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The Charthouse Group
Economic Economic Outlook Outlook for for Ports Ports and and ShippingShipping: : A PostA Post--Recession (Really?) AnalysisRecession (Really?) Analysis
Theo NotteboomITMMA - University of Antwerp and Antwerp Maritime Academy, Belgium
Jean-Paul RodrigueDept. of Global Studies & Geography, Hofstra University, New York, USA
ESPO 2011- The European Sea Ports ConferenceOptimising Port Performance and Reviewing Port Policy - Limassol, Cyprus
The Charthouse Group
Academia: Don’t know much and don’t get no respect(At least we’re not economists…)
2
The Charthouse GroupThe Charthouse Group
KEY ECONOMIC DEVELOPMENTS
Modern economic theory…QE1, QE2, … QExIn case of doubt, repeat
The Charthouse GroupThe Charthouse Group
Monthly Value of Exports or Imports, Selected Traders, 2006-2011 (Jan 2006=100)
50
75
100
125
150
175
200
225
250
Jan-0
6
Mar-
06
May-
06
Jul-
06
Sep
-06
Nov
-06
Jan-0
7
Mar-
07
May-
07
Jul-
07
Sep
-07
Nov
-07
Jan-0
8
Mar-
08
May-
08
Jul-
08
Sep
-08
Nov
-08
Jan-0
9
Mar-
09
May-
09
Jul-
09
Sep
-09
Nov
-09
Jan-1
0
Mar-
10
May-
10
Jul-
10
Sep
-10
Nov
-10
Jan-1
1
Mar-
11
China (Exports)
Japan (Exports)
Korea (Exports)
Germany (Exports)
USA (Imports)
Brazil (Exports)
Trade has bounced back.America’s consumption engine sputtering.
Yes, but at what cost?
3
The Charthouse GroupThe Charthouse Group
CRB Index (CCI), Monthly Close, 1970-2011
0
100
200
300
400
500
600
700
800
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Paradigm shift in input costs…Reaping the consequences of monetary policy.
The Charthouse GroupThe Charthouse Group
West Texas Intermediate, Monthly Nominal Spot Oil Price (1970-2011)
0
20
40
60
80
100
120
140
janv
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janv
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janv
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janv
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janv
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janv
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janv
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janv
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janv
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janv
./81
janv
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janv
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janv
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janv
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janv
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janv
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janv
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janv
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janv
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janv
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janv
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janv
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janv
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janv
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janv
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janv
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janv
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janv
./11
There’s going to be hell to pay as this propagates along supply chains.Steaming, slowly…
Europe: effect high fuel price somewhat softened by weak dollar.
4
The Charthouse GroupThe Charthouse Group
Industrial production - EU
Source: EC
Industrial production - world
EU is worst performer in terms of recovery industrial production
Offshoring remains strong.Monetary policy undermining industrial output.
The Charthouse GroupThe Charthouse Group
EUROPEAN PORTS:HAS PORT TRAFFIC BOUNCED BACK IN 2010?
5
The Charthouse GroupThe Charthouse Group
0
200
400
600
800
1000
1200
1400
1600
Roro Conventional general cargo
Liquid Bulk Dry Bulk Containers
Mill
ion
tons
of m
ariti
me
traf
fic
Cargo segment
200820092010
340 ports
266 ports-19.8% -14.0% +10.3%+13.6%
+1.4%
+9.5%+9.5%
316 ports
352 ports 135 ports
-12.0%-19.6%
-3.9%
European port traffic2008-2010 = -5.2%
Total European port throughput
2008: 4.26 billion tons2009: 3.76 billion tons (-11.7%)2010: 4.04 billion tons (+7.4%)
The Charthouse GroupThe Charthouse Group
Are container volumes bouncing back ?
-5
10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Co
nta
iner
thro
ug
hp
ut i
n m
illio
n T
EU
s (7
8 p
ort
s)
European port systemHamburg-Le Havre rangeMediterranean rangeUK rangeAtlantic rangeBalticBlack SeaExponential trendline total traffic
2009: - 14.4% compared to
2008
2010: + 10.4% compared to
2009
Non-anticipated traffic gap of 15 million TEU
6
The Charthouse GroupThe Charthouse Group
Market shares in the European container port system
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Sh
are
in to
tal c
on
tain
er th
rou
gh
pu
t
Hamburg-Le Havre range
Mediterranean range
UK range
Atlantic range
Baltic
Black Sea
Med ports are losing market share, mainly due to weaker position transhipment hubs
Rising market share Hamburg-Le Havre range
mainly due to Benelux ports.
Black Sea port system losesground due to declining volumes at Constantza
The Charthouse GroupMiddle East – Far East
Main shipping route
Americas
Americas
Transhipment/interlining port (transhipment incidence >75%)
Multi-port gateway region
Main shipping route
Gateway port
Gateway port also handlingsubstantial transhipment flows
Market shares in total European container traffic
© 2011 T. Notteboom – ITMMA, University of Antwerp
UK
Germany
France
Belg.
NL
Ireland
Romania
Sweden
Spain
Croatia
Hungary
Czech RepublicSlovakia
SerbiaBosnia&
Herz.
Alb.
Greece
Bulgaria
Turkey
Lithuania
Latvia
Estonia
Norway
Finland
Ukraine
Belarus
Russia
Portugal
Mace.
Den.
AustriaSwitz.
Italy
Poland
MoroccoAlgeria Tunisia
Cyprus
Malta
‘09: 25.5%‘10: 26.1%
‘09: 14.9%‘10: 14.9%
‘09: 0.8%‘10: 1.2%
‘09: 3.0%‘10: 2.9%
‘09: 7.3%‘10: 7.4%
‘09: 1.5%‘10: 1.6%
‘09: 4.3%‘10: 4.5%
‘09: 1.5%‘10: 1.6%
‘09: 0.9%‘10: 0.8%
‘09: 1.2%‘10: 1.3%
‘09: 1.9%‘10: 1.9%
‘09: 7.2%‘10: 7.1%
Otherports‘09: 29.8%‘10: 28.6%
7
The Charthouse GroupThe Charthouse Group
PROSPECTIVE FOR THE CRUISE INDUSTRY
The Charthouse GroupThe Charthouse Group
Cruise passenger numbers are up despite the crisis
Index evolution cruise passenger numbers
in regions around Europe (2008 = 100)
Number of cruise passengers in some
leading European cruise ports
0
20
40
60
80
100
120
140
2008
2009
2010
0
0,5
1
1,5
2
2,5
Mill
ions
of c
ruis
e pa
ssen
gers
2008
20092010
8
The Charthouse GroupThe Charthouse Group
The European cruise sector
• 5.5m passengers in 2010 • 30% of the global share of cruisers • Cruise capacity in Europe: +23% in 2011• Positive driving force: aging of the population creates a market
suitable for the cruise ship industry + increasing appeal to young people
• Negative driving force: the retirees will increasingly be broke...- Structure of pension plans (e.g. defined benefits) could be a
determining factor.
The Charthouse GroupThe Charthouse Group
PROSPECTIVE FOR THE TRANSHIPMENT MARKET
9
The Charthouse GroupThe Charthouse Group
The Global Transshipment Market
The Charthouse GroupThe Charthouse Group
Sea-sea transshipment plays a role, particularly in Med and in relation to UK and Baltic…
Algeciras
Sines Cagliari
Gioia Tauro
Malta
Taranto
Piraeus
Le Havre
Rotterdam
Antwerp
Zeebrugge
Bremerhaven
Hamburg
Valencia
Barcelona
Influences on North Europe(1) Limitations of calls for deepsea
vessels?(2) Benelux ports and Baltic(3) Maasvlakte 2 effect(4) Direct deepsea calls in Baltic
(cf. Gdansk)(5) Effect Russia(6) New capacity in UK(7) Green reflex (carbon footprint)
Influences on South Europe(1) Role of pure transhipment hubs(2) Direct calls in gateway ports
(cf. NAPA, Spain, etc..)(3) Increasing share Asia trade(4) Impact North Africa(5) Green reflex (carbon footprint)(6) Future interlining/relay
business
10
The Charthouse GroupThe Charthouse Group
Pure transhipment hubs in West Med lose market share
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%19
75
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Sh
are
in T
EU
thro
ug
hp
ut W
est-
Med
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
The Charthouse GroupThe Charthouse Group
Major ports and future terminal developments in non-EU Med ports: impact of a changing political landscape?
Container throughput in million TEU, capacity extensions in million TEU
Ambarli (Turkey)Traffic: 2.26 (2008)
Mersin (Turkey)
Haifa (Israel)Traffic: 1.39 (2008)
Beirut (Lebanon)Traffic: 0.95 (2008)
Port Said (Egypt)Traffic: 3.2 (2008)Capacity: +2.5 (2011)
Damietta (Egypt)Capacity: +4 (2012)
Misurata (Libya)Initial plans cancelled?
Enfidha (Tunisia)Capacity: +1 (2011)+2.5 (period 2011-2015)+2 (period 2015-2030)
Rades (Tunisia)Traffic: 0.3 (2007)
Djendjen (Algeria)Capacity: +2 (DP World)
Bejaia (Algeria)Traffic: 0.15 (2008)
Capacity: +2.5 (>2010)
Algiers (Algeria)Traffic: 0.5 (2007)
Capacity: +0.8 (2010)
Tanger Med IIAPMT/Akwa: + 3 mln TEU (2012)PSA: +2 mln TEU (2012)
Tanger MedAPMT: + 1.5 mln TEUEurogate: +1.5 mln TEU
11
The Charthouse GroupThe Charthouse Group
Transshipment/interlining potential of the Cape route?
Source: Notteboom (2010)
The Charthouse GroupThe Charthouse Group
PROSPECTIVE FOR THE MARITIME INDUSTRY
12
The Charthouse GroupThe Charthouse Group
A View from 2008: World Container Traffic (1980-2008) and Possible Scenarios to 2015
0
100
200
300
400
500
600
700
800
900
1000
1980 1985 1990 1995 2000 2005 2010 2015
Milli
on T
EU Divergence
AdoptionAdoption AccelerationAcceleration Peak GrowthPeak Growth MaturityMaturity
1966-1992 1992-2002 2002-2008 2008 -
Reference
Depression
To what extent the growth in 2010 is attributed to transshipment and emerging markets?
The Charthouse GroupThe Charthouse Group
How Containerization Growth Factors Influence Freight Routes?
Derived
Economic and income growthGlobalization (outsourcing)
Fragmentation of production and consumption
Substitution
Functional and geographical
diffusionNew niches
(commodities and cold chain)
Capture of bulk and break-bulk
markets
Incidental
Trade imbalancesRepositioning of
empty containers
Induced
Transshipment (hub, relay and
interlining)
13
The Charthouse GroupThe Charthouse Group
Ports and Maritime Shipping in the “Post-Bubble” Period
Over optimism is back?
Herding behavior?
Financialisation (dumb money at work)
Any lessons from the (recent) past?
Shifts in economic geography
Fundamentals remain shaky for (parts of) Europe
Gateway vs. transshipment
The Charthouse GroupThe Charthouse Group
Some key issues in liner shipping
Renewed risk for overcapacity.
18,000 TEU vessels and its ramifications on
ports.
Slow steaming: using a green
argument to hide a green ($) bottom
line?
Overcapacity absorbing potential
is weakening
Impact of bunker price evolution and
low-sulphur fuel
14
The Charthouse GroupThe Charthouse Group
Which Global Routing Structure is Likely to Emerge in Light of Expected Changes?
The Charthouse GroupThe Charthouse Group
How the Main Actors in Global Freight Distribution Influence Routing?
Top ten terminal operators: 65% of the world’s total container handlings
Container Terminal Portfolio of the Four Main Global Terminal Operators, 2010
15
The Charthouse GroupThe Charthouse Group
Regional Share in the Terminal Portfolio of the Twelve Largest Global Terminal Operators
(Hectares, 2010)
0% 20% 40% 60% 80% 100%
Hutchison Port Holdings
Port of Singapore Authority
Dubai Ports World
APM Terminals
Eurogate
Ports America
SSA Marine
Shanghai International Port …
Cosco Pacific
Hanjin
ICTSI
CMA-CGM
Africa
Australia
North America
South America / Caribbean
Pacific Asia
South Asia / Middle East
Mediterranean
Europe Atlantic
Changes in regional orientation?
The Charthouse GroupThe Charthouse Group
Market players are spreading the risksComplexity in terminal ownership structures
Example for the Rhine-Scheldt Delta - 2010
DP World
PSAHUTCHISON PORT HOLDINGS
APM Terminals(AP Moller Group)
ANTWERP
Antwerp Gateway
PSA (Antwerp/
Zeebrugge)
MSC Home terminal
CHZ
APM Terminal
ZEEBRUGGE
ROTTERDAM
Rotterdam World Gateway(Maasvlakte 2)
Operational by 2013
ECT
APM Terminal Maasvlakte CMA-CGM
MSC
NYK
Terminal 1(Maasvlakte 2)
Operational by 2014
Minority Shareholding
Waal- and Eemhaven
Delta Terminal
Euromax phase 1
Majorityshareholding
ZIM Line
DP World Delwaidedock
North Sea Terminal
Europe Terminal
Deurganck Terminal
New World Alliance
CYKH Alliance
Antwerp International Terminal (AIT) Shipping Line
(Global) Terminal Operator
Terminal
Shanghai International Port
Group (SIPG)
Albert II-dock north (under construction)
Cosco Pacific
100%
20%
50%
100%
100%
50%
50%
50%
60%
30%
10%
100%
100%
100%
50%50%
100%
42.5%
10%
20%
10%
35%
100%
65%
75%
25%
PORT
Financial Holding
Source: Notteboom& Rodrigue (2010)
16
The Charthouse GroupThe Charthouse Group
PROSPECTIVE FOR LOGISTICS AND INLAND FREIGHT DISTRIBUTION
The Charthouse GroupThe Charthouse Group
The logistics industry in 2010
• Global logistics industry saw a strong bounce-back in 2010
• Recovery not equally strong in all regions
• Sector increasingly challenged by natural disasters, security breaches and price fixing allegations
• Hangover from consolidation wave of past ten years.- Quarter of assets are intangible, largely made up of ‘goodwill’ on
acquisitions.
17
The Charthouse GroupThe Charthouse Group
Distribution based on RDCs Distribution based on one EDC
Distribution based on tiered system (EDC+RDCs)
Towards a new wave in distribution networks?
• Delivery within 24h• Twin/triple EDC system• DC bypass?
The Charthouse GroupThe Charthouse GroupMiddle East – Far East
Main shipping route
Americas
Americas
Transhipment/interlining port (transhipment incidence >75%)
Multi-port gateway region
Main shipping route
Gateway port
Gateway port also handlingsubstantial transhipment flows
Madrid and surroundings
West Germany
Bavaria Alpine region
South Poland/Czech Republic/
Slovakia/Hungary
Northern Italy
South France
Immediate hinterlands remain the backbone of ports’ gateway traffic..
.. but gateway regions increasingly vie for distant contestable hinterlands
Flexibility within a multi-port gateway context is key
18
The Charthouse GroupThe Charthouse Group
Example of multi-port gateway region in practice: the NAPA initiative (North Adriatic Ports Association)
34Source: www.portsofnapa.com
The Charthouse GroupThe Charthouse Group
How the “Last Mile” in Freight Distribution is Being Operationalized?
GatewayGateway Inland Inland TerminalTerminal
DistributionDistributionCenterCenter
Capacity
Frequency
CorridorCustomerCustomer
“Last Mile”
Segment
GLOBALGLOBAL HINTERLANDHINTERLAND REGIONALREGIONAL LOCALLOCAL
Shipping Network
MassificationMassification AtomizationAtomization
2211
22Inventory in transit11 Inventory at terminal
19
The Charthouse GroupThe Charthouse Group
Port Regionalization: Pushing Atomization in the Hinterland and Massification in the Foreland
FORELANDFORELAND
HINTERLANDHINTERLAND
Main Shipping Lane
Inland Terminal
INTERMEDIATE HUB
HinterlandHinterland--Based Based RegionalizationRegionalization
GATEWAY
ForelandForeland--Based Based RegionalizationRegionalization
European dimensionEuropean dimension•Port authority involvement in inland terminals/logistics zones•Extended gate strategies of terminal operators• Inland push by shipping lines•EC projects ( Hinterport, Tiger Demo, etc..) •ESPO/EFIP
The Charthouse GroupThe Charthouse Group
STRESSFUL TIMES AHEAD FOR PORTS?
20
The Charthouse GroupThe Charthouse Group
Are the good times back?
• Short-term perspective (1-2 years):- Artificially induced good times will wear off.- Various debt crises.
• 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 caution 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.- Very challenging macroeconomic environment (resources, debt).
The Charthouse GroupThe Charthouse Group
Thank you for your attention [email protected]