After devastating drops in 2009, European ports saw recovery for vehicle volumes in 2010, although most are still far from their peaks. Chris Lewis investigates current and future developments in the market. Additional reporting by Christopher Ludwig
The strong recovery for car volumes in most European ports’ fortunes seen in 2010 is testimony to the resilience of the sea trade for automotive, aided as well by a car market propped up by incentives in several major markets for at least part of the year. But the fact that some could grow as much as 50% but still be nowhere near the record totals hit only a few years ago is an indication of the depth of the recession into which the industry has been mired since 2008. And with the incentive period over for 2011, the question remains how well ports will perform, particularly those that rely more on imports.
In contrast with 2009, almost all the top ten ports recorded some growth last year, although in some cases import and export trades moved in opposite directions. The fact that most ports recorded at least some growth also means that the top of the table in 2010 doesn’t look hugely different from 2009 and indeed the top four performers of 2009–Zeebrugge, Bremerhaven, Emden and Grimsby/Immingham/ Killingholm–have neatly arranged themselves in the same order this year too. With a few exceptions, most ports find themselves within a place or two of their position in the 2009 league table.
The biggest change to the top order is the arrival of the British port of Tyne, near Newcastle, which has surged several places up the table and now finds itself in the top flight. But even here, an overall growth rate of near 50% has not been quite enough deliver an all-time record.
On the whole, the major ports’ growth does not seem to have been at the expense of the smaller players–or vice-versa– as the growth has largely been across the board. While there are those who believe that the recession will shake some of the smaller players out of the car handling market, there is little evidence on the strength of these figures that this is happening yet.
Handling records are still as rare this year as the proverbial hens’ teeth, though this should not perhaps be surprising given the length and the severity of the recession that the car industry has been in. Of the major ports, Emden in Germany– the major port for the Volkswagen Group–is currently one close to its all-time high. But Belgiums’ Zeebrugge–Europe and indeed the world’s number one port for cars–is a good 600,000 or so units off its best ever year, while number two Bremerhaven is around 500,000 cars adrift. Very broadly speaking, volumes in most ports are back to what they were in about the middle of the last decade or so. Of the 29 ports that reported figures for 2010 to Finished Vehicle Logistics, the overall gain from 2009 was nearly 24%. In 2009, a similar sample of ports reported a decline of 30%. Future for ports: China, electric cars, value-add? The question now for the ports is whether it is reasonable to expect the car market to return to 2007 or 2008 levels at any time in the near future. The strength of cross-border sales and transport to, from and between European nations cannot be disputed; for production within Europe short sea transport is likely to retain a high share. A bigger question would be whether cars will still be traded over long distances by sea at current or growing volumes. While historically the flows had been strongest moving west, whether from Europe to North America, or from Japan and South Korea to Europe, recent years have seen a shift, with Asian imports to Europe largely weaker, while European (particularly German) exports to the Chinese market have grown sharply.
Already German and other European manufacturers have made moves to increase production in the US and North America, limiting exposure to fluctuations in the Euro, including VW’s new factory in Tennessee and increased production plans for BMW and Mercedes-Benz. Will the same continue to happen for China? In contrast, will Chinese manufacturers move beyond small experimental export volumes and finally start exporting to Europe on a large scale, which might increase long-distance movements? For the short term, at least, most experts suggest that exports of Europeanmade cars to China will remain strong even as more localised production increases. The EU’s recently signed free trade deal with South Korea–assuming that it is fully ratified by all sides sometime in 2011–might also start to increase trade volumes from Europe to that country from this
year onwards. If electric cars gain a foothold in the European market that might again change the pattern of trade. While the first wave of these cars, from Nissan and Mitsubishi, will arrive from Japan, China’s BYD may also target the European market. Others may come in small volume from non-traditional regions (there are start-up companies in California, South Africa, Norway and elsewhere). They may also need special handling facilities and such a niche market could favour smaller ports. One school of thought suggests that shipping completed electric cars throws up some awkward problems–batteries could run down on long voyages making them impossible to move on arrival and there might also be dangerous goods issues with batteries. A better solution might be to set up local assembly operations in Europe and ports may have a role in this–at least one operator is studying the feasibility of setting up an assembly plant on its estate.
Indeed, while the big volumes of imported and exported cars tend to grab the headlines, much of the future profit in car logistics might be in added-value activities like this. It certainly could be the way forward for the more niche operations that may find it harder to compete simply on price and economies of scale. Few of the major car ports have large construction projects underway, though many have future plans and some ongoing smaller schemes are in hand. Most ports have plenty of capacity to handle the current levels of demand, although a return to the levels of trade last seen in 2008 could start to put some of the busier ports’ infrastructure under pressure.
Europe may be a mature market with little underlying growth, but that does not mean that it will not significantly change and adapt in future, says port of Zeebrugge vice-president and commercial manager Vincent Desaedeleer. “After the ‘rupture’ of 2009, we see a lot of volumes scattered around Europe, which will need rethinking in terms of logistics.”
He argues that it may well be that volumes of 300,000 cars per year, for example, which used to justify a stand-alone port and logistics operation, have sunk to 100,000 and no longer do so. While there is as yet little firm evidence to back this theory up, it is certainly a given that “the more volumes you have, the easier logistics becomes,” argues Desaedeleer.
There are likely to be changes to manufacturing patterns too, especially given the amount of surplus production capacity in Europe. Here, the effect on port volumes is harder to gauge. A shift in manufacturing to UK plants, for example, could increase traffic, but a move to Eastern Europe might reduce it. Whatever the outcome, Desaedeleer is convinced that the major shifts in European car manufacturing “are not over yet”.
The world’s largest carports
Having enjoyed a spectacular, near 25% increase in Zeebrugge’s car volume in 2010 over 2009, Desaedeleer is optimistic that 2011 will see a further rise in volume, though it’s too early to say yet whether 2010’s surge can be repeated. “However, I think we will grow ahead of the market,” he says. Even the 2010 figure is way below the 2.3m peak hit in 2008 and it would take a repeat of 2010’s percentage growth to even hit the 2m-mark in 2011. But Zeebrugge can take heart from the fact that even in the midst of the downturn, when volumes dipped to under 1.3m, the port retained its top spot, not only in Europe, but the world.
With capacity to spare, the port isn’t planning any major physical works; any increase in volume can easily be accommodated at existing jetties, ramps and terminals, says Desaedeleer. In Germany, the fortunes of the
car trade largely swing on the actions of the major domestic manufacturers. Bremerhaven, Germany’s top car port and the largest in Europe for export, said that growth in 2010 was mainly led by a recovery in exports by German OEMs after the crisis in 2009. Imports were lower than 2009 because of the expiration of the government’s scrappage bonus, when the large number of new registrations led to a momentary boom in imports. As a reaction to the end of the scrappage scheme, the German domestic market declined by 23% in 2010, but is now recovering from that effect “step by step”, according to a spokesman for the port’s terminal operator, BLG.
Looking to future developments, the port will be inaugurating the new Kaiserschleuse lock on April 29th, currently the largest construction project of its kind in Europe and replacing a lock that dates back to 1897. The new lock chamber will be 305 metres long, 55 metres wide and 13 metres deep, vastly improving ship access and allowing Bremerhaven to handle the largest car carriers in the world. On the IT front, BLG is introducing its new JC@rS (Java Car System) to handle planning and controlling, storage, order management and the transport of vehicles.
Emden close to all-time high
Meanwhile, the head of the automotive division at Emden terminal operator EVAG, Joerg Tuitjer said the port was currently implementing a more flexible process-orientated organisation to tackle the problems of uneven vessel arrivals and fluctuating volumes throughout the year.
Currently, Emden is only 2,000 cars off its record year, reached in 2008, and with volume forecast to expand around 100,000 cars in 2011 it is set to become one of the first ports in Europe to fully recover from the recession. Its volumes are dominated by the fortunes of Volkswagen, which is trying to push its market share and wrest Toyota’s crown as the top global manufacturer.
While the statistics may suggest otherwise–VW group accounts for around 85% of Emden’s total car volume–the port is not in any way closed off to other manufacturers, Tuitjer stresses. “We are actually a government-owned port and we–as well as VW–would be very happy to handle other manufacturers here. A couple of years ago, VW’s joint venture with Nissan brought in substantial imports from the port of Tyne in the UK, but not currently.” Emden’s business with the UK is today mostly in the other direction as all of VW’s exported vehicles to that country pass through the port.
Future developments at Emden would include the building of new quays and ro-ro ramps in conjunction with the government. A new short-sea ramp will relieve pressure on the existing area and enable the port to operate more efficiently. Many of Europe’s major maritime gateways handle trade cars in significant volumes, although the business is often relatively small compared with the huge volumes of containers and bulk traffics. Belgium’s Antwerp is one. Total car trade in the port has picked up, although imports were very slightly down. As well as new cars, the export trade from the Belgian gateway includes secondhand vehicles heading for Africa. A port spokesman said the increase was thanks to overall economic growth.
Future car-related developments in the port could include multi-storey car terminals. While expensive, it would help maximise space utilisation in a port where expansion is limited by residential areas and the border with the Netherlands.
Relative strength in the UK
In the UK, there have been ups and downs. The port of Tyne has seen some of the strongest growth in 2010. Commercial manager, Alasdair Kerr says that while the port is not back to the peak volume of 2007, “it looks like a recovery is taking place and we look forward to working with our customers to encourage further growth.” Imports doubled in 2010 over 2009 while Tyne’s larger export trade grew by 33.8%, giving an overall growth figure of not far short of 50% for the year. Main OEMs are Nissan–which has its manufacturing plant at nearby Sunderland producing the Qashqai and Juke–and VW Group, although the third largest vehicle handler is Höegh, which operates the Höegh Northern Terminal that opened in June 2010. This is already handling a variety of OEMs for transhipment traffic, and signs look promising for further growth in 2011 for transhipment traffic as well as imports and exports, says Kerr. Tyne has also received its first shipment of the Nissan Leaf electric vehicle.
Another UK port that has had a good year is Southampton where, despite a small falling-off in imports, total trade was up nearly 18% thanks to a near one third growth in exports. Southampton is the only port in the UK–and one of only a few worldwide–to invest in multi-storey car terminals and is about to start work on the fourth such facility expected to open towards the end of 2012. Recent investment in the port’s rail network also means that six full-length car trains can be handled in the Eastern Docks are of the port alone. In the western part of the UK, the Port of Bristol says that the coming year will be “challenging”, with car sales in UK forecast to decline. However, the good news for the south-west UK port is that all new vehicle imports have been accommodated through its Portbury facility in the last year and it has capacity for more volume.
Construction of a new deep sea container terminal at Bristol’s Avonmouth Dock has started which, when it goes into operation, will release berth and storage capacity at Portbury for cars, which remain the number one trade for Bristol Port. Livorno in Italy has fallen out of the top ten following a decrease in new car trade volumes over 2009 by around 9%. The decline mostly followed the ending of government incentives for new car purchases, which made 2009 one of the best times ever to be purchasing ‘green’ vehicles, said a port spokesman when they were introduced towards the end of March 2009.
There are plans for expansion of facilities, however. Sintermar (a company set up by some of the port’s familyowned businesses, including D’Alesio, Neri and Fremurs, together with car receiver Elia) has become an important player in handling import, export and distribution of cars on its own terminal and on the west side of one the main docks at the Darsena Toscana ‘public’ area of the port since September 2009. Forecasts for 2011 indicate that Sintermar’s car trade will rise by approximately 50%, and is expected to reach 130,000 vehicles over the next year.
Sealiv (owned by Mercurio group, Trade and Logistics, Cilp and Giorgio Gragnani) also on the west side of Darsena Toscana, expects to handle up to 300,000 cars in 2011.
Scandinavian recovery and privatisation
The twin Danish-Swedish ports of Copenhagen-Malmö had a very good year in 2010, increasing imports substantially. For 2011, the port plans to put new terminal facilities into operation and will move the ro-ro and container activities to new terminals in the Norra Hamnen (North Harbour) in Malmö. This will, from the second half of 2011, release about 150,000 square meters of consolidated terminal area for handling and storing of new cars. The port has ongoing contacts with the car manufacturers and expects further growth.
Sweden’s port of Gothenburg, while not in the top 20, is in the midst of a major transition for its vehicle handling business. In 2008, the Port Authority of Gothenburg made the decision to divest its automotive terminal operations, including the splitting up the vehicle logistics operations into two terminals: one for ro-ro and short sea, the other for deep sea vessels, with separate management for each until the authority found private operators.
The short-sea concession was announced in autumn of 2010, awarded to DFDS and Cobelfret, who will form a joint venture to run the terminal, approval for which is going through the European and Swedish competition authorities, according to Peter Kleberg, DFDS’s head of automotive. The deep-sea concession, meanwhile, was awarded in February to Logent, a Swedish logistics company, and should take effect in April.
The two terminals combined grew nearly 48% in 2010 to 228,000 (162,500 for short sea, 65,500 in the ocean terminal), but still well down from the 328,000 the port handled in 2006. The port offers close proximity to both Volvo Cars and the Volvo Group, for which it moves construction equipment, trucks and bus chassis.
The ocean terminal has a separate high-and-heavy processing area, while there are good rail and road links. The Skandiatransport PDI centre has room for expansion, and there is also a separate area where Ford carries out PDI, according to Peter Karlsson, the managing director of the car terminal under the current port authority structure. While the US remains Volvo Car’s biggest market, Gothenburg doesn’t link the carmaker to China, where its new owner, Geely, expects to grow considerably in the coming years. Volvo Cars sends its exports to Asia using the shipping line Eukor from the port of Wallhamn, 50km north of Gothenburg and operated by Grimaldi. In 2010 Volvo Cars sold around 35,000 cars in China.
Karlsson pointed out that should the network with Eukor or other shipping lines change, there could be scope for future export growth for shipping to Asia. However as Geely builds new Volvo plants in China, exports from Sweden to Asia could also be curbed, putting more focus on Gothenburg’s current trade links.
While Gothenburg has no illusions about growing into a vehicle port the size of its larger German rivals, it still serves as an important link in the North Sea between Western Europe as well as the Baltic. Karlsson said that the port had already seen interest from some Chinese manufacturers making long-term plans. Sooner than that, however, he expects to see an increase in construction equipment imports from China.
Port reforms at Piraeus and Le Havre
Piraeus, the leading car port in Greece is in the midst of a staged expansion of its handling capability. The first phase, completion of which is expected within the next couple of months, is a 32,000 square metre expansion of the G2 terminal in the Karvounoscala area which will enhance storage capacity by 3,500 cars and add two extra berthing spots. Also included is a rail connection expected in 2012. The G1 terminal at the DEI pier is also being expanded by 4,000 cars and there will be two extra berthing spots. Stage B of the plan, completion of which is expected in three years, includes expansion of DEI pier to give a total area of 138,000 square metres and a dock length of 1km, boosting total storage capacity to 12,000 cars. There will then be around four berthing spots, depending on vessel size. Finally, Stage C will see, in about four years’ time, expansion of G2 at the Fish market area to give an extra area of 26,800 square metres.
Traffic at the port has staged a strong comeback in 2010, particularly for imports which were up 50%. According to a spokesman, the port faced labour unrest in 2008 and 2009 following the concession of Pier II of the container terminal to China’s Cosco Pacific and the recovery followed the end of the dispute in November 2009. Traffic also rose thanks to increased productivity, with ship waiting time reduced almost to zero, as well as service quality improvements and competitive tariffs which have helped bring back transhipment cargo.
The increase was across the board as almost all shipping lines and OEMs use Piraeus. Greece itself has no car manufacturing capability, so the only outbound traffic from Piraeus are transhipments.
Le Havre, France’s largest automotive gateway, described 2010 as “the recovery year” with total volume up by around a third over 2009. The improvement in its fortunes was thanks to “strong action” carried out by stevedores, logisticians, manufacturers, shipping lines and handlers to attract new trades and customers. Le Havre is a fully multimodal terminal, with barges serving the Paris area, and rail and road connections available to all parts of the country. Kia has been distributing its vehicles into France from Le Havre since January 2010 while BMW is also using Le Havre to import of some of its models bound for the French market.
Quality in the Netherlands
Despite Dutch ports’ pre-eminence in containers and bulk trades, they have never been as strong in the car trade, particularly compared to their Belgian or German neighbours. However, the Netherlands as a whole is very strong in addedvalue logistics activities and while the numbers of cars handled may not be particularly impressive in any of the ports, the country’s logistics operators are adept at finding other activity to make comparatively small flows possible. Alain Bresseleers, general manager of the Koopman car terminal in Amsterdam, said that while imports had risen by a healthy margin–the terminal handles Nissan cars–export traffic to Russia had suffered in the recession. However, Koopman is carrying out a feasibility study with a Korean manufacturer that could see it set up an assembly operation for electric cars at its Amsterdam facility.
Sjors Bosvelt, general manager at the Broekman Group, which handles all the new car trade in the port of Rotterdam, said that the financial crisis and the ending of the scrappage schemes had left their mark on car trade, which was around 25-30% down on 2009. Rotterdam had also seen something of an artificial boost in early 2009 when overstock levels reached a peak. However, with new car sales in Europe now stabilising, he feels that the recession has “reached its deepest point” and that the future trend will be upwards.
Meanwhile, the Broekman Group is concentrating on added-value services, for example preparing vehicles for country-specific markets, or offering fleet pool management services. There is more to profitability in the car-handling trade than sheer volume throughput, Bosvelt points out. Another area of growth could be electric vehicles, and Broekman is studying the possibilities of what remains a largely unknown area. Who would make them, where would they come from and what would be the complications involved in shipping and handling them? Would they be expected to have any battery charge left after a 30-day journey from the Far East?
Rotterdam isn’t Broekman’s only car-handling port in the Netherlands. It’s facility at the inland port of Born in the south of the country handles traffic from the Nedcar plant, which makes Mitsubishis.
Finland’s ports meanwhile have lost much of their once lucrative Russian trade thanks first to the heavy drop in Russian sales; while Russian sales are rising again, improvements in port facilities, handling and security in the destination country has obviated the need for transhipment via another country in many cases.
Hanko, for example, handled only a quarter of the cars in 2009 that it did in 2008. However, the port authority reports that car business is on the up again, but this time it is mainly because of growth in the domestic Finnish market. While volumes clearly do not match those when the Russian transhipment trade was at its height, they nevertheless recorded a 46% growth overall in 2010 over 2009.
Russia looks set once again to prime northern European ports for growth, as sales early in 2011 continue a strong upward trend. While the import ratio is unlikely to reach its pre-crisis level, thanks to Russian government support for domestic production, manufacturers still look likely to use northern ports for at least some transhipment into Russia. Elsewhere, the picture looks likely to remain somewhat mixed, with exports expected to stay strong out of Germany, as well as for imports to recover somewhat in Europe’s largest market. For most ports, the approach to peak volumes of 2007 are still likely to be several years away