DOWN, BUT SPENDING BIG

Figure 2
Figure 2. Source: Base data from ports, WSP
Figure 1
Figure 1. Photo: Ports, OECD, Datamar, WSP
Vado Ligure
Vado Ligure brings more capacity to the Ligurian Sea region – Phase One opened around a year ago and Phase Two will open this year. Photo: APM Terminals

Despite being hit hard by COVID-19, many gateway container ports in Italy continue to invest in capacity. Accommodating bigger vessels is the main catalyst, A J Keyes reports.

Italian import-export container ports are investing strongly in deeper water and terminal infrastructure, even though the country’s economy continues to see limited growth. Why do this? The answer is a simple one – to compete for ever-larger container ships.

According to the Organisation for Economic Co-operation and Development (OECD), over the past decade the Italian economy “achieved a modest recovery, supported by global economic conditions, expansionary monetary policy and structural reforms.

However, the recovery has recently weakened and Italy continues to suffer from long-standing social and economic problems.” In the eight years prior to COVID-19, there was, on average, zero economic expansion in Italy (OECD figures) and the country is now facing a significant contraction – how has port development fared in this climate?

PORTS REFLECT NATIONAL ECONOMICS

The north-south split in the Italian economy is reflected by the country’s gateway ports. The Ligurian Sea area is where the largest volume import-export container ports are located, which support the more industrialised part of the country.

At the end of 2019, Italy’s container ports in the Adriatic, Tyrrhenian and Ligurian sea regions handled a total of 7.87 million TEU. This reflected annual growth of 3.2 per cent per annum since 2000, with year-on-year total volume increases since the Global Financial Crisis of 2009. This occurring despite the economic stagnation.

The impact of COVID-19 can easily be seen. As Figure 1 shows, based on available data for these ports for 2020, the same ports recorded total throughput of 6.81 million TEU. The drop in activity was most intensely felt in the Ligurian Sea region. The 2019 total of 4.87 million TEU has fallen to 4.15 million TEU – a decrease of 14.8 per cent.

By way of comparison, the Tyrrhennian Sea area ports saw a drop of 11.7 per cent, from the 2019 total of 1.18 million TEU to 1.05 million TEU, while the Adriatic Ports handled 1.81 million TEU for 2019 and 1.61 million TEU for 2020, a decrease of -11.2 per cent.

It seems clear that the economic situation before COVID-19 was one of general stagnation and limited growth in the Italian economy. However, the onslaught of the pandemic in 2020 has caused these existing issues to expand their influence, bringing more challenges for ports and supply-chain partners in seeking container volume growth.

NO PORT WINNERS IN 2020

Consequently, it is no surprise that 2020 can be summed up as a bad year for port throughput in Italy, with losses generally incurred by all major ports compared to 2019. For example, in the Ligurian Sea area, Livorno volumes in 2020 were down by -12.4 per cent, Genoa endured an even larger decline of -19.5 per cent and La Spezia’s drop was -15.2 per cent.

By comparison, in the Tyrrhenian Sea area, Naples recorded a decrease of -21.6 per cent, while across the Adriatic Sea region, container traffic in Venice fell by -15.7 per cent and at Trieste total container activity was down by -12.1 per cent.

Of course, it is necessary to put 2020 into perspective. Italy suffered some of the worst consequences of COVID-19 of any European country and its ports have clearly been impacted. However, there were already some economic challenges, so the onslaught of the coronavirus pandemic has further exacerbated existing issues. Yet, almost ironically, the situation has not slowed the desire to keep investing in terminal capacity across a number of the major facilities.

TERMINAL INVESTMENT CONTINUES

In Livorno, the new Europa Platform is a deepwater facility that will ultimately offer between 1.6 – 2.0 million TEU per annum for larger container ships. Construction is forecast to commence in 2022 and the facility will provide a water depth of 18m (with 20m possible) and at full development up to 3000m of quay line.

Current estimates have operations slated for mid-2024 and a private operator is being targeted to provide investment in landside and shore-side equipment. To date, no deal has been reached, but there is interest. “There are at least three interested groups who are analysing the project,” stated Stefano Corsini, President, Port Authority of the Northern Tyrrhenian Sea.

This position compares with the newly-opened Vado Ligure, in the province of Savona, north west Italy, which commenced operations in Q1 2020. The terminal is a 50-year joint-venture concession between APM Terminals (50.1 per cent), China Cosco Shipping (40 per cent) and Qingdao Port International (9.9 per cent), which brings a terminal operator and shipping line volumes.

The container handling infrastructure is part of a wider multipurpose operation, which includes ro-ro and reefer/ fruit cargoes. Of the ultimate 1.1 million TEU of annual container handling capacity, the semi-automated container terminal will have 700m of quay and 860,000 TEU of capacity.

Phase 2 of the terminal is now under development and is scheduled to be completed in the first half of 2021. The natural deep water that the terminal sits adjacent to (a distinctive feature of Savona-Vado harbour) allows the latest-generation container vessels to berth safely and both Maersk Line and Cosco ship calls are expected to ramp-up – they will be needed to fill this additional regional capacity.

Major Italian port operator, Contship Italia has confirmed it is adding more than 1.8 million TEU of new handling capacity by 2024. Of this, substantial investments are planned at La Spezia Container Terminal (LSCT), the company’s main container terminal in Italy.

The development project will start at the Ravano terminal, the addition of a new 524m quay, equipped with five ship-to-shore (STS) cranes offering a lift capability 25 rows across on deck. The aim of this first phase is to add 300,000TEU to the current handling capacity and the operator hopes it will realise an “additional vessel capacity of 300-400 TEU per call".

According to Contship Italia, there is also another key objective from this investment: “To increase the share of rail transport from the current 32 per cent to 40 per cent of the modal split.” There are ongoing developments in Genoa. PSA Investments (a subsidiary of PSA International Pte Ltd) and Gruppo Investimenti Portuali (GIP) have gained approvals from the Genoa Port Authority for the proposed restructuring of their Genoa-based operations that will see PSA becoming the majority shareholder in, and obtaining management control of, both PSA Genova Pra’ and the Southern European Container Hub (SECH) terminal.

David Yang, Regional CEO, PSA Europe, Mediterranean & the Americas, explains the benefits of the new arrangement. “It will enable the merged platform to better serve the needs of shipping line customers, and ultimately the increasingly demanding logistic requirements of importers and exporters in the immediate and extended hinterland.”

Also underway at the port, the Calata Bettolo container terminal was due for completion in April 2016 but is now scheduled for Spring 2021. It will comprise a 725m quay serving a 180,000km2 terminal area offering an annual capacity of 550,000 TEU. Itatermineaux Sarl and Terminal Investment Limited Sarl, both part of the MSC Group, hold the 33-year concession (to 2045) for the terminal.

INVESTING TO SERVE BIGGER SHIPS

A major catalyst to Italian port expansion is the requirement to serve larger ships – specifically, to keep pace with the bigger ships lines want to call. This is shown in Figure 2, which highlights the growth in average ship sizes on both US and Asian trade routes calling to Italy in the period between 2005 to 2020.

The big ship trend is clear. And, in turn, there is a commensurate requirement for deeper water, larger cranes and longer quays. The requirement to invest in Italy is now driven not by year-on-year demand expansion but, rather, the changing requirements of shipping lines.

This places further financial pressures on an already stressed sector and it is seeing some projects struggle to gain traction – the proposed offshore terminal platform for Venice being one example.

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