Industry Commitment, Funding Required to Implement Port Call Optimization for Chemical Tankers

Port Efficiency Committee-CAPT Mike Cunningham, USCG (Ret.)

Photo courtesy of Lou Vest

The Houston Ship Channel is a long, narrow, highly developed waterway, with one of the highest concentrations of petrochemical facilities and marine terminals serving those facilities, in the world. Of the approximately 26,000 deep draft vessel movements along this complicated waterway in a given year, chemical tankers make up just under half of the movements (approximately 10,000).

In January 2018 the Greater Houston Port Bureau (GHPB) Board of Directors chartered the Houston Ship Scheduling System Working Group (HS3WG) to propose a solution to increase efficiency for chemical tanker port call scheduling in Houston. The first task of the HS3WG was to build a cost model to estimate the total cost of chemical tanker movement inefficiency to vessel operators, terminal owners, and cargo owners. This cost model was the first representation of the problem in dollar values. The cost model shows that a chemical tanker port call to Houston adds up to $670,241 per call, or over $900 million for all chemical tanker port calls in a year. With the cost model as a metric, the HS3WG then decided to focus on a target to reduce port cost by 20%. To achieve a 20% reduction in total port call costs, the model projects that inefficient moves must be reduced by 50%.

The cost model was designed to be adjusted by diverse companies to determine how much the current inefficiency costs each company. In mid-June, lean process consultants from a GHPB member company began evaluating the model by running a number of simulations to test the underlying assumptions. In addition, several other companies are using the model to assess the impact of inefficiency on their own bottom lines. These reviews led the HS3WG to begin developing comprehensive solution proposals.

The HS3WG identified a number of solutions and improvements that could potentially reduce inefficiencies. To date, 23 solutions or improvements were pegged as low cost (less than $500,000), low complexity (easy to implement), and low timing (less than six months) to implement. The total cost to implement all ideas is estimated at $5 million. While this is a substantial sum of money, especially for a not-for-profit such as the GHPB, it is a drop in the bucket when compared to the target of reducing annual port costs by $180 million (20% of $900 million)..

While a number of solutions and improvements would reduce inefficiency, the HS3WG determined that the biggest single driver of inefficiency was a lack of information transparency regarding vessel and terminal schedules.

In addition to cost, complexity, and timing, the HS3WG evaluated solutions on whether they were realistic and, more importantly, expandable to all other forms of deep draft trades such as product and crude tankers, breakbulk, containerships, and bulkers. Since the lack of information transparency was the largest single factor in creating the inefficiency, the HS3WG was unanimous in determining that the primary course of action should be to pursue a software-based terminal and vessel scheduling system.

There are a number of software platforms that could potentially meet Houston’s needs. As work proceeds, the HS3WG will evaluate the products offered by a wide range of companies. While multiple products and efforts should be evaluated, the Avanti/Pronto platform out of the Port of Rotterdam warrants particular attention.

Pronto is an existing product that builds a shared platform to exchange information on all aspects of a port call, including vessel and terminal schedules. The Port of Rotterdam, in conjunction with a number of international companies, is seeking to promote Pronto for port call optimization (PCO) on a global basis. One major oil company has been using Pronto at its crude facilities in Europe and has realized a 20% reduction in delays. The company plans to expand Pronto’s use to its chemical facilities in Europe, as well as to its facilities in Asia.

In May the GHPB Board of Directors agreed to canvass member companies most impacted by chemical tanker inefficiency for funds to help cover the cost of continuing our discussions with the Port of Rotterdam regarding the potential of Pronto.

We urge all port region stakeholders to consider this significant efficiency issue and invest in this crucial optimization project. If you’d like to participate, contribute, or have questions, please contact CAPT Mike Cunningham at mcunningham@txgulf.org or call (713) 678-4300.

  • Date July 3, 2018
  • Tags 2018 June