Terminal operators in Europe will soon face new pressures from mega-alliances, but have yet to show that their hinterland cargo can be delivered efficiently under the conditions envisaged. The FMC’s recent approval of the P3 alliance suggests that its services will become reality in all three proposed East-West routes by the middle of the year. Whatever shippers think of the development, Port Authorities and terminal operators will be challenged by its consequences, particularly in Europe. Port rationalisation so far announced by Maersk, MSC and CMA CGM means that much bigger chunks of Asian cargo will have to be discharged from every vessel, and then, just as importantly, processed through each gateway to its hinterland before the next arrives, possibly just a few days later.
The ability to berth vessels timeously will count for little if insufficient stack capacity is available to receive their cargo. In most cases, that means greater use of intermodal transport, as most EU roads are already congested. Berthing vessels on time also depends on them arriving on time, which, as regularly reported in Drewry’s Carrier Performance Insight, cannot be taken for granted, particularly in the case of MSC.
The problem of handling vessels over 14,000 teu is not new, only the scale of it is escalating, as evidenced by Evergreen’s plans to join the CKYH alliance between Asia and Europe this month, and the spate of ULCV ships still being ordered (see Table 1), all of which are earmarked for the Asia/Europe trade.
The G6 and CKYHE alliances will also have to become much more integrated than simple vessel sharing agreements in order to match P3’s efficiency, which means further port rationalisation. Like P3, their port calls will get fewer as vessels get bigger, so the cargo needing to be processed in favoured ports every week will inevitably escalate.
The ability to berth vessels timeously will count for little if insufficient stack capacity is available to receive their cargo. In most cases, that means greater use of intermodal transport, as most EU roads are already congested. Berthing vessels on time also depends on them arriving on time, which, as regularly reported in Drewry’s Carrier Performance Insight, cannot be taken for granted, particularly in the case of MSC.
The problem of handling vessels over 14,000 teu is not new, only the scale of it is escalating, as evidenced by Evergreen’s plans to join the CKYH alliance between Asia and Europe this month, and the spate of ULCV ships still being ordered (see Table 1), all of which are earmarked for the Asia/Europe trade.
The G6 and CKYHE alliances will also have to become much more integrated than simple vessel sharing agreements in order to match P3’s efficiency, which means further port rationalisation. Like P3, their port calls will get fewer as vessels get bigger, so the cargo needing to be processed in favoured ports every week will inevitably escalate.
Asia/North Europe services have already changed significantly over the past two years. Whilst average vessel size only increased from 9,367 teu to 10,923 teu, the number of weekly services has reduced from 30 to 22, and the number of port calls from 104 to 87. Interestingly, the number of Northern European ports served did not decrease, only the frequency, as shown in Figure 1.
Figure 1
Comparison of Asia/N Europe Port Calls Between 2012-2014
Comparison of Asia/N Europe Port Calls Between 2012-2014
Figure 2 shows the way Maersk, MSC and CMA CGM’s schedules between Asia and Northern Europe will further change once P3 is established. Average vessel size will increase from 11,580 teu to 13,032 teu, but the number of weekly services will be reduced from nine to eight, and the number of port calls from 41 to 32. In our view, similar reductions will occur in Asia and North America in a few years.
Figure 2
Maersk/MSC/CMA CGM Asia/N Europe Service Port Calls in N Europe
Maersk/MSC/CMA CGM Asia/N Europe Service Port Calls in N Europe
European ports have seen this challenge coming for a long time, which is why so much time and money has been invested in dredging and the development of intermodal transport. The latter remains a problem, however, as Europe’s railway infrastructure is still more congested than its roads. For example, Rotterdam has been at the forefront of developing intermodal transport, yet the way its hinterland cargo is transported has changed little over the past four years (see Table 2). The Netherlands is still the only country with a dedicated railway line for freight (between Rotterdam and the German border), and, like Antwerp, has improved its barge handling facilities enormously.
Table 2
Rotterdam’s Modal Split of Containers between 2009 and 2012 (% of total)
Table 2
Rotterdam’s Modal Split of Containers between 2009 and 2012 (% of total)
The table is deceptive as although 54% of Rotterdam’s hinterland cargo moved by road in 2012, which percentage is said to have changed little in 2013 (final figures are not yet available), the proportion is much higher for short distances. Likewise, rail scores better over longer distances. Also, much cargo that used to be stuffed/unstuffed in the port is now handled at ‘inland’ ports such as Duisburg on the German border. Duisburg is Europe’s largest inland port and increased its container traffic by another 16% last year, up to three million teu, whereas Rotterdam’s cargo declined by 2.1%, down to 11.6 million teu.
Hamburg’s modal split also changed little in 2013, with road’s share still reaching 59%, compared to 39% for rail transport and 2% for barge transport. For distances over 700km, rail’s share rises to over 70%, however.
Our View
Europe’s slow climb out of recession means that cargo growth should remain manageable this year and next, but it is only a temporary benefit of the economic slowdown. Much more needs to be done to improve intermodal transport.
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