NICHE PORTS MORE FEEDERS AND BETTER DIALOGUE

And is the shipping and trade press focusing on the right issues to get these questions higher up on the political agenda? Nick Elliott talked with APL’s president for Europe, David Appleton, at a recent Terminal Operator’s Conference.

“T he major issue, and this is what you hear in many discussions when people talk about supply and demand, is that the carriers have kept up fairly well in terms of supplying capacity to meet demand over the long term, ” says Appleton.

“We have some short-term capacity overhangs which cause some imbalance and rate volatility but over the longer term we (the carriers) have coped quite well with demand in terms of servicing the growth in trade.

“What we are now facing in Europe on the other hand is that ports may be struggling to keep up with that demand. Some are clearly in a more critical state than others. Look at the UK for example. The capacity situation is amongst the poorest in Europe. It really is quite restricted. And the recent denial by the UK government of the planned Dibden Bay development in Southampton was a little bit of a setback, to say the least.

“When you contrast the growth in European ports over the last 12 months with what has gone on in China and Asia, there is no comparison. Chinese ports over the past year have grown by anything between 35% and 55% compared with European growth of around 8%. These figures speak for themselves.

“When APL tried to put a new service into commission this summer, which we eventually succeeded in doing, we thought the port choice would be pretty straightforward. We were employing 4,500 to 5,000 TEU vessels, not 8,000 TEU. We put seven vessels on the service instead of eight so we didn’t need so many port calls either. Yet we met enormous difficulties in securing the berths. In Hamburg we took the last available berth and in Rotterdam, although they were able to accommodate the service, we couldn’t use the terminal that we use for our other services but had to go to an alternative.”

LACK OF DIALOGUE BETWEEN STAKEHOLDERS So where lies the nub of the problem and how can it be fixed?

“There doesn’t appear to been a very cohesive dialogue between all the stakeholders: carriers, terminals, the shippers themselves, and national governments, who are setting the legislative agenda and framework for this growth in the future, ” Appleton believes. “If you look at all the attention in the press concerning the relationships between carriers and their customers, the focus is on competition rules, the EC’s Regulation 4056, the block exemption and its probable replacement. All this is very valid but discussion around what Europe is going to do in terms of its ability to accommodate growth in trade has only begun to gather pace very recently.

“There is an extensive DG Transport White Paper outlining some future transport initiatives for Europe but it seems to be a very ad hoc approach. And it is not clear to people on our side of the industry when some of these specific strategies are to be delivered and how, so that we can incorporate them in our own planning. Overall accountability seems vague.”

Was Dibden an example of this lack of joined-up government planning?

“The decision to not go forward with Dibden Bay may have solved one local environmental issue but its rejection will almost certainly exacerbate another one somewhere else.

Demand comes from the shippers, manufacturers and suppliers of goods and products which we the public consume. For the carriers this is manifested as a demand for door-to-door delivery. In the UK as elsewhere, the consumer will expect to go into the high street department store and buy goods at ever decreasing prices. In order to be competitive, these goods are increasingly being manufactured overseas, principally in China and the Far East. In order to accommodate these demands we must have the ability to get those goods to market and right now that ability is severely compromised by a lack of port capacity, especially in the south of England.”

Turning back to continental Europe, Appleton continues his theme:

“Some of the major terminal operators here in Europe, contending with understandable environmental concerns, are looking for assistance to help raise the awareness of national governments and regional authorities to give them the ability to develop more terminal capacity. I haven’t spoken to one who doesn’t want to develop more capacity. But the issue is just not high enough up on the political agenda.”

INTERMODAL PIONEERS APL was the carrier above all others who pioneered intermodalism, not just by rail in the US but with innovative use of available resources in Asia. In Europe, says Appleton: “We try to maximise the cargo we move by rail and inland waterway, but national rail networks have not yet been as conducive to this as might be expected. In Europe carriers are generally not asset providers for inland services, but procure them from third parties. However we pay a great deal of attention to managing this very important part of our service. Critical mass is helpful in this regard and we are rapidly developing our European capabilities, considering that our history here in Europe is relatively short compared with other carriers.

“As we have gained momentum we have gradually put our own organisations in place around Europe over the past four years, allowing us to look more seriously at our own contribution to the transport network.

“The customer once more drives the demand for inland transport.

If the customer says, ‘we have a warehouse in the north of England and we would like you to find a local port of entry for that location to minimise the impact of congestion in the main ports, then we at APL have to take due note of that. Furthermore, for a customer, transportation costs may become secondary by comparison to a potential loss of sales in peak season, due to missed deadlines. In other words the cost of goods arriving late can exceed savings made by sharp procurement.

“As this is a growing trend, ” says Appleton, “it can lead to a greater interest in niche ports and you now see some of the global carriers setting up their own feeder services. Interestingly, he explains: “At the moment there is a high demand for container ships and even small feeder vessels are hard to get hold of without paying very high charter rates, which can in turn begin to kill the economics of the exercise.”

ENCOURAGE SMALL FEEDER BUILDING PROGRAMME?

As to the theoretical cascade effect whereby as mainline vessels get bigger, the ships they replace become tomorrow’s feeder vessels, Appleton surmises that this could become self-defeating when it comes to the use of smaller ports. “In future, cascaded larger feeder vessels may only be able to use deeper draft ports. The effect of this could be that some of the ports which play an important role in serving regional markets, will be unable to so. Perhaps the answer is to encourage a programme of building smaller, efficient feeder vessels in the 1,200 or 1,500 TEUs category to better utilise these ‘closerto-market’ ports, ” and thereby lessen the impact of constantly growing overland traffic, he suggests.

“We have a fairly good handle on what the rate of trade growth will be. We know what the new vessel order book looks like. We know the size and type of these ships and that they are going to be around for 20 to 25 years. We know when they are being delivered. And the ports have their plans for expansion. What’s really missing is a well-articulated strategy for inland and shortsea transport in Europe. The EU is doing work on this question but how often do we hear about it? How often are we, the industry, consulted and asked to debate the key issues? How often do we see reports in the press on progress of this strategy with measures of its success against set milestones? Maybe progress is being made in the corridors of power but we don’t see it.”

INDUSTRY’S PROFILE NOT WHERE IT SHOULD BE “If we don’t raise the flag nothing will happen, ” insists Appleton. “Our industry hasn’t so far adequately drawn attention to the question of port capacity, and other important issues. The industry’s profile isn’t where it should be in the public domain. From what I’ve seen, media attention is more focused on the competitive aspects of what carriers and terminals are doing, than the operational issues. So you find that stories about the EU Commission’s attention to the conference system has more prominence than that of its transport policy.

“So the onus is to some extent on the media to draw attention to some of the more critical issues. They should put more pressure on the EC to ask what is being done on these strategic planning and development issues. I don’t see the media asking these questions.

“Some of the dialogue we’ve had with the European Shippers Council, ” concludes Appleton, “away from the usual hot potato of anti-trust immunity and conferences, has the potential to be very constructive, since we ultimately have the same interests. During these discussions we have agreed on the need for more dialogue between us in terms of enabling some of this essential growth in terminal capacity to take place. Our shippers have to satisfy the demand of getting goods to market and if these goods are going to continue to be globally sourced, they will continue to look to the carriers for a solution.

The whole process has a high degree of mutual dependency.

Therefore all those involved in the transport chain need to confer, discuss and communicate their future needs so as the facilities can be put in place. This is the kind of debate the trade press can assist in encouraging and these are the kind of questions shipping journalists need to start asking.”