German gloom

Last year Germany’s two main container ports were among the worst performing in northern Europe with both Hamburg and Bremen/Bremerhaven losing market share to their main rivals.

While Hamburg’s box traffic collapsed by almost a third, Bremerhaven saw its throughput fall more than 17%. These performances compared with declines of 9.6% and 15.6% at Rotterdam and Antwerp, respectively, and a near 3% increase in traffic at Zeebrugge (see table).

While the fall was mainly attributable to the significant downturn in import, export and relay traffic handled for the Scandinavia/Baltic Sea regions as a consequence of the global recession and credit crunch, other factors appear to have been at work, especially in the case of Hamburg.

In announcing its 2009 results earlier this year, Hamburg Port Authority (HPA) indicated that on its core trades to/from Asia, including China, volumes slumped by 24.3% to 4.2m teu. Even more catastrophic was the near 44% reduction in transhipment traffic with the Baltic, with flows to Russia particularly soft last year.

While the downturn in this latter business was partly due to the economic circumstances, it was exacerbated by the decision of some ocean carriers to switch their relay business to other ports, including Antwerp and Rotterdam which are recognised as being cheaper to use than German ports and where several carriers operate their own terminals.

This latter situation is also thought to have partly come to the rescue of Bremerhaven last year and helped to stem that port’s losses in cargo volumes. Mediterranean Shipping Co and Maersk Line both have affiliated terminals in Bremerhaven via sister company APM Terminals in Maersk’s case and were, therefore, less inclined to transfer eastern European and Scandinavian transhipment cargo to other ports as the focus was on maximising the use of their own assets and investments.

Hamburg has also suffered as a consequence of the restricted draught of the Elbe River, which impacts on liner companies’ operating flexibility and loading capacity. HPA and the State Government have been fighting for years to dredge the access channel in the river by another metre but various and vested differences between the political parties has impeded progress.

Hence inbound vessels calling at Hamburg are restricted to a maximum draught of 12.5 metres at low tide, or 14.8 metres with the tide. For ships leaving EuropeÕs third largest port the restrictions are more onerous because, while the limitations at low tide are the same at high tide, a maximum draught of just 13.5 metres is permitted. The problems become acute for those lines, such as Coscon, which deploy super post-panamax ships of 10,000teu-plus.

Claudia Roller, chair of Port of Hamburg Marketing Association, who has often expressed concern about the lack of progress, is optimistic that something will now happen.

"The Federal Government and the Senate of the Free and Hanseatic City of Hamburg have recently agreed that the deepening of the River Elbe is a top priority, and a full analysis of how everyoneÕs environmental concerns should be handled is nearing completion," she says. "We are confident that it will be possible to start dredging in the first half of next year and ocean carriers will immediately start noticing a difference through the extension of the current narrow tidal windows."

Bremerhaven has a different problem and that is the lack of space in which to expand. The portÕs quay can be extended no further, hence its backing of the JadeWeser project in Wilhelmshaven. This new deepwater port is scheduled to open in February 2012 with an initial 430 metres of quayline, with a depth alongside of 16 metres, and an annual capacity of 500,000-750,000teu a year.

To help stem the tide of transhipment cargo losses to other ports, Hamburg Ð like Rotterdam, Antwerp and Zeebrugge has cut or frozen its 2010 port dues. Most significant has been a reduction of up to 50% on charges for transhipment cargo, depending on the volumes of containers moved. This became effective on 1 January 2010. In addition, Hamburg’s pilotage charges have been held, rather than implementing a 2% increase by mid-2012, as originally planned by HPA.

The port authority claims that its port dues for feeder vessels are up to 50% cheaper than those of Antwerp and Rotterdam, so the new discount on transhipment cargo brought in by deepsea ocean carriers will make the port even more competitive. Up to now deepsea ocean carriers have been charged port dues based only on the maximum size of their vessels. Now they will receive a discount based on the quantity of cargo handled.

Despite this, ocean carriers still have to pay loading and unloading charges levied by the port’s container terminal operators, HHLA and Eurogate, which are said to be much higher than in Benelux ports. However, it is understood that their charges for transhipment cargo have since been reduced to match those of Rotterdam and Antwerp.

Moreover, HHLA and Eurogate have formed a company called Feeder Logistik Zentrale (FLZ) with 67% and 33% shareholding respectively to improve their offerings for the port’s feeder companies. The service is free of charge and its aim is to better co-ordinate scheduling each time a feeder vessel approaches the port.

Instead of vessel operators having to contact each terminal to get a berth on time, the job can be done for them on request by FLZ.

Based at HHLA’s Container Terminal Tollerort (CTT), its team of eight staff will work out the optimum schedule around the port’s eight terminals, and make the necessary contacts to set this up. Because of their centralised position, it is claimed that they have a better handle on berth availability, so are able to ensure that waiting time is minimised.

Currently, feeder vessels can lose two days to complete loading and unloading operations at all the berths that need to be called out for their mainline clients. FLZ should be able to save feeder operators at least 30% of their calling time in the port, thereby boosting productivity and service efficiency.

"For all those involved, the new organisation represents immense potential for optimising container handling activity in the port," says Bernd Bertram, head of Unifeeder in Germany, which was the first client of FLZ.

Commenting on these measures, Roller says: "Hamburg has always been an expensive port, but for some, the increases announced in 2008 were Ôthe straw that broke the camel’s back’. We hope that the cost-cutting steps now taken will enable us to recapture our lost market share."

Unsurprisingly, HPA has put several of its expansion plans on hold, pending clearer signs of a recovery. Meanwhile, HHLA has announced the closing its CTT facility with existing services transferring to its Container Terminal Burchardkai operation.

In terms of new developments, plans for a new state-of-the-art terminal in the Steinwerder area of the port have been delayed. Indeed, HPA had been considering alternative uses for the land, but recently announced that it would still house a 3.5m teu capacity container terminal. It is now expected that a revised date of 2020 is being targeted for its completion rather than 2015 as previously envisaged.

An intriguing question remains as to who should manage it. The Buss GroupÕs claim that as the incumbent tenant, it should be given the right of first refusal, no longer appears to be a considered option, with several suggesting that Hamburg should follow the model of other ports and consider liner companies, at least as shareholders in the project.

Many ocean carriers are likely to be interested, given Hamburg’s continuing strategic position in northern Europe and the growing preference by ocean carriers to more effectively control costs and operations in their ports. Coscon and Hanjin have previously expressed interests in such a venture in Hamburg.

Jens Kristian Elvers, head of port development and strategy at HPH, says: ÒBy law we are obliged to tender the contract. Our preference will be to favour a company that can bring new business to the port or tie in existing business more securely.Ó

Short term, it is a case of German ports and stevedores battening down, focusing on making their operations more efficient and cost effective and doing everything in their power to claw back the market share that was lost in 2009. Ultimately, though, the gloom will lift because German ports are crucial and critical links in the global supply chain.