11 January 1996 00:00 [Source: APC]
The storage and distribution business continues to expand in the Asia-Pacific. Bill Macdonald considers the opportunities.
Despite the stop-go nature of the chemicals market in the Asia-Pacific, both shippers and terminal operators are making provisions for shortfalls in future capacity. In China especially, the storage operators are playing their part in providing the infrastructure which will catapult the country into the 21st century.
With the region still experiencing high overall economic growth rates, most companies are willing to ignore the recent downturn in the chemicals market and focus on the long-term prospects for the region. 'Certain countries will grow even more than the average of 5-6% for the region. Companies tell me that in some countries they are seeing demand for plastics growing at 15% above the rate of GNP growth', says Bruce Conti, vice president and managing director for the Asia-Pacific, GATX Terminals Singapore.
There is an enormous market developing in the Asia-Pacific, with building activity and new investment happening all over the region. The demand for petroleum products alone will be twice as large in 2005 as in 1990. Singapore is still the hub of the area but its role is changing as other countries develop their own infrastructure and economies. In particular, the growth in demand in China is increasing the need for a second base in the region to serve the northern part of the country.
To Mohamed Merican, business development manager, Asia-Pacific, for Van Ommeren Tank Terminals (VOTT), Singapore plays a role more like a 'swing' than a hub in the region. 'The refineries in Singapore were made to swing with demand in the region,' he says. 'There has been a shift to China where the economy is growing. There has also been a change in countries such as Malaysia, which are growing, with investment in the country moving towards more consumer goods.'
VOTT has been operating in Singapore since 1980 where it serves virtually the whole of the Far East. India and Pakistan, too, have fallen inside the distribution region following the withdrawal of Russia as a supplier. VOTT operates two terminals in Singapore; at Pulau Sebarok, with 969 000m3 of capacity, and at Pulau Sakra with 66 000m3 of capacity.
The Sebarok Island terminal works chiefly as a break-of-bulk facility, supplemented by increasing blending activities. The utilisation of the terminal is nearly 100%, with a supply of 6m tonne/year. Docking facilities have recently been improved to accommodate even the largest tankers. The second terminal, on Sakra Island, was taken into service in 1994. The greater part of this terminal has been leased under a long-term contract to DuPont, which has a production site at an adjoining location.
GATX Terminals is involved in two facilities in Singapore, the largest of which, Tankstore, is a joint venture company owned by GATX Terminals and Paktank. Tankstore, a 'greenfield' terminal opened on a man-made island in 1990, is already the largest storage facility in the region. When the latest phase of expansion is complete it will boast a capacity of 929 500m3. It also has another facility at Jurong Town with a capacity of 150 000m3, in which GATX Terminals has a 50% share.
In China, the company is involved in a joint venture with Sinochem at Lashan, Shangdong, regarded by many as being the distribution hub of northern China. Sinochem Shangdong has an existing capacity of 86 000m3, with plans to eventually bring the storage capacity up to 178 500m3 by the end of the decade.
'There are a couple of projects in China that we are looking at. The idea is to have a network of terminals in the region. We have also been in discussion with various parties at Ningbo,' says Conti. 'We would expect some sort of agreement by early 1997.' The negotiations are believed to be with the Hong Kong trading company Dragon Crown, the Ningbo Port Authority and Mitsui.
Other problems with the infrastructure in China still have to be addressed, says Conti. 'It is not enough just to ship materials and offload them at the terminals. You still have to get them through the road and rail connections and these can be a considerable restraint,' he says.
Discussions are also under way to build a terminal at Kerteh in Malaysia. GATX Terminals will form a joint venture with Petronas, Malaysian Capital Ventures and Dialog. Conti believes that there will be a trend towards more satellite terminals throughout the region, with countries such as Malaysia and Indonesia taking business away from Singapore. However, these probably will not be big terminals, and the bigger tankers will still be offloading in the accommodating and well organised jetties of Singapore.
VOTT opened a terminal at Ningbo at the beginning of 1994 which now has a capacity of 63 000m3. The company also has a 10% interest in a 66 000m3 terminal at Dalian in the northeast and a 105 000m3 terminal at Ulsan in Korea. The chemical capacity of the terminal is used mainly for regional distribution purposes and for a number of large petrochemical companies that are connected by pipeline. The importance of this terminal will be enhanced by the growing demand in northern China. In Bangladesh, VOTT operates a small terminal for edible oils and fats. The company also has a 14 000m3 terminal at Madras in India.
The company recently announced a project to build China's first deep water tank storage terminal at Zhuhai, near Macao. VOTT is to participate in a joint venture with Zhu Kuan of China to develop the site. The first phase of the project, which will cost £80m (US$126m), will include the construction of 160 000m3, and is due for completion by early 1998. Future development of the site will push the total capacity up to 300 000m3. VOTT's activities in Asia will be supplemented in the near future with a participating interest in an existing 36 000m3 chemical terminal in Sydney, Australia, which will be enlarged to include a 96 000m3 terminal.
Both GATX and VOTT are fairly committed to operating joint ventures for building new terminal capacity. This is one way of taking advantage of local expertise, and most Asian governments nowadays are keen on keeping some control of developments happening within their own borders.
The new terminal capacity throughout the region should ease congestion, which is something of a problem in the area. In particular there is a shortage of high-quality facilities which are acceptable to responsible companies. Recently shipping activity has been adversely affected by Chinese government decisions to save on hard currency and control imports of chemicals. Again, however, long-term prospects are of growth and most shipping companies are making decisions to increase their fleet size and capacity.
Stolt NYK Asia-Pacific Services (SNAP) and Stolt-Nielsen Inter Asia Services (SNIAS) have increased their fleet size and capacity by over 45% during the last two years in order to participate in the rapid regional growth in the Asia-Pacific market. A further fleet expansion was also recently announced by SNAP. The Japanese shipbuilder Fukuoka Shipbuilding Co will build four stainless steel chemical parcel tankers of 11 500 dwt. The first is scheduled for delivery in September 1997, while the remainder are due for delivery in February, July and October 1998.
Stolt-Nielsen has also announced a 50:50 joint venture with Dovechem for a tank container cleaning and repair facility in Tianjin, China. The facility will be located on a site with an area of 3500m3, and is expected to be operational in early 1997. The development of the facility follows the recent opening of Stolt Donghwa terminal, the first such facility in Shanghai.
'The development of this facility with Dovechem follows our strategy of developing joint venture cleaning and repair plants in the Asia-Pacific. We already operate facilities in Tokyo, Nagoya, Kobe, Kaohsiung, Singapore and Shanghai,' says Richard Wingfield, managing director, Asia Pacific, Stolt-Nielsen. 'It is anticipated that the joint venture will develop additional facilities in China in the future. They support Stolt's tank container business by providing quality cleaning and repair services and are operated with strict environmental controls.'
The scale of investment by shipping and terminal companies in the Asia-Pacific has crept steadily upward in the past year. These new facilities are invariably state of the art, and they may go some way to alleviating the congestion which is a common feature of ports in the region.
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