Speaking at the beginning of this week’s RoRoEx conference in Gothenburg, Sweden, Mike Garratt, managing director of MDS Transmodal, pointed out that there was a 25% total increase in the intercontinental trade of goods between the first quarter of 2006 and 2012. Between 2007 and 2011 the total unit load of traffic across the globe grew 24% “almost as if the recession had not happened”.
“Even last year, between 2010-2011, total Far East exports grew by 7% and Far East exports into Europe grew by 7%,” said Garratt, adding that global car trade increased even more, growing by 12% in 2011 to reach 46.8m tonnes.
The principal import region for vehicles is still Europe, which saw an 8% growth. But the highest growth was intra-Asia, accounting for 17% of the international market, a 36% increase in 2011, with a 44% increase in vehicle traffic from Europe to the Far East.
“China is now a leading market for German goods and US exports and that is a very positive aspect of ro-ro trade,” he told attendees.
Looking over the last 12 years Garrat pointed to figures that showed that in 2000 there were 30m tonnes of vehicles shipped globally in international trade, growing up to 53m estimated for this year with a 78% growth.
However, in a session that contrasted this general international trend for growth in all goods shipped against a lamentably stagnant market within Europe, it was difficult to draw comparisons between the automotive sector and other industries.
Against the 24% growth in the total unit load of traffic between 2007 and 2011, intra-European unitized traffic showed hardly any growth.
Looking at the totality of trade between European countries generally, in containers and trailers, figures showed only 1%, with the total amount of ro-ro traffic recorded [in tonnage] moving between ports actually falling by 9% between 2005 and 2010 according to Eurostat, the European Commission’s statistics service,
Asked on the sidelines of the conference whether the global trade in vehicles was something that could be of benefit to the suffering European ro-ro industry, Garratt said that it was a very different sector of the ro-ro market, with the deep-sea providers not really part of it at all.
“You’ve got the apparent contradiction of global growth in cars while the port of Bristol, which was probably the leading UK port for cars, having a bad time because it was entirely based on the import of cars to the country,” said Garratt.
He pointed out that vehicles delivered from the Far East or Fiat deliveries from the Mediterranean were characterized by long dwell times but said that exports need to go out on the next ship, something that benefitted Southampton. He also pointed out that once popular Sheerness port in the UK is declining in terms of car volumes and looking at other project cargoes for business. “So you can’t say that just because the market is growing everyone benefits,” he told Automotive Logistics News.
However, last week’s announcement of a major development to enlarge Grimsby port’s car handling was a good example of where European vehicle trade would bring benefits.
“That is entirely for European traffic and it is specific for Volkswagen,” he observed. “The size of ships they were using through that existing Grimsby dock were extremely small, I think they were typically ships with a capacity for around 800 cars and that basically adds to the cost. It also meant VW had a very small pool of ships that they could charter from and that has an impact. It is good to have some choice to get the price down,” he added.
Garratt said that one way of challenging the problems facing European ports handling general ro-ro cargo, which are still largely dependent on road shipments, was to develop better rail connections for long distance haulage and that it was up to the ports to lead the way through the development of a port-centric distribution parks and by becoming actively engaged in the business of shipping.
Rail was also a long-term solution for the finished vehicle sector, as seen in VW’s relationship with DB Schenker, which benefits from a good hub and spoke arrangement in Germany. But more generally, this mode as an option for direct port access, is characterized by inertia said Garratt.
He pointed out that ro-ro was very successful at getting car parking located at ports and it was difficult for rail to break into it. “Once rail on the Continent achieves the competitiveness that it has achieved in some countries, including the UK, then the scope will be very considerable. Road haulage of new cars by road seems to me to be very expensive and it doesn’t need to be,” said Garratt.
In fact, vehicle delivery by road to individual dealerships was more than just expensive, it was something of an “absurd distribution system”.
“Why hasn’t the car industry discovered warehouses?” asked Garrat, pointing out the advantages of delivery to larger out-of-town locations, which could stock bigger numbers of vehicles, would not only cut costs by cutting road haulage costs but could reduce it as a mode by ushering a more effective use of rail delivery.
“It isn’t as if the manufacturer is trying to keep the dealer happy,” observed Garratt, “it seems to be the other way around normally. So why don’t the manufacturers tell the dealers what to do and say ‘we are going to deliver 500 cars here and then it is your problem.”