This is a summary copy of the findings from a regional study on South Pacific Vessels and Cruise Analysis, Port Landscape and Competitiveness. Further inquiries for in-depths understanding of the report can be forwarded to Harorimana.deo@gmail.com or info@aipfgroup.com . Free for personal use only.

1. COMMERCIALIZATION STRATEGY
REPORT 2013
1

2. Commercialization Strategy Report
was developed under a paid contract between
iPacific Frontiers Ltd and
Solomon Islands Ports Authority (The Client)
For any further information contact:
iPacific Frontiers Ltd (The Consultant)
Outback Bld, P.o.Box 2081
Honiara, Solomon Islands
email: ceo@aipfgroup.com
harorimana.deo@gmail.com
2

3. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
– Recommendations
3

4. Commercialization Strategy Report 2013
– Current state of the port landscape
• Major container ports in the region
• Main shipping routes that ply through the region
• Shipping network of Honiara and Noro
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
– Recommendations
4

5. Major container ports in the region
Current port landscape
5
Source: Consultants.
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
Lae Noumea Port Moresby Suva Lautoka Honiara Rabaul
Container Throughput
Slot Capacity
70.9%
25.3%
24.4%
15.2%
11.8%
10.6% 12.7%
TEUs

6. Commercialization Strategy Report 2013
– Current state of the port landscape
• Major container ports in the region
• Main shipping routes that ply through the region
• Shipping network of Honiara and Noro
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
– Recommendations
6

7. Main shipping routes that ply through the region
Current port landscape
7
Source: Consultants.Source: Consultants.
East Asia-ANZ:
2.2 million TEUs
Honiara
Solomon Islands
New Zealand
Australia
East Asia
South East Asia-
ANZ:
1.7 million TEUs
South East
Asia
Americas-ANZ:
0.8 million TEUs
North America
South America
South West Pacific
• South West Pacific region sits astride major shipping
routes that connect between Asia, ANZ and Americas
• Tremendous opportunity for transhipment activity

8. Main shipping routes that ply through the region
Current port landscape
8
Source: Consultants.Source: Consultants.
Australia-NZ:
213,000 TEUs
ANZ-East Pac:
221,000 TEUs
ANZ-West Pacific:
58,100 TEUs
Intra PNG:
15,000 TEUs
Honiara
Solomon Islands
New Zealand
Australia
FijiNew Caledonia
Vanuatu
Papua New Guinea

9. Commercialization Strategy Report 2013
– Current state of the port landscape
• Major container ports in the region
• Main shipping routes that ply through the region
• Shipping network of Honiara and Noro
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
– Recommendations
9

10. Shipping network of Honiara
Current port landscape
10
Source: Consultants.
Townsville
Lautoka
Suva
Noumea
Lae
Madang
Port Moresby
Rabaul
Lihir
Honiara
Noro
Santo
Port Villa
Baie de Prony
Wewak
Oro Bay
Fiji
New Caledonia
Vanuatu
Solomon Islands
Papua New Guinea
Shipping service Capacity
Carpenters Shipping Pac 1 32,300
Carpenters Shipping Pac 2 32,300
Greater Bali Hai 1 10,900
Greater Bali Hai 2 11,600
New Pacific Line 41,800
Sofrana 1 10,300
Sofrana 2 12,500
Swire Shipping – North Asia 31,800
Swire Shipping – PNG 21,100
Container throughput: 21,600 TEUs
Slot capacity: 200,000 TEUs
Slot capacity utilization rate: 10.6%
Transhipment: 4%, about 900 TEUs
Australia

11. Shipping network of Noro
Current port landscape
11
Source: Consultants.
Lautoka
Suva
Noumea
Lae
Madang
Port Moresby
Rabaul
Honiara
Noro
Santo
Baie de Prony
Oro Bay
Fiji
New Caledonia
Vanuatu
Solomon Islands
Papua New Guinea
Australia
Shipping service Capacity
Carpenters Shipping Pac 1 32,300
Greater Bali Hai 1 10,900
Maersk PNG Express 29,100
Container throughput: 2,000 TEUs
Slot capacity: 72,300 TEUs
Slot capacity utilization rate: 2.8%

12. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
• Determinants of container port traffic in the South Pacific
• Port tiers in the South Pacific
• Shipping line behaviour in container shipping operations
• Key players and their network strategy
– Competition, competitiveness and successful commercialization
– Recommendations
12

13. Determinants of container port traffic in the South Pacific
Shipping routes and network strategies
13
Source: Various.

14. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
• Determinants of container port traffic in the South Pacific
• Port tiers in the South Pacific
• Shipping line behaviour in container shipping operations
• Key players and their network strategy
– Competition, competitiveness and successful commercialization
– Recommendations
14

15. Port tiers in the South Pacific
Shipping routes and network strategies
15
Source: Consultants.
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000
Population
Container Throughput
(TEUs)
Size of the bubble denotes
estimated GDP of the port city
NoumeaSuva
Lautoka
Honiara Lae
Port Moresby
Tier 1 ports
Tier 2
ports
Tier 3 ports
RabaulMadang
Santo
Port Villa

16. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
• Determinants of container port traffic in the South Pacific
• Port tiers in the South Pacific
• Shipping line behaviour in container shipping operations
• Key players and their network strategy
– Competition, competitiveness and successful commercialization
– Recommendations
16

17. Shipping line behaviour in container shipping operations
Shipping routes and network strategies
17
Source: Yap.
Factors influencing shipping service
configuration

18. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
• Determinants of container port traffic in the South Pacific
• Port tiers in the South Pacific
• Shipping line behaviour in container shipping operations
• Key players and their network strategy
– Competition, competitiveness and successful commercialization
– Recommendations
18

19. Key players and their network strategy
Shipping routes and network strategies
19
Source: Consultants.
Lae
Rabaul
Honiara
Fiji
New Caledonia
Vanuatu
Solomon Islands
Papua New Guinea
Australia
Lautoka
Suva
Noumea
Port Moresby
Santo
Madang
Port Villa
Noro
Lae serves as primary hub for
ANZ-Asia and intra-regional
trades
Noumea serves as primary
hub for ANZ-East Pacific
and Americas trades
• Biggest opportunity is to attract mainline
services currently bypassing the region
• Deploy vessels up to 5,900 TEUs
• Mainline services will boost cargo by
three to four times from current levels
• Need to provide adequate handling
facilities and sufficient cargo base

20. Key players and their network strategy
Shipping routes and network strategies
20
Source: Consultants.
Honiara: 120 metres

21. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
• Market share analysis
• Competitive advantage analysis
• SWOT analysis
• Competitive analysis
• Focus areas 1 to 4
– Recommendations
21

22. Market share analysis
Competition, competitiveness, commercialization
22
Source: Consultants.
Much scope to build up capacity connected to these trade routes which could
translate into higher container throughput and better slot capacity utilization

23. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
• Market share analysis
• Competitive advantage analysis
• SWOT analysis
• Competitive analysis
• Focus areas 1 to 4
– Recommendations
23

24. Competitive advantage analysis
Competition, competitiveness, commercialization
24
Source: Consultants.
Port TEUs Competitive (dis)advantages Key customers
Lae
430 metres berth
11 metres draft
184,500
 Busiest container port
 Largest feeder network
 Highest slot utilization (70.9%)
 Strong local cargo base
 Transhipment hub for PNG
 Can handle 3G ships (3,500 TEUs)
Carpenters Shpg
Swire Shipping
New Pacific Line
Noumea
750 metres berth
10.3 metres draft
110,000
 Highest shipping capacity
 Largest container ships (2,560 TEUs)
 Second busiest container port
 Central location for Asia, ANZ, America
 High slot utilization (25%)
 Longest berth (750 metres)
CMA CGM
MSC
Swire Shipping
Port Moresby
125 metres berth
10.6 metres draft
89,500
 More shipping but less container traffic than Lae
 Difficult to receive big container ships
 Portek started 5-year operations
Swire Shipping
Carpenters Shpg
New Pacific Line
Sofrana

25. Competitive advantage analysis
Competition, competitiveness, commercialization
25
Port TEUs Competitive (dis)advantages Key customers
Suva
492 metres berth
12.5 metres draft
50,000
 Busiest container port in Fiji
 Second longest berth (492 metres)
 Deepest draft (12.5 metres)
 Low slot utilization (15%)
 Serves Asian market
CMA CGM
Swire Shipping
Pacific Direct
Sofrana
Lautoka
290 metres berth
10.5 metres draft
30,000
 Largest port for bulk cargo in Fiji
 Sister port to Suva
 Low slot utilization (12%)
 Mainly local cargo
 Serves ANZ-East Pacific, Americas
Swire Shipping
CMA CGM
Honiara
120 metres berth
9.1 metres draft
21,600
 Low slot utilization (11%)
 Mainly local cargo
 Limited vessel-handling capacity
 Limited cargo base
Carpenters Shpg
Swire Shipping
New Pacific Line
Rabaul
152 metres berth
10.2 metres draft
18,000
 Low slot utilization (13%)
 Mainly local cargo
 Many parallel calls at Honiara
Carpenters Shpg
New Pacific Line
Aitken Spence began
15-yr operations
Source: Consultants.

26. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
• Market share analysis
• Competitive advantage analysis
• SWOT analysis
• Competitive analysis
• Focus areas 1 to 4
– Recommendations
26

27. SWOT analysis
Competition, competitiveness, commercialization
27
Source: Consultants.

28. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
• Market share analysis
• Competitive advantage analysis
• SWOT analysis
• Competitive analysis
• Focus areas 1 to 4
– Recommendations
28

29. Competitive analysis
Competition, competitiveness, commercialization
29
Source: Consultants.
Supply restrictions:
Require berth length of 350 metres and
depth alongside of at least 13.0 metres

30. Competitive analysis
Competition, competitiveness, commercialization
30
Source: Consultants.
Demand restrictions:
• Two largest container ports in the region, Lae and Noumea, are situated roughly
at opposite ends of the Solomon Islands chain
• Large cargo base at these two ports will pose considerable challenges to
Honiara’s ambition to become a hub port in the region
• Large cargo base at a port will assure shipping lines to call and this brings
transhipment opportunities on top of local cargo
• Evidence of Lae which has feeder services
• If matters are left at the current state, Honiara could become a feeder port to
Lae or Noumea as well

31. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
• Market share analysis
• Competitive advantage analysis
• SWOT analysis
• Competitive analysis
• Focus areas 1 to 4
– Recommendations
31

32. Focus areas to boost the competitiveness of Honiara Port
Competition, competitiveness, commercialization
32
Source: Consultants.

33. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
• Focus areas
– Market segmentation analysis to attract additional traffic
– Development of an independent feeder network
– Development of a Honiara port cluster
– Growing the local cargo base
– Recommendations
33

34. Market segmentation analysis to attract additional traffic
Competition, competitiveness, commercialization
34
Market segment Priority Other potential targets
Time
frame
1
Shipping lines that call at the
Solomon Islands
Maersk Line
New Pacific Line
Carpenters Shipping
Swire Shipping
Greater Bali Hai
Sofrana
Short term
2
Shipping lines that charter slots
in segment 1
Hub Line
COSCO
Mitsui OSK Lines
NYK
Pacific Forum
Short term
3
Lines operating feeder svcs from
Lae
Hub Line PNG CEX
Bismarck Maritime
Curtain Bros PNG
Short term
4
Services calling in PNG region on
East/SE Asia-ANZ trade
Mariana Express ANA
ANL-CL APR
ANL-CL NAPX
Swire Shipg East/SE Asia
Swire Shipping SE Asia
Kyowa Paradise
Short term
5
Smaller svcs passing thru SI &
PNG on East/SE Asia-ANZ trade
Expand berth length to
350m with depth
alongside of 13m
Vessel sizes up to 2,500 TEUs
Medium
term
Source: Consultants.

35. Market segmentation analysis to attract additional traffic
Competition, competitiveness, commercialization
35
Source: Consultants.
Lae
Honiara
Noro
Port Moresby
From Tanjung
Pelepas,
Malaysia
Back to Tanjung
Pelepas, Malaysia
Papua New Guinea
Solomon islands
About 200 nautical miles in
each direction to/from Honiara
Market segment 1:
Additional sailing distance Maersk Line will
incur to turn around at Honiara instead of Noro

36. Market segmentation analysis to attract additional traffic
Competition, competitiveness, commercialization
36
Lae
Honiara
East/SE Asia 1 (from/to Singapore)
East/SE Asia 2 (from Singapore,
to Subic, Philippines)
From Yokohama, Japan
To Keelung, Taiwan
North Asia
service
Brisbane
Lihir
PNG service
Noro
Santo
To Kaohsiung, Taiwan
From Nukualofa,
Tonga
Port Villa
To Apia,
Samoa
Pacific Island service
Greater Bali Hai 1
Greater Bali Hai 2
Lautoka
Suva
Noumea
Port Moresby
New Zealand
ports
Australian
ports
Source: Consultants.
Market segment 1:
Swire Shipping and
Greater Bali Hai

37. Market segmentation analysis to attract additional traffic
Competition, competitiveness, commercialization
37
Source: Consultants.
Honiara
Solomon islands
Rabaul
Oro Bay
Madang
Hub Line PNG Express 1
Hub Line PNG
Coastal Express
New Pacific Line
(slot charter)
From Jakarta,
Indonesia
To Singapore
From Hong Kong To Busan, South Korea
Lae
Port Moresby
Papua New Guinea
Market segment 2:
Hub Line

38. Market segmentation analysis to attract additional traffic
Competition, competitiveness, commercialization
38
Source: Consultants.
Lae
Honiara
Port Moresby
Papua New
Guinea
Solomon islands
Rabaul
Madang
ANL APR
Mariana Express
Lines ANA
Swire Shipping East/South East Asia 1
Swire Shipping
East/South East Asia 2
Kyowa
Paradise
From Jakarta,
Indonesia
To Port Klang,
Malaysia
From Singapore
To Port Klang,
Malaysia
From Busan,
South Korea
To Townsville,
Australia
To Townsville,
Australia
From Singapore
To Noumea
From Singapore
To Noumea
801 nautical miles
800 nautical miles
562 nautical miles
ANL NAPX
Market segment 4:
Shipping services calling in PNG
on the East/SE Asia-ANZ trade

39. Market segmentation analysis to attract additional traffic
Competition, competitiveness, commercialization
39
Source: Consultants.
Market segment 5:
Smaller services passing
through Solomon Islands
and PNG on the East/SE
Asia-ANZ trade
Market segment would be better served by provision of berth length of 350 metres
with depth alongside at 13.0 metres

40. Market segmentation analysis to attract additional traffic
Competition, competitiveness, commercialization
40
Source: Consultants.
Market segment Priority Other potential targets
Time
frame
6
Larger vessels passing thru SI &
PNG on East/ SE Asia-ANZ trade
Expand berth length to
450m with depth
alongside of 14m
Third generation container
ships
Longer
term
7
Mainline svcs passing thru SI &
PNG on East/SE Asia-ANZ trade
Expand berth length to
750m with depth
alongside of 15m
Fourth and fifth generation
container ships
Longer
term
8
Lines that ply on Americas-ANZ
trade
Matson CLX 1
Hamburg Süd/Maersk
Pacific VSA PSW
Pacific VSA PNW
PIL CTP
CMA CGM/Marfret PAD
Longer
term
9
Shipping services that ply on the
ANZ-East Pacific trade
Maersk Line
Sofrana
Swire Shipping
MSC
Pacific Direct Line
Neptune Pacific
Reef Shipping
Express Cook Is Line
Mataroa Int’l Shipping
Longer
term

41. Market segmentation analysis to attract additional traffic
Competition, competitiveness, commercialization
41
Source: Consultants.
Require expanding port
infrastructure to berth of
450 metres and depth
alongside of 14.0 metres
Market segment 6:
Larger vessels passing
through Solomon Islands
and PNG on the East/SE
Asia-ANZ trade

42. Market segmentation analysis to attract additional traffic
Competition, competitiveness, commercialization
42
Source: Consultants.
Market segment 7:
Mainline services passing
through Solomon Islands
and PNG on the East/SE
Asia-ANZ trade
Require 750 metres of berth
and at least 15 metres draft

43. Market segmentation analysis to attract additional traffic
Competition, competitiveness, commercialization
43
Source: Consultants.
Honiara
Solomon Islands
North America
South America
New Zealand
Australia
Objective is to swing
traffic to Honiara
Matson’s South Pacific services
Market segment 8:
Shipping lines plying on
the Americas-ANZ trade

44. Market segmentation analysis to attract additional traffic
Competition, competitiveness, commercialization
44
Source: Consultants.
Market segment 9:
Shipping services plying
on ANZ-East Pacific trade

45. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
• Focus areas
– Market segmentation analysis to attract additional traffic
– Development of an independent feeder network
– Development of a Honiara port cluster
– Growing the local cargo base
– Recommendations
45

46. Development of an independent feeder network
Competition, competitiveness, commercialization
46
Source: Consultants.
An independent feeder
network which serves
smaller ports may help
to circumvent the hub
statuses of Lae and
Noumea
Townsville
Lautoka
Suva
Noumea
Lae
Madang
Lihir
Noro
Wewak
Oro Bay
Fiji
New Caledonia
Vanuatu
Solomon Islands
Australia
Port Moresby
Honiara
Rabaul
Transhipment hub
Feeder port candidates
Lae as the regional
transhipment hub:

47. Development of an independent feeder network
Competition, competitiveness, commercialization
47
Source: Consultants.
Lautoka
Suva
Noumea
Lae
Madang
Lihir
Noro
Wewak
Oro Bay
Fiji
New Caledonia
Vanuatu
Solomon Islands
Australia
Port Moresby
Honiara
Rabaul
Potential transhipment hub
Feeder port candidates
Santo
Port Villa
1a. Honiara as a
hub for hub-and-
spoke transhipment

48. Development of an independent feeder network
Competition, competitiveness, commercialization
48
Source: Consultants.
Potential transhipment hub
Feeder port candidates
Need to assess cargo growth
potential of feeder ports.
Honiara
Auki
BualaGizo
Kamaosi
Kirakira
Lata
Munda
Noro
Taro Island
Tigoa
Tulagi
Tabarato
Kandova
Surairo
Wairokoi
Ruaniu
Nguvia
1b. Honiara as a
national hub for hub-
and-spoke transhipment

49. Development of an independent feeder network
Competition, competitiveness, commercialization
49
Source: Consultants.
Honiara
Solomon Islands
North America
South America
New Zealand
Australia
East Asia
South
East Asia
East Asia-New Zealand service
South East Asia-
Australia service
2. Honiara as a hub for
inter-lining transhipment

50. Development of an independent feeder network
Competition, competitiveness, commercialization
50
Source: Consultants.
Honiara
Solomon Islands
North America
South America
New Zealand
Australia
East Asia
South
East Asia
3. Honiara as a hub for
relay transhipment

51. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
• Focus areas
– Market segmentation analysis to attract additional traffic
– Development of an independent feeder network
– Development of a Honiara port cluster
– Growing the local cargo base
– Recommendations
51

52. Development of a Honiara port cluster
Competition, competitiveness, commercialization
52
Source: Consultants.
Vessel entry and departure formalities
(customs and immigration)
Berth arrangement
Pilotage
Bunkering
Fresh water supply
Food provisions
Store supply
Stevedoring
Warehousing
Dry-docking and repair
Underwater repairs, cleaning,
photography, rudder, propeller
polishing
Hull, deck and engine survey
Safety inspection
Crew change
Crew training and certification
Medical assistance
Discharge of slops and tank cleaning
Waste disposal
Cargo stowage planning
Charts and publications
Legal advisory

53. Development of a Honiara port cluster
Competition, competitiveness, commercialization
53
Source: Consultants.
Honiara Port Cluster
Navy
Bunker
Engineering
Domestic
Ferry
Shipping
Seaport Maritime
Services
Ship
Repair
Marine
Equipmnt
Cruise
Fishing
Defence
Transport
and Logistics
Energy
Construction
Port-related
Industry Service
Industry
Steel
Industry
Metal
Working
Machinery
Recreation
and Tourism
Fish Production and
Processing Industry

54. Development of a Honiara port cluster
Competition, competitiveness, commercialization
54
Source: Consultants.

55. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
• Focus areas
– Market segmentation analysis to attract additional traffic
– Development of an independent feeder network
– Development of a Honiara port cluster
– Growing the local cargo base
– Recommendations
55

56. Growing the local cargo base
Competition, competitiveness, commercialization
56
Source: Consultants.
Sizeable local
cargo
More
shipping
traffic
Carriers
perform
transhipment
Economies of
scale and
network
economies
Honiara
becomes a
load centre
Virtuous cycle of cargo growth
for the Port of Honiara:

57. Growing the local cargo base
Competition, competitiveness, commercialization
57
Source: Consultants.
• Limited population size with small consumption volumes
• Limited hinterland that is captive to the port
• Limited port drafts which restricts calls by larger mainline vessels
• Limited terminal handling capacity which caps cargo throughput growth
• Inefficient work processes which lowers port productivity resulting in
excessive berth time and waiting time for the vessel
• Lack of space for future port capacity expansion
• Lack of support by policy makers
Challenges:

58. Growing the local cargo base
Competition, competitiveness, commercialization
58
Source: Consultants.

59. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
• Forecast of potential demand
• Port marketing considerations
• Key accounts management
• Critical issues for port commercialization
• Public relations management
– Recommendations
59

60. Forecast of potential demand
Competition, competitiveness, commercialization
60
Source: SIPA.
0
5,000
10,000
15,000
20,000
25,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Transhipment
Local
99.8%
97.6%
87.7%
94.6%
95.8% 90.2% 98.1% 98.8%
98.4%
95.9%+22.9%
+22.1% +0.6%
+29.9% +0.6%
-11.4% +0.3%
+26.3%
+13.5%
TEUs
Container throughput handled at Honiara Port (2003-2012):

61. 0
2,000
4,000
6,000
8,000
10,000
12,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Export Full
Export Empty
Import Full
Import Empty
Forecast of potential demand
Competition, competitiveness, commercialization
61
Source: SIPA.
Constitution of import and export containers at Honiara Port (2003-2012):

62. Forecast of potential demand
Competition, competitiveness, commercialization
62
Source: Consultants.
Modus Operandi Scenario:
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Transhipment
Local cargo
21,564
46,327
CAGR 2012-2035: 3.5%
TEUs
23,182
25,273
27,399
29,566
31,749
33,948
36,163
38,393
40,640
42,903
45,182
Assumptions:
 Local containers grow at 1,000 TEUs p.a.
 Reliance on local cargo
 Transhipment share at less than 6%
 Basic port and shipping-related services
 No plans for industrialization
 No plans for tourism hub development

63. Forecast of potential demand
Competition, competitiveness, commercialization
63
Source: Consultants.
Hub Port Scenario:
0
50,000
100,000
150,000
200,000
250,000
300,000
Industrial zone
Transhipment
Local cargo
21,564
260,461
TEUs
25,743
35,025
69,406
91,371
113,432
135,647
157,942
180,423
203,056
225,854
248,893CAGR 2012-2035: 12.0%
Estimated capacity limit for 150m berth
Assumptions:
 Local containers grow at 2,000 TEUs p.a.
 Feeder networks feed cargo to Honiara
 Industrialization undertaken
 Basic port and shipping-related services
 No plans for tourism hub development

64. Forecast of potential demand
Competition, competitiveness, commercialization
64
Source: Consultants.
Hub Port Scenario:
0
50,000
100,000
150,000
200,000
250,000
300,000
Industrial zone
Transhipment
Local cargo
TEUs
Estimated capacity limit for 150m berth
Strong industrial zone performance,
20% above baseline projection
Weak industrial zone
performance, 30%
below baseline
projection
Industrial zone: 1,000 hectares or 10 km2
Single plot size of 2 hectares or 20,000 m2
350 low-rise factories
Each factory generates 500 TEUs per annum
Projected to contribute 175,000 TEUs in total

65. Forecast of potential demand
Competition, competitiveness, commercialization
65
Source: Consultants.
Port Cluster Scenario:
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Industrial zone
Transhipment
Local cargo
21,564
728,912
TEUs
29,939
43,724
90,103
122,082
158,424
200,569
250,339
310,989
386,413
485,677
629,166
CAGR 2012-2035: 17.4%
Assumptions:
 Local containers grow at 4,000 TEUs p.a.
 Transhipment strategy anchors hub status
 Industrialization undertaken
 Tourism hub development
 Suite of port and shipping-related services

66. Forecast of potential demand
Competition, competitiveness, commercialization
66
Source: Consultants.
Port Cluster Scenario:
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
21,564
728,912
TEUs
29,939
43,724
90,103
122,082
158,424
200,569
250,339
310,989
386,413
485,677
629,166
Estimated capacity limit
for 150m berth
Estimated capacity limit
for 350m berth
Estimated capacity limit
for 450m berth
Estimated capacity limit
for 750m berth
Providing sufficient capacity
to accommodate vessel and
cargo traffic is key!

67. Forecast of potential demand
Competition, competitiveness, commercialization
67
Source: Consultants.
Summary of demand forecasts:
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
TEUs
Port Cluster Scenario
CAGR 2012-2035: 17.4%
Hub Port Scenario
CAGR 2012-2035: 12.0%
Modus Operandi Scenario
CAGR 2012-2035: 3.5%21,564
728,912
260,461
46,327

68. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
• Forecast of potential demand
• Port marketing considerations
• Key accounts management
• Critical issues for port commercialization
• Public relations management
– Recommendations
68

69. Port marketing considerations
Competition, competitiveness, commercialization
69
Source: Consultants.
Two important groups of customers Honiara Port must take into account:
1. Shipping lines

70. Port marketing considerations
Competition, competitiveness, commercialization
70
Source: Consultants.
Two important groups of customers Honiara Port must take into account:
1. Shipping lines

71. Port marketing considerations
Competition, competitiveness, commercialization
71
Source: Consultants.
Two important groups of customers Honiara Port must take into account:
2. Shippers

72. Port marketing considerations
Competition, competitiveness, commercialization
72
Source: Consultants.
• When targeting new customers, Honiara should be extremely careful not to
enter into a rate war and negative price spiral for all customers
• Transhipment market is much more volatile than the import/export market
• Gaining market share by increasing import/export volumes is likely to be
more time consuming but this strategy is more sustainable
• Cost is usually the primary focus of shipping lines. As such, Honiara must
develop new ways of improving efficiency and effectiveness

73. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
• Forecast of potential demand
• Port marketing considerations
• Key accounts management
• Critical issues for port commercialization
• Public relations management
– Recommendations
73

74. Key accounts management
Competition, competitiveness, commercialization
74
Source: Consultants.
Cycle of
Customers
Prospects
Existing
customers
New
customers
Ex-
customers
Customer relationship management:

75. Key accounts management
Competition, competitiveness, commercialization
75
Source: Consultants.
Key accounts for Honiara Port:

76. Key accounts management
Competition, competitiveness, commercialization
76
Source: Consultants.
• Managing well the relationship between the port of Honiara and key
customers is an important task
• Key account management involves coordinating interfaces between various
functions of the port and key account’s organization
• Key account management aims to deliver customer satisfaction, high level of
service and customer profitability
• Aim is to cultivate deep relationships with shipping lines and shippers so as
to convince them to handle more cargo and vessels through Honiara
• Authorities should understand the network strategy and primary motivation of
these lines to better cater to their needs

77. Key accounts management
Competition, competitiveness, commercialization
77
Source: Consultants.
Key account matrix:

78. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
• Forecast of potential demand
• Port marketing considerations
• Key accounts management
• Critical issues for port commercialization
• Public relations management
– Recommendations
78

79. Critical issues for port commercialization
Competition, competitiveness, commercialization
79
Source: Consultants.
• The port is an important gateway through which Honiara interacts with other
communities
• As the capital city, the port carries the additional important dimensions of social
and economic development for the country
• Policies made with respect to the port will have irrevocable and wide-ranging
impact on the country’s long-term propensity for competitiveness, growth and
development
• Any policies regarding commercialization of port operations or assets must
consider potential implications for:
• Commercial viability for operators
• Steady flow of financial revenue for government authorities
• Sustainable competitive setting where monopolistic tendencies will not set in

80. Critical issues for port commercialization
Competition, competitiveness, commercialization
80
Source: Consultants.
Demand conditions
Supply conditions
Market structure
Demand size
Demand growth
Demand composition
Cargo handling capacity
Vessel handling capacity
Contestability
Small
Weak
Unbalanced
Inadequate
Monopolistic
Oligopolistic

81. Critical issues for port commercialization
Competition, competitiveness, commercialization
81
Source: Consultants.
Shipping line/service Shipping agent
Carpenters Shipping Sullivans
Greater Bali Hai Tradeco
New Pacific Line Tradeco/Sullivans
Sofrana Tradeco
Swire Shipping Tradeco
Shipping line Cargo owner Ship agent SIPA Shipping services
Monopolization of the port value chain?

82. Critical issues for port commercialization
Competition, competitiveness, commercialization
82
Source: Consultants.
Contestability in
terms of port
connectivity:

83. Critical issues for port commercialization
Competition, competitiveness, commercialization
83
Source: Consultants.
100,000 TEUs
Steady
Import/Export/Transhipment
Expand port facilities
Develop new port
Addressing demand
conditions is key

84. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
• Forecast of potential demand
• Port marketing considerations
• Key accounts management
• Critical issues for port commercialization
• Public relations management
– Recommendations
84

85. Public relations management
Competition, competitiveness, commercialization
85
Source: Consultants.
• Honiara Port will also have to manage its relations with the public
• This is important when the public are important customers of the port as well
• Communications management
• Crisis management
• Corporate image and branding
• Risk management

86. Public relations management
Competition, competitiveness, commercialization
86
Source: Consultants.
1. Communications management

87. Public relations management
Competition, competitiveness, commercialization
87
Source: Consultants.
2. Crisis management
• Minimize disruption to Honiara’s critical
port and shipping-related business
processes, facilities and operations in
order to facilitate a rapid recovery from a
crisis or negative event
• Provide Honiara’s BCM Team with a
procedure for recovering critical
business operations, business functions
or suppliers that support company core
business
• Identify and prioritize resources needed
during business recovery and
restoration efforts

88. Public relations management
Competition, competitiveness, commercialization
88
Source: Consultants.
3. Corporate image and branding
Corporate Branding
Advertising
Logos
Websites
Vision
Brochures
Service quality
Marketing
Credibility
Physical infrastructure
• Image of the port directly affects port usage
and user take-up:
• Poor image could result in shipping lines
hesitating to initiate direct calls
• Good image will result in greater ease of
reception and appeal especially to
shipping lines who are deciding to
initiate direct calls for the first time
• An image of a pro-active, pro-business and
pro-excellence SIPA will likely result in
shipping lines and other members of the port
community that will want to do business with
the port
• Communications and marketing efforts are
likely to be more effective as well

89. Public relations management
Competition, competitiveness, commercialization
89
Source: Consultants.
4. Risk management
Risk Identification
(Source of risk)
Risk Analysis
(Prioritization)
Risk Monitoring
(Results/impact)
Risk Control
(Mitigation)

90. Public relations management
Competition, competitiveness, commercialization
90
Source: Consultants.
Risk assessment matrix:

91. Public relations management
Competition, competitiveness, commercialization
Source: Consultants.
Enterprise risks faced by Honiara Port:
Pricing pressure Competitive pressures on prices as cargo volume growth
slows in South West Pacific
Cost cutting and profit
pressure
Narrower margins shipping lines can absorb
Market risk Price volatility, interest rate hikes by U.S. Federal Reserve,
volatility of SBD
Macroeconomic risk Another major economic crisis setting back world trade
91

92. Public relations management
Competition, competitiveness, commercialization
Source: Consultants.
Enterprise risks faced by Honiara Port:
Management talent
and skill shortage
SIPA must have right people to implement and maintain
changes
Regulation and
compliance
Companies have to spend more on compliance costs
92
Sovereign debt Japan going bankrupt?
Emerging technologies
Organizations with requisite technologies are increasing
their competitive lead

93. Public relations management
Competition, competitiveness, commercialization
93
Source: Consultants.
Enterprise risks faced by Honiara Port:
Political shock Emerging markets brings higher exposure to political
shocks
Fraud Typical organization loses about 5% of revenues to fraud
Industry concentration Leads to cluster degeneration and loss of competitiveness
Reputation risk Loss of goodwill by shipping lines and shippers

94. Public relations management
Competition, competitiveness, commercialization
Major risk areas for Honiara Port Implication
1 Failed commercialization Results in cluster degeneration
2
Failure to capitalize on transhipment opportunities
accorded by strategic geographical position
Results in low cargo throughput
3 Failure to significantly boost cargo and vessel traffic Relegation to feeder port
4 Failure to provide sufficient capacity
Missed opportunity to boost demand
growth
5
Overcapacity as a result of weaker than expected
demand growth
High opportunity cost for port development
94
Source: Consultants.

95. Public relations management
Competition, competitiveness, commercialization
Major risk areas for Honiara Port Implication
6
Failure to develop BCM and ERM plan to respond to
potential human and/or nature-induced disasters
Port operations come to standstill,
adversely affecting Honiara’s reputation and
image
7
Failure to enlist commitment and support of the port
community to enhance overall competitiveness and
competitive advantage offering of the Honiara Port
Cluster
Low cargo throughput and lack of cluster
dynamism
8
Failure to step up in terms of port efficiency and
productivity
Loose potential market share to competitor
ports
9 Failure to have capable people in key positions
Challenges in bringing the port of Honiara
onto a new stage of growth and
development
95
Source: Consultants.

96. Public relations management
Competition, competitiveness, commercialization
96
Source: Consultants.
Risk control model for
the port of Honiara:

97. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
– Recommendations
• Quick wins
• Short term
• Medium term
• Longer term
97

98. Quick wins (over the next 12 months)
Recommendations
98
Source: Consultants.
Set up Commercial department
• Market research unit
• Marketing unit
• BCM and ERM unit
Enhance competitiveness,
marketing effectiveness,
contingency response and
image development

99. Quick wins (over the next 12 months)
Recommendations
99
Source: Consultants.
Market Research Unit
Good sensing of market developments in the port and shipping scene and broad
competitive environment in the port landscape
Key deliverables:
• Competitive benchmarking
• Port and shipping trends
• Database
• State of port development and competitiveness building
• Half yearly reports and presentations to management

100. Quick wins (over the next 12 months)
Recommendations
100
Source: Consultants.
Marketing Unit
Develop, strategize, communicate and evaluate feedback from key stakeholders in the
Honiara port cluster
Key deliverables:
• Marketing plan for the short term time frame
• Database of key accounts and other customers
• Develop and maintain key accounts management system
• Develop and maintain strong relationships with key accounts
• Conduct annual customer surveys and focus group meetings
• Develop and maintain positive image, branding of Honiara Port

101. Quick wins (over the next 12 months)
Recommendations
101
Source: Consultants.
BCM and ERM Unit
Foster and reinforce culture of preparedness and mindset to enable quick response to any
contingencies that may arise
Key deliverables:
• BCM and ERM plan identifying events that can result in significant losses to the port
• Contingency plans to mitigate risks and provide continuation of Honiara’s core business
• Perform regular user testing against multiple scenarios to reinforce familiarity and foster
BCP/ERM culture

102. Quick wins (over the next 12 months)
Recommendations
102
Source: Consultants.
Set up consultation processes with shipping lines, shippers and shipping agents separately
• Provide an avenue where collaborative win-win strategies can be forged through better
understanding of each party’s challenges and concerns
• Can also serve to forge a stronger bond within the Honiara port community

103. Quick wins (over the next 12 months)
Recommendations
103
Source: Consultants.
Set up key account management process
• Company information, contact details of direct point of contact, key decision makers
• Contract information, details of historical meetings and list of activities and notes
• Opportunities pipeline report
• Lost deal analysis – where improvements can be made to secure future customers
• Track record of marketing campaigns
• Customer feedback – outstanding issues, action items, customer satisfaction

104. Quick wins (over the next 12 months)
Recommendations
104
Source: Consultants.
Key account matrix:

105. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
– Recommendations
• Quick wins
• Short term
• Medium term
• Longer term
105

106. Short term (1-3 years)
Recommendations
106
Source: Consultants.
Target market segments in the short term:

107. Short term (1-3 years)
Recommendations
107
Source: Consultants.
Survey action plan
• Market research unit to conduct annual surveys of the port and shipping community
• Solicit feedback on customer satisfaction with current levels of services offered, major
concerns, as well as services which the port should offer

108. Short term (1-3 years)
Recommendations
108
Source: Consultants.
Development of an inter-island feeder network
• Entrench hub status of Honiara in the Solomon Islands by consolidating cargo at the port
• Step 1: Identify major load centres and key traffic flows in the Solomon Islands
• Step 2: Determine the market structures along these routes, e.g. number of service
providers, vessel types, frequency, source of cargo demand and seasonal variations
• Step 3: Analyze possible constraints to higher traffic volume
• Step 4: Work out possible solutions to increase traffic flows
• Step 5: Implementation
• Step 6: Evaluation of results

109. Short term (1-3 years)
Recommendations
109
Source: Consultants.
Development of the tourism industry
• Strong and thriving tourism industry will provide a good source of transient demand
• Labour-intensive in nature, source of income and employment generator for the country
• Inter-government agency effort and will require coordination between various ministries

110. Short term (1-3 years)
Recommendations
110
Source: Consultants.
Honiara port cluster development plan:
• Port-centric model is the most attractive option
• Anchored on activities that are centred on the
port and shipping lines
• Honiara already offers some of these activities
• Widen the range of services offered as well as
deepen the level of competition to elicit
competitive services and pricing

111. Short term (1-3 years)
Recommendations
111
Source: Consultants.
Set up communications, corporate image and branding unit:
• Where the level of customer profile,
sophistication and complexities in
managing stakeholders has matured
in relation to the cargo and vessel
traffic handled
• Unit to develop a corporate image that
is consistent with the port and create
an appropriate brand for the Honiara
port cluster

112. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
– Recommendations
• Quick wins
• Short term
• Medium term
• Longer term
112

113. Medium term (3-5 years)
Recommendations
113
Source: Consultants.
Target market segments in the medium term:
Requires expansion of container berth to 350 metres
in length with depth alongside of 13.0 metres

114. Medium term (3-5 years)
Recommendations
114
Source: Consultants.
Development of an export oriented industrial zone
• Presence of a strong manufacturing sector is vital in providing a sound local cargo base
for Honiara Port to draw upon
• Local cargo base will attract more shipping lines to call at the port
• Some of these shipping lines are likely to build on their existing service networks to hub
transhipment operations in Honiara
• Important to develop an industrial zone with strong export competitiveness
• Additional benefits of boosting the country’s current account position

115. Medium term (3-5 years)
Recommendations
115
Source: Consultants.
Competition Act for the Honiara port cluster
• Enact Competition Act to protect consumers and businesses from anti-competitive
practices of undertakings in the port cluster
• Three main types of anti-competitive behaviour:
• Agreements, decisions and practices that prevent, restrict or distort competition
• Abuse of a dominant position
• Mergers that substantially lessen competition

116. Commercialization Strategy Report 2013
– Current state of the port landscape
– Key shipping routes and shipping lines’ network strategies
– Competition, competitiveness and successful commercialization
– Recommendations
• Quick wins
• Short term
• Medium term
• Longer term
116

117. Longer term (5-10 years)
Recommendations
117
Source: Consultants.
Target market segments
in the longer term:
Requires expansion of
container berth to 450-
750 metres in length
and depth alongside of
14-15 metres

118. Longer term (5-10 years)
Recommendations
118
Source: Consultants.
Target market segments
in the longer term:
Requires expansion of
container berth to 450-
750 metres in length
and depth alongside of
14-15 metres