The hallmarks of this will be progressively bigger, strategically located transhipment hubs building healthy volume growth and a reduction of interest in transhipment activity in smaller hubs, especially at those located a significant way off the main arterial trade routes.
Between the existing main transhipment hubs there are now significant differences in available capacity and particularly so when it comes to serving the highest capacity vessels. Malta Freeport is a case in point: not all its quays can serve the largest vessels and it is true to say that the potential is limited as to the number of new berthing windows it can offer for such vessels. Expansion plans are in the melting pot but these are by no means imminent. For some ports there is also the issue of draft: 17m is the new standard and not all meet this criteria.
When you look at the combination of factors – which include the optimum routing of the new high capacity ships, available berthing windows, new operational requirements flowing out of mega consortia arrangements and new draft requirements – then there appears to be scope for the entrance of at least one or two major new hubs. All the more so if such a hub were to offer minimum deviation from the main trade lanes, top-of-the-range facilities, competitive labour cost, access to ‘soft’ funding via TEN-T status and potential gateway cargo.
The port of Augusta on the island of Sicily, Italy is just such a location and one that already boasts major port status with numerous refineries based there. Development work is underway in Augusta to build a new deepwater container quay which will be realised in the near term and which, in concert with the existing ITSA-operated container facilities, has the potential to quickly and effectively enter the arena of high capacity transhipment operations.
Tangier target
The benchmark today in terms of cost competitive transhipment operations in the Mediterranean is generally accepted to be the terminals in Tangier and it is against this that any new market entrant must pitch itself. Cost generally plays an important part in the location of transhipment operations – as evidenced by the recent success of COSCO’s operations in Piraeus.
Piraeus is a major example of a transhipment hub that has induced volume through keen pricing as is reflected in the typical wages of its workers which are reported to be in the order of €600 per month.
Beirut is another location that due to cost advantages has been able to attract container traffic. It presently has plans to add new capacity through the in-fill of its fourth port basin, a plan which is being met with some resistance by the port workers already engaged in general cargo operations there.
In Beirut, container throughput is now around the 1m teu mark, rising from 300,000 teu 10 years ago. In Piraeus, the COSCO facility has seen phenomenal growth, with traffic rising 20% in 2013 over 2012 volume to 2.52m teu with, which followed on from a 77% increase in 2012. Another big increase, in the order of 20%, is expected for 2014 when the official figures are announced.
Cost, however, is not always the whole story, especially for large consortia where there are certain trade-offs against terminal efficiency and availability of berthing windows that can be made against cost.
There are basically two categories of port that can expect to continue to compete in Mediterranean container transhipment operations other than the strategically located main hubs that offer minimum deviation time from the main trade routes. These are: cost competitive hubs such as Piraeus and Beirut, and secondly those where transhipment operations can be undertaken in conjunction with gateway cargo operations. Valencia is a case in point here, although for such ports the issue of cost per move for transhipment will increasingly be a prominent one.
The losers in the transhipment business will progressively be ports such as Malaga which are not strategically positioned and have geared themselves for transhipment operations but can no longer compete effectively in this arena due to new lower cost competition. There are also gateway ports off the main arterial routes that are simply not prepared to invest to accommodate transhipment cargo – it is generally speaking a high volume, low margin activity and there is a risk attached to investing to handle this cargo when pricing and other key competitive factors are not in your favour.