European ports survey 2012

The world’s most active vehicle-trading sea network. While European ports saw declines in imports within a tough market, volumes were surprisingly resilient in some areas, driven by exports, developing regions and changing OEM strategies.  

While the overall European automotive industry has suffered from five consecutive years of sales declines, finished vehicle handling at ports reveals the true complexity and resilience of the car handling trade. Our survey of European ports, which includes 34 ports representing more than twice as many vehicle terminals, in some ways confirms what you would expect given the conditions of the European market, which is that lower vehicle sales led to drops in imports, even as exports were generally stronger, especially from Germany and also the UK. Imports dropped by around 9%, while another export rise of 8% helped to keep overall volumes stable.

But even that imbalance masks a host of surprises and developments that defy generalisation. While ports in southern Europe have suffered from depressed markets, in some cases rising transhipment volume to North Africa or the Black Sea helped such ports to overcome declines of 30-40% for imports. In perhaps the single biggest surprise of the survey, such transhipment helped Greece’s port of Piraeus rank as the 11th largest port in Europe despite the turmoil in the Greek economy. New shipping services, infrastructure improvements and exports helped some Spanish ports, such as Barcelona, also offset the collapse in imports.

As well as pockets of growth across Europe – in Russia, notably, the UK and Scandinavia – port volumes have also been driven by OEMs and shipping lines redrawing their networks. In some cases, such as for Denmark following the closure of Copenhagen’s vehicle terminal, this has resulted in a consolidation of volumes at smaller ports closer to market. Elsewhere, such as for the German port of Cuxhaven, carmakers have looked for alternative export locations to the usual behemoths, such as Bremerhaven.

The coming years could bring more changes still, driven in part by changing regulations around sulphur emissions in much of northern Europe, as well as the development of ports in both North Africa, the Black Sea and Turkey.

Bremerhaven on top once again
The German port of Bremerhaven, which unseated Belgium’s Zeebrugge as Europe’s (and probably the world’s) largest vehicle handling port in 2011, retained its title last year. Total throughput increased 100,000 units to 2.15m as both imports of Korean brand vehicles and German exports went up. According to Wolfgang Stöver, sales and marketing director at terminal operator BLG Automobile Logistics, exports of German premium cars are forecast to increase again in 2013 by around 5%. Bremerhaven’s strongest destination markets were to the US, China and Russia, although growth rates are slowing slightly, according to Stöver.

According to Stöver, the strongest growth at Bremerhaven came from Kia and Hyundai, with a 30% and 15% rise respectively. Daimler and BMW also saw increases in exports for 2012 from Bremerhaven. As well as exports, Egon Christ, senior manager, worldwide transportation and vehicle distribution at Daimler, points out that the OEM uses Bremerhaven as a hub for imports originating in the US, South Africa, and in the future it will also use it from Finland (where the A-class will be built on contract).

At the BMW Group, Mathias Wellbrock, head of vehicle dispatch and distribution, says the carmaker is seeking more competition and alternatives in its port network. Bremerhaven handles BMW’s highest volumes, including exports to Asia and the US, but the carmaker has also developed the German port of Cuxhaven as an exit point for short-sea flows. “We shifted some of our volume to Cuxhaven in 2012, from which we increased our flows to Scandinavia and the UK,” explains Wellbrock. “ By doing so, we optimised lead-times and shipped the vehicles closer to the centre of gravity, including shipments to Immingham, Southampton, and Dublin.”

Port capacity in northern Europe
Daimler has faced some space constraints following strong exports to the Far East, including China, Korea and Japan, and to North America, but Christ says shipping capacity is generally balanced, although he suggests that ro-ro capacity could get tight in the coming years, while there are already space constraints at ports in northern Europe.

“There is a strong need to restart investment in newbuildings to avoid undersupply of vessel space in the upcoming years. Furthermore, port congestion is increasing, thus creating more bottlenecks,” Christ says. “Developments in the North Sea ports are moving forward slowly. The new space is far away from the berth, thus causing inefficient and long transhipments. In the mid and long term, there needs to be a fundamental redesign of port infrastructure, including multilevel storage facilities near the berth and more capacity and transportation flexibility.”

BMW also faces some issues with processing time at ports, rail connections to ports as well as the shuttling capacity from port for import cars, according to Wellbrock.

BLG’s main challenge is to reduce dwell-time and lead time at Bremerhaven, particularly in managing between the large imbalance between exports and imports. “For example, for exports, cars arrive overnight in Bremerhaven and may wait five to seven days for a vessel,” admits Stöver.

Christ acknowledges that the issue has impacted Daimler’s lead times to some extent. “The reduced imports to Europe have led to fewer import vessel calls, which reduces export sailing frequency,” he says.

To facilitate export flow, BLG is building a new bridge that will link its export storage yard to the Nordhafen berth area. The project should be ready in May, says Stöver.

Rises and falls in Benelux and France
Among northern European ports, the port of Antwerp saw one of the highest volume increases in 2012, rising 18% to 710,000 vehicles, driven mainly by strong export growth.

Matthias Vandecasteele, business development manager, says the export increase was thanks to growing volume to China, new models volumes, and an increase in the West African and South American trade lanes. Vandecasteele adds that the port of Antwerp implemented online tracking information for all parties, as well as other IT improvements that allow data exchange between businesses and government, as well as speeding up maritime transit through better vessel traffic management.

At the second-ranked port of Zeebrugge, the total vehicle throughput was stable at around 1.75m units in 2012. Joachim Coens, managing director, says that Zeebrugge’s exports and imports increased to the US as well as to smaller markets. For Russia, transhipments increased through the Russian port of Ust-Luga for imports from Japan and the US. Shipments to the UK, as well as southern Europe, France, and Spain declined. Coens predicts that Zeebrugge’s volumes will increase in the second half of the year by 5%.

Last year, Zeebrugge opened a new internal rail connection connecting terminal operators including ICO, WWL and C.Ro, which Coens says saves up to half a day in shunting times. ICO also built a new 700-metre quay wall that will provide space for another deep-sea vessel.

Both Mercedes-Benz and Hyundai-Kia have switched from land-based exports to the UK to using Zeebrugge. According to Frank Schnelle, general manager, development and planning at Glovis Europe, receiving cars by ship rather than truck has resulted in more available capacity and better operational compound planning. “That is because we can plan the workforce better by receiving cars from short sea than by individual truck arrival,” says Schnelle.

Hervé Cornède, commercial and marketing director at Haropa (a partnership among the ports of Le Havre, Rouen and Paris), says the economic situation led to an export decrease for French car manufacturers, whereas import volumes increased slightly. But the por t has worked on improving its efficiency through a project called Roro Max, which includes minimising the time that ships spend in the port and reducing distances between ships and compounds.

Haropa is part of a comprehensive project to introduce a multimodal system in the north of France. “Our target is to develop waterway service on the Seine River artery for vehicle transport between Le Havre and Paris. The challenge is to include developing barge services to offer hinterland facilities and flexibility,” s ays Cornède.

British strength
While German port volumes make up the greatest share of our European ports survey (with a total of 3.76m reported units between Bremerhaven, Emden and Cuxhaven), the total reported by the UK comes second (3.07m units), including four ports (or port amalgamations) in the top 12. At the Humber Ports, which includes Grimsby, Immingham and Killingholme, exports have exploded, increasing from 64,000 in 2011 to 150,000 in 2012. The growth was largely from General Motors at ABP Grimsby and Immingham, according to Jeffe Baker, business development manager, Humber Ports. He is also expecting increases from Toyota in the coming year.

Grimsby also expects higher volumes following the introduction of the Grimsby River Terminal, which will open in June. Until now, the port entrance at Grimsby had limited the vessel size capable of entering the port to 700 cars; this will now rise to about 3,000-unit ships.

Southampton is another UK port that has seen recent growth, thanks in part to Honda Motor Europe. The Japanese OEM uses the port of Southampton for 85% of its exports, where it maintains a centralised base for its European stock. Simon Stacy, head of logistics at Honda, says 85% of European countries are a part of this network, which most recently added Austria, Switzerland, and Hungary. The other 15% of Honda’s sea export volumes move through the port of Bristol to Ireland, Turkey, Malta, and others.

The hard hit, but resilient south
The economic crisis most affected ports in southern Europe, where some have seen imports drop by as much 40%. At Greece’s Piraeus Port Authority, import volumes declined as car sales in Greece encountered a sharp reduction of more than 30% each year for the past three years. But Piraeus, together with other ports in the region such as the port of Koper, in Slovenia, saw a surprisingly strong recovery in transhipment volume, driven in part by volume from Southeast Asia.

Piraeus has been challenged by longer lead times for sea connections, which means transhipped vehicles are stored for longer. “We will address this, primarily through expansion of our infrastructure and better yard handling,” s ays Dr. Thanassis Karlis, head of strategic planning.

According to Stavros Hatzakos, general manager, Piraeus will connect its car terminals with the rail network to central Europe, a project that will be ready by the end of June. “This will improve the competitiveness of the Piraeus car terminals as a gateway mainly for inbound volumes from Southeast Asia. Rail will be more competitive with road or sea,” he predicts.

Despite the region’s struggles, some new services have also been added. At Grimaldi Lines, Costantino Baldissara, commercial, logistics and operations director, says the Italian shipping line began a new deep sea service from the port of Bar, in Montenegro, to Europe, as well as a short sea connection to Mediterranean Sea ports. Grimaldi Lines also began service from the Italian port of Ravenna to Brindisi and Catania, and improved its connections between Livorno and Savona, and Barcelona and Valencia.

OEMs have also made ports changes in the region. Christ says that Daimler made a major change for imports to Turkey by consolidating all volumes originating from Monfalcone (Italy), Antwerp, and Valencia at Autoport Istanbul (see p62 for more).

Changing flows from Spain
Spanish ports saw some of the steepest declines last year. The port of Vigo’s total vehicle volume declined by a third in 2012, with imports down 78%. Port deputy managing director Rubén Marin expects that its exports will recover in 2012 between 20% and 25%, while imports and transhipments should stay the same.

The port of Pasajes, whose volume also declined by 30% last year, is facing cost and efficiency challenges as a result of the drop. “We also face cost challenges and increases because the Pasajes Port Authority is not recognising the need for competitive pricing per unit handled,” argues Bjorn O. Gran Svenningsen, head of car transport sales at short-sea operator UECC, which runs the terminal at Pasajes.

There have been infrastructure improvements at the port, though and UECC can now discharge two full trains at once at its terminal. “However, improved capacity may not be enough to counter efficiency problems with the mostly state-owned system,” says Augustin Fernandez, chief operating officer at UECC.

There is a trend toward creating a hub port in Spain to consolidate volumes. Some OEMs are moving to Santander where there is less empty equipment, for example. Sjors Bosvelt, general manager at Broekman Car Handling at the port of Rotterdam, says last year it began a ro-ro service with UECC that connects Rotterdam to Santander and Pasajes on a weekly basis. The service handles new vehicles, high and heavy cargo, and project cargo.

The port of Valencia was something of an exception in Spain, offsetting weaker exports from Ford with higher imports. “Our outlook for 2013 is an increase of 5%,” says Jorge Civera, business development manager.

The largest port by volume in Spain last year was again Barcelona, which has aspirations of being a hub port. While imports have plunged, transhipments for the Mediterranean Sea has doubled during the past two years. Direct exports to China have also begun, according to commercial manager Lluis Paris. “The new Grimaldi Terminal Barcelona will be ready to operate in the second half of this year. Barcelona is the hub of its short sea services in the Western Mediterranean Sea,” he says.

At Barcelona, three main areas of infrastructure improvement are currently underway, including the freeing of the container terminal contiguous to the car compound, which will allow more available surface for car handling. Furthermore, two new deep-sea berths plus one for feeders will minimise congestion. New rail facilities within car compounds, including large buffer yards, will connect with mainland Spain and the rest of Europe.

North Africa and beyond
One of the rare bright spots in the Mediterranean and southern European regions has been growth in parts of North Africa. Bosvelt says that Broekman began working with ro-ro provider NMT on an export business from Rotterdam to Africa and Middle East.

Gregor Belic, car terminal director for Luka Koper at the port of Koper, says its newest business is booming exports to the port of Djen Djen, Algeria. “We have 8,000 units ready to go. We also have 7,000 new Hyundai vehicles to export to Alexandria, Egypt,” he says.

Peter Menzel, commercial director at Neptune Lines Shipping and Managing Enterprises, which serves Black Sea ports such as Illychevsk and Constanta, as well as the Mediterranean Sea region, says that North Africa is the future. “The truth is that the economic downturn does not have much effect on imports from Romania, Turkey, and Morocco, all of which sell lower-priced cars,” he points out.

Chinese imports to the region are also growing here, particularly to Algeria, which is NOL’s largest destination. “We shipped 120,000 units in 2011 and 200,000 last year. Libya is also experiencing substantial growth,” says Menzel. NOL’s transhipments also increased for Russia and Ukraine for Japanese and Chinese cars.

BLG’s transhipment hub at Gioia Tauro, Italy, also recovered from weak figures thanks in part to Libyan and Algeria-bound imports. However, political and economic instability in North Africa, as well as the Ukraine, could undermine the recent growth.

Sulphur emission controls
The upcoming regulation changes on sulphur emissions are generating controversy, including a controlled area that has already tightened emissions to 1% in much of northern Europe and will limit them further to 0.1% by 2015. Daimler’s Christ believes the changes will have a negative impact on short-sea shipping volumes. “We may shift short-sea volumes from sea to land. Since this is not in line with the European transport policy, there w ill likely be a postponement from the planned date,” he suggests.

Volvo Group Logistics Services’ Kjell-Åke Hvittfeldt, who was senior vice-president of global purchasing before taking on a new position, says the regulations cause uncertainty. “Since we have no steamship contracts in place beyond 2014, we have no idea as to our costs,” he says. “Of course, for deep-sea shipments, the impact of a leg is a much smaller portion of the total cost than for short-sea shipments. However, beyond that, the solution is not obvious. Do the carriers buy low-sulphur fuel or sulphur scrubbers? We should know more in one year.”

As a means of addressing upcoming emissions regulations, UECC is building two dual fuel vessels – diesel and liquid natural gas (LNG) – that it will introduce in the first half of 2015. “East of the Dover Straits we would need light diesel in order to meet the new requirements. We would need to increase freight rates by 20% to 30%. We also need infrastructure in order to supply LNG,” says Svenningsen.

Luka Koper’s Belic expects the regulations will help Koper, where the restrictions will not come into force immediately. Likewise, Mathias Eklund, general manager of Stena SeaLine, believes the emissions rules will lead to further openings in the Black Sea, where the controls will also not be in place. Since January, Stena SeaLine has been providing a weekly ro-ro service for commercial vehicles from Derince, Turkey’s l a rgest vehicle port, to the Black Sea port of Illychevsk, Ukraine.

Copenhagen bows out of car trade
Scandinavian ports, which will be among those most impacted by the new emissions standards, made some significant changes to vehicle handling last year. In particular, the port of Copenhagen-Malmö closed the vehicle terminal in Copenhagen at the end of last year to focus more on waterfront developments and the cruise sector.

Taking up the slack is Scandinavian Auto Logistics, which operates the largest dedicated car terminal in Denmark at the port of Esbjerg. Managing director Henrik Otto Jensen notes that since Copenhagen-Malmö’s car terminal activities are now solely in Malmö, Sweden, it is cheaper and more efficient to distribute cars from Esbjerg than from Malmö, especially to western Denmark.

Daimler is among the vehicle makers to make changes in Scandinavia. For Sweden, it ships commercial vehicles via Zeebrugge to Malmö. It also ships Spanish production for Denmark via Zeebrugge to Esbjerg.

Scandinavia’s port volumes have seen mixed results. While Copenhagen-Malmö and Sweden’s Wallham saw higher volume in 2012, the port of Gothenburg dropped by nearly 30% following the decline of Volvo car exports.

More options in the Russian Baltic
Russia’s car market grew significantly in 2012, which had a mainly positive impact on imports. While Russia’ entry into the WTO has lowered import tariffs, Russian industrial policy has pushed OEMs to localise more production in the country, leaving the outlook for import growth somewhat uncertain. However, Russian port handling has grown, mostly at the expense of other Baltic Sea ports such as Hanko in Finland.

The main development in the Baltic was the opening of Russian Transport Lines’ (RTL) Novaya Govan Terminal at Ust-Luga, which is the second car terminal at the port along with the Yug-2 terminal. It is RTL’s second terminal in the Baltic along with its Sea Fishery terminal in St Petersburg.

RTL’s chief executive officer Konstantin Skovoroda sees both ports as one complex – Ust-Luga is 160km from St Petersburg. He points out that the combination of import volumes at terminals across St Petersburg and Ust-Luga ports increased by 15% in 2012 to nearly 440,000 units – a total that would have ranked 11th in the total rankings and fifth in import totals. Skovoroda expects similar vehicle volumes this year.

The opening of Novaya Govan was several years coming and Skovoroda believes RTL’s two terminals will ultimately compliment each other. “We need to divide the volumes because, although Fishery Port volumes are closer to the dealerships, Novaya Govan is better for storage,” he says.

Europe’s ups and downs will continue to have a direct influence on vehicle port volumes and OEM shipping strategies but it’s obvious that the overall port network is rarely one that faces collective growth or decline. Rather, the emergence of new markets and routes, together with regulatory changes, are likely to give new rises and falls in each market. While the top ten ports or so have been remarkably stable in their standings over recent years, the future could see the emergence of, if not a new order, then an ever more complex and diverse mix of ports used by carmakers.