How spreader productivity impacts terminal profitability

 

In terms of "lost" wages, one United States west coast port has estimated cumulative downtime cost at over $1,200 USD per hour, with each 20-minute duration of spreader downtime generating a direct cost to the port of $420 USD. Based on such an estimate, 60 hours of annual ship-to-shore spreader downtime would produce an annual idled worker + equipment "cost" to the terminal of some $75,600 USD for a single spreader. This is fully half the cost of a new ship-to-shore spreader. However, since labor is generally a “fixed” cost, many terminals find it somewhat more helpful to attempt to quantify downtime from an opportunity cost standpoint.

 

 

A slightly more reliable spreader at a busy terminal (a spreader that averages half-a-move more per hour – from 25.5 moves per hour to 26.0 moves per hour, for example) can add as much as $194,000 USD in annual profit each year. This calculation is based on 3,080 extra moves over the course of a year (6,160 operating hours x 0.5 extra moves per hour) and a terminal profit of $63 USD per move. This added annual profit is more than the entire capital investment in the spreader, and why spreader productivity is by far the single most important factor determining payback on spreader investment.

There is a further intangible return on investment issue when it comes to spreader downtime, and this is in the area of marketing effectiveness. Perhaps the greatest “hidden” cost of excessive downtime is the damage it can do to a terminal’s relationships with its customers. Container terminals which are highly reliable and efficient, and which “turn” ships more quickly than other terminals, will gain a marketing advantage over peers, which will likely translate into higher market share and greater pricing power. Conversely, container terminals with frequent work stoppages due to spreader downtime, or terminals that have container ships lined up waiting to dock due to the late departure of other ships from the dock, operate at a considerable marketing disadvantage.

 

 

Since the spreader is the key “link” in the productivity chain, this is why the selection of a spreader partner is a defining, strategic activity in the terminal success process. Bromma Group’s important new white paper – Return on Investment In Spreaders – is an important new tool for developing a strategic perspective on spreader fleet investment.

 

In addition, Bromma regional managers are available to help you develop a spreader return-on-investment model tailored to your terminal's specific operating environment and future growth scenarios.