EU port volumes set to slip

According to Fitch’s recent report, small and medium sized ports in particular are at risk of being drawn into a price because of this new trend, or could miss out on cargo even if they invest to accommodate larger ships.

Although European container ports have had strong growth rates since 1985, averaging 6.5% annual growth or three to four times GDP growth, Fitch adds the continued rise in throughput has been driven by trends that are unlikely to continue.

The rise of Asia as a manufacturing hub was a major source of growth for the ports, as was goods that used to be shipping in general cargo vessels being switched to containers. But, Fitch says this trend is likely to continue for the next 10 years before ‘running out of steam’ as exporters rebalance their economics to focus on domestic demand and as labour costs meet with Europe.

“We believe that as these drivers gradually diminish, container throughput growth will align with underlying growth in the supply and demand of transported goods,” the report says.

“GDP, industrial production or private consumption may therefore be better indicators of future growth, all of which have tended to be between 1% and 3% in Europe over the last couple of decades,” it adds.

The ratings therefore include “conservative growth assumptions”, rather than a continuation of past trends. But these assumptions also vary between ports as changes in the industry – like the introduction of larger ships and retailers concentrating cargo at a single point – push growth towards larger ports and reduce the market power of smaller ports.

As a result, the report says smaller ports could face a race to the bottom on pricing in times of shrinking volumes unless they “build a role as feeder ports to the main hubs”.