Scale and critical mass matter to transshipment hubs, but location and inland connectivity are more important to gateway terminals, said Drewry’s Neil Davidson.
Being a supersized port with the capability of handling ULCVs does not guarantee success, but scale is more important for transshipment hubs than it is for gateway ports, said Neil Davidson, Drewry’s senior analyst of ports and terminals, Tuesday during a Drewry webinar.
Among Mediterranean transshipment hubs, Greece’s Port of Piraeus and Morocco’s Tanger Med have seen the largest market share increases over the past 10 years at about 9% and 4.2%, respectively. Piraeus Container Terminal S.A. handled 4.41 million TEUs in 2018, a 19.4% increase, and Tanger Med’s four terminals have handled 9.4 million TEUs of traffic, according to its website.
The Italian ports of Taranto and Cagliari and Spain’s Malaga “lacked critical mass and have struggled to be sustainable” and have lost market shares by 3.2%, 2.3% and 0.5%, respectively, Davidson said during the webinar, “Drewry’s Container Ports briefing: Is supersizing ports the answer?”
“In general, the message is that for the transshipment ports, scale and critical mass matter and small hubs are increasingly struggling,” he said.
Carrier involvement in transshipment terminals “is absolutely critical more so than ever,” Davidson said. Piraeus Container Terminal S.A. is a wholly owned subsidiary of COSCO Pacific Lines, and CMA CGM operates a terminal with Eurogate at Tanger Med with 1.4 million TEUs of traffic, according to Tanger Med.
Malaga is returning to the market with support from Maersk. Taranto, which closed despite having Evergreen as a major shareholder, is due to reopen under Yilport ownership, but does not yet have shipping line involvement, Davidson said. Yilport’s parent company, Yildrim Holdings, has a 24% stake in CMA CGM.
“Clearly that’s a very significant element in transshipment terms, but I think it’s much less of a factor in gateway terminals, where it’s much more about location and inland connectivity,” Davidson said. “Ownership by shipping lines is not necessarily essential to success, particularly if smaller terminals can succeed as the analysis shows in this sector.”
Drewry found that smaller gateway ports can be successful and highlighted three Chilean ports that had 2018 throughputs of at least 154,000 TEUs. Coronel (529,000 TEUs), Lirquen (315,000 TEUs) and Puerto Angamos (154,000 TEUs) are all finger pier operations and use mobile harbor cranes. Coronel, which has the smallest maximum alongside vessel draft among the three ports at 13 meters, also uses ship-to-shore gantry cranes.
“Smaller gateway ports can and are successful. South America shows that you don’t have to be a large highly equipped port or terminal to have a successful gateway niche,” Davidson said. “There is a simple reason why smaller ports can and do and continue to succeed in the big ship era and that’s because it’s about the cargo and not the ships, of course. Good inland transport links and proximity to cargo-generating areas are the key factors at work.”
Proximity to China’s factories has been, in part, responsible for the decline of the Port of Hong Kong’s loss of market share over the last 10 years among main Pearl River Delta gateway ports, he said. The Port of Hong Kong — a “very large port with critical mass, high performance and service levels and the ability to handle ULCVs” — has seen its market share fall by 13.4%, while the upriver ports of Guangzhou and Dongguan have had their shares increase by 8.7% and 5.3, respectively.
ULCV navigation limitations also are not necessarily an impediment, Davidson said. The Port of Antwerp gained nearly 3% of the Northwest Europe port market share between 2009 and 2018 “despite its upriver location and the tidal window challenges of ULCV navigation,” he said. Antwerp’s gain was second only to Rotterdam, which gained about 3%.
Belgium’s Port of Zeebrugge, however, has lost more than 3% of the market share during the same time frame.
“Meanwhile, its Belgian neighbor Zeebrugge is ideal for ULCVs as it’s a very small deviation from the main shipping channels and has few tidal access restrictions,” Davidson said. “Obviously Zeebrugge has seen a sharp loss of share and consequent closure of two of its deep-sea terminals. It remains to be seen whether the COSCO ownership of the remaining deep-sea container terminal in the port will reduce the trend.”
The rolling four-quarter average change in the global container port throughput was 3.7% in the first quarter of 2019, down from 6.2% from the first quarter of 2018. Overall, the global container throughput grew 2.7% in the first quarter of 2019 compared to the same period of 2018. North America showed the most growth at 5.4% “with frontloading of imports by shippers trying to beat possible trade tariff deadlines likely still at work,” Davidson said.
North Europe’s throughput grew 3.7% and Greater China’s 3.3%. The data, which showed Latin America’s throughput dropping by 5.6%, suggests American imports are being sourced outside of China, and Mexico, Canada, Japan and Europe are the beneficiaries, Davidson said.
He also said the ramifications of the trade war — along with shorter supply chains, environmental considerations and changing labor costs — could lead to “greater regionalization of trade.”
“If it’s more regional trade, you may not need so much transshipment. You may not need so many big ships,” Davidson said. “You may need more medium- and small-sized vessels in regional trade. It could be an opportunity for medium- and small-sized ports to partake more actively in trade because it’s more regional in nature.”