Shift in emphasis

Valencia celebrated double digit 2010 growth figures. Credit: Fundación Valenciaport Valencia celebrated double digit 2010 growth figures. Credit: Fundación Valenciaport

Southern European ports need to focus on the move to feeder roles and value-add solutions to survive. John Bensalhia reports

Switch on the TV. Read the papers. Listen to the radio. It seems there's no escaping reports about the recent economic downturn that has plagued practically every aspect of society, across the globe.

Take Southern European ports. During the last couple of years, the economic downturn has affected this sector in various ways. And while commentators have expressed different views with regard to the situation in Southern Europe, an undeniable fact is that 2010 has seen an upward turn in fortunes, compared with 2009.

Willem Slendebroek, senior port and shipping consultant of Dynamar, offers a number of interesting points about throughputs for Southern European ports. “The overall growth was 3.8% in 2010, and this compared with 1.8% over the last five years. The growth figures bounced back from the crisis of 2009, in which an average decline of 7% was noted. As such, the volumes are increasing again, but still not yet on pre-crisis level.”

The ports with particularly good 2010 growth figures were those of Valencia, La Spezia and Genoa with well over two digit increases. The best performers were the ports of Koper and Pireaus with growth rates of more than 30%. Further statistics show that the East Mediterranean South European ports showed the largest increase of 13%, while West Mediterranean ports had a growth of 2.6%.

Andrew Griffiths, managing consultant at BMT Hi-Q Sigma, concurs that 2009 was a particularly tough year for the ports of Spain, France, Italy, Greece and Turkey, with an unprecedented 10%-30% downturn in traffic levels. 2010 fortunately showed a resumption of growth across the region, especially trade with North America and China.

“The West Mediterranean port volumes in 2010 compared with 2009, show French ports increased their volumes by 8%, Spanish ports by 5% and Italian ports by 2%. The West Mediterranean is characterised by a large number of direct services to established ports in France, Spain and North West Italy," says Mr Griffiths.

Greek ports have also been affected by the economic climate, as Mr Griffiths explains: “Greece’s volumes have suffered from the recession and remain well below the peak of 2007 even though the volumes have started to recover in 2010. It is forecasted that the Greek volumes will remain depressed for the next three to four years.

“The recovery across the region will continue to be slow as government deficit reduction programmes are implemented. Stronger growth is projected in North African economies, which are benefitting from increased FDI and developing as low–cost manufacturing centres. This will have a positive impact as a percentage of this traffic will be transhipped through Southern European ports.”

Richard A Butcher, group marketing and sales director of IMS UK, suggests that a rather grim picture can be painted for Southern European ports. “With all ports loosing teu throughputs and overall world standing, it marks the fact that the world’s economies are shifting and the demand for finished goods are shifting to newer stronger economies such as those BRIC economies rapidly emerging and gaining ground every year.”

Mr Butcher adds that as the carriers start operating larger 13,000, 15,000 and 18,000 teu ships, the ports of calls and the terminals managing them will face major issues such as water draughts, quay lengths, and the necessary handling facilities to manage these larger vessels.

“The carriers introduced slow steaming during 2009 and 2010 and are continuing the policy,” says Mr Butcher. “This has seen changes to port handling as in order to maintain the frequencies the lines took laid up tonnage and re-introduced it to the services, thereby increasing the physical number of vessels but with a slower ETA/ETD time for individual vessels. Port planners had to rejig their schedules and rely on sophisticated Berth Planning products like those being provided by NAVIS to make certain that no conflicts were incurred and vessel turn times were met.”

Finance has also been a key factor in the last couple of years for Southern European ports. While world trade is starting to show signs of a recovery, countries like Greece, Portugal and Spain have been affected by the global recession as well as an unstable Euro. With these financial worries, Southern European ports have been hit. Mr Butcher acknowledges that: “Stabilisation of these volatile financial markets will eventually be made, but the waves created have been witnessed by the considerable drop in teu volumes that the lines moved during 2009 and into early 2010.”

And the unstable economy has had a domino effect on Southern European ports. Declining cargo volumes have led to declining annual revenues, which have led to a reduction in expansion and growth. Mr Butcher says: “In order to attract the larger vessels, considerable capital investment will be required and be committed to areas such as quay side expansion, dredging, larger and faster cranes, new and faster RTGs and handling equipment, new advanced computer solutions and inland infrastructure.

"All of these require long term strategic planning and a call for capital investment from private equity, global terminal groups or governments or a combination of all three parties.”

Mr Griffiths adds that a challenge to Southern European ports is that container vessels are increasing in size and that the majority of new vessel capacity will be supplied as ultra-large container vessels which will only be able to call at ports with deepwater container berths (17m) and high capacity/outreach cranes.

“Not all the ports in region will be able to handle these larger vessels and are potentially at risk of losing their direct calls while others may gain. The increased vessel size on major trade lanes will support carrier demand for transhipment services to niche and emerging markets. There is a risk that the markets currently served by feeders may attract an increased number of direct calls as volumes grow.”

Despite this mixed picture of the Southern European port sector, Mr Butcher does suggest brighter times ahead. “They still will play an important role in the markets and although the overall container volumes might not grow at the same extent as their Northern counterparts, the markets have already started evolving and far greater emphasis has been placed on the Hub and Spoke operations.”

Mr Butcher adds that terminals must adapt to focus on smaller vessels calling but higher volumes. “More competitive rating structures, and a closer focus on logistics and supply chain management need to be adopted.”

Also assessing the future for Southern European ports, Mr Griffiths concludes: “The prospect for the Southern Europe region looks bright but there are some clouds looming over the horizon with the development of new large efficient ports in Egypt and Morocco which will impact the transhipment business. Capacity issues will start to surface in the next three to four years unless new capacity is developed.”

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