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Budha believes ports and terminals is not as visible an industry as it should be. Inside the industry, ports and terminals are hugely profitable enterprises. The average EBITDA margin in a well-run terminal is better than 50%, which means for every $100 charged for handling a container, the terminal is left with $50 to make interest payments and for distribution to shareholders.
In this short interview, Budha Majumdar discusses how ports and terminals have been changing and continue to evolve, both from a technological point of view and in terms of their workforce. Budha is the Course Director for the Diploma in Terminal Management and the Certificate in Container Terminal Operations and Management at Lloyd’s Maritime Academy.
Broadly speaking, how would you say the ports and terminals landscape has changed over the past few years, and what has been the impact of these changes?
I think the biggest changes that have happened have been in the last 20-25 years as private sector investors became much more engaged in the ports and terminal business. No other country has gone down the route of the UK where there are wholly privatised large ports. However, ports all over the world have moved to a landlord model where the port authority, which is usually a Government body, owns the land and provides some basic maritime and land infrastructure and focuses primarily on land use management. Private investors then come in and make massive investments in ports and terminals infrastructure, equipment, systems and people and operate the port and the terminal under a concession agreement from the port authority. That has been the biggest change in recent years, where government-owned ports have decided that they cannot make investments of $1 billion or $2 billion in improving ports facilities and have invited private sector operators to make that investment and use their expertise to run the port and the terminal.
When I give lectures, I say to the students the biggest change for the industry has been the container, which has subsequently brought about massive investments in port facilities, but that was more than 50 years ago, so we’re due for another disruptor coming into the industry in the next decade or so.
Looking towards the future, how do you think ports and terminals will transform in the next five years?
Port operations have become much more technologically advanced. When I first started in the industry we used hundreds of unskilled manual labour to move cargo on and off the ships, but now the people who work in the port can be measured in two digit numbers – fifty to sixty people work in large ports and they’re all educated, qualified, highly trained, and they’re more like technicians than labourers. That has changed because of technology and automation and in the nature of the skill of operations where you need more skilled professionals, because each crane now costs $10 million or more and everything is mechanised. So, the quality of the people now working in ports has changed beyond recognition and they are now better educated, more highly skilled, better paid and better looked after.
Also, I believe the next generation of customers for ports and terminals isn’t going to be the cargo owner or the shipping line, but it’s going to be major 3PL logistics providers like DSV, Kuehne & Nagel and CEVA because they are the ones who will take control of the supply chain, from the factory in China to the store in London. They will make sure that each individual unit of activity is controlled as tightly as possible. Once they get involved in this business directly with ports and terminals, we’d better watch out because they’re completely focused on eliminating waste. There are some very smart people coming into the industry who will challenge the way terminal managers run their operations to make processes more cost effective.
You are the Course Director for Diploma in Terminal Management, why is the course relevant right now and how is it different?
Before putting together the Diploma course, I met with two recruiting managers from two big terminal operators. They said they needed a course that allows their new recruits and newly promoted managers and senior supervisors to get to the nuts and bolts of the industry. So, my strap line is: I won’t show you how to do your job, I will tell you why you should do your job with clear end goals in mind. This approach works, and so I also went on to write up a short, sharp course for container terminal operators and managers. That’s the 12-week Certificate in Container Terminal Operations and Management.
These courses prepare people for roles larger than the ones they’re currently in by taking a much wider and deeper view of the industry, looking at best practice and by prompting them to search for articles which discuss contemporary issues in their industry. A distance learning course is useful for employers of people who have busy day-jobs and cannot be released for prolonged classroom attendance. It is good for the participants who can study the course content at their own pace and be able to quickly put into practice concepts and ideas they pick up on the course. Each module has an online quiz to test understanding of what they have read.
If you could give someone starting out in this industry one piece of advice, what would that be?
Shipping is a derived demand of global trade. And ports are a derived demand of shipping. That makes ports a derived demand of a derived demand. But what’s changed is the acknowledgment of ports being such an integral part of the supply chain that drives global maritime trade, you must find out what makes the global maritime trade tick and what your role in it is.
Director, PCLP (Port Centric Logistics Partners)
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