
global tourist attraction as well, more or less due to its waterfront.
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Fundamental differences
between urban
agglomeration and port
logic
Mr Merk shared some fundamental differences in urban centres
and port logic. The main economic advantage of being in cities is
agglomeration, where many people with different skills have access
to many opportunities. This is the main reason why people choose
to live in cities. Ports, on the other hand, work based on the logic of
minimisation, e.g., minimising transport costs, etc.
These two differences pose challenges to port cities. A trade and
services cluster could, to some extent, will combine with a waterfront
economy because this economy could provide urban amenities that
could make the city more attractive. However, large industrial areas
could be considered largely incompatible with the other two sectors.
For instance, the creative class that may want to live in a reconverted
warehouse, while they might appreciate the local fish markets, generally
does not appreciate the fumes from a series of oil refineries or the
fumes from big cargo ships.
Related to these economic profiles are some social considerations.
Shipping and port industrial activities are traditionally labour intensive
and fairly low-skilled, often carried out by a workforce of predominantly
immigrants. This population composition has prevailed in most port
cities, even when economic functions have over time become less
labour-intensive, such as developing into higher-end maritime cluster.
This simultaneous presence of a former population related to a port
industry and a new population related to the high-end services, for
example, can create social tensions, said Mr Merk. Sometimes described
as the “frontline soldiers of globalisation”, port cities can become places
where social dissatisfaction and the resentment of elites begin. “It is no
coincidence that some of the port cities are indeed the places where
some of the recent extremist political movements have emerged; think
Marseilles, Rotterdam, Antwerp and Gothenburg,” he said.
Upsizing, consolidation,
energy and the
environment
What are the developments that shape the relation between
shipping and their ports? Mr Merk focused on three different trends
when addressing this question. The first was upsizing, the second
consolidation, and the third was related to energy and the environment.
In terms of upsizing, he discussed mega ships and their impacts.
These are becoming bigger than apartment buildings and even
neighbourhoods. To give a sense of the acceleration in ship sizes, he
said:
If you look at container ships, it took two decades to double in size
between 1975 and 1995. It took one decade to grow from 5,000 to
9,000 TEU [20-feet equivalent] ships, and another decade to go from
9,000 to what is now the biggest ship, the 19,000 TEU ship.
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Today, ships of 21,000 TEUs are in the order books. The OECD has also
reflected in their study on mega ships, scenarios in which there will be
24,000 TEU ships in 2020. These will have huge impacts on the whole
transport chain — in maritime transport and also terminals, ports and
landside transportation.
Mega cities with ports also mean that shipping markets will be more
in direct competition. The peaks in ports of mega cities, generated by
mega-ships, will translate into traffic peaks and possibly contribute to
more urban gridlock. Labour flexibility, Mr Merk said, will be needed
to accommodate the big peaks of mega-ships. For instance, truck
drivers will be nudged into driving at night, warehouses will need to be
opened 24 hours a day. Port cities should be prepared for a lot of local
resistance related to this.
What does this mean for
policy planning?
Mr Merk concluded his presentation by drawing attention to the kinds
of policy planning challenges involved in developing port cities for the
future. The first challenge was size. Mega cities, mega ships and mega
ports — all these needed forward-looking and strategic planning.
It involves delicate planning with phenomenal investment, and if
competitors do the same, one immediately becomes less effective.
The second challenge was consolidation. This includes the regulation
of competition. “Concentration can make cities very expensive”, he
said — a paradox of many global cities, where their successes eventually
undermine their sustainability. For instance, in terms of negotiating
power, “ports in South Europe would do well to collaborate more or
actually merge.” The merger of certain ports mirrors the consolidation
of all these shipping lines.
The third and final challenge was in energy. Mr Merk emphasised
the need for institutions to come together, and for policymakers to
provide the infrastructure in order to recognise and manage a real
energy transition. “Port authorities would need to become more
entrepreneurial”, by developing into network managers and bringing
together different actors and to create synergies between those actors.
This will be an important step to improve “the acceptability of the port
versus its citizens of the port city,” he said.
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Highlights from Q&A
From left: Olaf Merk and R Arjun Batra (moderator)
The Q&A session was moderated by Mr Arjun Batra, Group Managing
Director, Drewry Shipping & Consultants Ltd. The following are some
highlights from the session:
In terms of future development, Singapore is now moving its
container terminals out of Pasir Panjang to Tuas. What will be the
main challenges for Singapore as port city, or even as a maritime
centre?
Mr Merk replied that when assessing the challenges of a port,
determining factors are largely based dependent on external
developments. It depends on what the competitors are going to do,
if they are “at the same game as Singapore”, and whether these
competitors will be more efficient. “Are they also going to be able to
benefit from their geographical location?” he asked. There is not much
that Singapore can do in this aspect, apart from continuing to improve
its efficiency, to be at the forefront of a lot of technological innovation,
etc. If Singapore is able to achieve that, Mr Merk thinks it will continue
to play a central role as a transhipment hub for the years to come.
About Singapore’s position as a maritime centre, the challenge —
as with all large maritime centres — is in “how to deal with the
successes”, he said. If a global city becomes too successful, it also
undermines its success, in that it could become too expensive such
that the quality of life that first attracted a lot of the global talent to
that place also starts to decrease. There needs to be a balance there,
he said. Also relating to quality of life are the environmental impacts
that very large ports tend to have. Mr Merk qualified that Singapore
was doing comparatively well in relation to Hong Kong and Shanghai,
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when it comes to global maritime city functions and environmental
sustainability. But it might, in the future, have to “up its game if all
others are doing [the same].”
What will be the impact for Asia if Nicaragua builds its canal, and
how important will the Nicaragua Canal be for Singapore?
Mr Merk suggested that the key factor would be the performance of
the main shipping flows that are going on right now. For the moment,
he thinks the role of Singapore is still very important “because there
is a lot of Asia-Europe maritime transport.” The question is whether a
Nicaragua Canal be a game changer. Here, the burden of the proof is
on the stakeholders behind the Canal. His personal sense is that the
current and projected flows via the Malacca Straits — with Singapore as
its hub — will continue to be the main route.
In planning ahead and looking beyond the move of the port to
Tuas — what are some of the new elements Singapore should
consider, given that the OECD has done the study on the port
cities and future opportunities?
Mr Merk replied that there are two elements to consider. The first is
related to Singapore’s unique position — not only as a port but as
a leading maritime cluster and a leading waterfront economy. (The
latter underlines the element of the quality of life and the liveability.)
Therefore, an important issue for Singapore is environmental
sustainability. Looking at some of the large US and European ports,
“there is a lot of effort, a lot of thinking going on”, about the different
measures to mitigate some of their environmental impacts. This is
sometimes in the form of international regulation, e.g., emission
control, but in many cases, they are in the form of local initiatives, such
as incentive structures to reduce environmental impacts, having cleaner
port trucks and cleaner ships. There is a whole range of instruments that
some other ports have used, he said, that might also be considered for
the case of Singapore.
The second thing is the trend of developing ports further away
from the city and the city centre. To him, this tends to lead to the
“disconnectedness of the citizens with its port.” It is important to
ensure citizens still know there is a port in order to have local support
for sustaining these port functions well. That way, people would
still be willing to see a their tax monies go into sustaining such an
infrastructure. This could be a challenge in the longer term, i.e., making
sure that the port is still somehow present in the hearts and minds of
the Singaporean.
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About the Speakers
Speaker:
Mr Olaf MERK
Administrator, Ports and Shipping, International Transport Forum
Organisation for Economic Co-operation and Development (OECD)
Mr Merk directs studies on ports, port-cities, port regulation and governance. He
is the author of various OECD books including “The Competitiveness of Global
Port-Cities”. In his previous posting as Administrator of the OECD Port-Cities
Programme, he directed more than a dozen studies on port-cities, including on
Shanghai, Hong Kong, Rotterdam and Hamburg. He has authored various portrelated articles in academic and professional journals. He is also Assistant Professor
at the Institute for Political Science (Sciences Po) in Paris. Prior to the OECD, he
worked for the Netherlands Ministry of Finance. He holds a Master’s degree in
Political Science from the University of Amsterdam.
Moderator:
Mr Arjun BATRA
Group Managing Director, Drewry Shipping & Consultants Ltd
Arjun Batra is a shareholder and Group Managing Director of Drewry Group, with
overall responsibility for Advisory operations within the Drewry group of companies.
Arjun has been instrumental in setting up Drewry’s international offices in India and
Singapore. His previous experience includes finance director at Stelmar Tankers, and
senior positions with Easyjet and Troodos Shipping. He holds a MSC in Shipping from
the Cass Business School and is a Master Mariner.
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About the CLC Lecture Series
The Centre for Liveable Cities was set up in 2008 by the Ministry of National Development and the Ministry of the Environment and Water Resources, based on a strategic
blueprint developed by Singapore’s Inter-Ministerial Committee on Sustainable Development. Guided by its mission to distil, create and share knowledge on liveable and
sustainable cities, the Centre’s work spans three main areas - Research, Capability
Development, and Promotion. The CLC Lecture Series is a platform for urban experts
to share their knowledge with other practitioners.
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All rights reserved. No part of this document may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying,
recording, or otherwise, without prior written permission of the Centre for
Liveable Cities.
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