The Ramifications of the Crisis:
Revising Future Expectations
Theo Notteboom
ITMMA - University of Antwerp and Antwerp Maritime Academy
Jean-Paul Rodrigue
Department of Global Studies & Geography, Hofstra University
Terminal Operators Conference - Europe
Valencia (Spain), June 8-10 2010
Outline
1. Towards an economic recovery in Europe?
2. Towards a new hierarchy in the European
container port system?
3. Towards a paradigm shift?
1. Towards an economic recovery in
Europe?
World trade and manufacturing output
Source: EU
1. Towards an economic recovery in
Europe?
GDP growth (q-o-q) in EU
Source: EU
GDP growth (index) in EU
1. Towards an economic recovery in
Europe?
Industrial production - world
Source: EU
Industrial production - EU
1. Towards an economic recovery in
Europe?
Investments in capital goods in EU
Source: EU
Private consumption in EU
1. Towards an economic recovery in
Europe?
Increased need for factoring in
uncertainty/risk in business strategies
Outline
1. Towards an economic recovery in Europe?
2. Towards a new hierarchy in the European
container port system?
3. Towards a paradigm shift?
How serious is the throughput issue?
The European case
Throughput gap of 18 million TEU
nobody anticipated in early 2008
100
95
90
85
80
75
70
65
60
55
50
45
40
35
30
25
20
15
10
5
-
Setback of three years
(volumes of 2006)
European port system
Exponential trendline total traffic
The bubble effect?
Till 1993: Fairly linear development
of total container traffic
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
Since 1993: traffic path
becomes exponential
2008: Stagnation
1985
Container throughput in million TEUs
(75 European container ports)
2009: - 14% compared to 2008
Container throughput development and
various forecasts, Antwerp
Actual throughput
12
Antwerp Port Authority (1990)
11
Bubble?
Cost-benefit analysis Second Scheldt terminal (1992)
OSC and Marconsult (1993)
10
OSC (1995)
9
OSC (1997)
Throughput in TEU
Verbeke et al (1996)
8
Cost-benefit analysis container dock west - working strategy 1 (1997)
Cost-benefit analysis container dock west - working strategy 2 (1997)
7
OSC - Deurganck Study (2001) - Base Case
6
OSC - Deurganck Study (2001) - Low Case
Strategic Plan (2004)
5
4
3
2
1
Source: Notteboom
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
0
Top 15 European container ports
in 1000 TEU
R
1985
1 Rotterdam
2655
2 Antwerp
1243
3 Hamburg
1159
4 Bremen
986
5 Felixstowe
726
6 Le Havre
566
7 Marseille
488
8 Leghorn
475
9 Tilbury
387
10 Barcelona
353
11 Algeciras
351
12 Genoa
324
13 Valencia
305
14 Zeebrugge
218
15 Southhampton
214
TOP 15
10450
TOTAL Europe
17172
Share R'dam
Share top 3
Share top 10
Share top 15
15%
29%
53%
61%
1995
Rotterdam
4787
Hamburg
2890
Antwerp
2329
Felixstowe
1924
Bremen
1518
Algeciras
1155
Le Havre
970
La spezia
965
Barcelona
689
Southampton
683
Valencia
672
Genoa
615
Piraeus
600
Zeebrugge
528
Marsaxlokk
515
TOP 15
20841
TOTAL Europe 33280
2000
Rotterdam
6275
Hamburg
4248
Antwerp
4082
Felixstowe
2793
Bremen
2752
Gioia Tauro
2653
Algeciras
2009
Genoa
1501
Le Havre
1465
Barcelona
1388
Valencia
1310
Piraeus
1161
Southampton
1064
Marsaxlokk
1033
Zeebrugge
965
TOP 15
34698
TOTAL Europe 51000
Rotterdam
Hamburg
Antwerp
Bremen
Gioia Tauro
Algeciras
Felixstowe
Le Havre
Valencia
Barcelona
Genoa
Piraeus
Marsaxlokk
Southampton
Zeebrugge
TOP 15
TOTAL Europe
Share R'dam
Share top 3
Share top 10
Share top 15
Share R'dam
Share top 3
Share top 10
Share top 15
Share R'dam
Share top 3
Share top 10
Share top 15
14%
30%
54%
63%
12%
29%
57%
68%
2005
9287
8088
6488
3736
3161
2937
2700
2287
2100
2096
1625
1450
1408
1395
1309
50067
73729
13%
32%
58%
68%
2008
Rotterdam
10784
Hamburg
9737
Antwerp
8664
Bremen
5448
Valencia
3597
Gioia Tauro
3468
Algeciras
3324
Felixstowe (*)
3200
Barcelona
2569
Le Havre
2502
Marsaxlokk
2337
Zeebrugge
2210
Genoa
1767
Southampton (*) 1710
Constanza
1380
TOP 15
62697
TOTAL Europe 90710
2009
Rotterdam
9743
Antwerp
7310
Hamburg
7008
Bremen
4565
Valencia
3654
Algeciras
3043
Felixstowe (*)
2900
Gioia Tauro
2857
Marsaxlokk
2330
Zeebrugge
2328
Le Havre
2234
Barcelona
1801
Southampton (*)
1600
Genoa
1534
La spezia
1046
TOP 15
53951
TOTAL Europe
78011
Share R'dam
Share top 3
Share top 10
Share top 15
Share R'dam
Share top 3
Share top 10
Share top 15
(*) Estimate
= port gained places in ranking (2008-2009)
= port lost places in ranking (2008-2009)
12%
32%
59%
69%
12%
31%
59%
69%
R
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Taking a medium-term view on traffic
development: Winners and losers
during the period 2006-2009
THE MAIN WINNERS
THE MAIN LOSERS
TEU gains - 2006-2009 (in 1000 TEU)
Valencia
1042
Marsaxlokk
845
Zeebrugge
675
Antwerpen
291
Tarragona
192
Gdansk
162
Sines
132
Koper
124
Bremen
120
Tilbury
103
Southampton
100
Le Havre
96
Leghorn
83
Leixos
76
Cagliari
66
Trieste
57
Rotterdam
53
% traffic gains - 2006-2009
Tarragona
1580.0%
Gdansk
207.1%
Sines
107.9%
Gent
82.1%
Marsaxlokk
56.9%
Koper
56.7%
Bordeaux
46.4%
Zeebrugge
40.8%
Valencia
39.9%
Teesport
34.2%
Szczecin
29.6%
Trieste
25.7%
Ravenna
22.6%
Leixos
20.1%
Varna
19.7%
Venice
16.6%
Tilbury
13.9%
Venice
Napels
Teesport
Leghorn
Savona
Napels
53
51
46
Source: ITMMA – own compilation
12.7%
12.3%
11.5%
TEU losses - 2006-2009 (in 1000 TEU)
Hamburg
-1854
Piraeus
-743
Barcelona
-517
Constantza
-443
Algeciras
-202
Malaga
-175
Taranto
-151
Felixstowe
-130
Genoa
-123
Kotka
-112
St-Petersburg
-106
Amsterdam
-103
La spezia
-91
Gdynia
-83
Gioia Tauro
-81
Bilbao
-80
Thessaloniki
-74
Marseille
-70
% traffic losses - 2006-2009
Ventspils
-97.3%
Piraeus
-52.9%
Vlissingen
-50.0%
Constantza
-42.7%
Burgas
-40.0%
Malaga
-37.6%
Hamina
-37.5%
Amsterdam
-33.6%
Bahia de Cadiz
-31.5%
Rouen
-26.7%
Stockholm
-26.0%
Kotka
-24.7%
Cuxhaven
-23.6%
Barcelona
-22.3%
Thessaloniki
-21.4%
Hamburg
-20.9%
Malmö
-20.3%
Helsingborg
-18.6%
Med and UK succeeded in reversing
recent decline in market share
60%
50%
Hamburg-Le Havre range
45%
Mediterranean range
40%
UK range
35%
Atlantic range
Baltic
30%
Black Sea
25%
20%
15%
10%
5%
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
0%
1985
Share in total container throughput
55%
Changes in Container Traffic at Some
Major European Ports, 2008-2009-Q1
2010
EUROPE
Rotterdam – the Netherlands
Antwerp – Belgium
Zeebrugge - Belgium
Hamburg – Germany
Bremerhaven – Germany
Le Havre – France
Marseille - France
Algeciras - Spain
Barcelona – Spain
Valencia - Spain
St-Petersburg – Russia
Volume in
2008
(1000 TEU)
Volume in
2009
(1000 TEU)
Volume change
2009 vs. 2008
Volume change
Q1 2010 vs.
Q1 2009
10,784
8,664
2,209
9,742
5,448
2,501
851
3,324
2,569
3,597
1,970
9,743
7,309
2,328
7,008
4,565
2,230
877
3,043
1,800
3,654
1,323
-9.6%
-15.6%
+5.4%
-28.0%
-16.3%
-10.4%
+3.0%
-8.5%
-29.9%
+1.6%
-33%
+16%
+15.9%
+23.9%
-4%
+12%
+17%
+8.8%
-5.7%
+6.7%
-
Growth differences mainly explained by:
•Consolidation of volumes on trunk lines
•End of capacity constraints in some ports
•Major inter-port shifts in transhipment business
•Russia effect
Source: statistics individual port authorities
Trade volumes per route to/from
Europe: Mixed results
Year on year change in trade volumes (basis = TEU)
Europe-SSA Northbound
Europe-SSA Southbound
Q1-2009
-4.2%
-1.3%
Q2-2009
-4.3%
-3.1%
Q3-2009
-7.1%
-1.8%
Q4-2009
3.5%
2.6%
Europe-Asia Westbound
Europe-Asia Eastbound
-22.1%
-15.6%
-22.2%
-1.6%
-13.2%
9.2%
-0.2%
29.1%
20.4%
21.6%
-6.2%
2.7%
Europe-North America WB
Europe-North America EB
-16.9%
-29.0%
-21.6%
-35.0%
-15.0%
-25.6%
-6.5%
-6.6%
10.8%
14.1%
-7.9%
-18.9%
Europe-India/Middle East WB
Europe-India/Middle East EB
-12.1%
-4.1%
-7.4%
-0.6%
-0.5%
1.7%
4.7%
6.4%
17.7%
11.7%
3.5%
7.1%
Europe-South/Latin America NB
Europe-South/Latin America SB
-12.9%
-27.4%
-12.3%
-26.4%
-18.6%
-22.5%
2.7%
-0.8%
5.9%
45.9%
-7.8%
5.9%
Europe-Oceania NB
Europe-Oceania SB
-6.8%
-14.7%
-9.1%
-26.4%
-14.0%
-8.5%
-12.9%
-6.0%
-19.4%
11.7%
-24.9%
-4.7%
Source: based on data EELA
Q1-2010 Q1-2010 vs. Q1-2008
8.2%
3.6%
4.6%
3.2%
Inventory replenishment or an
underlying recovery in demand ?
Revisiting transshipment in Europe
Hamburg
Rotterdam
Le Havre
Bremerhaven
Antwerp
Zeebrugge
Barcelona
Sines
Valencia
Taranto
Cagliari
Piraeus
Algeciras
Gioia Tauro
Tanger Med
Malta
Market shares of ports in the West-Med
according to diversion distance from the
main route
West-Mediterranean ports with one-way diversion distance > 250 nm
West-Mediterranean ports with one-way diversion distance 100-250 nm
West-Mediterranean ports with one-way diversion distance < 100 nm
90%
80%
70%
60%
50%
40%
30%
20%
10%
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
0%
1975
Share in TEU throughput West-Med
100%
Profile map of European seaport system
Multi-port gateway regions
1. Extended Rhine-Scheldt Delta
2. Helgoland Bay
3. UK SE Coast
4. Spanish Med
5. Ligurian Range
6. Seine Estuary
7. Black Sea West
8. South Finland
9. Portugese Range
10. North Adriatic
11. Gdansk Bay
12. Kattegat/The Sound
Gateway port
CONTAINERS
Transhipment/interlining port
(transhipment incidence >75%)
Gateway port also handling
substantial transhipment flows
Logistics core region
8
Multi-port gateway region
Main stand-alone gateways
Inland corridor
12
Main shipping route
11
2
3
1
Americas
6
Americas
7
10
5
9
4
Main shipping route
Middle East – Far East
© 2010 T. Notteboom – ITMMA, Universityof Antwerp
The immediate hinterland as
the backbone for port volumes
•
Containers: challenge of co-modality and cargo bundling on short distances
Le Havre
Containerized
cargo by road,
rail and barge
Zeebrugge
Germany
the Netherlands
Belgium
France
Other
Bremen
Hamburg
Antwerp
Rotterdam
0%
20%
40%
60%
80%
100%
Share in total inland traffic flows of port (modes rail, truck and barge)
The immediate hinterland as
the backbone for port volumes
• Competition but also synergy between regional ports
• Increasing role of inland/dry ports
0
25
50
100
150
Seaport in Extended Rhine-Scheldt Delta
Inland Container Terminal (barge
or multimodal)
Growth region European
Distribution (outside seaport system)
Logistics corridors
Harlingen
Leeuwarden
Kilometers
200
Drachten
Alkmaar
Beverwijk
Groningen
Veendam
Meppel
Zaandam
Amsterdam
Hillegom
ROTTERDAM A. a/d Rijn
Utrecht
Kampen
Almelo
Netherlands
Ede
Hengelo
Zutphen
Valburg
Nijmegem
Gorinchem
Oss
Oosterhout
Germany
Emmerich
Den Bosch
Duisburg
Tilburg
Gennep
Zeeland Seaports
Moerdijk
Dortmund
Krefeld
Zeebrugge
ANTWERP
Helmond
Venlo
Duesseldorf
Deurne
Ostend
Neuss
Meerhout
Dunkirk
Dormagen
Born
Genk
Willebroek
Cologne
Ghent
Wielsbeke
Stein
Grimbergen
Bonn
Brussels
Avelgem
Belgium
Liège
Lille
Andernach
Valenciennes
France
Koblenz
Lux
Mertert
Gateway port
Transhipment/interlining port
(transhipment incidence >75%)
Gateway port also handling
substantial transhipment flows
Multi-port gateway regions
1. Extended Rhine-Scheldt Delta
2. Helgoland Bay
3. UK SE Coast
4. Spanish Med
5. Ligurian Range
6. Seine Estuary
7. Black Sea West
8. South Finland
9. Portugese Range
10. North Adriatic
11. Gdansk Bay
12. Kattegat/The Sound
Multi-port gateway region
8
Main shipping route
12
11
2
3
1
Americas
West
Germany
6
South Poland/
Czech Republic/
Slovakia/Hungary
Ports increasingly compete
for more distant
hinterlands
Bavaria
Alpine region
Americas
Northern
Italy
South
France
7
10
5
9
Madrid and
surroundings
4
Main shipping route
Middle East – Far East
Keeping Track of the Big Picture:
Emerging Global Maritime Freight
Transport System
Outline
1. Towards an economic recovery in Europe?
2. Towards a new hierarchy in the European
container port system?
3. Towards a paradigm shift?
The Double Squeeze on Ports and
Maritime Shipping
Overcapacity
New terminals coming
online
New ships coming
online (+ cancellations)
Contestability for
gateways
Contestability for
hubs
Rebalancing
Lower profitability
Less pressures on terminal resources
Less financial appeal
M&A activity in terminal operating
industry
• Expected net returns on investment grossly overrated on
assumptions that:
- container throughput figures would go through the ceiling
- container handling facilities would be in short supply
- prices would rise steeply.
• Since 2008: no major terminal transactions
• Max 8 to 10 times EBITBA
• Shipping lines’ divestment in terminals?
A more prudent approach to
plot sizes of capacity extensions?
• Deurganckdock
- 5.3 km quay wall,
- 326 ha, 44 GC
- 8m TEU
• Rotterdam: Euromax
- 5.5m TEU, 2.3m TEU in 1st phase
• Rotterdam: Maasvlakte I & II
• Le Havre: Port 2000
Rebalancing risk
•
Globalization and the growth of the shipping industry appear to have
skewed the perception of risk downward.
Source: Rodrigue, Notteboom and Pallis (2009)
The “Calm” after the Storm: A Paradigm
Shift for Maritime Container Trade and
Ports
1) Risk
Allocation
Desire to allocate greater risks onto private
sector in PPPs:
• Requires clear policy goals and stable regulation.
• Moral hazard risks will continue to be tested.
More demanding capital markets and less
access to (cheap) credit:
• Focus on performance to meet financial metrics.
• New projects more critically assessed.
Greater consideration of cost recovery of port
infrastructure investment:
• From the deal / financial structure to quality of the
asset.
2) Reviewing
False
Asymmetries
The assumption that larger players have more
information than smaller players:
• The larger players appear to have lost the most.
The “Calm” after the Storm: A Paradigm
Shift for Maritime Container Trade and
Ports
3) Growth
Story:
Time for
realism
Abandoning the compound annual growth
paradigm
• Port traffic assumptions likely to be less backward
looking.
• Stronger cyclical effects than perhaps first
assumed.
Greater attention on market fundamentals:
• Globalization or regionalization?
4) Barriers to
Entry:
Competition
matters
Paying attention to competition drivers:
• Growth may no longer mitigate competitiveness as
it did previously.
• Transshipment a particularly vulnerable segment.
5)
Amortization:
Modest times
Volume & pricing assumptions more modest:
• Longer amortization periods.
• PPP rent sharing more probable.
Will we get back to a ‘business
as usual’ scenario?
• No: the ‘business as usual’ practices between 2002 and
2008 were highly ‘unusual’.
• Medium-term perspective (3-5 years):
- Sustained pressure on terminal rates due to
restructuring/consolidation of shipping services and
memory effects in terminal overcapacity situation.
- Actors will continue to show cautious in competitive
bidding processes.
• Long-term perspective (>5 years):
- Strategic port sites remain scarce goods.
- Terminals will regain status as interesting investment
objects, but with a more realistic risk assessment.
CONCLUSIONS
• Mid-term problems to a ‘recently enlarged port
sector’ with investors rediscovering risk
• Provide opportunities:
- to develop corrective actions as good days will be
back.
- to revisit growth expectations as trade growth is not
exponential.
Topics for Discussion
• How solid are the growth fundamentals for the
shipping industry?
• Which sectors and regions are the most
vulnerable?
• Who is likely to default next?
• Signs of divesture?
• What could be the “new normal”?
Thank you for your attention !
theo.notteboom@ua.ac.be
jean-paul.rodrigue@hofstra.edu