Livorno Port Authority Livorno, Italy · 2015. 5. 15. · Livorno Port Authority Livorno, Italy Financial Engineering Plan for the Development of the Logistic Node of Livorno through

Doc. No. 14-1394-H1 Rev. 0 - MARCH 2015

Livorno Port Authority Livorno, Italy Financial Engineering Plan for the Development of the Logistic Node of Livorno through the Implementation of the First Phase of the Platform Europe (CIG: 60079415C0)

Competitive Analysis and Traffic Forecasts for the Europe Platform of Livorno

Doc. No. 14-1394-H1 Rev. 0 – March 2015

QUADRO DI RACCORDO ATTIVITÀ CONTRATTUALI E CAPITOLI DEL REPORT

ATTIVITÀ DELLA PROPOSTA TECNICA CAPITOLI DEL REPORT Pagina

A1) Analisi dello Scenario Internazionale

dell’Industria dello Shipping Chapter 4 - Container shipping trends and implications for Livorno

68

A2) Analisi della Domanda e Previsioni dei Traffici

del Terminal Capitolo 2 - Historical container traffic volumes for the region 16

Capitolo 3 - Development of Livorno’s markets to 2035

40

Capitolo 8 - Livorno forecast volumes to 2035 180

A3) Analisi delle Caratteristiche Dimensionali e

Quantitative dell’Offerta di Movimentazione Contenitori nell’Area di Influenza della Piattaforma Europa e Posizionamento Competitivo del Futuro Terminal Contenitori della PE

Capitolo 5 - Livorno’s competitive position 108

Capitolo 6 - Teminal location and hinterland links

137

Attività B) Redazione di uno studio economico

logistico che evidenzi le peculiarità della posizione geografica del porto di Livorno. Confronto con altre possibili combinazioni logistiche mare – terra che raggiungano gli stessi interland o interporti

Capitolo 7 - Built-up cost analysis

160

Attività aggiuntive) Elaborazione del modello

simulazione delle previsioni di domanda nell’ipotesi che il terminal contenitori della PE non fosse costruito, cioè: valutazione dello “Scenario Zero”

Capitolo 9 - Gap Analysis

185

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TABLE OF CONTENTS

Page

LIST OF TABLES III

LIST OF FIGURES V

1 EXECUTIVE SUMMARY – LIVORNO EUROPE PLATFORM 1

1.1 INTRODUCTION 1

1.2 HISTORICAL CONTAINER TRAFFIC VOLUMES FOR THE REGION 3

1.3 DEVELOPMENT OF LIVORNO’S CONTAINER TRAFFIC MARKETS TO 2035 4

1.4 CONTAINER SHIPPING TRENDS AND IMPLICATIONS FOR LIVORNO 6

1.5 LIVORNO’S COMPETITIVE POSITION 8

1.6 ANALYSIS OF THE ITALIAN ROAD AND RAIL NETWORK 8

1.7 BUILT-UP COST ANALYSIS 9

1.8 LIVORNO FORECAST TO 2035 12

1.9 LIVORNO GAP ANALYSIS 13

2 HISTORICAL CONTAINER TRAFFIC VOLUMES FOR THE REGION 16

2.1 INTRODUCTION AND MARKET DEFINITION 16

2.2 ITALIAN REGIONAL DEMAND: GENERAL PERSPECTIVE 18

2.3 HISTORICAL DEMAND BY ROUTING 20

2.4 CONCLUSION 33

3 DEVELOPMENT OF LIVORNO’S CONTAINER TRAFFIC MARKETS TO 2035 34

3.1 INTRODUCTION 34

3.2 RELATIONSHIP OF GDP GROWTH WITH TRADE GROWTH 34

3.3 GENERAL ECONOMIC SCENARIOS AND DRIVERS 36

3.4 ITALIAN REGIONAL ECONOMIC POSITION 39

3.5 REGIONAL (NORTHERN TYRRHENIAN) ITALIAN FORECAST TO 2035 43

3.6 TRANSIT FORECAST TO 2035 51

3.7 TRANSSHIPMENT FORECAST TO 2035 55

3.8 CONCLUSION 59

4 CONTAINER SHIPPING TRENDS AND IMPLICATIONS FOR LIVORNO 62

4.1 INTRODUCTION 62

4.2 THE INTERNATIONAL CONTAINER SHIP SIZE REVOLUTION 62

4.3 GLOBAL SUPPLY/DEMAND BALANCES & ‘CASCADING’ 70

4.4 PORT CONCENTRATION 75

4.5 THE DEVELOPMENT OF LINER SHIPPING SERVICES IN ITALY 76

4.6 MEDITERRANEAN STRATEGIES OF MAJOR CONTAINER SHIPPING LINES 88

4.7 IMPACT OF ULTRA-LARGE SHIPPING LINE ALLIANCES 97

5 LIVORNO’S COMPETITIVE POSITION 102

5.1 INTRODUCTION 102

5.2 CURRENT TERMINAL FACILITIES AND PLANNED TERMINAL DEVELOPMENTS 102

5.3 PRODUCTIVITY COMPARISON 121

5.4 CONTAINER HANDLING COSTS 125

5.5 REGIONAL CAPACITY DEVELOPMENTS, 2014-2025 126

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TABLE OF CONTENTS (Continuation)

Page

5.6 SWOT ANALYSIS 127

5.7 CONCLUSION 130

6 ANALYSIS OF THE ITALIAN ROAD AND RAIL NETWORK 131

6.1 THE PORTS CONSIDERED 131

6.2 ANALYSIS OF THE ITALIAN ROAD AND RAILWAY NETWORK 132

6.3 THE ITALIAN RAIL NETWORK 133

6.4 PORT ROAD AND RAIL CONNECTIONS 135

6.5 ACCESSIBILITY TO PORTS 141

6.6 MAIN IMPROVEMENT WORKS TO THE ITALIAN ROAD NETWORK 142

6.7 MAIN IMPROVEMENT WORKS TO THE ITALIAN RAILWAY NETWORK 143

6.8 THE ITALIAN FREIGHT VILLAGE SYSTEM 148

6.9 THE ROLE OF FREIGHT VILLAGES IN THE ITALIAN LOGISTIC SYSTEM 150

6.10 CONCLUSIONS 153

7 BUILT-UP COST ANALYSES 154


7.2 NORTH ITALIAN INLAND MARKETS 154

7.3 CONCLUSION 172

8 LIVORNO FORECAST TO 2035 174


8.2 LIVORNO DEMAND TO 2035 174

8.3 SUPPLY/DEMAND BALANCE TO 2025 177

8.4 CONCLUSION 178

9 LIVORNO GAP ANALYSIS 179


9.2 GAP ANALYSIS 179

9.3 CONCLUSION 182

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LIST OF TABLES

Table No. Page

Table 1.1: Assumed Percentage GDP Growth and Multipliers for Italian Local Regional Forecast – Base Case 5

Table 1.2: Livorno Europa Platform SWOT Analysis 8

Table 1.3: Comparison of Maximum Size of Vessels Accomodatable at Various Ports 10

Table 1.4: Direct Cost Options ex Far East (‘000 €??) 10

Table 1.5: Direct Cost Options to US East Coast (‘000 €??) 11

Table 2.1: The Total Regional Hinterland Demand, 2000-2014 19

Table 2.2: Livorno Container Volumes, 2008-2014 22

Table 2.3: Total Imports and Exports for Selected North Italian Regions (bn kg) 24

Table 2.4: Port of Genoa Container Traffic Volumes by Terminal (TEU 000s) 28

Table 2.5: Regional Container Transshipment Market by Port, 2000-2014 (‘000 TEUs) 30

Table 3.1: Further Issues Determining Future Container Port Demand Growth 38

Table 3.2: Italian Economy Macroeconomic Indicators and Forecasting 40

Table 3.3: Comparison of GDP Growth Forecasts for Italy 42

Table 3.4: Italy – GDP and Northern Tyrrhenian Import/Export Container Port Demand – Annual Real % Change 46

Table 3.5: Assumed Percentage GDP Growth and Multipliers for Italian Local Regional Forecast – Base Case 47

Table 3.6: Forecast Total Northern Tyrrhenian Import/Export Regional Container Demand to 2035 49

Table 3.7: Forecast Total Northern Tyrrhenian Regional Container Demand by Region to 2035 (‘000TEUs) 50

Table 3.8: Forecast Regional GDP Development for Potential Central European Transit Volumes to 2035 – Annual Percentage Change 52

Table 3.9: Forecast Regional GDP – Import/Export Container Demand to 2035 - Ratio 53

Table 3.10: Forecast Regional Central European Container Demand to 2035 – ‘000TEUs 54

Table 3.11: Forecast Regional Feeder Demand to 2035 – ‘000TEUs 58

Table 3.12: Forecast Total Northern Tyrrhenian Port Demand to 2035 – ‘000TEUs 60

Table 4.1: Design Development of Large Containerships 66

Table 4.2: Ultra Large Container Ship Deliveries to 2015 70

Table 4.3: Estimated Container Fleet Supply/Demand Balances 20012-2016 71

Table 4.4: Fleet Status for Major Asia-North Europe Operators 72

Table 4.5: The Development of Average Vessel Sizes on Key Container Trades 2010-2014 – position at start of year (TEUs) 73

Table 4.6: Far East/Middle East-Mediterranean Service Lines for 2005 77



Table 4.9: North America-Mediterranean Service Lines for 2005 80



Table 4.12: Major Lines Transshipment Hub Strategies 88

Table 5.1: Terminal Facilities of Livorno, Genoa, La Spezia and Marseille Ports 103

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LIST OF TABLES (Continuation)

Table No. Page

Table 5.2: Terminal Facilities of Tyrrhenian Sea Ports 112

Table 5.3: Terminal Facilities of Adriatic Sea Ports 115

Table 5.4: Terminal Facilities of Transhipment Ports 120

Table 5.5: Terminal Facilities of Barcelona and Valencia Ports 120

Table 5.6: Total Berth Length (m) at Comparative Container Ports 121

Table 5.7: Annual Productivity TEUs per Berth Length (m) 123

Table 5.8: Total Number of STS Gantry Cranes at Comparative Container Ports 124

Table 5.9: Annual Productivity- ‘000s TEUs per STS Gantry Crane 125

Table 5.10: Stevedoring Costs – 2014 – US$ - per 40’ Loaded Container 126

Table 5.11: Northern Tyrrhenian Sea Port Capacity Developments to 2025 – Million TEUs 127

Table 5.12: Livorno Europa Platform SWOT Analysis 128

Table 6.1: Road and Rail Network Accessibility 141

Table 6.2: Impact of road network works on ports 142

Table 6.3: Impact of Railway Network Works on Ports 147

Table 6.4: Distance Matrix-Road 151

Table 6.5: Distance Matrix-Railway 151

Table 6.6: Distance Matrix-European Cities 152

Table 6.7: Railway Distance Matrix-European Cities/km 153

Table 7.1: Deep-Sea Containership Trading Costs 2014 155

Table 7.2: Deep-Sea Shipping Costs from Singapore to Trieste, La Spezia and Genoa 159

Table 7.3: Deep-Sea Shipping Costs from Singapore to Livorno, Salerno and Fos 160

Table 7.4: Deep-Sea Shipping Costs from New York to Trieste, La Spezia and Genoa 161

Table 7.5: Deep-Sea Shipping Costs from New York to Livorno, Salerno and Fos 162

Table 7.6: Comparison of Maximum Size of Vessels Accommodatable at Various Ports 163

Table 7.7: Stevedoring Costs- 2014 – US$ - per 40’ Loaded Container 164

Table 7.8: Distance (km) Matrix between Ports of Interest and Indicative Destinations 165

Table 7.9: Total Road Transport Cost (€) 165

Table 7.10: Total Rail Transport Cost (€) 166

Table 7.11: Cheapest Option Matrix (US $/FEU) 167

Table 7.12: Deep-Sea Shipping Costs from Singapore and New York to Gioia Tauro 169

Table 7.13: Total Built-up Costs for the Feeder Options Serving Major Markets ex Far East (via Gioia Tauro) 170

Table 7.14: Total Built-up Costs for the Feeder Options Serving Major Markets to US East (via Gioia Tauro) 170

Table 7.15: Direct Cost Options ex Far East 171

Table 7.16: Direct Cost Options to US East Coast 172

Table 8.1:Forecast Total Livorno Port Demand to 2035 175

Table 9.1: Forecast Total Livorno Port Demand to 2035 – “Do Nothing Approach” – ‘000TEUs 180

Table 9.2: Forecast Total Livorno Port Demand Variance to 2035 - ‘000TEUs 181

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LIST OF FIGURES

Figure No. Page

Figure 1.1: Total Regional Container Port Demand 200-2014 3

Figure 1.2 : Italy : GDP and I/E Container Port Volumes 2000-2015 5

Figure 1.3: Forecast Total Northern Tyrrhenian Sea Port Demand (Base Case), ‘000 TEUs 6

Figure 1.4: World Container Fleet Development 1990-2016 (‘000TEUs) 7

Figure 1.5: Italian Freight Village System 9

Figure 1.6: Livorno Port Demand (‘000TEUs) Less Transshipment, 2014-2035 12

Figure 1.7: Livorno Port supply/Demand Balance (‘000TEUs), 2014-2025 13

Figure 1.8: Livorno Revised Demand Forecast “Do Nothing” Approach 14

Figure 2.1:Major Hub and Spoke Transshipment Hubs in West-Central and East Mediterranean 18

Figure 2.2: Total Regional Container Port Demand 200-2014 20

Figure 2.3:Main Italian Regions 21

Figure 2.4: Total Livorno Container Port Demand 2008-2014 22

Figure 2.5: Map of Northern Italy 23

Figure 2.6: Italian Import Cargo by Region, 2004-2013 25

Figure 2.7: Italian Export Cargo by Region, 2004-2013 26

Figure 2.8: Total Regional Container Port Demand 2000-2014, Italy-Northern Tyrrhenian Sea 26

Figure 2.9: Genoa Port Import/Export and T/S Container Traffic 27

Figure 2.10: Broad Region: Transshipment Volumes 2000-2014 32

Figure 2.11: Regional Transshipment Demand by Zone 2000-2014 33

Figure 3.1: N. Europe Economic & Trade Indicators 1992-2013 35

Figure 3.2: World GDP & Container Port Trade 1991-2013 (% Change) 36

Figure 3.3: Italian Economy Macroeconomic Indicators and Forecasting 40

Figure 3.4: Italy: GDP and I/E Container Port Volumes 1996-2015 41

Figure 3.5: Comparison of Northern Tyrrhenian Sea Container Trade Growth with Italian Local Growth 41

Figure 3.6: GDP and Northern Tyrrhenian Import/Export Container Port Demand 47

Figure 3.7: Relevant Central European Transit Countries 51

Figure 3.8: Potential Central European Volumes via Northern Tyrrhenian Ports (Base Case) 55

Figure 3.9: Forecast Total Northern Tyrrhenian Sea Port Demand (Base Case), ‘000 TEUs 59

Figure 3.10: Northern Tyrrhenian Sea Port Supply/Demand Balance (‘000 TEUs), 2014-2025 61

Figure 3.11: Northern Tyrrhenian Sea Port Supply/Demand Balance Excluding Transshipment (‘000 TEUs), 2014-2025 61

Figure 4.1: World Container Fleet Development 1990-2016 (‘000TEUs) 64

Figure 4.2: Evolution of Largest Container Ships to 2014 65

Figure 4.3: Maersk’s ‘EEE’-Class Vessel 65

Figure 4.4: Ship Size Increases 2013/15 67

Figure 4.5: Estimated Vessel LOA for Different Capacities and L/B Ratios (Source: Lloyds Register) 69

Figure 4.6: Forecast Container Fleet Productivity to 2016 (TEUs/Fleet TEU) 72

Figure 4.7: Average Vessel Sizes on europe Deepsea Container Trades since 2010 73

Figure 4.8: Percentage of Vessels Ordered by TEU: 2010-October 2014 74

Figure 4.9: USEC & Far East Trade Services Calling at all Ports of Interest 83

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LIST OF FIGURES (Continuation)

Figure No. Page

Figure 4.10: USEC & Far East Trade Services Calling at Livorno, Genoa and La Spezia Ports 84

Figure 4.11: USEC & Far East Services Calling at Secondary Ports 84

Figure 4.12: USEC & Far East Trade Services Calling at Main Transhipment Ports 85

Figure 4.13: USEC & Far East Trade Services Calling at Barcelona and Valencia Ports 86

Figure 4.14: Comparative Vessel Sizes Calling at Livorno in 2013-2014 87

Figure 4.15: Vessel Capacity – North Europe, Intra-Med Trade and Feeder Services 87

Figure 4.16: Maersk Line Fleet Development, 2007-2014 (‘000 TEUs) 89

Figure 4.17: MSC’s Fleet Development, 2007-2014 (‘000TEUs) 91

Figure 4.18: CMA-CGM’s Fleet Developments, 2005-2014 (‘000TEUs) 93

Figure 4.19: Evergreen’s Fleet Development, 2007-2014 (‘000 TEUs) 94

Figure 4.20: Evergreen’s Change of Heart on The Capacity of Vessels Deployed 95

Figure 4.21: Hapag-Lloyd’s Fleet Development, 2007-2014 (‘000TEUs) 96

Figure 5.1:Map of Ports on the Northern Tyrrhenian Sea and Other Primary Competition for Livorno 104

Figure 5.2: Port of Livorno (Europa Platform) 106

Figure 5.3: La Spezia Container Terminal 107

Figure 5.4:PSA’s Voltri (VTE) Terminal 108

Figure 5.5:SECH Terminal 108

Figure 5.6: Planned Design of APMT’s Vado Ligure Project 110

Figure 5.7:Marseille-Fos 111

Figure 5.8: Ports on the Tyrrhenian Sea 112

Figure 5.9: Naples Container Port 113

Figure 5.10: Salerno Container Terminal 113

Figure 5.11: Civitavecchia Port 114

Figure 5.12: Map of Ports on The Adriatic Sea 115

Figure 5.13: Port of Trieste 116

Figure 5.14: Port of Venice Offshore Terminal Project 117

Figure 5.15: Port of Ancona 118

Figure 5.16: Port of Ravenna 119

Figure 5.17: Link between Ports’ TEU Volumes, Depth and Evolution in Vessel Size 129

Figure 5.18: Comparative Water Depth (m) and Draft (m) of Major Livorno Port Competition 130

Figure 6.1: Main Competitive Port System 131

Figure 6.2:Italian Motorway Network 133

Figure 6.3: Accessibility Port of La Spezia 138

Figure 6.4: Road Accessibility of the Port of Venice 140

Figure 6.5: Railway Accessibility to the Port of Venice 140

Figure 6.6: Benefits to Ports from Road Infrastructure Works 143

Figure 6.7: Development of Railway Infrastructure - Modules Until 2017 144

Figure 6.8: Development of Railway Infrastructure - Gauges until 2017 145

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LIST OF FIGURES (Continuation)

Figure No. Page

Figure 6.9: Rhein-Alps Corridor and Terzo Valico di Giovi 145

Figure 6.10: Ports with Major Benefits From Railway Infrastructural Works 148

Figure 6.11: The Italian Freight Villages System 149

Figure 6.12: Ports and Linked Freight Villages 150

Figure 6.13: Italian Ports and European Cities 152

Figure 7.1: Long Term IFO Bunker Price Development 1976-2015 156

Figure 7.2: Total At-Sea Trading Costs at Different Bunker Price (21 Knots) 157

Figure 7.3: Road Costs Estimation-FEU 166

Figure 8.1: Livorno Port Demand (‘000 TEUs), 2014-2035 176

Figure 8.2: Livorno Port Demand (‘000TEUs) Less Transshipment, 2014-2035 177

Figure 8.3: Livorno Port Supply /Demand Balance (‘000TEUs), 2014-2025 178

Figure 9.1: Livorno Revised Demand Forecast “Do Nothing” Approach 182

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a RINA company

D’APPOLONIA S.p.A. Società a socio unico RINA S.p.A. Via San Nazaro, 19 - 16145 Genova Tel. +39 010 3628148 - Fax +39 010 3621078 - www.dappolonia.it - [email protected] C.F. / P. IVA / R.I. Genova N. 03476550102 - Cap. Soc. € 520.000,00 i.v.

REPORT FINANCIAL ENGINEERING PLAN FOR THE DEVELOPMENT OF THE

PLATFORM EUROPE (CIG: 60079415C0) COMPETITIVE ANALYSIS AND TRAFFIC FORECASTS FOR THE EUROPE

PLATFORM OF LIVORNO

1 EXECUTIVE SUMMARY – LIVORNO EUROPE PLATFORM

1.1 INTRODUCTION

The container markets that are served by the Livorno are undergoing a transformation. The

size of vessels that are being deployed on the major regional trades is increasing rapidly and,

despite macro-economic conditions, demand continues to increase for the Italian market as a

whole. In addition, there are moves to increase the hinterland reach of the region’s ports to

include transit markets to the north. The position in Livorno is uncertain. The existing

facilities are already seeing their competitive position eroded as a result of lack of water

depth. Without significant investment the role of Livorno in the container trades will

inevitably stagnate and then decline. A major project to transform the port – the Livorno

Europa Platform – is planned to transform the role of the port to allow the largest vessels to

call at the port and to permit the extension of the hinterland across the broader region.

Against this background, the Livorno Port Authority launched a tender won by D’Appolonia

(part of RINA Group SPA) and Ocean Shipping Consultants (part of Royal Haskoning DHV

UK Ltd.) to assist them in providing a Market Study to assess the competitive position of the

proposed development plans for the new facility in the port of Livorno (The Europa

Platform).

The position of such a project is determined by the following key issues:

overall demand development – macro-economic outlook and container flows;

the current and future balance of the market – i.e. the supply/demand position for the

facility;

the relative position of the project in comparison to competing terminals (existing and

planned);

the suitability of the proposed terminal for handling the largest existing and planned

vessels;

the ‘hinterland reach’ of the terminal – especially with regard to intermodal services.

The following is a brief review of each of these points, which are addressed in the body of

the Study:

Overall demand development: It is well known that container volumes in the regional range

have been stable as a result of the economic conditions facing Italy in the past few years.

However, with economic recovery there will undoubtedly be very strong demand growth in

the region. Potential demand in the region will also be driven by the concentration of port

calls, with much larger vessels and also the potential extension of the hinterland to the north.

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There is a long-standing potential to extend the reach of Italian ports into Switzerland,

Austria, Southern Germany and other regional central European markets.

The current/future supply/demand balance: The existing capacities of ports in the range

from Livorno to the north will not be sufficient to handle anticipated demand. Even with

proposed developments at Genoa and at Vado Ligure, the outlook is for a shortage of

absolute demand over a ten year horizon. It should also be noted that all capacity is not

equally attractive. Much of the capacity in the port range will become obsolete over the

period as a result of ship-size constraints. There is also clear potential to significantly extend

the hinterland of Livorno to the south, where there is a lack of suitable deep water port

capacity.

It is apparent that there is a prima facie case for the development of new capacity in the port

range of which Livorno is a part.

Relative position of the project: In terms of the proposed capabilities of the new terminal it

is apparent that the facilities will offer market-leading capabilities in the region. The ability

to berth the largest vessels will be significantly better than that offered in other facilities

(especially Genoa) and this will be congruent with the future demands of the market. This

competitive position will be sufficient to stimulate significant interest from the major

shipping lines (and – perhaps more importantly – shipping alliances) serving the region.

The proposed development at Livorno will be highly competitive.

Suitability for current and future vessels: The increase in vessel sizes that is currently

underway will be a critical driver at Livorno. OSC are currently heavily involved in these

issues and can confirm the likelihood of 18,000TEU – and possibly much larger vessels –

seeking to call at ports in the range in the near/medium term. The current proposal for the

Livorno terminal will offer this capability, although there may be some requirement for a

limited design modification to sufficiently ‘future-proof’ the concept.

The proposed facilities will be competitive with regard to maritime access requirements.

Hinterland links: The situation with regard to containers on the Italian railways is well

known, both with regard to distribution within Italy and also for transit containers to the

north. The development of the new capacity at Livorno will not, by itself, solve these

problems. However, the proposed provision of a rail terminal directly adjacent to the facility

and the development of a local distribution centre will allow the port to offer a highly

competitive argument in contrast to competing locations. This will be very important for any

investor looking at a long term commitment to the Italian and transit markets.

The proposed terminal will be better placed than its competitors with regard to intermodal

links.

These factors together constitute a compelling argument for the successful development of

the project and will be sufficient to attract commercial investment. A further point to

mention is that the proposed development at Livorno offers a conventional solution to the

provision of capacity for northern Italy that is based upon optimal berth and terminal layout

and hinterland links. This is a concept that will be well understood in the market and will be

readily appraisable in commercial terms. This is a quite different proposition to that which is

being proposed at Venice.

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1.2 HISTORICAL CONTAINER TRAFFIC VOLUMES FOR THE REGION

Current volumes at Livorno represent 7.92 per cent of the regional total, with recent volumes

reaching 0.58m TEU. This is still less than the highs of 0.78m TEU recorded prior to the

economic slump in 2009.

Figure 1.1: Total Regional Container Port Demand 200-2014

The “region” in this instance is defined by the primary competition that the port of Livorno

is likely to face which incorporates:

ports in the immediate vicinity of Livorno on the Northern Tyrrhenian Sea;

developed and developing ports on the Italian Adriatic Coast;

the Tyrrhenian Sea ports closer to Rome;

facilities in South France.

The port suffered badly in 2009, with volumes dropping by just under 24 per cent before

recovering in 2010-11 only then to lose business in 2012 to developing facilities primarily in

Genoa. Recovery since then has been steady rather than dramatic and it is clear that the port

facility will need to develop if it is to be able to compete with its neighboring competition,

which is the primary purpose of this report.

Provided that the necessary improvements in water depth, quay length and shore-side

equipment are made, then there is no reason why the Port of Livorno should not be able to

compete in the following main markets:

local Livorno market and expansion into local north and central Italian markets;

transit markets to Switzerland, Slovakia, Czech. Republic, Slovenia, Austria and Hungary

(plus south Germany);

transshipment (where these is some potential, but to a much lesser extent).

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The central Mediterranean region as a whole has a long history of handling large volumes of

transshipment and although there have been some slight declines in recent years volumes on

the whole are showing signs of recovery. However, although ports on the Northern

Tyrrhenian Sea could see some increases in transshipment demand, this is not the target area

for the Europa Platform. Together the Northern Tyrrhenian Sea ports represent just 2.3 per

cent of the transshipment demand with about 0.35m TEU recorded in 2014, of which

Livorno represents just 0.4 per cent.

1.3 DEVELOPMENT OF LIVORNO’S CONTAINER TRAFFIC MARKETS TO 2035

The economic relation between GDP, trade, container port demand is very useful in

forecasting the development of the container sector. In the Italian economy, the initial

relationship between GDP growth and trade growth appears to have broken down recently,

but is expected to return to equilibrium in two to three years, by 2017. Despite this and the

numerous factors at work, which need to be built into (or allowed for in the interpretation of)

forecasts, the generation of trade through economic growth provides the most rational basis

for predicting the future direction and scale of container port demand.

The relationship between Italian GDP growth and import/export remained strong throughout

the period of economic decline up to 2009 and up to 2011. By 2012, the first signs of the

breakdown in the relationship between trade growth and economic growth were evidenced,

and although there is some sign of recovery in 2014, the future prospects suggests a further

breakdown in the relationship in the short-term (See Figure 1.2).

When looking at the import/export volumes and GDP forecast from 2014 and comparing

them with the economic development, it is apparent that the Italian economy is passing

through a transition period with important structural changes, which has temporarily

displaced the direct relationship between GDP and container volumes. Despite the GDP

continuing to be negative or near zero with a slight recovery forecast for 2015, local demand

growth has achieved positive growth figures for 2014 and is set to record 3.5-4.0 per cent

growth in both import and export volumes. There is indication that Italy is shifting towards

an export-driven economy, meaning that the elasticity demand/GDP is growing towards

levels more typical in export-driven countries such as Germany. This indicates that a

reasonable and realistic traffic forecast to be achieved specific attention must be paid to the

trade forecast.

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Figure 1.2 : Italy : GDP and I/E Container Port Volumes 2000-2015

Due to the questionable merits of the short-term relationship between Italian GDP-growth

and trade growth it is reasonable to assume that the short-term forecast to 2017 should be

based on the Italian export demand with the later methodology returning to the normal

GDP/trade growth relationship from 2018 for the balance of the forecast period. In all three

cases it is envisioned that economic and trade recovery will be gradual due to anticipated

continued restraints on credit, as banks rebuild their balance sheets, and the dampening effect

that fiscal measures to repay government debt exert on consumer expenditure growth. It is

the opinion of Ocean Shipping Consultants (OSC) that deferring this recovery for a year or

two would seem the wisest assumption.

It is assumed that during the scope of this analysis that any commercial initiative, pricing

policy, etc. has or will improve a particular terminals market share of increase the expected

demand forecast related to that terminal. From 2000 to 2014 the GDP growth to trade growth

ratio has been 1:4.16 with the pre-economic crash ratio being 1: 4.02 from 2000 to 2006. It is

expected that the ratio will bounce back to 1: 3.00 by 2017/2018, before returning to a more

realistic continental level of 1: 2.00 from 2020 (See Table 1.1).

Table 1.1: Assumed Percentage GDP Growth and Multipliers for Italian Local Regional Forecast – Base Case

Table 1

Assumed Percentage GDP Growth and Multipliers for Italian Local Regional Forecast - Base Case

2012 2013 2014 2015 2016 2017 2018 2019 2020-24 2025-2029 2030-2035

GDP % Grow th -2.37 -1.85 -0.32 0.54 1.20 1.15 1.10 1.05 1.00 1.50 2.00

Local % Grow th -1.34 0.81 2.58 2.73 2.38 2.00 1.33 1.00

% Ex port Grow th 2.14 0.13 1.99 2.50 3.00 3.50

Multiplier 3.18 -1.50 -0.83 4.65 2.50 3.04 3.00 2.50 2.00 2.00 2.00

NB: it is assumed that forecasts w ill be based on ex port figures for 2015-2017 and GDP grow th for the balance of the period

Source: Ocean Shipping Consultants

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Using these multipliers shown in Table 1.1, the total Northern Tyrrhenian port regional

volumes are expected to increase from 4.49m TEU in 2014 to between 5.68-6.21m TEU in

2020; 6.40-7.01m TEU in 2025; 7.22-7.92m TEU in 2030 and 7.86-8.87m TEU in 2035 (See

Figure 1.3). Even without any transshipment volumes (which it is wise to exclude because

of their transient nature), it is clear from supply/demand calculations that the region will be

in need of additional capacity from around 2016-17, which is why it is imperative for The

Europa Platform project to go ahead as soon as is practical.

Figure 1.3: Forecast Total Northern Tyrrhenian Sea Port Demand (Base Case), ‘000 TEUs

1.4 CONTAINER SHIPPING TRENDS AND IMPLICATIONS FOR LIVORNO

There is growing evidence that the majority of shipping lines are committed to a strategy of

building/utilising ever larger ships with the current focus on shifting shipping building

production towards the construction of Ultra Large Container Ships (ULCS). As at October

2014 (or Q4 2014), the total number of vessels on order stood at 469 with a total tonnage of

3.49mTEU, 47 per cent of which can be accounted for by orders of vessels over 12,000

TEU. Of these new orders, 21 vessels with capacity >8,000TEU were delivered during 2014

(October-December); 131 during 2015; 65 during 2015 and 23 from 2017 onwards (See

Figure 1.4).

These developments will be manifested in the rapid introduction of much larger vessels into

secondary services. The role of these vessels will be as mother ships offering transhipment

hub port calls on the major arterial trades. In addition, regional ports will increasingly be

used to link distinct deepsea services for markets outside the immediate region. The driving

force of these developments will be the introduction of larger vessels and the lines’ need to

fill them.

The pace of this ship size revolution continues to accelerate, with recent confirmed orders for

vessels of over 20,000TEU (Mitsui OSK Lines) and also detailed evaluation of 22,000TEU

and 24,000TEU designs. Long term planning for container terminals must take these

developments into account.

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Figure 1.4: World Container Fleet Development 1990-2016 (‘000TEUs)

Impact on the Port of Livorno

For Livorno, this means that the majority of mainline services will be controlled by four

main Alliance groups, which will increasingly be calling at fewer ports on their main haul

services in order to save money. This will have the added result of increasing the amount of

transshipment units handled at what few ports the main Alliance groups call at. Of the four

main Alliance groups, both 2M and Ocean Three Alliance have their own terminal interests,

so it is more likely (although not impossible) that Livorno will only have an opportunity to

attract vessels from the CKYHE or G6 Alliance, but will be able to offer improved port

facilities at a port where the major shipping lines, such as Maersk, MSC and CMA-CGM,

are not having any priority berthing advantages, which in itself is a very attractive selling

point.

However, that said, both the 2M services and the Ocean Three Alliance services have

recently announced a number of vessel calls from Asia and the US into ports on the Northern

Tyrrhenian Sea, Tyrrhenian Sea and the Adriatic, all of which could be potential calls for the

newly developed Livorno facility and it is important that Livorno does not ignore this

opportunity entirely.

With the various planned port developments at Livorno, the possibility of being able to

compete with Genoa, La Spezia, Trieste, Gioia Tauro, Marsaxlokk, etc. remains good and

the port has a good chance of attracting services operated by either the CKYHE or G6

Alliances, whether mainline to Asia or US East Coast or feeder vessels. There also remain

some lines that are not yet aligned to main Alliances (such as Zim Line or PIL-Wan Hai) and

their volumes also offer a further opportunity for Livorno.

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1.5 LIVORNO’S COMPETITIVE POSITION

The competitive position of any port is the result of its physical capabilities, location and the

built-up transport costs versus alternative port facilities. It is felt that Livorno’s primary

competition falls into the following categories:

other ports on the Northern Tyrrhenian Sea, i.e. La Spezia, Genoa (V.T.E., SECH and

Vado Ligure), and Marseille-Fos;

secondary competition on the Tyrrhenian Sea, including Naples, Salerno and

Civitavecchia;

other ports on the Adriatic Sea, i.e. Trieste, Venice, Ancona and Ravenna;

Central Mediterranean transshipment hubs such as Gioia Tauro, Cagliari, Taranto and

Marsaxlokk;

gateway terminals such as Barcelona and Valencia.

The Livorno Port Authority is currently in a position of having the capability of deciding

precisely what facilities it should look to create as part of the Europa Platform Project.

Obviously, the additional depth of water (18m) compared with the original plans would

ensure that the port is “future proofed” against any expected vessel size changes in the mid

to long term and together with the potential for strong rail links into northern Italy and into

parts of central Europe, the future demand potential would be attractive to would be terminal

operator. With a capable terminal operator the terminal could go from strength to strength,

improving both terminal and customs efficiencies. Table 1.2 highlights the SWOT Analysis

for The Europa Platform in Livorno.

Table 1.2: Livorno Europa Platform SWOT Analysis

1.6 ANALYSIS OF THE ITALIAN ROAD AND RAIL NETWORK

The ports under consideration are generally well connected to their major hinterlands by

road. There are some significant bottlenecks but investment is underway or planned to

alleviate these constraints. Livorno is well placed in this regard and enjoys relatively good

access not simply to the northern hinterland but also to the central Italian markets.

The situation with regard to rail is more problematic. There is a well-established and mature

rail network, but this has been restricted by a lack of investment for freight operations

Table 2

Livorno Europa Platform SWOT Analysis

Strengths Weaknesses Opportunities Threats

Planned relativ ely deepw ater in the near term Shallow er w ater than Vado Ligure and Trieste Improv e customs clearance times Failure to improv e w ater depth to 18.0m w ill lose

competitiv e adv antage to Vado Ligure and Trieste

Good potential for transit markets Productiv ity lev els low er than t/s hubs Potential to attract major lines w ith larger Accelerated dev eloment of Collata Bottolo

v essels - 18,000TEU possible

Significant local market in Liguria and north Italian Need for deeper w ater alongside (especially from Scope for dedicated/priority arrangements Failure to deepen port w ould hit competitiv e

regions 2018) w ith major lines position - loss of major opportunity

Ability to combine transit and import/ex port Customs reputation not good but potentially better Scope to further boost productiv ity

containers than Genoa

Reasonable cost structure Scope to combine local and transit business

Reasonable lev els of productiv ity Marginal potential for local transshipment

Good rail connection direct to the port Barge direct from terminal into hinterland


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(particularly for containers). Further investment is planned, but attention is required both for

investment in new capacity and the modernisation of operating practices. There is very little

international rail movements of containers and, in the longer run, the position of all ports

(including Livorno) will depend upon the extension of the hinterland to the north by means

of intermodal trains.

Figure 1.5: Italian Freight Village System

Investments in both road and rail capabilities will significantly extend Livorno’s hinterland.

The freight village network is an important aspect of domestic containerised goods

distribution and Livorno is well connected into this system (See Figure 1.5).

1.7 BUILT-UP COST ANALYSIS

Direct calls at deepwater port facilities clearly offer the most cost-effective way of serving

the northern Italy regions and the more distant regions of central Europe. On a unit cost

basis, the arguments still clearly favour direct shipments rather than feeder services, although

it should be recognised that some shipping lines do not have the necessary volume to make a

direct call economically viable and so will have to use the more expensive feeder option.

Table 1.3 highlights the size of vessels that the competing ports can handle on the two main

trade lanes both now and in the future.

Source: D’Appolonia

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Table 1.3: Comparison of Maximum Size of Vessels Accomodatable at Various Ports

This means that together with Vado Ligure and Trieste, The Europa Platform remains well

placed to offer cost-effective solutions to any number of destinations, particularly on trade

lanes where the ULCS’s are already being deployed and where the port’s deepwater

advantage can be maximised. This is the case on the main arterial trade lanes such as Asia-

Europe, but vessels of this magnitude, i.e. >18,000TEU have yet to ‘cascade’ onto secondary

trade lanes such as the US east coast services, where it is only likely that vessels will

increase to 8,500TEU capacity in the mid-term, because of demand restrictions as well as US

port restrictions in terms of the vessel sizes that they can handle. These issues will be

resolved in the long-term and the deepwater ports will again be well prepared for

accommodating the larger tonnage.

Table 1.4 and 1.5 highlight the total built-up costs of shipping containers from a number of

different ports to a number of different locations both in Italy and in central Europe.

Table 1.4: Direct Cost Options ex Far East (‘000 €??)

Table 3

Comparison of Maximum Size of Vessels Accomodatable at Various Ports

Terminal Depth (m) Max.Capacity (TEU) Required-USEC Required-FE Required-USEC Required-FE

Current Current Future Future

Europa Platform 16.0 (18.0) 12,500 (18,400) 4,500 8,500 8,500 18,400

Darsena Toscana 11.8 3,000 4,500 8,500 8,500 18,400

Vado Ligure 17 18,400 4,500 8,500 8,500 18,400

VTE 15 8,000 4,500 8,500 8,500 18,400

SECH 14.5 6,400 4,500 8,500 8,500 18,400

LSCT 14 5,000 4,500 8,500 8,500 18,400

Trieste 18 18,400 4,500 8,500 8,500 18,400

Fos 15 8,000 4,500 8,500 8,500 18,400

Salerno 9.7 2,500 4,500 8,500 8,500 18,400

Civ itav ecchio 14 5,000 4,500 8,500 8,500 18,400


Table 4

Direct Cost Options ex Far East

Milan Bologna Padua Rome Turin Parma Munich Basle Vienna Budapest

Europa Platform 1759.34 1345.78 1751.88 1856.12 1941.47 1368.54 3160.55 2900.08 3703.19 3485.36

Vado Ligure 1214.65 1811.40 2045.37 2558.34 1325.57 1458.48 2924.24 2437.41 3761.26 4113.00

VTE 1278.60 1875.36 2109.33 2622.29 1389.52 1522.43 2988.19 2501.36 3825.21 4176.96

SECH 1261.50 1858.26 2092.23 2605.19 1372.42 1505.33 2971.09 2484.26 3808.11 4159.86

LSCT 1608.79 1586.15 1990.55 2341.73 1792.89 1212.14 3032.03 2799.47 3742.69 4097.34

Trieste 2221.28 1754.71 1352.20 3135.12 2616.42 1992.52 2467.58 3227.27 2414.86 2659.83

Fos 2769.77 3259.69 3682.63 3759.31 2301.55 2968.22 4050.01 3197.68 4246.52 4530.25

Salerno 3904.15 3413.20 3802.78 2075.62 4025.08 3541.36 4301.44 4283.81 4478.58 4759.97


Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 1.5: Direct Cost Options to US East Coast (‘000 €??)

It is clear from this that Livorno direct is the most cost-effective option for cargo to/from

Bologna and Rome;

direct options to/from all three deepwater ports (The Europa Platform, Vado Ligure and

Trieste) offer the most cost-effective routes to all the destinations under consideration.

Although the cost effectiveness of various cargo routings is important, it is also necessary to

stress that this is not the only factor that shipping lines will assess in order to determine

which ports they serve, although in truth these too are also driven by financial requirements,

because of the expensive nature of the ULCSs they operate. Other factors include:

terminal efficiency, i.e. the number of containers that can be handled per hour. This

affects the amount of time spent in port and therefore the cost of a port stay. The more

productive a port can be on a regular and reliable basis, the cheaper the port stay and also

the slower a vessel needs to sail between ports to meet the next berthing window, giving

further fuel savings;

customs clearance – it is again important to ensure that once a container has been

discharged, it is not delayed unnecessarily with customs and security checks that delay

the final delivery date/time of a consignment, which could (depending on the commodity)

effect the output of a factory production line;

frequency, reliability and capacity of intermodal services – particularly for distances of

>500km it is likely that the containers will be moved from the quay via rail. In order not

to lose the benefit of a quick discharge on the quayside, it is imperative that the rail

providers have the necessary capacity and frequency of services to ensure that the

containers are not left waiting for a connection;

frequency, reliability and capacity of road haulage – the same is true for road haulage

options for distances <500km;

further volume discounts are also possible to offer to major clients in order to reduce their

built-up costs and guarantee some core port volumes.

In the future, there will remain some local and international competition challenges for The

Europa Platform particularly with Trieste and Vado Ligure locally and major north

European ports for central European destinations, but there remain sufficient incentives to

Table 5

Direct Cost Options to US east coast


Europa Platform 1605.98 1192.41 1598.52 1702.75 1788.10 1215.18 3007.18 2746.71 3549.82 3331.99

Vado Ligure 1057.86 1654.62 1888.58 2401.55 1168.78 1301.69 2767.45 2280.62 3604.47 3956.22

VTE 1057.86 1654.62 1888.58 2401.55 1168.78 1301.69 2767.45 2280.62 3604.47 3956.22

SECH 1040.76 1637.52 1871.48 2384.45 1151.68 1284.59 2750.35 2263.52 3587.37 3939.12

LSCT 1378.47 1355.82 1760.22 2111.41 1562.57 981.81 2801.70 2569.14 3512.36 3867.02

Trieste 2106.09 1639.51 1237.01 3019.93 2501.22 1877.33 2352.38 3112.08 2299.67 2544.63

Fos 2535.52 3025.44 3448.38 3525.06 2067.30 2733.97 3815.76 2963.43 4012.27 4296.00

Salerno 3698.89 3207.94 3597.52 1870.36 3819.82 3336.10 4096.18 4078.55 4273.32 4554.71


Doc. No. 14-1394-H1 Rev. 0 – March 2015


call at The Europa Platform to warrant the interest of an international terminal operator

and/or major shipping line to further investigate the possibility of a direct call. Once a major

operator is secured, together with shipping line volumes, then The Europa Platform future is

secured. It is imperative therefore that the Port Authority can attract such a client.

1.8 LIVORNO FORECAST TO 2035

Figure 1.6: Livorno Port Demand (‘000TEUs) Less Transshipment, 2014-2035

Figure 1.6 illustrates the potential Livorno forecast (excluding the limited transshipment

potential). Following the initial “ramp-up” expected in the first few years of partial

operation from 2019-2021, the Livorno share of the Northern Tyrrhenian Sea port market is

expected to increase as follows, based on its deepwater advantage:

the share of the local market is expected to reach 20 per cent by 2021 before increasing

further to 23 per cent in 2025; 25 per cent in 2030 and 28 per cent in 2035;

the share of the international transit market is expected to reach 20 per cent in 2021

before then increasing to 30 per cent in 2025; 40 per cent in 2030 and 50 per cent in

2035;

although of relatively minor importance, the transshipment share at Livorno is likely to

increase to 17 per cent in 2021; 18 per cent in 2025; 19 per cent in 2030 and 20 per cent

in 2035.

Livorno demand is expected to increase from 0.58m TEU demand in 2014 to between 0.64-

0.67m TEU demand in 2015; 0.93-1.02m TEU in 2020; 1.49-1.63m TEU in 2025; 1.90-

2.08m TEU in 2030 and 2.33-2.67m TEU in 2035.

However, the outlook for Livorno if the port is not developed will be highly problematic.

The trend towards the introduction of much larger vessels into the trades will see the limited

facilities at the port increasingly marginalised. This will result in a decline in container

volumes and a reduction to feeder port status. This will see much higher costs for regional

cargo owners and act as a disincentive for regional development.

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The additional capacity developments planned in Vado Ligure, plus the existing capacity at

established Genoese facilities at Voltri and SECH add to the improvement in the competitive

position of the major competitors in the region meaning that there really is no alternative for

Livorno but to go ahead with the planned expansion plans (Figure 1.7 further illustrates the

supply/demand balance for Livorno).

Figure 1.7: Livorno Port supply/Demand Balance (‘000TEUs), 2014-2025

However, the total capacity available can also be somewhat misleading since it is the

importance of deepwater capacity, rather than the total capacity, that is key to Livorno’s

future prosperity. In this respect, Livorno with The Europa Platform, and Vado Ligure are

the two main facilities in the region that can handle the largest type of container vessels

(although Vado Ligure has a further depth advantage over Livorno) and are best placed to

attract the main clients.

It is important to reiterate that whilst Livorno will be well placed to take advantage of the

deepwater capacity, it makes sense to future proof the port at this stage against any potential

requirements for deeper vessels in the coming years. Vado Ligure and Trieste are already

better suited to withstand any such future developments and so it is prudent for Livorno to

deepen to 18m alongside the main berth to ensure its continued competition with these port

facilities and those in northern Europe for transit volumes.

1.9 LIVORNO GAP ANALYSIS

Failure to develop the port of Livorno will result in a continuous reduction of container

volumes from 2018 on as cargo and shipping lines will move to those bigger and deeper

ports that are able to handle the larger vessels that will be deployed in the region in the near

future. This reduction will continue until eventually Livorno will not be able to offer a

sustainable business case based on its declining container volumes.

In the short-term, Livorno would still be able to attract cargo volumes similar to what it does

today (0.3m TEU), but by 2025 in particular, the number of ULCSs delivered to all major

shipping lines will mean that any port that doesn’t have the capability to handle these ships

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will lose significant amounts of business and continue to do so for the balance of the forecast

period. Figure 1.8 illustrates the revised demand forecast if the Port Authority were to “Do

Nothing” and clearly illustrates that the port would rapidly lose trade share to competing

deepwater facilities in the region.

Figure 1.8: Livorno Revised Demand Forecast “Do Nothing” Approach

It is assumed that the port will maintain its current market share of local and transshipment

cargo from now until 2018 when the Vado Ligure deepwater development is expected to be

operational. At this point it is reasonable to assume that:

Livorno’s share of the local market will reduce, initially by the same share that we have

assumed it will increase if Europa Platform and the deepwater facility were to go ahead,

i.e. by 6.2 per cent, down from 13.8 per cent share to 7.6 per cent in 2021. With no

deepwater berthage to attract shipping lines, cargo will gradually move to other facilities

that are better equipped to handle larger vessels. The share of local cargo in Livorno will

continue to drop to five per cent in 2025; three per cent in 2030 and just two per cent in

2035;

no European transit cargo is likely to develop with no rail developments expected and no

shipping lines operating ULCSs calling at the port with just feeder vessels with minimal

cargo volumes calling;

with no deepwater berthage, what little share of transshipment there is will reduce

considerably and eventually fall to nothing by the end of the forecast period. Some

feeder volumes will remain and so the share is likely to reduce from the current market

share of 16 per cent to just three per cent in 2021; two per cent in 2025; one per cent in

2030 and zero on 2035.

The port world is full of examples of facilities that have failed to take such an

opportunity to make the required adjustments to the port in order to allow the port to

accept larger vessels. This has generally resulted in marginalized volumes and reduced

revenues. Livorno really has no choice. It either develops to meet the future needs of

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the shipping lines, or it becomes nothing, but a feeder outport or niche provider with no

sustainable future.

The Europa Platform project represents a strong future for the port and will be

competitive with regard to other ports in the region and other major terminals under

consideration for northern Italy (e.g. Venice). The proposed facilities will be well

formatted for the requirements of the shipping lines and also offer a compelling

hinterland argument. There is also clear scope to compete for northern transit markets

from this location as intermodal links are progressively improved. This Market Study

confirms the need for the proposed development.

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2 HISTORICAL CONTAINER TRAFFIC VOLUMES FOR THE REGION

2.1 INTRODUCTION AND MARKET DEFINITION

The basic approach taken by this study is to firstly define the market for the port of Livorno.

Separate analyses will be developed for the following markets:

the local Italian import/export market;

the transit market – primarily to north Italy, but also to Switzerland, Austria and South

Germany;

the regional transshipment hub market.

For the regional transshipment market, this study concentrates on the development of the

markets in central Mediterranean. At present, this business is confined to activities at Gioia

Tauro, Cagliari, Taranto, La Spezia and Marsaxlokk, with some limited volumes also being

handled in Genoa and Livorno.

The narrowly defined ‘Central Mediterranean’ market is a subset of a more significant and

broader geographical region and in evaluating future developments, and supply/demand

balances, it is clearly necessary to take a broader perspective of demand. In this study, it is

clear that transshipment activity in the Central Mediterranean will be competing – to varying

degrees – with major transshipment hubs and gateway ports handling significant volumes of

transshipment business.

Therefore, the region that is relevant to the current review comprises the following locations:

Central Mediterranean Hub Ports – these include the major terminals in Italy (Cagliari,

Gioia Tauro, La Spezia and Taranto) and also Marsaxlokk (Malta), with some minor

volumes also handled in Genoa and Livorno;

the Gibraltar Strait – currently Algeciras, Malaga and Tangiers and, in the future, other

terminals in southern Spain and Morocco;

the Mediterranean Spanish Gateway Ports – Valencia and Barcelona together with some

further potential developments;

Atlantic Terminals – the major transshipment terminals in the Canary Islands and in

Lisbon, together with the under-utilised facilities at Sines.

Not all these terminals are equally competitive with the Italian ports and nor do they have

directly overlapping transshipment hinterlands and market roles. However, the relative

position of each of the ports in each sector will be assessed and conclusions drawn.

Some remarks are also necessary concerning the definitions of ‘transshipment’ in the current

context. In simplified terms transshipment refers to the transfer of a container from one

vessel to another (usually via the quay).

However, there are two distinct sectors here, which are driven by different pressures:

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Hub-and-spoke Transshipment. As ship sizes continue to increase and shipping line

mergers and alliances continue (note especially the 2M Alliance and the Oceans Three

Alliance), the economic advantages of reducing the number of port calls becomes ever

more pronounced. These advantages flow directly from the high capital costs associated

with containership construction and the time penalties involved in calling at several ports

to load/unload relatively small consignments. The trend to fewer port calls will continue

and will favour the larger, centrally placed ports in a region.

However, increasing transshipment also implies increasing feeder flows, which place

demands on smaller ports to gear up to handle containers at dedicated container berths.

Transshipment already has a significant place in the global market and its share is

expected to continue increasing. The major lines will continue to serve port regions by as

few direct calls as possible, and thus the role of hub-and-spoke container distribution will

continue to strengthen. This will be strongly manifested in the Central Mediterranean

markets;

Relay Transshipment (or ‘Interlining’). The relay sector is driven by different factors,

although, from a port perspective, the requirement to move containers between vessels is

similar. The aim of relay transshipment is to extend service coverage and flexibility by

linking two or more mainline services – typically east-west services with north-south

services. This enables carriers to increase the number of revenue earning legs on their

larger vessels. With increasing complexity of vessel itineraries, relay transshipment will

also continue to become more widespread. This is a major feature of demand in the

Gibraltar Straits markets, although some instances of relay transshipment can also be

evidenced in the Central Mediterranean hubs.

The development of the transshipment sector will, therefore, be a compound of both

economic growth-induced demand and the policies of major operators in converting direct

flows into transshipped flows.

Leading operators will typically have transshipment hubs in at least two out of the three main

Mediterranean zones (West, Central and East), in order to reduce transit times to/from ports

in the East Mediterranean, Central Mediterranean and West Mediterranean as well as to/from

various relay trades.

Maersk Line, for example, have transshipment hubs centred in Algeciras (and/or Tangiers),

Gioia Tauro and Port Said, each of which is shown in a separate geographical circle in

Figure 2.1. Similarly, CMA/CGM, concentrates the bulk of their transshipment activities in

Malta (or Gioia Tauro) and Port Said, with some services also calling at Damietta in the

East.

The introduction of more and larger alliance groups has already led to the greater

cooperation of lines over their choice of transshipment hubs. However, in practise this has

usually resulted in some shipping lines having to accept that they may have to use more than

one transshipment hub in each zone, which will not enable them to be able to provide their

customers with the optimum coverage and maximum service synergies they crave.

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Figure 2.1:Major Hub and Spoke Transshipment Hubs in West-Central and East Mediterranean

2.2 ITALIAN REGIONAL DEMAND: GENERAL PERSPECTIVE

The primary competition for the local regional market for the port of Livorno is comprised of

the container port facilities located in the Northern Tyrrhenian Sea, namely Savona, Genoa

(especially SECH and VOLTRI) and La Spezia (LSCT). Further competition is also

possible, to a greater or lesser extent depending on the quality of the terminal, from

secondary container facilities located on the Tyrrhennian Sea, Adriatic Sea and also the

south of France.

It is apparent that regional demand grew rapidly up until the economic downturn of 2008/9.

Total demand growth, with an overall CAGR for the defined region of some 3.7 per cent

noted over the period reaching around 6.8m TEU in 2008.

In 2009, total regional volumes dropped by some 11.4 per cent to a little under 6.0m TEU,

but the crisis proved to be short-lived in the region. Volumes recovered to 7.3m TEU in

2014.

The broad scale of regional demand growth over the period 2000-2014 is summarised in

Table 2.1. This highlights the region that is under review. This comprises the Northern

Tyrrhenian Sea, Tyrrhennian Sea, Adriatic Sea and south France markets, where the level of

transshipment units are relatively minor compared with the major central Mediterranean

transshipment hubs. The focus for the Northern Tyrrhenian Sea market of which Livorno is

a part is for local and transit volumes to certain parts of central Europe.

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Table 2.1: The Total Regional Hinterland Demand, 2000-2014

Table 2.1

The Total Regional Hinterland Demand, 2000-2014

'000 TEUs

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 *

Italy - Ligurian Sea

Livorno 519.2 531.8 546.9 592.8 638.6 658.5 657.6 745.6 778.9 592.1 628.5 637.8 549.0 559.2 577.5

Genoa 1500.6 1526.5 1531.3 1605.9 1628.6 1625.0 1657.1 1855.0 1766.6 1533.6 1758.9 1847.1 2064.8 1988.0 2172.9

La Spezia 910.0 974.6 975.0 1006.6 1040.4 1024.5 1136.7 1187.0 1246.1 1046.1 1285.2 1307.3 1247.2 1300.4 1303.0

Sav ona 36.9 50.1 54.8 53.5 83.9 219.9 227.2 242.7 252.8 196.3 220.0 170.4 75.3 77.9 81.8

Total 2966.7 3083.0 3108.0 3258.8 3391.5 3527.9 3678.6 4030.3 4044.4 3368.1 3892.6 3962.6 3936.4 3925.5 4135.2

Italy - Tyrrhennian Sea

Naples 396.6 430.1 446.2 433.3 347.5 373.7 445.0 460.8 481.5 515.9 534.7 526.8 546.8 480.0 418.8

Salerno 276.0 321.3 374.9 417.5 411.6 418.2 359.7 385.3 330.4 269.3 234.8 235.2 208.6 263.4 265.0

Civ itav ecchio (Rome) na na na na na na na na 25.2 28.3 41.5 38.2 51.0 54.0 65.2

Total 672.6 751.4 821.1 850.8 759.1 791.9 804.7 846.1 837.1 813.5 811.0 800.1 806.4 797.4 749.0

Italy - Adriatic Sea

Venice 218.0 246.2 262.3 283.7 290.9 289.9 316.6 329.5 379.1 369.5 392.9 458.4 429.9 446.6 456.1

Trieste 206.1 200.6 185.3 120.4 174.0 198.3 220.3 265.9 335.9 277.0 281.6 393.2 408.0 458.6 476.5

Rav enna 181.4 158.4 160.6 160.4 169.5 168.6 162.1 206.8 214.5 185.0 183.0 215.3 208.2 226.9 222.6

Ancona 83.9 90.0 94.3 84.8 86.0 85.4 97.0 87.2 102.2 105.5 110.4 120.7 142.2 152.4 75.8

Total 689.4 695.2 702.6 649.3 720.3 742.2 796.0 889.4 1031.6 937.0 967.9 1187.6 1188.3 1284.5 1230.9

South France

Marseille-Fos 722.4 742.0 808.9 833.0 916.3 906.1 946.4 1002.9 851.2 876.8 953.4 930.0 1061.2 1099.2 1175.9

Total 722.4 742.0 808.9 833.0 916.3 906.1 946.4 1002.9 851.2 876.8 953.4 930.0 1061.2 1099.2 1175.9

Regional Total 5051.1 5271.6 5440.6 5591.9 5787.2 5968.1 6225.7 6768.6 6764.3 5995.4 6625.0 6880.3 6992.2 7106.6 7291.0

* partially estimated

Sources: Ports / Ocean Shipping Consultants

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Regional demand growth is further detailed in Figure 2.2.

Figure 2.2: Total Regional Container Port Demand 200-2014

2.3 HISTORICAL DEMAND BY ROUTING

The Domestic Market and the Further Potential for Livorno

Current volumes at Livorno represent 7.92 per cent of the regional total recorded in Table

2.1, with recent volumes reaching 0.58m TEU. This is still less than the highs of 0.78m TEU

recorded prior to the economic slump in 2009. The “region” in this instance is defined by

the primary competition that the port of Livorno is likely to face which incorporates:

ports in the immediate vicinity of Livorno on the Northern Tyrrhenian Sea;

developed and developing ports on the Italian Adriatic Coast;

the Tyrrhenian Sea ports close to Rome;

facilities in South France.

The port suffered badly in 2009, with volumes dropping by just under 24 per cent before

recovering in 2010-11 only then to lose business in 2012 to developing facilities primarily in

Genoa. Recovery since then has been steady rather than dramatic and it is clear that the port

facility will need to develop if it is to be able to compete with its neighboring competition,

which is the primary purpose of this report.

Provided that the necessary improvements in water depth, quay length and shore-side

equipment are made, then there is no reason why the Port of Livorno should not be able to

compete in the following main markets:

local Livorno market and expansion into local north Italian transit markets;

transit markets to Switzerland, Slovakia, Czech. Republic, Austria and Hungary (plus

south Germany);

transshipment

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Figure 2.3:Main Italian Regions

Figure 2.3 illustrates the 20 main Italian regions, of which the following nine are within the

expanding reach of Livorno port and its primary competition in both the Adriatic Sea and the

Northern Tyrrhenian Sea:

Toscana;

Liguria;

Emillia-Romagna;

Piemonte;

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Valle d’Aosta;

Veneto;

Lombardia;

Friuli-Venezia Giulia;

Trentino Alto Adige.

Table 2.2 provides more detail of the Livorno port volumes since the economic slump of

2008-9.

Table 2.2: Livorno Container Volumes, 2008-2014

Figure 2.4: Total Livorno Container Port Demand 2008-2014

Table 2.2

Livorno Container Volumes, 2008-2014

'000 TEUs

2008 2009 2010 2011 2012 2013 2014

Import 339.36 263.11 278.26 288.64 259.83 263.03 263.90

Ex port 356.56 273.10 299.97 305.01 262.71 264.32 255.60

Transshipment 82.94 55.85 50.26 44.16 26.51 31.83 57.97

Total 778.86 592.05 628.49 637.80 549.05 559.18 577.47

% Transshipment 10.65% 9.43% 8.00% 6.92% 4.83% 5.69% 10.04%

Full - Local 524.32 405.04 441.57 461.35 400.33 401.05 392.79

Empty - Local 171.60 131.17 136.66 132.29 122.22 126.30 126.71

Total 695.92 536.20 578.23 593.64 522.54 527.35 519.50

Source: Liv orno Port Authority / Ocean Shipping Consultants

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These details are further illustrated in Figure 2.4.

Although Livorno has historically been almost entirely directed toward the local Livorno

markets (Tuscany and Emillia-Romagna), it is apparent that with the establishment of

effective and reliable rail intermodal and haulage links to/from the port into north Italy and

further afield to Switzerland, Austria and South Germany, it should be possible to further

develop the volumes of transit cargo shipped.

Figure 2.5 illustrates the regions of North Italy and the ports that have the potential to access

these regions. In addition, the south France port of Marseille-Fos should also be considered

as competition for Livorno, particularly for the more north western Italian regions.

Figure 2.5: Map of Northern Italy

Although it is difficult to locate the exact origin and destination of Italian container volumes,

there are Government statistics that provide total annual transit volumes by region and by

weight, which provide some guidance and Ocean Shipping Consultants/D’Apollonia have

reviewed the data in detail and are confident the data shown is the best that can be defined.

These details are reported in Table Table 2.3.

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Table 2.3: Total Imports and Exports for Selected North Italian Regions (bn kg)

Table 2.3 Total Imports and Exports for Selected North Italian Regions (bn kg)

Region

Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports

Toscana 4,121 1,762 4,094 1,868 4,409 1,958 4,584 2,025 4,014 1,613 3,887 1,660 3,635 1,865 3,122 1,782 3,007 2,033 3,357 1,741

Liguria 5,122 493 4,393 2,671 4,706 550 3,984 3,545 3,793 3,844 3,793 2,595 3,856 2,165 3,782 2,771 3,426 888 2,431 4,250

Emilia Romagna 6,746 3,449 5,765 3,604 6,782 3,838 7,103 3,905 5,813 3,476 5,375 3,341 5,837 3,653 5,566 3,842 5,501 3,769 5,765 3,891

Piemonte 4,341 2,615 3,872 2,720 4,240 2,876 4,313 2,898 3,250 2,549 3,666 2,608 3,183 2,755 2,948 2,711 2,885 2,639 3,161 2,813

Valle d'Aosta 35 52 33 71 37 78 36 80 25 63 31 65 31 72 29 69 24 65 31 67

Veneto 7,467 3,144 7,437 3,228 8,074 3,814 7,535 3,670 6,987 3,396 6,511 3,152 6,912 3,719 5,639 3,723 6,335 3,652 6,661 3,607

Lombardia 21,063 5,955 20,902 6,566 18,624 7,151 17,502 7,705 14,098 6,933 16,790 6,396 15,359 6,943 13,750 6,852 13,207 6,796 12,432 7,027

Friuli-Venezia Guilia 2,856 1,251 3,099 1,256 3,038 1,472 3,211 1,501 2,811 1,440 2,926 1,260 2,825 1,434 2,908 1,484 2,787 1,406 2,877 1,403

Trentino Alto Abige 1,066 557 1,100 585 1,135 581 1,201 613 1,024 556 1,045 581 1,063 685 1,033 686 1,000 679 977 744

Others 8,720 2,944 7,888 2,843 7,766 3,418 8,454 3,443 8,381 2,734 6,993 3,095 10,107 3,368 8,704 3,160 6,343 3,085 6,627 2,777

Total 61,537 22,222 58,583 25,410 58,810 25,736 57,923 29,384 50,195 26,604 51,018 24,753 52,808 26,659 47,482 27,080 44,515 25,011 44,320 28,319


20092004 2005 2006 2007 2008 2010 2011 2012 2013

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For Italian import volumes, Lombardia consistently has the highest share ranging from a

high of 35.7 per cent in 2005 to 28.0 per cent in 2013. Veneto has increased its share from

12.1 per cent in 2004 to 15.0 per cent in 2013 and Emilia Romagna has increased from 11.0

per cent in 2004 to 13.0 per cent in 2013. Further details are illustrated in FigureFigure 2.6.

Figure 2.6: Italian Import Cargo by Region, 2004-2013

Figure 2.7 illustrates the Italian export volumes. Once again the region of Lombardia is

responsible for the majority of the cargo representing a share of 26.8 per cent in 2004 and

24.8 per cent in 2013. However, Liguria represents the second highest export region having

increased from a 2.2 per cent share in 2004 to 15.0 per cent in 2013. Elsewhere, Veneto

represented a share of 14.1 per cent in 2004, decreasing to 12.7 per cent in 2013 and Emilia

Romagna also showed a decrease from 15.5 per cent in 2004 to 13.7 per cent in 2013.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Figure 2.7: Italian Export Cargo by Region, 2004-2013

The primary competition for the port of Livorno for local cargoes, are ports located on the

Northern Tyrrhenian Sea, i.e. terminals in Genoa, La Spezia and Savona. Volumes handled

at these ports in isolation are illustrated in Figure 2.8, which shows that volumes handled in

Livorno lag behind volumes in La Spezia and Genoa.

Figure 2.8: Total Regional Container Port Demand 2000-2014, Italy-Northern Tyrrhenian Sea

Doc. No. 14-1394-H1 Rev. 0 – March 2015


However, this does not tell the full story, because volumes handled in Genoa are spread over

seven terminals, where only V.T.E. (Voltri) records more than Livorno and where SECH is

more or less Livorno’s equal. This means in effect that only La Spezia Container Terminal

(LSCT) and V.T.E. have historically handled more than Livorno in the immediate vicinity.

Table 2.4 highlights the total volume of containers handled at each Genoese facility since

2000 and is further illustrated in Figure 2.9 by import/export and transshipment type. The

relatively small portion of transshipment for the facilities of this major Northern Tyrrhenian

Sea port facility is evident.

Figure 2.9: Genoa Port Import/Export and T/S Container Traffic

0

500

1,000

1,500

2,000

2,500

2008 2009 2010 2011 2012 2013 2014

TEU

000

S

Figure 2.9 Genoa Port Import / Export and T/S Container Traffic

T/S

Import / Export

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Table 2.4: Port of Genoa Container Traffic Volumes by Terminal (TEU 000s)

Table 2.4 Port of Genoa Container Traffic Volumes by Terminal (TEU 000s)

Terminal

Total TEU TEU T/S %T/S Total TEU TEU T/S %T/S Total TEU TEU T/S %T/S Total TEU TEU T/S %T/S Total TEU TEU T/S %T/S Total TEU TEU T/S %T/S Total TEU TEU T/S %T/S

SECH 314.51 6.69 2.1% 244.88 5.70 2.3% 316.87 8.96 2.8% 205.50 0.75 0.4% 327.20 0.29 0.1% 325.43 1.88 0.6% 447.34 57.75 12.9%

Messina 235.80 57.41 24.3% 216.99 42.60 19.6% 244.53 59.44 24.3% 280.02 43.06 15.4% 211.87 46.96 22.2% 186.25 36.63 19.7% 196.63 54.53 27.7%

V.T.E. 1009.49 84.85 8.4% 885.28 50.07 5.7% 980.95 59.44 6.1% 1140.12 89.58 7.9% 1242.95 133.87 10.8% 1177.25 81.99 7.0% 1157.08 79.18 6.8%

Rebora 118.82 108.37 121.78 145.26 221.98 210.26 275.68 18.70 6.8%

Total 1766.61 148.95 8.4% 1533.63 98.37 6.4% 1758.86 145.10 8.2% 1847.10 133.38 7.2% 2064.81 181.13 8.8% 1988.01 125.11 6.3% 2172.94 210.16 9.7%

Source: Genoa Port

20142008 2009 2010 2011 2012 2013

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Since 2008, Livorno’s share of this specific regional market has decreased from 17.5 per

cent in 2000 to 14.0 per cent in 2014. This compares with La Spezia’s share of 31.1 per cent

in 2008 and 31.4 per cent in 2014; Voltri’s share of 30.0 per cent in 2008 and 28.0 per cent

in 2014 and SECH’s share of 9.3 per cent in 2008 and 10.8 per cent in 2014 respectively.

This suggests that Livorno’s share of this market has been lost to La Spezia and SECH,

although some could also have moved to ports outside this core Northern Tyrrhenian region.

With improved terminal capabilities there is no reason why Livorno should not be able to

increase its share of the local and transit markets.

Similarly, with the development of a relatively deep water facility, it should be possible to

increase Livorno’s share of transshipment volume beyond the 10 per cent of the existing

total currently enjoyed.

Regional Transhipment Market - Central Mediterranean

The central Mediterranean transshipment market is extensive and likely to continue to grow

with the introduction of still larger vessels on the main arterial trade lanes requiring fewer

direct port calls by the main services and thus by association an increase in the amount of

units served via transshipment hubs.

Demand has been funded by very rapid growth in local cargo traffic (import/export flows)

and also by the transshipment sector. The shift to larger vessel sizes has been a major

catalyst in the development of both gateway terminals (combining import/export and

transshipment flows) such as Barcelona and Valencia and also for major transshipment hub

ports – Gioia Tauro, Malta, etc.

The recent vessel orderbooks of the top twenty shipping lines would suggest that further

average increases in vessel sizes are extremely likely in the short-term.

The overall transshipment market that is relevant here includes hub ports in the central

Mediterranean and includes Gioia Tauro, Marsaxlokk, Taranto and Cagliari and is based on a

geographical arc from Valencia to Livorno. The increasing use of transshipment relative to

direct shipment, combined with the two container moves generated for each transshipment

operation, has generally led to a much more rapid growth in transshipment demand than for

hinterland traffic.

This paper assumes that – for hub and spoke transshipment – future demand will be related

to economic growth in the entire region, and will be a compound of economic growth-

induced demand and the policies of major operators in converting direct flows into

transshipped flows. In the longer term, as the possibilities for further conversion to

transshipment decreases, it can be expected that the differential between the growth of non-

transshipment demand and transshipment demand will decrease.

For relay demand, the main drivers are the level of deepsea container trade growth for

services transiting the region and the relative economics of direct services and interlined

links between discrete liner services. By definition, this sector is determined by factors

outside the geographic region under direct review.

The development of demand at the transshipment ports under consideration is summarised in

Table 2.5 for the period since 2000.

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Table 2.5: Regional Container Transshipment Market by Port, 2000-2014 (‘000 TEUs)

Several major trends are apparent within this overview:

the development of demand has been extremely dynamic, with a CAGR of 11.1 per cent

recorded for the entire period from 2000 to 14.9m TEU in 2008, before an economic

decline to 14.1m TEU in 2009, followed by a further CAGR of 2.1 per cent rise, during

the recovery phase to 15.6m TEU in 2014;

demand has fragmented over the period as new terminals have been introduced into the

market. Gioia Tauro, Algeciras and Malta have historically been the most significant

container terminals for transshipment, but secondary hubs and regional gateway ports

have recorded significant demand increases over recent years;

the three major established terminals have seen combined shares of 83.8 per cent in 2000

(Algeciras 29.3 per cent; Gioia Tauro 39.5 per cent and Marsaxlokk 15.0 per cent),

reduced to 65.0 per cent in 2005 (Algeciras 27.2 per cent; Gioia Tauro 27.2 per cent and

Marsaxlokk 10.6 per cent) and still further to 61.8 per cent in 2014 (Algeciras 27.2 per

cent; Gioia Tauro 18.6 per cent and Marsaxlokk 16.0 per cent);

Table 2.5

Regional Container Transshipment Market by Port, 2000-2014

'000 TEUs

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*

'000 TEUs

Algeciras 1890.7 2039.1 2124.5 2367.7 2803.5 3051.5 3121.3 3249.7 3164.7 2890.9 2622.5 3347.1 3757.6 3948.2 4237.1

Valencia 207.1 297.6 471.5 573.0 609.6 702.9 808.3 1034.3 1582.2 1824.6 2155.6 2226.3 2280.6 2158.3 2488.0

Barcelona 295.0 317.0 328.7 406.7 573.7 704.3 867.3 989.0 995.9 606.3 633.1 656.8 435.8 276.8 307.9

Malaga 85.2 235.1 446.5 527.4 409.8 274.0 279.6 450.7 300.4 261.7 55.3

Las Palmas 186.1 223.9 273.4 502.2 637.8 645.0 835.0 927.1 835.1 587.7 674.9 839.1 790.2 602.5 537.9

Lisbon 13.5 25.2 40.8 71.0 40.4 33.3 16.3 19.1 22.8 13.7 16.9 16.5 18.8 19.5 20.0

Tangiers 61.0 894.3 1175.9 2004.0 2011.9 1750.9 2397.1 1372.8

Cagliari 25.0 302.3 488.6 617.5 675.9 520.1 241.3 697.2 558.2 613.2 627.6 682.7 656.0

Gioia Tauro 2546.5 2377.6 2827.2 3021.5 3116.6 3052.2 2788.3 3300.6 3336.0 2772.7 2785.7 2252.0 2548.0 2716.9 2901.7

Taranto 194.0 452.7 610.4 664.1 631.0 758.0 756.0 775.0 741.5 581.9 604.4 263.5 193.3 161.2

Marsax lokk 966.4 1087.5 1119.8 1170.0 1315.2 1188.0 1390.6 1804.1 2239.6 2165.9 1801.2 1793.6 2425.0 2612.5 2494.0

Liv orno 17.8 29.9 27.1 52.2 59.3 57.1 61.3 74.7 82.9 55.8 50.3 44.2 26.5 31.8 58.0

La Spezia 131.2 140.5 112.1 148.3 128.9 108.0 156.3 233.1 204.2 155.5 185.7 98.0 91.1 101.4 95.1

Genoa 195.5 187.9 149.1 195.6 201.3 182.7 141.8 160.9 148.9 98.4 145.1 133.4 181.1 125.0 210.2

Total 6449.8 6920.2 7951.9 9420.9 10724.2 11208.6 12066.9 13657.1 14932.7 14060.0 14494.6 15087.2 15497.2 16127.8 15595.1

Per cent share

Algeciras 29.3 29.5 26.7 25.1 26.1 27.2 25.9 23.8 21.2 20.6 18.1 22.2 24.2 24.5 27.2

Valencia 3.2 4.3 5.9 6.1 5.7 6.3 6.7 7.6 10.6 13.0 14.9 14.8 14.7 13.4 16.0

Barcelona 4.6 4.6 4.1 4.3 5.3 6.3 7.2 7.2 6.7 4.3 4.4 4.4 2.8 1.7 2.0

Malaga 0.8 2.1 3.7 3.9 2.7 1.9 1.9 3.0 1.9 1.6 0.4

Las Palmas 2.9 3.2 3.4 5.3 5.9 5.8 6.9 6.8 5.6 4.2 4.7 5.6 5.1 3.7 3.4

Lisbon 0.2 0.4 0.5 0.8 0.4 0.3 0.1 0.1 0.2 0.1 0.1 0.1 0.1 0.1 0.1

Tangiers 0.4 6.0 8.4 13.8 13.3 11.3 14.9 8.8

Cagliari 3.2 4.6 5.5 5.6 3.8 1.6 5.0 3.9 4.1 4.0 4.2 4.2

Gioia Tauro 39.5 34.4 35.6 32.1 29.1 27.2 23.1 24.2 22.3 19.7 19.2 14.9 16.4 16.8 18.6

Taranto 2.8 5.7 6.5 6.2 5.6 6.3 5.5 5.2 5.3 4.0 4.0 1.7 1.2 1.0

Marsax lokk 15.0 15.7 14.1 12.4 12.3 10.6 11.5 13.2 15.0 15.4 12.4 11.9 15.6 16.2 16.0

Liv orno 0.3 0.4 0.3 0.6 0.6 0.5 0.5 0.5 0.6 0.4 0.3 0.3 0.2 0.2 0.4

La Spezia 2.0 2.0 1.4 1.6 1.2 1.0 1.3 1.7 1.4 1.1 1.3 0.6 0.6 0.6 0.6

Genoa 3.0 2.7 1.9 2.1 1.9 1.6 1.2 1.2 1.0 0.7 1.0 0.9 1.2 0.8 1.3

Total 100.0 100.0 99.7 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

* partially estimated

Sources: Ports / Ocean Shipping Consultants

Doc. No. 14-1394-H1 Rev. 0 – March 2015


indeed, of the big three terminals, both Malta and Gioia Tauro have struggled to show

year on year increases in volumes. Gioia Tauro has still to recover to the pre-crisis highs

of 2008, whilst volumes at Malta declined in three consecutive years from 2009-2011,

before showing signs of recovery in 2012 and 2013;

without any significant local volumes at either Gioia Tauro or Marsaxlokk, both terminals

are reliant on the strategies of the major shipping lines to handle the majority of their

transshipment volumes. Increasingly, shipping lines want to offer a transshipment hub

that also has the potential for significant local cargoes, is cost efficient and has the ability

to handle larger vessels efficiently. This puts both Gioia Tauro and Marsaxlokk in an

increasingly vulnerable position;

the recent winners of market share for transshipment calls are both Valencia and Tanger-

Med. Valencia is also able to offer some local cargoes whilst Tanger-Med is much

cheaper than its competition. In 2014, the top three transshipment hubs in the region

were Algeciras with 27.2 per cent; Gioia Tauro with 18.6 per cent and both Valencia and

Malta with 16.0 per cent each;

Cagliari saw a significant drop in 2008 as a result of Maersk Line moving business away

from the terminal, but in 2009 CICT was able to attract business from the Grand Alliance,

returning volumes to 2007 levels;

operated by Contship Italia, Gioia Tauro is the busiest transshipment port in central

Mediterranean; its transshipment volumes had increased to a peak of 3.3m TEU in 2008,

before declining in 2009. Volumes have gradually recovered, but in 2014 still had not

reached the pre-crisis heights. In 2013, the port handled some 2.90m TEU.

Other ports in the region, like Taranto and Marsaxlokk, also experienced important increases

over the period to 2008. Marsaxlook peaked at 2.2m TEU in 2008 before declining due to

the prevailing world economic situation. Volumes have recovered to 2.5m TEU in 2014,

mainly as a result of CMA-CGM volumes. Taranto also peaked in 2008 at 0.8m TEU, but

has dropped to under 200,000TEU/annum by 2013-14:

the major central Mediterranean terminals have been considered together as they are

primarily orientated toward hub-and-spoke distribution in the central region. They do

have some overlap with the Gibraltar Straits terminals, however. In 2008, total demand

from these ports reached a peak level of 6.6m TEU, but Cagliari, Taranto and Marsaxlokk

volumes have continued to drop. Only Gioia Tauro has shown any sign of consistent

recovery with volumes increasing in 2010, 2012, 2013 and 2014.

These developments are further summarised in Figure Figure 2.10.

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Figure 2.10: Broad Region: Transshipment Volumes 2000-2014

As is summarised in Figure 2.11 in proportional terms the initial shift was in favour of the

central Mediterranean hub terminals, but more recently stronger growth has been noted

particularly in Tanger-Med, but also in the Atlantic and Spanish gateway transshipment

terminal markets.

The combined share of the Gibraltar Straits and Tangiers shows an increase of 8.1 per cent

from the 49.8 per cent share in 2007 when Tanger-Med first opened for business and 57.9

per cent in 2014, making it the highest regional share of transshipment, with an even greater

share than the combined central Mediterranean hubs with a share of 39.8 per cent of the

regional transshipment market. This change in dominance is well illustrated in Figure

Figure 2.11.

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Figure 2.11: Regional Transshipment Demand by Zone 2000-2014

2.4 CONCLUSION

The central Mediterranean region as a whole has a long history of handling large volumes of

transshipment and although there have been some slight declines in recent years volumes on

the whole are showing signs of recovery. This is primarily being felt in the main hub ports

of Gioia Tauro and Marsaxlook, but with the requisite deep water and significant local and

transit market potential, there is no reason why the Italian ports on the Northern Tyrrhenian

Sea shouldn’t see increases in transshipment demand. Together the Northern Tyrrhenian Sea

ports represent about just 2.3 per cent of the transshipment demand with about 0.35m TEU

recorded in 2014, of which Livorno represents just 0.4 per cent. Although it has the potential

to increase over time after the port developments have taken place, the key demand growth is

focused on local and transit markets rather than the highly competitive transshipment market.

Future demand will be determined not only by developments within the regional market, but

also by external factors. In order to develop a coherent set of forecasts in these sectors, it is

therefore necessary to evaluate these factors. These will be further developed in Chapter III

of this Study.

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3 DEVELOPMENT OF LIVORNO’S CONTAINER TRAFFIC MARKETS TO 2035

3.1 INTRODUCTION

This Section develops the methodology for the analysis of the macro-economic factors

shaping regional demand which leads to the provision of a series of forecasts concerning the

development of regional container demand for specific terminal facilities. Individual

container facility demand in Livorno for the same period is subsequently derived from this.

The approach taken is as follows:

the relationship between economic development at the macro level and container port

demand in the region is considered;

the general economic outlook for the region is defined in terms of different cases

(scenarios) and the link between economic development and containerised trade assessed;

a series of forecasts for local and regional demand are developed.

This is obviously an over-simplification, given the varying particular factors relevant to

specific trades and regional markets. Nevertheless, a clear methodological link has been

established between world GDP and total container demand. This provides the best tool for

examining the likely future course of demand growth – especially over the timescale

appropriate for the current study.

However, in the case of Italy since the global recession, the country’s economic growth has

been flat whilst the trade growth has been somewhat more buoyant. This means that the

current relationship between the Italian GDP and container demand has broken down and

will therefore necessitate another forecast method for the short-term future. This will be

discussed later in the Section.

3.2 RELATIONSHIP OF GDP GROWTH WITH TRADE GROWTH

General Considerations

General analysis indicates that there is a relation between the rate of expansion of a

particular regional economy and the level of trade growth. This, in turn, is manifested in the

level of import/export demand at the regional container ports. This aggregate relationship is

very important in assessment of the future expansion of the potential hinterland of the

regional ports.

The relation between macroeconomic growth and trade is fundamental to an understanding

of the development of the container port market in the region as a whole. Furthermore, trade

in manufactured and intermediate goods – the prime constituents of containerisation – has

been at the centre of world economic expansion in recent years and the integration of the

region into the global trading system is well advanced, but still has further to progress.

As an indicator of these long-term relationships in more mature markets Figure 3.1 provides

a summary of the development of key variables for the EU economy for the period since

1990. This allows a comparison of the year-on-year proportional development of container

port demand and GDP.

Although some evidence of a parallel development appears since 1993, prior to this period

the relation was much more erratic. It remains the case, however, that container port

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throughput increased generally much more rapidly than GDP – highlighting the nature of the

recent, consumption-led maintenance of economic growth. The continued growth of

container throughput during periods of economic downturn has been a feature of the

containerised market world-wide.

This fundamental position and relationship has been sustained over the entire period. During

the economic crisis, declines in output were directly reflected in lower trade and

containerised port demand level. The subsequent recovery and now stagnation is also

reflected in container volumes.

Figure 3.1: N. Europe Economic & Trade Indicators 1992-2013

The actual global position has also been considered and the results of the year-on-year

development of GDP and container port volumes are summarised in Figure 3.2. The

massive growth in container trades in recent decades has been generated by the globalisation

of manufacturing industries, which have increasingly sourced finished or partially

manufactured goods in low-cost regions of the world. As economies have expanded, trade

has also increased to meet the demands of industry for raw materials and intermediate goods

as well as the demands of consumers for competitive products. This trade has provided the

primary constituents of containerisation.

The pattern of sustained expansion was severely disrupted by the collapse of world

economies in 2008-2009. The economic contraction was of a different nature to the cyclical

downturns of the 1980s and 1990s, and it will take some years to unravel the consequences

of the global banking crisis and continuing government indebtedness. This has had a

particularly negative impact on Italy.

The container system has been a beneficiary and a catalyst of global sourcing trends. The

availability of low-cost transport effectively eliminates freight charges as a significant

consideration in the cost of most high-value commodities. This allows complex global

sourcing patterns to be developed.

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The figure below contrasts world economic growth with the development of global container

port demand since 1991. It is clear that there is a relation between the development of GDP

and that of container handling demand, though the inexactitude of these measures leads to

some distortion, and the relationship is clearer for some countries than others.

Figure 3.2: World GDP & Container Port Trade 1991-2013 (% Change)

3.3 GENERAL ECONOMIC SCENARIOS AND DRIVERS

This economic relation between GDP, trade and container port demand is very useful in

forecasting the development of the container sector. Of course, it is not a sufficient

explanation of the development of container port demand. The more focused the analysis

becomes, the less accurate such an aggregate approach will be. There are numerous other

factors at work, and the limitations of economic data (which are often revised) and container

handling statistics further complicate the picture.

Other factors affecting the development of container port demand, and issues relating to the

measurement and comparison of GDP growth and container port demand growth, include:

the imbalance of the trades means that high volumes of empty containers are handled.

Moving empties is a major part of a terminal’s business, but they do not represent cargo

actually being traded;

although of limited relevance for Livorno and the ports on the Northern Tyrrhenian Sea,

transshipment doubles the number of port moves per container (and hence the TEU

count), but again it does not represent additional cargo. As a component of overall

container port demand, transshipment demand is only indirectly related to underlying

import/export container demand;

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the increasing penetration of containerisation. In the current regional market under

review there is scope for further containerisation of the general cargo base. In addition,

an imbalance of loaded containers between inbound and outbound traffic means that

shippers continually search for more cargo to containerise on the return legs, increasing

the use of containers in low value cargo sectors;

container throughput is quantified in volume terms and GDP is measured in value terms.

Clearly, the two measures are not directly comparable. In recent years, the volume of

containerised cargo has increased more rapidly than its real value, due to factors such as

the fall in the price of electronic goods;

there are other significant economic relationships, which modify the underlying link

between economic growth and trade growth. For example, fluctuations in the relative

propensities to consume or save, to import or purchase domestically, to export or sell

domestically are volatile. Relative movements in prices, incomes, exchange rates, tastes,

confidence and other factors mediate all of these factors;

in addition to the limitations of available economic data, there are lags in the economy

between causes and their effects, so that it is not always clear which periods should be

compared when different aspects of economic development (such as GDP and trade) are

contrasted.

In analysing the development of demand over the period under review it is also necessary to

consider other – somewhat less mechanically forecastable – issues. These are summarised in

Table Table 3.1.

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Table 3.1: Further Issues Determining Future Container Port Demand Growth

In addition to the economic data, there are always lags in the economy between causes and

their effects, so that it is not always clear which periods should be compared when different

aspects of economic development (such as GDP and trade) are contrasted.

In recent decades, as economies have expanded, so trade has also increased to meet the

demands of industry for raw materials and intermediate goods, and the demands of

consumers for competitive products. Trade in manufactured goods and intermediate goods –

the prime constituents of containerisation – has been at the centre of this global economic

expansion.

During this period, the fundamental structure of the world economy has altered. The ability

to source finished or partially manufactured goods in areas of low costs has been at the

centre of the 'globalisation' of industries. Not only has this boosted world output, but it has

also intensified the relation between economic output and trade. In the longer run, it will be

the sustainability of this pattern of growth that will define the outlook for containerisation.

The container system has been both a catalyst and a beneficiary of these developments. The

availability of low-cost transport effectively eliminates freight charges as a significant

consideration in the cost of most higher-value commodities. This allows complex global

sourcing patterns to be developed. With the continued availability of low-cost labour in

Table 3.1

Further Issues Determining Future Container Port Demand Growth

The Penetration of Containerisation The impact of this is largely complete, but there are significant sectors

w here containerisation of new commodities w ill further boost demand.

Possible Limits to Growth The current economic model w ill not be constrained by limits to

demand in the period to 2020. There is much potential demand that

w ill fund increased container trade.

Demand Saturation Large sectors of the w orld economy are at a relativ ely low phase

of demand dev elopment. Grow th to current OECD consumption

lev els w ill sustain demand ex pansion ov er the period to 2020.

Trade Imbalances The imbalances resulting from OECD demand w ill become more

difficult to finance but shifts in ex change rates w ill ease these

pressures. Increased import demand w ill be generated from major

ex porting economies.

Demand Elasticities There w ill be a further slow dow n in the intensity of GDP : trade

co-efficient. How ev er, a sustainable rate of 1 : 1.8/2.0 w ill deliv er grow th.

One-Off Globalisation? Globalisation w ill be focussed in the nex t 10/15 y ear period. This process

is still underw ay and far from complete and w ill remain the most significant

issue for the current study period.

Regionalisation Ev idence indicates that regional dev elopment has slow ed and that global

sourcing is the optimum structure. Low cost regional manufacturers

cannot compete w ith China and (in the future) w ith India.

Transshipment Will continue to grow more rapidly than import/ex port flow s

- this w ill further amplify the economy : port demand relationship.


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China and other developing regions, the migration of manufacturing to these locations seems

certain to continue.

In addition to direct, trade-related factors and transshipment, containerport demand has also

been boosted by the continuing containerisation of backhaul bulk cargoes in developed

markets. These factors, and others discussed below, mean that the relationship between

GDP growth and containerport demand growth is not clear-cut.

The container sector has passed through a period of uncertainty at the global level and this

has been particularly manifested with regard to Italy. A more detailed assessment of the

relationship between trade and the economy for Italian ports will be provided in Section 3.4.

The initial relationship between GDP growth and trade growth appears to have broken down

recently, but is expected to return to equilibrium in two or three years, by 2017. A slightly

different methodology for the short-term demand forecast is therefore used and fully

explained later in this Section.

Despite this and the numerous factors at work, which need to be built into (or allowed for in

the interpretation of forecasts) the generation of trade through economic growth provides the

most rational basis for predicting the future direction and scale of container port demand.

3.4 ITALIAN REGIONAL ECONOMIC POSITION

The overall link between GDP growth and national import/export demand is very important.

In general, this relationship is very useful in determining the general outlook for demand

growth. The relationship is further detailed in Figure 3.3 and further reflected in Table 3.2.

The relationship between GDP growth and import/export remained strong throughout the

period of economic decline up to 2009 and up to 2011. By 2012 the first signs of the

breakdown in the relationship between trade growth and economic growth were evidenced

and although there is some sign of recovery of the relationship in 2014, the future prospects

suggests a further breakdown in the relationship in the short-term.

In the short-term, at least, the increasing importance of exports is important to stress and will

also be used as a measure for future demand growth.

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Figure 3.3: Italian Economy Macroeconomic Indicators and Forecasting

Table 3.2: Italian Economy Macroeconomic Indicators and Forecasting

Looking at the import/export volumes and GDP forecast from 2014 and comparing them

with the economic development, it is apparent that the Italian economy is passing through a

transition period with important structural changes, which has temporarily displaced the

direct relationship between GDP and container volumes. As can be observed in Figure 3.4,

whilst GDP growth has continued to be negative or almost zero, with some slight recovery

forecast from 2015 at/around one per cent, local demand growth (exports and empties) has

achieved positive growth figures in 2014 and is set to record 3.5-4.0 per cent growth in both

-20,00

-15,00

-10,00

-5,00

0,00

5,00

10,00

15,00

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Figure 3.3 Italian Economy Macroeconomic Indicators and Forecasting

GDP (constant prices, % change)

Volume of Imports of Goods and Services (% change)

Volume of Exports of Goods and Services (% change)Source: IMF

Table 3.2 Italian Economy Macroeconomic Indicators and Forecasting

Description Units 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Gross domestic product

constant prices % change -1.16 -5.49 1.72 0.45 -2.37 -1.85 -0.17 0.85 1.30 1.25 1.05 1.05

Volume of imports of

goods and serv ices % change -2.96 -13.37 12.57 0.78 -7.05 -2.75 1.31 2.65 3.80 3.80 3.70 3.60

Volume of ex ports of

goods and serv ices % change -2.83 -17.51 11.36 6.23 2.14 0.13 1.99 3.49 3.65 3.60 3.45 3.40

* Shaded cells indicate forecasted v alues

Source: IMF

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import and export volumes. In other words, despite the economic downturn, container

demand has continued to grow.

Figure 3.4: Italy: GDP and I/E Container Port Volumes 1996-2015

Figure 3.5 provides a comparison of Italian Northern Tyrrhenian Sea import/export TEUs

(Livorno, Genoa, La Spezia and Savona) with the volume growth of Italian import and

export goods, since 2000.

Figure 3.5: Comparison of Northern Tyrrhenian Sea Container Trade Growth with Italian Local Growth

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Figure 3.5 Comparison of Ligurian Sea Container Trade Growth with Italian local growth

% growth Italian import tonnes % growth Italian export tonnes

% growth in Northern Tyrrhenian Sea imp/exp

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In recent years, Italian exports have been increasing as companies seek to replace the

depressed internal demand. It is apparent that there is a good relationship with the trade of

goods in general, but more robust between exports and container volumes. The latter can be

explained by the high proportion of exported goods that are containerised, while a high

percentage of imported goods are related to the energy sector, such as oil and gas, and thus

not containerised. As the economy develops and reaches higher levels of income, the

consumer patterns change and the correlation between GDP and trade changes accordingly.

However, the Italian economy is shifting towards an export-driven economy, meaning that

the elasticity demand/GDP is growing towards levels more typical in export-driven countries

such as Germany.

This analysis indicates that, in order to produce a reasonable and realistic traffic forecast,

specific attention must be paid to the trade forecast, instead of relying exclusively on general

GDP forecast. Thus a correlation with trade must be used at least for a transitional period

until the Italian economy stabilises, reaching a new equilibrium. It is clear that this

behaviour will not last forever, and once the economy stabilises the relationship between

GDP and trade growth will return to equilibrium.

Economic experts are struggling to agree on precisely what will happen in the Italian

economy (See Table 3.3), although the IMF have assumed that there will be a return to a

definitive relationship between container demand and GDP growth almost immediately, it

would seem wise to defer this recovery a year or two.

Table 3.3: Comparison of GDP Growth Forecasts for Italy

There remains some considerable uncertainty about the short-term economic position of

Italy, as evidenced by the following action taken by Italian banks, OECD and the European

Commission, all of which are less optimistic than the IMF at present about the short-term

Italian economic position:

Italy's central bank slashed 2015 growth forecast and believes deflation will persist

throughout 2015;

Italian Government forecasts 0.6 percent growth this year, while the Organisation for

Economic Cooperation and Development projects growth of 0.2 percent and the

International Monetary Fund forecasts 0.8 percent;

quantitative easing is expected to boost economic growth-bond purchase program which

would provide space for reforms.

Table 3.3 Comparison of GDP Growth Forecasts For Italy

Bank Units 2014 2015 2016 2017 2018 2019

ISTAT - Bank of Italy % change -0.30 0.50 1.00 na na na

European Commission % change -0.40 0.60 1.10 na na na

OECD % change -0.40 0.20 1.00 na na na

IMF % change -0.17 0.85 1.30 1.25 1.05 1.05


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EU reports suggest that the further contraction in the economy in 2014 will result in an

acceleration of external demand to drive a fragile recovery during 2015, with higher import

prices keeping inflation positive. Private consumption has been recovering slowly since

2013. As global trade lost momentum, Italy’s exports did not trigger the anticipated

recovery in equipment investment as quickly as expected and a weak recovery is likely in

2015. There is, however, potential for strengthening in 2016 with this being driven by

improving external demand and a lower exchange rate, which should result in higher exports

and an increase in equipment investment. The country is in a weak economic situation

where the historical indicators of high levels of unemployment (currently 12.6 per cent) and

low inflation impede the increase in domestic demand.

The Bank of Italy has reported growth in consumption and disposable income, but not in

investment. Credit conditions are gradually improving, but there is still high perceived credit

risk. Interest rates for new loans are 30 basis points above the euro-area. Recovery depends

on investment recovery and economic policies (an expansive stance on monetary

policy/expansionary government measures, fiscal consolidation and the 2015 Stability Law;

adjusts public finances in pace to suit cyclical economic conditions), but forecasts are still

subject to “considerable uncertainty”.

In summary, the Italian economic difficulties need to be addressed, but once addressed

further growth is expected. This is a good thing for the Europa Platform Project, which

should be ready in time to take advantage of this expected recovery.

3.5 REGIONAL (NORTHERN TYRRHENIAN) ITALIAN FORECAST TO 2035

As has been evidenced in the preceding sub-section, the relationship between GDP growth

and trade growth in the immediate short-term is subject to question. It is reasonable to

assume therefore that the short-term forecast to 2017 should be based on the Italian export

demand rather than the relationship between GDP and trade growth, although the latter

methodology will return from 2018 for the balance of the forecast period.

Demand forecasts will be developed at the regional level. Three macro-economic cases

(Base, Low and High) will be developed for the period to 2035, with this allowing an

identification of the Base Case for the Italian region under review, taking into account all

competing facilities in the region (such as Genoa and La Spezia) and also the core likely

range of macro-economic outcomes. This will define the general background against which

the position of the specific Livorno terminal will be assessed.

In addition to macro-economic drivers, the analysis will focus on the further development of

vessel sizes on key

trades, the process of port concentration (balance of supply and demand) and specific

regional issues. The focus of this aspect of the work will be on the integration of macro-

economic factors with specific containerisation and other issues, such as the increase in

vessel sizes on shipping line services calling in the region, in order to develop informed

views of market developments for each shipping sector. Regional local, transit and

transshipment forecasts will be developed.

The inter-dependencies within the world’s economy and foreign trade mean that it is

necessary to consider the global and regional economic scenarios that are likely to underpin

economic growth, trade and hence port demand both within the region and in the broader

relay context. Three cases have been developed:

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Base Case – continued growth over 2015-19, as forecast by the economic experts. Since

there is a disagreement between IMF, OECD, The European Commission and Italian

Banks (ISTAT) an average of what they all report will be used to form the expected

growth rates. From the current perspective, the Base Case remains the most likely

outcome;

Low Case – Continued Instability – recovery is slower and weaker, and is followed by

a slower pace of expansion in the medium term. Continued uncertainty, posed in

particular by financial instability in parts of the euro area, manifests in a sharper

downturn in 2015;

High Case: Enhanced-Recovery – this assumes a stronger performance in 2015 and

more positive subsequent development, followed by a somewhat higher rate of economic

expansion in the medium term.

In all three cases, it is envisaged that economic and trade recovery will be gradual due to

anticipated continued restraints on credit, as banks rebuild their balance sheets, and the

dampening effect that fiscal measures to repay government debt exert on consumer

expenditure growth.

Of course, any series of projections of macro-economic conditions can only offer a range of

possible developments and, in any particular year, there will be volatility around these

conditions. Nevertheless, for current purposes, this simplified perspective provides a

suitable basis for projections. It will be developments at this macro-economic level that are

critical in determining the position for the regional economies.

The essential global and regional conditions for the three cases on which the economic

growth forecasts in this study are based are as follows:

Base Case

Economic fall-out of global financial crisis continues to settle over 2015-16;

Government and financial-sector imbalances are addressed, and credit availability

improves;

Economic growth and free trade policies in the EU;

Return to long-term growth of US economy, accompanied by free-trade policies;

Euro zone pressures intensify, but are managed;

Economic and currency stability in East Asia;

Political stability, economic expansion, continuing structural reforms and successful

management of economic overheating in China;

Continued deregulation, restructuring and revitalisation of the Japanese economy;

Oil price stable at relatively medium levels;

Stable trade framework and continued foreign direct investment in emerging and

developing economies;

Deceleration of decline in the economy related to the specific terminal followed by return

to expansion path and renewed import-based growth;

Some progress on economic reform in Italy.

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Low Case: Continued Instability

Weak short-term outlook manifests in sharp deceleration in 2015-16 growth relative to

base case, and subsequent expansion continues to be affected by longer-term

repercussions of the recession;

Restoration of government and financial-sector balances continues to be difficult, and

restrictions on credit availability remain at least in the short term;

Slower growth in the EU economies;

More prolonged slowdown in US, leading to slower world growth;

Renewed inflexibility of economic management and irreconcilable policy objectives in

euro zone;

Economic uncertainty in China;

More prolonged stagnation of the Japanese economy, with inadequate structural

adjustment;

Uncertain and volatile development of oil prices;

More uncertain trade and foreign investment climate in emerging and developing

economies;

The economy related to the specific terminal under review records more sluggish

development;

Continued uncertainty in Italian economy.

High Case: Enhanced Recovery

Economic fall-out of global financial crisis settles more rapidly and pace of subsequent

growth is stronger and sustained at a higher level;

Restoration of government and financial-sector balances proceeds more successfully, and

credit availability improves more rapidly;

Economic growth and free trade policies in the EU;

Stronger return to long-term growth of US economy, stimulating greater expansion in

trade and eased credit conditions;

Euro zone pressures are managed;

Accelerated economic and currency stability in East Asia;

Political stability, economic expansion, continuing structural reforms and successful

management of economic overheating in China;

Continued deregulation, restructuring and revitalisation of the Japanese economy;

Oil price stable at relatively high levels;

Stable trade framework and continued direct foreign investment in emerging and

developing economies;

Earlier and steeper recovery of the economy related to the particular facility under

review, and renewed import-based growth;

Stabilisation in Italian economy and easing of debt crisis.

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At no stage during the scope of the analysis has any commercial initiative, pricing policy etc.

been assumed to improve a particular terminals market share or increase the expected

demand forecast related to that terminal.

Over this period as a whole, the ratio between GDP growth and trade growth has been 1 :

4.16 (see Table 3.4 including 2009-10 and 2012-14 and Figure Figure 3.6), with the pre-

economic crash recording a ratio of 1 : 4.02 between 2001 and 2006. It is expected that the

ratio will bounce back to 1 : 3.00 by 2017/18, before returning to a more realistic continental

level of 1 : 2.00 from 2020.

Table 3.4: Italy – GDP and Northern Tyrrhenian Import/Export Container Port Demand – Annual Real % Change

Table 3.4

Italy: GDP and Ligurian Import/Export Container Port Demand

- annual real % change

GDP I/E Port Demand

2000 3.7

2001 1.8 3.91

2002 0.5 3.49

2003 0.1 1.53

2004 1.5 4.87

2005 0.6 5.93

2006 1.8 4.37

2007 1.5 7.30

2008 -1.2 1.31

2009 -5.5 -15.24

2010 1.7 14.82

2011 0.5 5.00

2012 -2.4 -1.34

2013 -1.9 0.81

2014 -0.3 2.58


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Figure 3.6: GDP and Northern Tyrrhenian Import/Export Container Port Demand

In considering the short term development of demand it is realistic to assume that this more

recent ratio will continue to be manifest in the local market once a return to equilibrium has

been made, although some moderation is anticipated.

This methodological allows demand forecasts to be generated for the Italian economy and

the range of developments are summarised in Table 3.5. The approach taken is to summarise

independent forecasts that have been prepared for the development of Italian GDP over the

period to 2019 and to take an average. These have been taken from the OECD Italian

outlook and from similar projections published by the IMF. In addition, the projections

offered by the European Commission and The Italian Banks (ISTAT) have also been

included. All of these projections have been presented since 2014 and can be regarded as

current. They clearly factor-in current uncertainties.

Table 3.5: Assumed Percentage GDP Growth and Multipliers for Italian Local Regional Forecast – Base Case

Table 3.5

Assumed Percentage GDP Growth and Multipliers for Italian Local Regional Forecast - Base Case

2012 2013 2014 2015 2016 2017 2018 2019 2020-24 2025-2029 2030-2035

GDP % Grow th -2.37 -1.85 -0.32 0.54 1.20 1.15 1.10 1.05 1.00 1.50 2.00

Local % Grow th -1.34 0.81 2.58 2.73 2.38 2.00 1.33 1.00

% Ex port Grow th 2.14 0.13 1.99 2.50 3.00 3.50

Multiplier 3.18 -1.50 -0.83 4.65 2.50 3.04 3.00 2.50 2.00 2.00 2.00

NB: it is assumed that forecasts w ill be based on ex port figures for 2015-2017 and GDP grow th for the balance of the period


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The next step is to apply these GDP projections to the known 2014 import/export volumes

for Italy by means of the co-efficient (multiplier) identified in the recent past. This is then

reduced to a more sustainable level from 2020 where the multiplier is adjusted to a similar

level as currently experienced in north Continent ports. This gives a conservative estimate

of the total development of demand over the forecast period. This rate of change is also

applied directly to the overall development of demand in the four ports that are in direct

competition (Genoa, La Spezia, Livorno and Savona). Given the limited role of

transshipment in these ports, this is a realistic assumption. This allows an estimation of the

total potential market that Livorno will be competing for over the period to 2035 to be

estimated.

Demand shown in Table 3.4 corresponds to local Italian import/export volumes in TEU for

the Northern Tyrrhenian Sea region (including Livorno, Genoa, La Spezia and Savona).

Despite attempts in particular by La Spezia and Genoa to extend the reach of their terminals

by railway developments, at present the number of containers that ‘transit’ a Northern

Tyrrhenian port to another country in central Europe, such as Austria, Switzerland or

Germany, is so small as to be insignificant. It is therefore reasonable to assume that all the

units included in the regional demand forecast here shown are from/to points in Italy.

For the future, however, the developments at Europa Platform will allow the future

reorientation of cargo to include transit cargo to/from central European countries.

It is also important to try and assess where within Italy these units originate or are destined

to. In Section II, the current import/export volumes has been assessed for the whole of Italy

by region and this data will again be used to provide details of which Italian region the local

cargo for this forecast is likely to have come from or be destined to (it is assumed that the

same ratio will apply throughput the forecast period). The data shown has adjusted each

regional share to make it more specific to the Northern Tyrrhenian Sea port reach. To this

end units to/from Veneto, Trentino and Friuli-Venezia Giulia are taken out (these regions are

far more likely to be served via Adriatic ports) and the balance of the regions weighted

between the remaining seven Italian regions that are within easy reach of the Northern

Tyrrhenian Sea ports.

The regional demand forecast by region is shown in Table Table 3.6

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Table 3.6: Forecast Total Northern Tyrrhenian Import/Export Regional Container Demand to 2035

Table 3.6

Forecast Total Ligurian Import/Export Regional Container Demand to 2035

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Base Case

GDP 0.54 1.20 1.15 1.10 1.05 1.00 1.00 1.00 1.00 1.00 1.50 1.50 1.50 1.50 1.50 2.00 2.00 2.00 2.00 2.00 2.00

Multiplier 4.65 2.50 3.04 3.00 2.50 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00

000TEUs 4135.2 4327.4 4435.5 4570.5 4707.7 4825.3 4921.8 5020.3 5120.7 5223.1 5327.6 5434.1 5542.8 5653.7 5766.7 5882.1 5999.7 6119.7 6242.1 6366.9 6494.3 6624.2

Low Case

GDP 0.40 0.80 0.80 0.70 0.75 0.75 0.75 0.75 0.75 0.75 1.10 1.10 1.10 1.10 1.10 1.60 1.60 1.60 1.60 1.60 1.60

Multiplier 2.75 1.63 2.25 3.00 2.50 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00

000TEUs 4135.2 4248.9 4318.0 4415.1 4547.6 4661.3 4754.5 4849.6 4946.6 5045.5 5146.4 5249.3 5354.3 5461.4 5570.6 5682.0 5795.7 5911.6 6029.8 6150.4 6273.4 6398.9

High Case

GDP 0.75 1.50 1.50 1.50 1.45 1.45 1.45 1.45 1.45 1.45 1.90 1.90 1.90 1.90 1.90 2.40 2.40 2.40 2.40 2.40 2.40

Multiplier 6.67 4.67 5.33 3.00 2.50 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00

000TEUs 4135.2 4410.9 4616.7 4862.9 5008.8 5134.1 5236.7 5341.5 5448.3 5557.3 5668.4 5781.8 5897.4 6015.4 6135.7 6258.4 6383.6 6511.2 6641.4 6774.3 6909.8 7048.0


Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 3.7: Forecast Total Northern Tyrrhenian Regional Container Demand by Region to 2035 (‘000TEUs)

Table 3.7

Forecast Total Ligurian Regional Container Demand by Region to 2035

- '000TEUs

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Base Case

Toscana 374.0 391.4 401.2 413.4 425.8 436.4 445.2 454.1 463.1 472.4 481.9 491.5 501.3 511.3 521.6 532.0 542.6 553.5 564.6 575.9 587.4 599.1

Liguria 490.1 512.8 525.7 541.7 557.9 571.9 583.3 595.0 606.9 619.0 631.4 644.0 656.9 670.0 683.4 697.1 711.0 725.2 739.8 754.5 769.6 785.0

Emilia Romagna 708.3 741.2 759.7 782.9 806.4 826.5 843.0 859.9 877.1 894.6 912.5 930.8 949.4 968.4 987.8 1007.5 1027.7 1048.2 1069.2 1090.6 1112.4 1134.6

Piemonte 438.2 458.6 470.1 484.4 498.9 511.4 521.6 532.0 542.7 553.5 564.6 575.9 587.4 599.2 611.1 623.4 635.8 648.6 661.5 674.8 688.3 702.0

Valle d'Aosta 7.2 7.5 7.7 7.9 8.2 8.4 8.6 8.7 8.9 9.1 9.3 9.5 9.6 9.8 10.0 10.2 10.4 10.6 10.9 11.1 11.3 11.5

Lombardia 1427.5 1493.9 1531.2 1577.8 1625.2 1665.8 1699.1 1733.1 1767.7 1803.1 1839.2 1875.9 1913.5 1951.7 1990.8 2030.6 2071.2 2112.6 2154.9 2198.0 2241.9 2286.8

Others 689.9 721.9 740.0 762.5 785.4 805.0 821.1 837.5 854.3 871.3 888.8 906.5 924.7 943.2 962.0 981.3 1000.9 1020.9 1041.3 1062.2 1083.4 1105.1

Total 4135.2 4327.4 4435.5 4570.5 4707.7 4825.3 4921.8 5020.3 5120.7 5223.1 5327.6 5434.1 5542.8 5653.7 5766.7 5882.1 5999.7 6119.7 6242.1 6366.9 6494.3 6624.2

Low Case

Toscana 374.0 384.3 390.5 399.3 411.3 421.6 430.0 438.6 447.4 456.3 465.5 474.8 484.3 494.0 503.8 513.9 524.2 534.7 545.4 556.3 567.4 578.8

Liguria 490.1 503.5 511.7 523.2 538.9 552.4 563.5 574.7 586.2 597.9 609.9 622.1 634.5 647.2 660.2 673.4 686.8 700.6 714.6 728.9 743.5 758.3

Emilia Romagna 708.3 727.8 739.6 756.2 778.9 798.4 814.4 830.7 847.3 864.2 881.5 899.1 917.1 935.5 954.2 973.3 992.7 1012.6 1032.8 1053.5 1074.6 1096.0

Piemonte 438.2 450.3 457.6 467.9 481.9 494.0 503.9 513.9 524.2 534.7 545.4 556.3 567.4 578.8 590.4 602.2 614.2 626.5 639.0 651.8 664.8 678.1

Valle d'Aosta 7.2 7.4 7.5 7.7 7.9 8.1 8.3 8.4 8.6 8.8 9.0 9.1 9.3 9.5 9.7 9.9 10.1 10.3 10.5 10.7 10.9 11.1

Lombardia 1427.5 1466.8 1490.6 1524.2 1569.9 1609.1 1641.3 1674.1 1707.6 1741.8 1776.6 1812.2 1848.4 1885.4 1923.1 1961.5 2000.8 2040.8 2081.6 2123.2 2165.7 2209.0

Others 689.9 708.8 720.3 736.5 758.6 777.6 793.2 809.0 825.2 841.7 858.5 875.7 893.2 911.1 929.3 947.9 966.9 986.2 1005.9 1026.0 1046.6 1067.5

Total 4135.2 4248.9 4318.0 4415.1 4547.6 4661.3 4754.5 4849.6 4946.6 5045.5 5146.4 5249.3 5354.3 5461.4 5570.6 5682.0 5795.7 5911.6 6029.8 6150.4 6273.4 6398.9

High Case

Toscana 374.0 398.9 417.6 439.8 453.0 464.4 473.6 483.1 492.8 502.6 512.7 522.9 533.4 544.1 554.9 566.0 577.4 588.9 600.7 612.7 625.0 637.5

Liguria 490.1 522.7 547.1 576.3 593.6 608.4 620.6 633.0 645.7 658.6 671.8 685.2 698.9 712.9 727.1 741.7 756.5 771.6 787.1 802.8 818.9 835.3

Emilia Romagna 708.3 755.5 790.8 833.0 857.9 879.4 897.0 914.9 933.2 951.9 970.9 990.3 1010.1 1030.3 1051.0 1072.0 1093.4 1115.3 1137.6 1160.3 1183.5 1207.2

Piemonte 438.2 467.5 489.3 515.4 530.8 544.1 555.0 566.1 577.4 588.9 600.7 612.7 625.0 637.5 650.2 663.3 676.5 690.0 703.8 717.9 732.3 746.9

Valle d'Aosta 7.2 7.7 8.0 8.5 8.7 8.9 9.1 9.3 9.5 9.7 9.9 10.1 10.3 10.5 10.7 10.9 11.1 11.3 11.6 11.8 12.0 12.3

Lombardia 1427.5 1522.7 1593.8 1678.8 1729.1 1772.4 1807.8 1844.0 1880.8 1918.5 1956.8 1996.0 2035.9 2076.6 2118.1 2160.5 2203.7 2247.8 2292.7 2338.6 2385.4 2433.1

Others 689.9 735.8 770.2 811.3 835.6 856.5 873.6 891.1 908.9 927.1 945.6 964.5 983.8 1003.5 1023.6 1044.1 1064.9 1086.2 1108.0 1130.1 1152.7 1175.8

Total 4135.2 4410.9 4616.7 4862.9 5008.8 5134.1 5236.7 5341.5 5448.3 5557.3 5668.4 5781.8 5897.4 6015.4 6135.7 6258.4 6383.6 6511.2 6641.4 6774.3 6909.8 7048.0


Doc. No. 14-1394-H1 Rev. 0 – March 2015


3.6 TRANSIT FORECAST TO 2035

Although there are no current transit volumes from Northern Tyrrhenian ports to countries

such as Austria, Switzerland and south Germany, the development of efficient and reliable

intermodal links from any of the Northern Tyrrhenian Sea ports, coupled with new terminal

facilities and deep water designed to handle the largest class of vessels suggest that it is

possible that the better developed terminals (of which Livorno will be one) will have the

possibility of attracting shipping lines that would consider routing their central European

cargo via the Northern Tyrrhenian Sea instead of the current practise of shipping to these

central destinations from ports in North Europe, or even on the Baltic Sea. Figure 3.6

illustrates the geographical location of the countries in question. Switzerland and Austria are

the most accessible from Liguria together with south Germany although there are some

challenges in convincing consignees to route their cargo via anything other than a German

port. Other more distant central European countries may be considered but are unlikely to be

major volumes due distances involved.

Figure 3.7: Relevant Central European Transit Countries

In order to be able to provide a demand forecast for transit volumes, it is first necessary to

assess the volumes of containers that are currently being routed in other ways and to assess

the likely range of countries that the Northern Tyrrhenian Sea ports can reach. Details of the

costs associated with the latter is included in the built-up cost analysis review reported in

Section VII, but obtaining details of the combined central European transit volumes of north

European, Baltic and Black Sea ports can be problematic. Fortunately, Ocean Shipping

Consultants has done enough detailed work and assessments for ports in all these areas and is

able to provide a reasonable assessment of these total transit volumes and how they are

routed. This data can then be used to predict the likely share of this volume that Northern

Tyrrhenian Sea ports could attract in the future.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 3.8 examines the GDP growth developments expected of potential central European

transit countries.

Table 3.8: Forecast Regional GDP Development for Potential Central European Transit Volumes to 2035 – Annual Percentage Change

Table Table 3.9 now assesses the ratio between the forecast regional GDP growth figures

and the expected import/export demand, based on historical data obtained from ports in

Germany, Belgium, The Netherlands and The Baltic States, all of which have shipped

containers to central Europe in recent years. These figures can then be used to develop a

total forecast figure for the central European transit volumes.

It remains extremely unlikely that any German cargo will be routed via anything but north

European ports and so the total central European volumes that could possibly be routed via

Northern Tyrrhenian Sea ports concentrates on cargo for Austria, Switzerland and Slovenia,

with some limited potential from Hungary, Slovakia and the Czech Republic.

Table 3.8

Forecast Regional GDP Development For Potential Central European Transit Volumes to 2035

- annual percentage change

2014 2015 2016-2020 2021-2025 2026-2030 2031-2035

Base Case

Czech Rep. 1.5 2.1 2.3 1.1 1.2 1.2

Slov ak Rep. 2.4 2.7 3.1 3.0 3.2 3.4

Austria 1.0 1.9 1.5 1.8 1.9 2.0

Slov enia 1.4 1.4 1.8 1.9 2.0 2.0

Sw itzerland 1.3 1.6 1.9 1.8 1.8 2.0

Hungary 2.8 2.3 1.8 1.8 1.9 2.0

Central Europe 1.7 2.0 2.1 1.9 2.0 2.1

Low Case

Czech Rep. 1.5 2.1 2.2 1.0 1.1 1.1

Slov ak Rep. 2.4 2.7 2.9 2.8 3.0 3.2

Austria 1.0 1.9 1.4 1.7 1.8 1.9

Slov enia 1.4 1.4 1.7 1.8 1.9 1.9

Sw itzerland 1.3 1.6 1.4 1.7 1.7 1.9

Hungary 2.8 2.3 1.6 1.6 1.7 1.8

Central Europe 1.7 2.0 1.9 1.8 1.9 2.0

High Case

Czech Rep. 1.5 2.1 2.5 1.2 1.3 1.3

Slov ak Rep. 2.4 2.7 3.3 3.2 3.4 3.6

Austria 1.0 1.9 1.6 1.9 2.0 2.1

Slov enia 1.4 1.4 1.9 2.0 2.1 2.1

Sw itzerland 1.3 1.6 2.0 1.9 1.9 2.1

Hungary 2.8 2.3 2.0 2.0 2.1 2.2

Central Europe 1.7 2.0 2.2 2.0 2.1 2.2

Source: IMF, Ocean Shipping Consultants

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 3.9: Forecast Regional GDP – Import/Export Container Demand to 2035 - Ratio

Table Table 3.10 provides details of the unconstrained central European forecast that

Northern Tyrrhenian ports will take a share of once fully developed and competitive.

However, determining the share of this volume that could be re-routed differently to the way

that it is currently routed is largely subjective, although assessing major shipping lines future

strategies and the revised capabilities of newly developed ports in the region (especially

Livorno and Vado Ligure) in comparison to existing terminal facilities and possible

congestion in some north European ports can all be helpful as determining factors.

Table 3.9

Forecast Regional GDP : Import/Export Container Demand to 2035

- ratio

2012-2015 2016-2020 2021-2025 2026-2030 2031-2035

Czech Rep. 2.2 2.0 2.0 2.0 2.0

Slov ak Rep. 2.4 2.1 2.1 2.1 2.1

Austria 1.8 1.8 1.8 1.8 1.8

Slov enia 1.8 1.8 1.8 1.8 1.8

Sw itzerland 1.9 1.9 1.8 1.7 1.7

Hungary 2.1 2.0 1.8 1.8 1.8

Percentage of demand ex pansion generated by one per cent of GDP grow th


Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 3.10: Forecast Regional Central European Container Demand to 2035 – ‘000TEUs

Figure Figure 3.8 provides an assessment of the likely transit volumes based on the

following developing shares. These shares are derived based on the competitive position of

the port (Section V) and the Built-Up Cost Analysis (Section VII). Despite planned

developments in the Northern Tyrrhenian Sea ports it remains unlikely that the initial share

of traffic will be substantial and that any traffic will be slow to develop. The following

figures reflect the likely share of each central European market under review:

Czech Republic – 0.5 per cent share in 2020 to be increased to 1.0 per cent in 2025; 1.5

per cent in 2025 and 2.0 per cent in 2035;

Slovakia – 0.5 per cent share in 2020 and maintained for the balance of the forecast

period;

Austria – 40.0 per cent share in 2020 to increase to 45.0 per cent in 2025; 50.0 per cent

in 2030 and 2035;

Table 3.10

Forecast Regional Central European Container Demand to 2035

- '000TEUs

2015 2020 2025 2030 2035

Base Case

Czech Rep. 352.9 443.6 494.6 556.9 627.0

Slov ak Rep. 279.5 383.1 520.0 719.8 1016.2

Austria 632.6 722.7 847.7 1002.9 1196.9

Slov enia 189.4 246.2 287.8 338.4 405.6

Sw itzerland 257.6 303.4 354.3 412.0 486.9

Hungary 449.9 527.6 618.8 732.1 873.8

Total 2161.9 2626.8 3123.2 3762.1 4606.4

Low Case

Czech Rep. 352.9 438.2 485.6 541.4 603.6

Slov ak Rep. 279.5 375.6 499.8 678.4 939.1

Austria 632.6 717.6 834.0 978.2 1157.3

Slov enia 189.4 242.0 272.2 319.2 382.8

Sw izerland 257.6 291.7 339.2 391.1 458.5

Hungary 449.9 518.5 597.6 694.8 814.9

Total 2161.8 2583.6 3028.4 3603.1 4356.2

High Case

Czech Rep. 352.9 449.1 503.8 572.8 651.3

Slov ak Rep. 279.5 390.7 540.9 763.6 1099.3

Austria 632.6 727.9 861.5 1028.2 1237.8

Slov enia 189.4 251.1 293.7 343.6 412.3

Sw itzerland 257.6 307.4 363.7 426.4 508.1

Hungary 449.9 536.9 640.7 771.4 936.7

Total 2161.8 2663.2 3204.4 3905.9 4845.4


Doc. No. 14-1394-H1 Rev. 0 – March 2015


Slovenia – an initial 40.0 per cent share in 2020 to increase to 45.0 per cent in 2025; 50.0

per cent in 2030 and 2035;

Switzerland – an initial 40.0 per cent share in 2020 to increase to 45.0 per cent in 2025;

50.0 per cent in 2030 and 2035;

Hungary – 0.5 per cent share in 2020 and maintained for the balance of the forecast

period.

Figure 3.8: Potential Central European Volumes via Northern Tyrrhenian Ports (Base Case)

Volumes are conservative given the uncertain nature of the routing of the transit volumes

over time and the many factors in play – particularly related to shipping lines strategy – that

can change the routing of this cargo. In the Base Case, it is reasonable to assume that

volumes can increase to a combined volume of 515,728TEU in 2020; 681,045TEU in 2025;

892,229TEU in 2030 and 1,066,680TEU in 2035 the vast majority of the volumes being

to/from Austria, Switzerland and Slovenia.

3.7 TRANSSHIPMENT FORECAST TO 2035

It is worth noting from the outset that with spare capacity in Taranto and other established

major transshipment hubs located in the central Mediterranean such as Gioia Tauro and

Marsaxlokk in particular, the chances of even a deep-water facility taking a substantial share

of the total transshipment volumes for the region are remote. Indeed the new Livorno

facility will concentrate primarily on local import/export volumes plus some additional

transit volumes to/from some central European countries.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Transshipment Forecast Methodology

With regard to import/export volumes (hinterland) cargoes, the pace of economic

development and pace of globalisation of the economy are central considerations. In the

case of transshipment, the position is more complex. Whereas non-transshipment container

handling demand is directly related to economic development in the port hinterland, hub-

and-spoke transshipment demand is related to regional import/export container handling

demand, and hence economic development in the transshipment region, as well as the

decisions of carriers to optimise the economics of operating large containerships.

The development of regional transshipment demand will be determined by developments

both within the regional market and also by external factors, such as:

the ability of a terminal to handle large container vessels (>10,000TEU capacity);

the respective strategies of the main shipping lines calling at the terminal.

The level of future regional hub and spoke demand will be a function of local demand, the

size of typical consignments and the adequacy of regional port infrastructure. The specific

strategies and investments of the major shipping lines will be a critical input.

Hub-and-spoke transshipment

As ship sizes continue to increase and shipping-line mergers and alliances multiply, so the

economic advantages of reducing the number of port calls for each string become more

pronounced. The economic imperative for keeping the number of port calls to a minimum

flows from the combination of the high capital costs of containership construction and the

time penalties involved in calling at numerous ports with small consignment sizes and

throughput volumes. The trend to fewer port calls will continue to favour the growth of

large, centrally-placed hub ports within port regions. In this respect, Northern Tyrrhenian

Sea ports are not as well placed as ports such as Gioia Tauro and Marsaxlokk.

Relay transshipment

The relay sector is driven by different factors, although, from a terminal-operations

perspective, the requirement to move containers between vessels is similar. The aim of relay

transshipment is to extend service coverage and flexibility by linking two or more mainline

services – typically east-west services with north-south services. This enables carriers to

increase the number of revenue-earning legs on their larger vessels. Increasingly

comprehensive service networks are boosting the opportunities and scope for relay

transshipment, although any relay transshipment operation is driven by specific operators

(shipping lines) looking to combine services. With this in mind, it remains extremely

unlikely that Livorno (or other Northern Tyrrhenian Sea ports) will be able to entice a major

operator to start performing any ‘relay’ operations and should really only be considered as a

remote, upside potential.

For Central Mediterranean hubs per se, the type of transshipment typically witnessed

is primarily ‘hub and spoke’, although based on 2014 data there is also 17 per cent of

this transshipment volumes that is considered as ‘relay’ (although only three per cent

in Northern Tyrrhenian Sea ports). This is mainly due to the geographical preference

of most lines to link two mainline services, one from East-West rotations and one from

North-South rotations, at transshipment hubs in the West Mediterranean, rather than

the central Mediterranean.

Hub and Spoke Transshipment Forecasts

Doc. No. 14-1394-H1 Rev. 0 – March 2015


The level of demand for hub and spoke container transshipment in the region under review

will be a function of the overall development of demand in the individual markets and the

relation between direct and feeder container movements. The approach taken is to initially

identify the anticipated scale of overall demand growth in each of the target feeder markets

on the basis of coefficients between GDP and container trade and to consider how these will

develop under the three macro-economic cases developed in this report. By the very nature

of the feeders deployed particularly in the Northern Tyrrhenian Sea, but even at the main

central Mediterranean hubs, this is heavily influenced by the Italian market, with larger

numbers of feeder services covering the Adriatic, Tyrrhenian Sea and Northern Tyrrhenian

Sea.

A review of the proportional importance of feedered containers in the current market place is

then undertaken and an estimate of how the importance of feedering will develop in the

forecast period for each market. This is then used to project the level of containers shipped

indirectly into these markets.

The final step is to multiply these containers by a factor of two to reflect the double port

move involved in transshipment. This generates the resulting level of hub and spoke

transshipment that can be anticipated for the region, which represents a core aspect of

regional demand growth.

Table 3.11 details the hub and spoke demand forecast for the central Mediterranean ports,

including the Northern Tyrrhenian Sea ports. Ports in the latter region are set to increase

transhipment volumes from 0.35m TEU in 2014 to between 0.43-0.47m TEU in 2020; 0.50-

0.53m TEU in 2025; 0.58-0.62m TEU in 2030 and 0.67-0.72m TEU in 2035.

Attention is now turned to the share of the relay transhipment volumes.

Relay Transshipment Forecasts

The development of relay demand is more problematic than the hub and spoke sector. The

transfer of containers between discrete deep-sea services (usually operated by the same

shipping line) is dependent upon the following:

the scale of demand growth on the potential relay trades;

the relative economics of relayed versus direct services;

the individual network considerations and opportunities open to a specific operator.

Although a top-down estimate can be made concerning the overall potential in this market

sector, it will be the decisions made by the major lines that are the primary drivers of this

part of the market. It is clear that there are few lines with the critical mass to allow complex

interlining in the region and those which have the capacity have made heavy terminal

commitments. Based on this conclusion, it would seem highly unlikely that Northern

Tyrrhenian Sea ports will handle any ‘relay’ volumes and what they could do should only be

considered as ‘upside potential’.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 3.11: Forecast Regional Feeder Demand to 2035 – ‘000TEUs

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Base Case

N. Ty rrhenian ports 352,3 368,7 377,9 389,4 402,2 415,5 429,0 443,0 457,4 472,2 487,6 502,2 517,3 532,8 548,8 565,2 582,2 599,7 617,6 636,2 655,3 674,9

C.Med hubs 5156,7 5396,3 5531,2 5699,6 5887,7 6082,0 6279,6 6483,7 6694,4 6912,0 7136,6 7350,7 7571,3 7798,4 8032,4 8273,3 8521,5 8777,2 9040,5 9311,7 9591,0 9878,8

Total TEUs 2754,5 2882,5 2954,6 3044,5 3145,0 3248,7 3354,3 3463,3 3575,9 3692,1 3812,1 3926,5 4044,3 4165,6 4290,6 4419,3 4551,9 4688,4 4829,1 4973,9 5123,2 5276,8

Port Mov es 5509,0 5765,0 5909,1 6089,0 6289,9 6497,5 6708,6 6926,7 7151,8 7384,2 7624,2 7852,9 8088,5 8331,2 8581,1 8838,6 9103,7 9376,8 9658,1 9947,9 10246,3 10553,7

High Case


C.Med hubs 5156,7 5500,5 5757,2 6064,2 6264,3 6471,1 6681,4 6898,5 7122,7 7354,2 7593,2 7821,0 8055,7 8297,3 8546,2 8802,6 9066,7 9338,7 9618,9 9907,4 10204,7 10510,8

Total TEUs 2754,5 2938,1 3075,3 3239,3 3346,2 3456,6 3568,9 3684,9 3804,7 3928,3 4056,0 4177,7 4303,0 4432,1 4565,1 4702,0 4843,1 4988,4 5138,0 5292,2 5450,9 5614,4

Port Mov es 5509,0 5876,3 6150,5 6478,5 6692,3 6913,2 7137,8 7369,8 7609,3 7856,7 8112,0 8355,4 8606,0 8864,2 9130,1 9404,0 9686,1 9976,7 10276,0 10584,3 10901,8 11228,9

Low Case


C.Med hubs 5156,7 5298,5 5384,6 5505,8 5687,5 5875,1 6066,1 6263,2 6466,8 6677,0 6894,0 7100,8 7313,8 7533,2 7759,2 7992,0 8231,8 8478,7 8733,1 8995,1 9264,9 9542,9

Total TEUs 2754,5 2830,3 2876,2 2941,0 3038,0 3138,3 3240,3 3345,6 3454,3 3566,6 3682,5 3793,0 3906,7 4023,9 4144,7 4269,0 4397,1 4529,0 4664,9 4804,8 4948,9 5097,4

Port Mov es 5509,0 5660,5 5752,5 5881,9 6076,0 6276,5 6480,5 6691,1 6908,6 7133,1 7365,0 7585,9 7813,5 8047,9 8289,3 8538,0 8794,1 9058,0 9329,7 9609,6 9897,9 10194,8


Doc. No. 14-1394-H1 Rev. 0 – March 2015


3.8 CONCLUSION

Table 3.12 and Figure 3.9 combine the forecast volumes from 2014 to 2035 for Northern

Tyrrhenian Sea ports including local, transit and ‘hub and spoke’ transshipment volumes.

Figure 3.9: Forecast Total Northern Tyrrhenian Sea Port Demand (Base Case), ‘000 TEUs

Volumes are expected to increase from 4.49m TEU in 2014 to between 5.68-6.21m TEU in

2020; 6.40-7.01m TEU in 2025; 7.22-7.92m TEU in 2030 and 7.86-8.87m TEU in 2035.

Figure 3.10 and Figure 3.11 assess the supply/demand balance for the region both including

transshipment in the total demand and alternatively with the transshipment portion taken out.

The supply/demand balance is calculated on the total capacity expected in the region, but

also on 80 per cent of the total capacity. It is well recognised in the industry that when a port

facility reaches 80 per cent utilisation, the port can start suffering some operational

difficulties and so it is important for ports not to get to this level of utilisation if it can be

avoided.

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Table 3.12: Forecast Total Northern Tyrrhenian Port Demand to 2035 – ‘000TEUs

Table 3.12

Forecast Total Ligurian Port Demand to 2035

- '000TEUs

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Base Case

Import/Ex port 4135.2 4327.4 4435.5 4570.5 4707.7 4825.3 4921.8 5020.3 5120.7 5223.1 5327.6 5434.1 5542.8 5653.7 5766.7 5882.1 5999.7 6119.7 6242.1 6366.9 6494.3 6624.2

Transit 0.0 0.0 0.0 0.0 171.9 343.8 515.7 548.8 581.9 614.9 648.0 681.0 723.3 765.5 807.8 850.0 892.2 927.1 962.0 996.9 1031.8 1066.7

Transshipment 352.3 368.7 377.9 389.4 402.2 415.5 429.0 443.0 457.4 472.2 487.6 502.2 517.3 532.8 548.8 565.2 582.2 599.7 617.6 636.2 655.3 674.9

Total 4487.5 4696.0 4813.4 4959.9 5281.8 5584.7 5866.6 6012.0 6159.9 6310.2 6463.1 6617.4 6783.3 6952.0 7123.3 7297.3 7474.1 7646.5 7821.7 8000.0 8181.3 8365.8

High Case

Import/Ex port 4135.2 4410.9 4616.7 4862.9 5008.8 5134.1 5236.7 5341.5 5448.3 5557.3 5668.4 5781.8 5897.4 6015.4 6135.7 6258.4 6383.6 6511.2 6641.4 6774.3 6909.8 7048.0

Transit 0.0 0.0 0.0 0.0 173.8 347.6 521.5 556.1 590.7 625.3 659.9 694.5 738.6 782.8 827.0 871.2 915.3 952.7 990.1 1027.5 1064.9 1102.3

Transshipment 352.3 375.8 393.3 414.3 428.0 442.1 456.5 471.3 486.6 502.4 518.8 534.3 550.4 566.9 583.9 601.4 619.4 638.0 657.2 676.9 697.2 718.1

Total 4487.5 4786.7 5010.0 5277.3 5610.6 5923.8 6214.7 6368.8 6525.6 6685.0 6847.0 7010.6 7186.4 7365.0 7546.5 7730.9 7918.3 8102.0 8288.7 8478.7 8671.8 8868.3

Low Case

Import/Ex port 4135.2 4248.9 4318.0 4415.1 4547.6 4661.3 4754.5 4849.6 4946.6 5045.5 5146.4 5249.3 5354.3 5461.4 5570.6 5682.0 5795.7 5911.6 6029.8 6150.4 6273.4 6398.9

Transit 0.0 0.0 0.0 0.0 169.1 338.1 507.2 537.9 568.6 599.3 630.0 660.8 700.5 740.1 779.8 819.5 859.2 850.1 841.0 832.0 822.9 813.8

Transshipment 352.3 362.0 367.9 376.2 388.6 401.4 414.4 427.9 441.8 456.2 471.0 485.1 499.7 514.7 530.1 546.0 562.4 579.3 596.6 614.5 633.0 652.0

Total 4487.5 4610.9 4685.8 4791.3 5105.2 5400.8 5676.1 5815.4 5957.0 6101.0 6247.4 6395.2 6554.5 6716.2 6880.6 7047.6 7217.3 7341.0 7467.5 7596.9 7729.3 7864.7


Doc. No. 14-1394-H1 Rev. 0 – March 2015


Figure 3.10: Northern Tyrrhenian Sea Port Supply/Demand Balance (‘000 TEUs),

2014-2025

Figure 3.11: Northern Tyrrhenian Sea Port Supply/Demand Balance Excluding Transshipment (‘000 TEUs),

2014-2025

Even without any transshipment volumes, it is clear from these supply/demand illustrations

that the region will be in need of additional capacity from around 2016-17, which is why it is

imperative for the Europa Platform project to go ahead. The fraction of this regional volume

that can be considered for the new facility in Livorno will be discussed in more detail in

Section 8.

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4 CONTAINER SHIPPING TRENDS AND IMPLICATIONS FOR LIVORNO

4.1 INTRODUCTION

This Section provides an overview of the Major container shipping trends and global ship

size revolution and the impact that this has on the specific region that the port of Livorno is

operating in, highlighting the increase in the size of tonnage deployed; the increase in the

importance of larger vessels in the container fleet and the impact on the following main

issues:

shipping lines are striving for improved scale economies – this has meant the introduction

of much larger vessels;

there has been a miss-match between supply and demand, with this being due to the

introduction of much larger vessels and weaker than anticipated demand growth

following from global economic conditions. This has resulted in severe and prolonged

over-capacity;

the Asia-Europe container trade cannot absorb all of the largest vessels that have been

added to the market. The result has been a period of ‘cascading’ of large vessels onto

other trades – usually ahead of underlying demand and port capabilities;

the search to fill the largest vessels has seen increased use of transshipment. The number

and size of feeder vessel services has increased - Indeed, this is vital to the economics of

the largest vessels;

the reduction in the number of facilities that are able to handle the ULCS’s;

the importance to shipping lines of being able to take full advantage of the economies of

scale by ensuring that the ULCS’s are well utilised;

further use of Vessel Share Agreements and more formal alliance partnerships.

The proposed global and regional strategies of the major container shipping lines will is

reviewed as will their strategies related to both transshipment in the Mediterranean and

Northern Tyrrhenian Sea region and direct calls in the Livorno region.

4.2 THE INTERNATIONAL CONTAINER SHIP SIZE REVOLUTION

It is apparent that this process is still underway, with the shares of the largest vessels set to

increase further. Serious evaluation is underway concerning the addition of even larger

vessels (It is evident in Figure 4.1 that vessels of >8,000TEU have been on the increase since

2005 and that vessels of >10,000TEU have also been on the increase since their introduction

in 2009. It is now common for 14,500-15,500TEU vessels to be deployed on the main

services from Asia-Europe and in 2013 vessels of 18-19,000TEU have also been introduced.

The expectation is for vessels to continue to increase to 22-24,000TEU and for vessels of

this size to be common by 2030.)

The shipping lines’ attempts to manage these developments will significantly change the

structure of various port sectors. The process of consolidation and increased use of

transshipment are set to radically change the market.

This Section presents a summary of the development of vessel sizes and types that can be

anticipated over the period to 2030. The focus is on:

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Asia-Europe trades, where the largest vessels will be deployed. A summary is presented

of the dimensions of vessels that will be used on these trades;

the cascading effect on secondary deepsea trades will be a critical development. This is

already underway and there will be a further upsizing of vessels for redeployed Asia-

Europe tonnage;

port concentration. There are strong economic pressures to reduce the number of port

calls on the mainline services, with these intensified by increasing vessel sizes;

the role of transshipment and hinterland volumes will increase in importance on a global

basis, but particularly in the Mediterranean, North Europe and Caribbean markets.

For the purposes of this study, a phased development is apparent:

for the period to around 2018, the outlook is fairly clear. The orderbook commitments of

the major lines are fairly firmly set and the actual physical structure of the container fleet

is apparent. However, there remain great uncertainties over the management of the fleets.

The uncertainty over the failed P3 alliance proposal and the subsequent introduction of

the 2M as an alternative by Maersk and MSC and The Ocean Three alliance by CMA-

CGM (with CSCL and UASC, plus a ‘loose’ agreement with Hamburg Sud) is indicative

of the state of flux in the markets;

the outlook from 2019 will be much more complex and there are many more variables

that need to be considered. These include:

the timing and introduction of even larger vessels on the Asia-Europe trades,

there will also be further vessel size generational shifts for secondary deepsea trades,

the potential ‘fracturing’ of the Asia-Europe trades,

direct calls vs feedering in this future.

The port and terminal requirements for container handling gantries and quay wall strength

will vary under different alternatives.

The shift to larger vessels has been the most significant feature for deepsea containerisation.

The search for scale economies is at the heart of this drive. On a tonnage-mile basis, the

savings from larger vessels are significant and also one of the few factors that are directly

controlled by ship operators. Furthermore, as soon as one major operator advances to the

next size echelon, the competitive nature of the shipping industry may force other operators

to follow suit. The net effect is a rise in both average vessel size and the size of the largest

vessels deployed.

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Figure 4.1: World Container Fleet Development 1990-2016 (‘000TEUs)

As Figure Figure 4.1 shows, the trend in favour of larger vessels is well established and has

accelerated since 2004. The share of 12,000TEU+ vessels increased from 1 per cent of the

containership fleet at the beginning of 2008 to 12 per cent at present. The very largest

vessels are deployed on trades between East Asia and Europe. The oversupply of these

largest classes of vessels is now resulting in pressure to re-deploy these vessels on other

trades. There is likely to be pressure to deploy further larger vessels on these trades, where

water depth and other considerations permit such operations.

Figure Figure 4.2 illustrates the deployment of container vessels up to and including the

18,300 TEU Triple ‘EEE’ Class units (pictured in Figure Figure 4.3), with these

developments further considered in Table Table 4.1.

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Figure 4.2: Evolution of Largest Container Ships to 2014

Figure 4.3: Maersk’s ‘EEE’-Class Vessel

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Table 4.1: Design Development of Large Containerships

Design Development of Large Containerships

TEUs Length Beam (m)

Maximum Noted Required

overall

(m) draught*

(m) berth depth

(m)*

First generation: 1968 1,100

Second generation: 1970-80 2-3,000 213 27.4 10.8 12.0

Panamax: 1980-90 3-4,500 294 32.0 12.2 12.8-13.0

Post-panamax: 1988-95 4-5,000 280-305 41.1 12.7 13.5-14.0

Fifth generation: 1996-2005 6,400-8,000 300-347 42.9 14.0-14.5 14.8-15.3

Super post-panamax: 1997-> 8,000-11,400 320-380 43-47 14.5-15.0 15.3-15.8

Ultra large container ships: 2006-> 14,500 380-400 56.4 15.5 16.4

New-panamax: 2010 12,500 366 49.0 15.2 16.1

Triple E-Class 18,270 400 59.0 15.5 16.4

CSCL 19,100 Class 19,100 400 58.6 15.5 16.4

MSC Oscar 19,244 400 59.0 15.5 16.4

* Maximum draught is rarely realised, even when vessels are fully laden, so required berth depth is less in practice. Source: Ocean Shipping Consultants

Vessels have recently increased beyond 19,000TEU capacity (See Figure 4.4). The

requirements of the larger ships, such as the Triple E-Class and MSC Oscar, can be noted in

terms of vessel length (meaning longer quays are needed to berth) and berth depth (meaning

deeper water needed at ports and terminals).

Vessel width is also a relevant factor that might force terminals to invest in order to be able

to accommodate larger vessels entering service.

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Figure 4.4: Ship Size Increases 2013/15

Since June 2013, when the first Maersk ‘EEE’ unit was delivered, several contenders have

emerged to stake their claims to be the ‘world’s largest’ in terms of advertised container

intake. The Maersk Triple-E class vessels (18,340TEU) were surpassed by CSCL. The

CSCL Globe has an official capacity of 18,982TEU, but CSCL have advertised a

19,100TEU capacity on earlier occasions. MSC’s new MSC Oscar has a declared capacity

of 19,224TEU and was delivered into service in January 2015, but for may lose its ‘largest

ship’ title when UASC’s Barzan is deployed in April 2015. Although currently listed as

18,800TEU capacity, UASC have indicated that the capacity will be adjusted upwards prior

to delivery.

All of the aforementioned ships share similar dimensions. Each has a breadth of 58.60-

59.00m allowing to stow 23 rows of containers on deck and 21 rows in holds. They also

have a similar length of 395-400m that fits 24 bays of 40’ containers.

Factors defining the upper limits of the size of container vessels

It is apparent that the size of container vessels is now approaching a peak. Factors which

define upper limits are:

scale of demand. This is the most obvious determining factor. Attempts to increase ship

size beyond that called for by market demand result in half-empty vessels, trading with

the costs, but not the benefits of scale;

at-sea versus in-port costs, long versus short hauls, and number of port calls: economies

of scale are reaped whilst vessels are at sea. Limitations in productivity of container

terminals are a limit to the maximum size of container vessels;

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the new Panamax dimensions will restrict maximum vessel sizes on some trades to 369m

loa x 49m beam x 15.2m maximum draught. The new locks being built in the Panama

Canal will make longer hauls, incorporating a Panama-Canal transit, possible for larger

vessels, which is a core consideration. Transshipment will be central to raising load

factors on such services, with more ports capable of competing simply as a transshipment

hub;

limits to scale economies. There are diminishing returns from increasing vessel size

beyond certain limits – to obtain the same percentage increases in economies of scale it is

necessary to expand vessel size by increasingly large margins. This is reviewed in more

detail in Section VII of this report;

available ports: The largest vessels can only be accommodated at very few ports, and

possibly only when partially loaded, thus negating the theoretical benefits to be gained by

scale economies, but not the higher costs of the vessels. The opportunities for utilising

such vessels are therefore limited;

terminal capacity and hinterland links. Much higher consignment sizes will place

increased pressures on the supporting infrastructure. This will limit the advantages of

shipping scale economies.

Future Maximum Vessel Sizes

As we have seen, vessels >19,000TEU have recently been advertised, but there are also

further pressures to develop yet larger containerships and there have also been conceptual

assessments of even bigger vessels (c. 22,000-24,000TEU), which will potentially be up to a

further 50m in length.

Ocean Shipping Consultants has been heavily involved in discussions with Lloyd’s Register

(and shipping lines) concerning the likely dimensions of this new class of vessel and it seems

possible in principle to fit 20,000TEU into a vessel with a length of 400-433m. This is the

same as for the 18,000TEU vessels with the addition of 4 x 20’ bays and two cross-decks,

with the same beam and draught as the ‘EEE’ class vessels. These are likely to be

introduced over the next five to ten years into the Asia-Europe trades, resulting in tonnage

that is currently deployed on the main arterial routes having to be cascaded to the secondary

trades, thereby increasing the average size of vessels deployed on these trade lanes.

These possibilities are examined in the following, within which these overall constraints and

configurations may be universally applied:

a design constraint for all modern designs of container ship is the height to which

containers may be stacked. In the container holds and on deck the greatest stack height is

constrained by the strength of the containers, so the lowest box is not crushed and there is

not unacceptable constraint on the weight of containers which can be carried in each

stack;

the twin island configuration is used almost universally in order to maximise the

container capacity within the constraints of bridge visibility requirements.

This assessment has not identified any major technical obstacles to the development of ships

of 20,000 TEU and above.

Current large container ships have breadth consistent with carriage of 22 or 23 stacks abreast

on deck. The capacity then becomes a function of vessel length. It is considered that vessel

capacity increases by greater

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length alone is nearing the upper limit. As ever, more boxes will be squeezed into the

current breadth limit, but it is unlikely that vessel capacity will exceed 22,000TEU without

increasing the breadth.

There are many options available to ship owners who wish to progress to container ships

with capacities greater than those in service today. In addition, it is possible for some

existing ships to be lengthened to provide increased capacity. Some of the options have been

evaluated here and indicative vessel dimensions deduced.

Figure 4.5: Estimated Vessel LOA for Different Capacities and L/B Ratios (Source: Lloyds Register)

Figure 4.5 summarises the options which are available for increased capacity of large

container ships. It is a compromise between increasing breadth, with consequential

challenges for the terminals, and increasing length, with consequential challenges for the

bending strength of the ship that will determine the optimum. It is unlikely that very small

values of L/B will predominate, so the lesser values of length are unlikely to represent the

upper limits which we will be seen on ship length. Equally, ship length comes at a price, so

it unlikely that high L/B values will dominate. So, on this basis, it would seem that 450

metres LOA is a realistic upper limit for vessel length in the foreseeable future – so the

design of berths for the very largest anticipated container ships should be predicated on a

vessel length of 450m.

The following are the estimated potential dimensions of vessels larger than those that are

currently trading/on order:

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TEUs LOA – m Beam – m Max Draught – m Maersk EEE 18,270 400 59.0 15.5 SCL/UASC vessels 18,400 400 58.6 15.5 New generation I 22,000 430 59.0 15.5 New generation IIA 24,000 450 59.0 15.8 New generation IIB 24,000 430 61.5 15.5

The development of 22,000TEU vessels will be by means of increasing length, with 430-

433m being the likely dimension. There are seen to be two options for 24,000TEU vessels –

either further lengthening, with a slightly deeper draught or a shift to broader vessels on a

length of up to 430m. This would entail an additional row of containers.

It is realistic to anticipate that 22,000TEU vessels with a length of around 430m+ and 23

rows wide will be deployed on the Asia-Europe trades. The shift to 24,000TEU+ vessels

will be more complex and would involve significant infrastructure and container crane

investments.

4.3 GLOBAL SUPPLY/DEMAND BALANCES & ‘CASCADING’

The level of ordering remains at high levels, with this focused on the largest class of vessels.

10,000TEU and larger vessels will increase their importance within the total fleet from

around 16 per cent at present to at least 20.5 per cent by the end of 2016. Clearly, this

cannot all be absorbed by the Asia-Europe trade and there will be increased pressures to

deploy much of this capacity on other trades. This is the ‘cascade’ effect.

The breakdown of current capacity and deliveries by ship size sector are further summarised

in TableTable 4.2.

Table 4.2: Ultra Large Container Ship Deliveries to 2015

The anticipated balance of supply and demand in the global container fleet is summarised in

Table Table 4.3

Table 4.2

Ultra Large Container Ship Deliveries to 2016

In service 6/14 Due by end 2014 Due by end 2015 Due by end 2016 Total

no. 000TEU no. 000TEU no. 000TEU no. 000TEU no. 000TEU %

10,000-12,999TEU 72 793.30 9 97.68 17 178.36 11 112.02 37 388.06 48.9%

13,000-15,999TEU 145 1965.30 8 108.00 23 325.85 25 352.50 56 786.35 40.0%

16,000TEU+ 12 212.50 9 160.68 31 556.91 1 18.80 41 736.39 346.5%

Total 229 2971.10 26 366.36 71 1061.12 37 483.32 134 1910.8 64.3%

Source: Lloy d's Register/Ocean Shipping Consultants

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Table 4.3: Estimated Container Fleet Supply/Demand Balances 20012-2016

This brings together fleet capacity with anticipated demand by size sector. A mid-range

estimate of demand growth has been factored into the projection.

The severity of the effect is clear. The fleet as a whole will see a limited decline in average

productivity between 2012 and 2016, but the impact is concentrated in the larger size ranges.

It is anticipated that the productivity of the 10,000TEU+ fleet sector will decline by around

56 per cent over the period – almost entirely as a result of supply-side developments. This

will result in very great pressures to redeploy this tonnage onto other trades and, indeed, this

is already being noted, even though the actual trade demand doesn’t justify deploying larger

vessels at this stage.

The situation is further summarised in Figure 4.6, where it is clear that total fleet

productivity drops from 19.07 to 16.96 between 2012 and 2015, before increasing slightly to

17.28 in 2016. Similarly, productivity for the 10,000TEU+ fleet sector decreases from 12.81

to 5.62 between 2012 and 2016.

Table 4.3

Estimated Container Fleet Supply/Demand Balances 20012-2016

<4000TEU 4000-7999TEU 8000-9999TEU 10,000TEU+ Total

Capacity - '000TEUs

2012 8303.5 3214.0 2028.4 1796.1 15342.0

2013 8128.7 3414.0 2154.3 2718.2 16415.2

2014 8299.9 3638.5 2725.5 3337.8 18001.7

2015 8410.5 3963.5 3010.3 4398.9 19783.2

2016 8395.0 4038.5 3160.3 4882.2 20476.0

Demand - '000TEUs

2012 129.10 121.90 18.55 23.00 292.55

2013 136.20 126.56 18.92 24.04 305.71

2014 142.33 134.47 19.20 25.00 321.00

2015 150.87 138.74 19.59 26.25 335.45

2016 159.17 147.32 19.98 27.43 353.90

Implied Productivity - TEUs/TEU

2012 15.55 37.93 9.15 12.81 19.07

2013 16.76 37.07 8.78 8.84 18.62

2014 17.15 36.96 7.05 7.49 17.83

2015 17.94 35.00 6.51 5.97 16.96

2016 18.96 36.48 6.32 5.62 17.28


Doc. No. 14-1394-H1 Rev. 0 – March 2015


Figure 4.6: Forecast Container Fleet Productivity to 2016 (TEUs/Fleet TEU)

Details of the orderbooks of the main container shipping lines operating on the main arterial

services are shown in Table 4.4 and highlights the number of lines that either have a fleet of

ULCS’s and/or are ordering new vessels of this magnitude. Of the top twenty container

shipping lines only Zim Line and Wan Hai do not and will not possess vessels of this size in

the near future.

Table 4.4: Fleet Status for Major Asia-North Europe Operators

Table 4.4

Fleet Status for Major Asia-North Europe Operators

Fleet Capacity Orderbook* 12,000TEU+ orders*

million TEUs million TEUs

Maersk 2.765 0.310 14 x 18270

MSC 2.500 0.505 6 x 18000, 5 x 15900, 8 x 14000

CMA CGM 1.578 0.252 3 x 16000

Ev ergreen 0.905 0.248 4 x 14400

Cosco 0.801 0.054 4 x 13400

Hapag lloy d 0.742 0.040 2 x 13200

APL 0.581 0.075 2 x 14000

Hanjin 0.594 0.074 4 x 14000

China Shipping 0.656 0.189 5 x 19000, 3 x 17900

Mitsui 0.584 0.081 3 x 14500

NYK 0.505 0.000 4 x 14000

OOCL 0.506 0.067 2 x 13200

Yangming 0.415 0.256 5 x 14500

Hy undai MM 0.396 0.077 3 x 13100

K Line 0.360 0.073 5 x 13900

UASC 0.299 0.192 6 x 18000, 11 x 14000

* - direct orders + long term charters


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TableTable 4.5 and Figure Figure 4.7 highlight the general increase in average size of

vessels deployed on some of the key Trade lanes from 2010 to 2014.

Table 4.5: The Development of Average Vessel Sizes on Key Container Trades 2010-2014 – position at start of year (TEUs)

Figure 4.7: Average Vessel Sizes on europe Deepsea Container Trades since 2010

The t introduction of the ‘EEE’ Class vessels by Maersk Line followed by the subsequent

introduction of vessels 19,000TEU+ has increased the maximum size of vessels deployed on

the main arterial route, but the ‘cascade’ effect of larger vessels onto secondary trade lanes is

also evident. The latter is also important for the increase in size of vessels that are used on

connecting north-south services, i.e. Europe-South America, Europe-ANZ or Europe-Africa.

The Development of Average Vessel Sizes on Key Container Trades 2010-2014

- position at start of y ear (TEUs)

2010 2011 2012 2013 2014 Current largest

vessel

Asia-North Europe 8822 8880 9600 11250 12300 18270

Transatlantic (N.Europe) 3850 3995 4010 4050 4250 5892

Europe-South America Atlantic 4500 4500 4600 6050 6250 8760

Europe-Southern Africa 4425 4555 5015 5350 6050 10350

Europe-Middle East/Indian SC 3450 3650 4425 5500 7250 11250

Europe-Australasia 4250 4415 4450 4450 4600 5906

Transpacific 5350 5500 5700 6000 6250 14000

Asia-South America Pacific 3100 3750 5100 7300 7450 13100

Asia-Middle East 6050 6150 6950 8000 8100 14100


Doc. No. 14-1394-H1 Rev. 0 – March 2015


The following points should be noted:

there has been a progressive increase in the sizes of vessels deployed on all trade lanes

shown in Figure 4.7 barring the Europe-Australasia services. The structure of demand

means that restrictions at Melbourne limit the size of vessel that can be deployed. The

development of new deepwater capacity at Webb Dock in Melbourne and the use of part-

loaded tonnage will see an increase in vessel sizes in the next few years to around

8,000TEU;

development of vessel sizes on the Transatlantic trades will potentially be of very great

importance to Livorno, since this is the dominant trade in terms of current services calling

at Darsena Toscana. At present, the average vessel size is around 4,250TEU with the

largest units being around 6,000TEU. This will change in the medium term. The

improvement of the Panama Canal has resulted in a major round of port improvements in

the US Atlantic ports, which will see larger vessels cascaded onto the Transatlantic

trades.

For ports and terminals, the increase in container ship sizes will result in further pressure on

port performance levels and the pressure on terminals to increase their productivity levels

will intensify. The ports that do not improve their performance will lose market share, unless

they are able to make better use of the facilities at their disposal or expand their facilities in

order to ensure that they are better placed to handle the bigger vessels.

Feeder Vessel Size Developments

Apart from the evident increase in the number of ULCS’s deployed and the ‘cascade’ effect

this has had on the sizes of vessels deployed on secondary trade lanes, it is also important to

stress the impact on the number and size of feeder vessels ordered recently.

Figure Figure 4.8 illustrates the number of vessels ordered by TEU size range between 2010

and October 2014.

Figure 4.8: Percentage of Vessels Ordered by TEU: 2010-October 2014

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As a result of the increase in the size of vessels deployed, particularly on the main arterial

trade lanes and the decreasing number of terminal facilities that are able to handle these

vessels efficiently, the instance of

transshipment is also seen to be on the increase – this is particularly true in Europe and the

Mediterranean.

Vessels >10,000TEU accounted for some 27 per cent of vessel orders since 2010, but at the

same time the orders of vessels of <2,000TEU have amounted to 24 per cent. In fact, the

single highest percentage share of vessels ordered between 2010 and October 2014 is 22 per

cent, which was the share of the 1,000-2,000TEU capacity segment (49 vessels).

Shipping lines have been slow to recognise the need for more feeder vessels and particularly

in the Mediterranean and Asian markets, where vessels of 25-30 years of age have remained

commonplace, new tonnage has long been overdue. Most of the orders thus far are

concentrated on the need for 1,000-1,100TEU vessels in North Asia and 1,600-1,700TEU

vessels in South-East Asia. As well as supporting the main Asia-Europe strings, these feeder

vessels are also important for operation in intra-Asia niche markets.

It stands to reason that with the continuing increase in vessel size on Asia-Europe strings that

more feeder vessels will also be required at the European end of the main trade lane, which

will also help promote intra-European/Mediterranean services.

Whilst mainline vessels continue to increase (as is suspected), the number and size of feeder

vessels that support the main networks will also increase. The demand for feeder vessels is

therefore expected to continue to represent a high percentage of the new vessel orders and

vessels are likely to increase from 1,700TEU to 2,500TEU in the short-term, to coincide with

the increase in the average size of vessels on the main arterial trades.

4.4 PORT CONCENTRATION

As a result of the increase in the size of vessels being deployed on all trades following the

cascading of larger tonnage from the main arterial trades, it is inevitable that the number of

ports that are capable of handling the larger size of vessel will decline – not all ports will

have the necessary depth of water, length of quay or number and type of gantry cranes to be

able to handle vessels of this size.

Couple this with the increased total costs of calling at ports with larger tonnage and this will

result in shipping lines having to maximise the efficiencies of their deployed assets by

reducing the time spent in port and by reducing the actual number of direct calls (and

increasing transshipment).

The implications for terminals are clear in this highly competitive market:

they will have to expand – terminal area, length of quay and depth of water are all crucial

if ports are to be able to increase the size of vessels they can handle and handle quickly

and efficiently;

they will need more yard space to be able to handle larger consignments;

they will need more gantry cranes and more efficient gantry cranes to be able to increase

their productivity, thereby reducing the port stay time;

they will need to train their crane drivers and other shore side staff in order to increase

their efficiencies.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


In markets such as North Europe and the Mediterranean, this will mean that transshipment

business will be focused on those terminals that can meet the requirements of the shipping

line. This has always been the case, but the economics of introducing much larger vessels

will accelerate this trend. This is an extremely important point for container facilities in

these regions.

4.5 THE DEVELOPMENT OF LINER SHIPPING SERVICES IN ITALY

So far this Section has been dealing with the general and global container shipping trends

evidenced over the last 5-10 years, but it is also imperative to relate this to the Italian port

region that the port of Livorno is a part of. It is clear from the preceding sub-sections that

there has been an increase of vessel sizes on the main arterial trades and that his has had a

“knock-on” effect on the secondary trade lanes, where the vessels that have been displaced

from the main services have been “cascaded” down to operate on smaller trade lanes.

To properly assess the development of vessel sizes in Italy, it is important to look at a series

of years and to split Livorno’s competing ports into different groups depending on their

competitive position versus Livorno. This analysis will look at the average tonnage

deployed on the US East Coast and Far East services for the following port groups in order

of their importance to Livorno as competition, for 2005, 2010 and 2015:

Livorno and other Northern Tyrrhenian Sea ports;

Secondary competition located on the Adriatic Sea and Tyrrhenian Sea ports as well as

Marseille-Fos;

Mediterranean transshipment hubs.

Table 4.6 – 4.8 shows how services develop between 2005, 2010 and 2015 on the main Asia-

Europe trade lanes, whilst Table 4.9 – 4.11 show how Europe-US services developed over

the same years.

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Table 4.6: Far East/Middle East-Mediterranean Service Lines for 2005

Table 4.6

Far East/Middle East-Mediterranean Service Lines for 2005

Operator/grouping Operation Ports called Freq. (days) RV (days) No. of ships Average teu Trade Lane

MSC N/S EUROPE ANR,VLC,SPE,FOS 7 91 13 2808 AUS-EUR

P&O NEDLLOYD/CONTSHIP/CMA

CGM/MARFRET/HAMBURG SUD/HAPAG-

LLOYD NETWORK

EASTABOUT ZEE,SPE

7 70 10 4113 AUS-EUR

P&O NEDLLOYD/CONTSHIP/CMA

CGM/MARFRET/HAMBURG SUD/HAPAG-

LLOYD NETWORK

WESTABOUT TIL,MXX,SPE

7 84 12 2357 AUS-EUR

CHINA SHIPPING (CSCL) AMX SHA,NAP,GOA,BCN,VLC 14 56 4 4151 FE-MED

CMA CGM/CONTSHIP/P&O

NEDLLOYD/MARFRETSIN,MXX,SPE 7 84 12 2357 FE-MED

CMA CGM/NORASIA MEX BCN,FOS,GOA,MXX 7 49 7 4323 FE-MED

CMA CGM/NORASIA/APL NCX XGG,MXX 7 56 8 5770 FE-MED

COSCO/K LINE/YANGMING AMX BCN,VLC,NAP,GOA,FOS 7 49 7 3541 FE-MED

CSCL/ZIM AEX 2 LYG,VLC 7 63 9 5499 FE-MED

EVERGREEN/LLOYD T. FEM BCN,VLC,TAR,GOA,FOS 7 56 8 2868 FE-MED

GRAN ALLIANCE LOOP M BCN,FOS,SPE 7 56 8 4656 FE-MED

GRAND ALLIANCE AEX GIT 7 63 9 4481 FE-MED

GRAND ALLIANCE LOOP E CAG 7 56 8 3642 FE-MED

HANJIN EMA SPE,FOS,VLC,GIT 7 56 6 2969 FE-MED

LLOYD TRIESTINO/CMA CGM ADR NBO,TRS 7 49 7 2626 FE-MED

MAERSK SEALAND AE6 BCN,FOS,GIT,GIT,GOA 7 56 8 4566 FE-MED

MAERSK SEALAND AE2 GIT 7 63 9 7362 FE-MED

MAERSK SEALAND AE5 ALG,GIT,VLC 7 77 11 7836 FE-MED

MSC DRAGON EXP SPE,FOS,BCN,VLC,NAP 7 63 9 6718 FE-MED

MSC SILK EXPRESS LEH,VLC 7 63 9 7030 FE-MED

YANGMING/K LINE AMS GOA,LIV 7 56 8 5557 FE-MED

ZIM/NORASIA/CSCL AMP RIJ,VCE,TRS 7 91 134 3355 FE-MED


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Table 4.7



CMA CGM (NE/MED) EPIC HAM,MXX, 7 56 8 4268 EU-ME/SA

CSAV NORASIA (NE/MED) IMEX HAM,MXX, 7 56 8 4613 EU-ME/SA

HAPAG-LLOYD/HAMBURG SUD IOS

(NE/MED)IOS HAM,CAG 7 49 7 4265 EU-ME/SA

HDS LINES EMCL (NE/MED) EMCL HAM,MXX, 10 50 5 2583 EU-ME/SA

MAERSK LINE ME3 (MED) GIT 7 42 6 3593 EU-ME/SA

MESSINA (MED) MESSINA MDC,GOA,NAP 14 42 3 1823 EU-ME/SA

MSC FALCON SERVICE SIN,GIT,SPE,BCN,VLC 7 35 5 3951 EU-ME/SA

MSC IPAK SERVICE ANR,GIT,VLC 7 49 7 5867 EU-ME/SA

MSC/SCI IMED (MED) IMED BCN,GOA,SPE 7 42 5 3262 EU-ME/SA

UNITED ARAB (UASC)/HANJIN (MED) MINA/IMU GOA,BCN,VLC 14 42 3 1823 EU-ME/SA

CKYH MD2 SHA,GOA,LIV,FOS 7 56 8 6116 FE-MED

CKYH MD1 SHA,NAP,GOA,BCN,VLC 7 56 8 5523 FE-MED

CKYH MD3 PUS,SPE,BCN,VLC 7 56 8 5606 FE-MED

CMA CGM MEX VLC,BCN,FOS,GOA,NAP,MXX 7 77 11 6051 FE-MED

CSAV NORASIA MNS XGG,MXX,SPE,GOA,FOS,BCN,VLC 7 70 10 5689 FE-MED

EVERGREEN UAM TOK,TAR,GOA,BCN,VLC 7 98 14 5570 FE-MED

GRAND ALLIANCE AEX LCH,CAG 7 70 10 5712 FE-MED

GRAND ALLIANCE EUM/MED PUS,GOA,FOS,BCN,VLC 7 63 9 6690 FE-MED

HANJIN/HMM/UASC/YANGMINGAAX/MAE/ACM3/AA

XPUS,TRS,VCE 7 56 8 4328 FE-MED

HDS AMEL SHA,MXX 7 56 8 3411 FE-MED

MAERSK LINE AE6/TP6 ALG,BCN,VLC 7 98 14 9685 FE-MED

MAERSK LINE/CMA CGM AE12/PHEX PUS,TRS 7 63 9 6628 FE-MED

MAERSK LINE/CMA CGM AE11/MEX2 LYG,GIT,GOA,FOS 7 70 10 8225 FE-MED

MSC LION SERVICE HAM,VLC 7 77 11 11341 FE-MED

MSC DRAGON EXPRESS PUS,GIT,NAP,SPE,FOS,BCN,VLC 7 77 11 9168 FE-MED

MSC TIGER SERVICE PUS,GIT 7 70 10 8437 FE-MED

MSC SILK EXPRESS RTM,VLC 7 77 11 13945 FE-MED

UASC/CSCL AMC1/AMX1 VLC,SPE,GOA,FOS 7 63 9 5681 FE-MED

CMA CGM FAL1 HAM,MXX, 7 70 10 10837 NEU-FE

CMA CGM FAL3 HAM,MXX, 7 70 10 9030 NEU-FE

CMA CGM/HAPAG-LLOYD NEW NEMO/EAX SIN,MXX,SPE 7 91 13 2798 NEU-FE

EVERGREEN CES SHA,TAR 7 70 10 7129 NEU-FE

MSC

AUSTRALIA

SERVICE SIN,GIT,SPE,MON 7 98 14 3153 NEU-FE


Doc. No. 14-1394-H1 Rev. 0 – March 2015



Table 4.8



CMA CGM EPIC HAM,MXX 7 56 8 6556 EU-ME/SA

Hamburg Süd/Hapag-Lloy d/CSAV (Norasia) IOS HAM, CAG 7 56 8 6229 EU-ME/SA

MSC IPAK RTM,GIT, VLC 7 49 7 8654 EU-ME/SA

MSC New Falcon serv ice VLC, FOS, SPE, NAP, GIT, VLC 7 91 (12) 5000 EU-ME/SA

CKYH grouping MD1/PM1 SIN, SPE, GOA, BCN, VLC 7 112 16 9699 FE-MED

CKYH grouping MD2 SHA, GOA, BCN, FOS 7 70 10 8444 FE-MED

Ev ergreen UAM KHH, TRS 7 (112) (16) 6018 FE-MED

G6 Alliance EUM/MED PUS, GOA, FOS, BCN, VLC 7 70 (9) 8817 FE-MED

Maersk Line ME2 PTM, VLC, BCN, GOA, MXX 7 49 7 8238 FE-MED

Maersk Line/CMA CGM AE20/MEX3 SHA, MXX, GOA, SPE 7 70 (9) 8939 FE-MED

Maersk Line/CMA CGM AE11/MEX1 QIN, MXX, VLC, BCN, FOS 7 77 11 9748 FE-MED

Maersk Line/CMA CGM AE12/PHEX PUS, TRS 7 70 10 8272 FE-MED

MSC Dragon Ex press PUS, GIT, VLC, SPE, FOS, BCN 7 91 (12) 14030 FE-MED

MSC Silk Ex press RTM, GIT 7 84 12 13326 FE-MED

UASC/CSCL AMC1/AMX1 QIN, SPE, GOA, FOS, BCN, VLC 7 77 11 8598 FE-MED

CMA CGM FAL1 HAM, MXX 7 (84) 11 14023 NEU-FE

CMA CGM/Hapag-Lloy d New NEMO/EAX HAM, GOA, MXX 7 91 13 4289 NEU-FE

MSC/SCI ISES HAM, GIT 7 56 8 6369 NEU-FE


Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 4.9: North America-Mediterranean Service Lines for 2005

Table 4.9

North America-Mediterranean Service Lines for 2005


CANMAR SENATOR B VLC,LIV 7 28 4 1061 MED-NA

CANMAR SENATOR A GIT,SAL,GOA,FOS 7 28 4 1892 MED-NA

CMA CGM/LLOYD TRIESTINO

AMERIGO

EXPRESS/MUS CAG,LIV,GOA,FOS,VLC 7 35 1595 MED-NA

CMA CGM/P&O NED./HAMBURG

SUD/MARFRET/HAMBURG SUD/HAPAG-

LLOYD EASTABOUT PHL,SPE 7 70 10 4113 MED-NA

CMA CGM/P&O NED./HAMBURG

SUD/MARFRET/HAMBURG SUD/HAPAG-

LLOYD WESTABOUT DAM,MXX,SPE 7 84 12 2331 MED-NA

COSCO/K LINE/YANGMING TAS 3 GOA,BCN,NAP 7 28 4 1663 MED-NA

COSTA CONTAINER LINES CCM BCN,FOS,LIV,SVL,VLC 9 36 4 1513 MED-NA

ITALIA/LYKES/TMM MPE VLC,LIV,GOA,FOS 11 66 6 2420 MED-NA

MAERSK SEALAND GULF/MED GIT,GOA 7 42 6 4175 MED-NA

MECL/TMM-LYKES MED/GULF/MEXICO CAG,LIV,GOA,BCN,VLC 8 - 9 42 5 3266 MED-NA

MELFI MELFI NAP,LIV,GOA,BCN,VLC 12 36 3 1111 MED-NA

MSC MED/US SPE,VLC,BCN,NAP 7 42 6 2489 MED-NA

NSCSA LIV,NOL 21 84 4 1090 MED-NA

P&O NEDLLOYD/HAPAG-LLOYD FAMEX ALY,SAL,SPE,CAG 7 42 6 2136 MED-NA

P&O NEDLLOYD/HAPAG-LLOYD/ZIM GAMEX CAG,SAL,GOA,BCN, 7 35 5 2165 MED-NA

UASC/HANJIN MIX ALY,SPE,FOS,BCN,VLC,GOA,GIT 7 77 11 2286 MED-NA

ZIM ZCS HFA,LIV,BCN 7 98 14 4623 MED-NA


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Table 4.10

North America Mediteranean Service Lines for 2010


EVERGREEN UAM UAM VLC,GOA,BCN 7 98 14 5570 MED-NA

GRAND ALLIANCE AEX CAG 7 70 10 5712 MED-NA

HAPAG-LLOYD MGX CAG,LIV,GOA,FOS,BCN,VLC, 7 49 7 3298 MED-NA

HAPAG-LLOYD MPS LIV,GOA,FOS,BCN,VLC,CAG 12 72 6 2350 MED-NA

HAPAG-LLOYD/HANJIN MCA/MC1 CAG,SAL,LIV,GOA,FOS,VLC 7 35 5 2144 MED-NA

MELFI LINES MELFI SAL,LIV,GOA,BCN,VLC,HLFX 12-13 38 3 1222 MED-NA

MSC LOOP A SPE,VLC,GIT,NAP 7 42 6 4409 MED-NA

MSC LOOP B NAP,SPE,BCN,VLC,GIT 7 42 6 4994 MED-NA

MSCCANADA MOROCCO

EXPRESSSPE,BCN,VLC 7 28 4 2710 MED-NA

MSCWEST MED

CALIFORNIA EXPRESSNAP,SPE,VLC,GIT 7 56 8 3658 MED-NA

MSC CANADA EXPRESS VLC 7 21 3 3295 MED-NA

MSC TURKON GEM,SAL 8 40 5 1155 MED-NA

MSC ZIM ZCS HFA,LIV,GOA 7 105 15 4900 MED-NA

NSCSA LIV,PSD 21 84 4 1090 MED-NA

MAERSK LINE MAERSK/CMA CGM

WEST MED/AMERIGO

EXPRESS

MXX,GIT,LIV,GOA,FOS 7 42 6 3021 MED-NA

MAERSK LINE UASC/HANJIN

MINA/IMU

PSD,SPE,GOA,BCN,VLC 7 63 9 3901 MED-NA


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Table 4.11

North America-Mediterranean Service Lines for 2015


CMA CGM Amerigo Ex press LIV, GOA, FOS, BCN, VLC, MXX 7 42 6 2876 MED-NA

Hapag-Lloy d MGX CAG, LIV, GOA, BCN, VLC 7 49 7 4897 MED-NA

Hapag-Lloy d MCA CAG, SAL, LIV, GOA, FOS, VLC 7 35 5 2552 MED-NA

Hapag-Lloy d/Hamburg-Süd MPS/MCPS LIV, GOA, FOS, BCN, VLC, CAG 7 77 11 4256 MED-NA

MSC Canada Ex press GIT, SPE, VLC 7 28 4 3793 MED-NA

MSCWest Med California

Ex pressGIT, CVV, SPE, VLC 7 70 10 4983 MED-NA

MSC Med/US Loop A SPE,VLC, GIT, NAP 7 42 6 5803 MED-NA

MSC Med/US Loop B SPE, BCN, VLC, GIT, NAP 7 49 7 6123 MED-NA

UASC/Hanjin MINA/IMU NYJ,VLC, SPE, GOA, FOS, BCN 7 77 11 4903 MED-NA

Zim ZCA HFA, LIV, GOA, BCN, VLC, LIV 7 49 7 4253 MED-NA


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The following graphs provide a summary of how the size of vessels has changed over time

on the main trade lanes. Figure Figure 4.9 illustrates the development of the size of vessels

deployed for all ports included in the above summary which are of interest to Livorno as

competing ports.

Figure 4.9: USEC & Far East Trade Services Calling at all Ports of Interest

This increase in vessel size mirrors the global position already highlighted, although it also

shows that the average size of vessels deployed even on the main trade lanes from/to the

Mediterranean lag behind the size of vessels deployed on north European trade lanes.

Figure Figure 4.10 illustrates the average size of vessels deployed on the Northern

Tyrrhenian Sea and which are the primary competition for Livorno port’s local volumes.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Figure 4.10: USEC & Far East Trade Services Calling at Livorno, Genoa and La Spezia Ports

Although, illustrating the increase in tonnage deployed, there is seen to be a slight reduction

in vessel size noted for vessels that call in Liguria when compared with the rest of the sample

of services reviewed.

Figure 4.11: USEC & Far East Services Calling at Secondary Ports

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Figure Figure 4.11 illustrates the average size of vessels deployed on ports that are regarded

as secondary competition for the local Livorno market, but which will also compete for

transit volumes into north and central Italy as well as Germany, Austria and Switzerland.

The trend for the average size of these vessels deployed is also slightly higher than those

calling in Northern Tyrrhenian Sea ports.

Figure 4.12: USEC & Far East Trade Services Calling at Main Transhipment Ports

Figure Figure 4.12 illustrates the average size of vessels deployed over time for the main

central Mediterranean transshipment hubs. Once again the average size of vessels is

generally bigger than those on the Northern Tyrrhenian Sea but a little less than the

“secondary” ports. This suggests that larger vessels are calling in Trieste, where there is

deep water, for transshipment as well as local and transit volumes, thereby increasing the

average size of vessels in this sector.

By way of comparison, the same exercise is done for the major Spanish gateway ports of

Barcelona and Valencia. Here the average size of vessels are greater than the Italian ports,

suggesting a higher demand, although in this instance demand is comprised of local, transit

and transshipment volumes, which is the model that Livorno should look to replicate.

Details are illustrated in Figure Figure 4.13.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Figure 4.13: USEC & Far East Trade Services Calling at Barcelona and Valencia Ports

The following conclusions can be drawn:

although shipping lines have been ordering bigger and bigger vessels, the largest vessels

have yet to be deployed on any Mediterranean services, with those available vessels being

deployed on north European services instead. However, the 16,600TEU MSC London

did call at La Spezia in February 2015 suggesting that it will be possible for larger vessels

to call at ports in the region, especially now that 19,000TEU+ vessels are on order;

in general, vessels calling at ports in the Northern Tyrrhenian Sea a slightly smaller than

the rest of the sample under review. This could well change with the improvement s to a

number of facilities on this coastline in the near future;

for Northern Tyrrhenian Sea ports, the size of Asian trade services has increased in

capacity by 120 per cent to 8,450TEU between 2005 and 2015. Similarly, on the US East

Coast trade, vessels have increased 89.2 per cent to 4,444TEU. This is representative of

the tonnage capacity increases experienced elsewhere in Italy;

gateway ports (such as Valencia and Barcelona), which are able to attract local, transit

and transshipment volumes require larger tonnage than ports that concentrate on either

local or transhipment volumes alone;

vessels that are currently calling at Livorno are feeder vessels, but there is potential to

attract services on secondary trade lanes or even main arterial trades once the port

improvements have been made.

Figure Figure 4.14 illustrates the size of vessels deployed in Livorno over the last two years

and further illustrates that Livorno is currently used only as a feeder destination port.

Vessels between 2,000-5,000TEU are on the increase suggesting an increase in the size of

feeders used, but also an increase in short-sea intra-Med services.

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Figure 4.14: Comparative Vessel Sizes Calling at Livorno in 2013-2014

A review of owned (Maersk, MSC and CMA-CGM) and major third party feeder services

(UFS, MFI, X-Press Container Services) confirms that there has been an increase in the

average size of feeder vessel deployed between 2005 and 2015. Feeder vessels are generally

on short-term (3-12 months) charter, so it is relatively easy to “flex” the capacity of a

service. Figure 4.15 illustrates that the average feeder has increased 120 per cent between

2005 and 2015, to 1,778TEU capacity.

Figure 4.15: Vessel Capacity – North Europe, Intra-Med Trade and Feeder Services

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4.6 MEDITERRANEAN STRATEGIES OF MAJOR CONTAINER SHIPPING LINES

A number of transshipment ports have been established in the Mediterranean and the Black

Sea over the last twenty years or more, with more competition likely as larger vessels are

brought onto the main arterial trades. These vessels require deeper water and high capacity

cranes, supported by more container handling equipment and a skilled work force in order

for shipping lines to be able to turn the vessels around quickly, thereby ensuring that they

can continue to maximise the economies of scale. The expense of these vessels will also

mean that shipping lines will seek to minimise the number of direct port calls made, thereby

increasing their reliance on feeder services and reliable transshipment hubs.

The ideal transshipment hub would also be able to offer a reasonable proportion of local

cargo, so that the port is not entirely reliant on transshipment volumes. Ports such as

Algeciras, Marsaxlokk, Gioia Tauro, Taranto and Cagliari are almost entirely reliant on

transshipment volumes, with their respective volume throughput including at least 90 per

cent of transshipment volumes.

With new transshipment hubs being introduced into the Black Sea region recently (e.g.,

Constanta and Ambarli), it is also feasible that shipping lines could also look to add an

Adriatic port as part of their portfolio of transshipment hubs. However, shipping lines

generally have transshipment hubs in the at least two out of three of the following regions:

West Mediterranean;

Central Mediterranean;

East Mediterranean/Black Sea.

It is apparent that a transshipment location in the Northern Tyrrhenian Sea or the Adriatic

could be competitive with Taranto, Cagliari, Gioia Tauro and Marsaxlokk, although shipping

lines may not want to add yet another hub to an already crowded portfolio. The current

transshipment hubs of choice for the main shipping lines are highlighted in Table Table 4.12.

Table 4.12: Major Lines Transshipment Hub Strategies

Table 4.12

Major Lines Transshipment Hub Strategies

Shipping Line West Med Central Med East Med/Black Sea

Maersk Line Algeciras, Tanger-Med Gioia Tauro Port Said East, Constantza

MSC Valencia Gioia Tauro Piraeus, Ambarli

CMA CGM Tanger-Med Marsax lokk Damietta, Beirut

Ev ergreen Taranto Port Said, Damietta, Ambarli

Grand Alliance Gioia Tauro, Cagliari Damietta

New World Alliance Gioia Tauro Damietta

CKYH Alliance Algeciras Port Said

China Shipping Damietta


Doc. No. 14-1394-H1 Rev. 0 – March 2015


The review of the strategies of the major shipping lines in the Mediterranean will concentrate

on the top five liner shipping companies, namely Maersk Line, MSC, CMA-CGM,

Evergreen and Hapag-Lloyd, these being a representative sample of all the main Alliance

groups.

Maersk Line

Maersk is the largest international container shipping line in terms of container shipping

capacity (i.e. a combination of owned and chartered-in vessels).

The current fleet of Maersk Line at July 2014 comprised 585 containerships with an overall

capacity of 2.8m TEU. Out of this fleet, 329 ships (56 per cent of the fleet) are chartered-in.

This gives Maersk Line plenty of flexibility to either increase or decrease the size of vessels

deployed, or even to pull out of non-profitable services. However, other lines such MSC and

CMA-CGM operate with a higher ratio of chartered tonnage, 67.6 per cent and 77.9 per cent

respectively.

Figure 4.16: Maersk Line Fleet Development, 2007-2014 (‘000 TEUs)


with a current fleet capacity of 2.8m TEU, Maersk Line is some 10.6 per cent bigger than

its largest competitor, MSC, operating 85 more vessels. However, the difference has

been shrinking during the last decade;

the capacity of the fleet has increased steadily year on year – with an expansion of 47 per

cent recorded (in TEU terms) between the end of 2007 and July 2014;

like the other two major shipping lines, Maersk’s fleet is heavily biased in favour of

larger vessels and this is also reflected in the company’s orderbook. This will also mean

that Maersk Line has been, and will continue to be, looking for ports with deeper water in

the future in order to be able to handle the larger capacity vessels;

the sheer scale that Maersk Line is able to operate with is its main advantage.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


A total of 14 additional containerships are now on order, all of which are 18,270 TEU

capacity vessels. Delivery dates are: five units during 2014 (three delivered in Q1), six units

during 2015, and the balance during 2016. The emphasis is still on the largest classes of

vessels and now on increasing the average size of deployed tonnage, which are likely to be

utilised in the Asia-Europe trades, resulting in large vessels cascading onto secondary trades.

In terms of financial position, and according to H1 2014 results, Maersk remains the most

profitable container carrier, with an operating profit of US$ 1,001 million. The ownership of

APM Terminals, giving preferential tariffs to Maersk Line, plus a sheer use of the scale

economies, could be one of the reasons for the financial success of the line.

Regional Mediterranean Strategy

Maersk Line used to have their transshipment hub operations centred in Algeciras, Gioia

Tauro and Port Said East. With larger ship deployment, more and more Maersk Line and

2M Alliance services will offer transshipment options. Although with MSC involvement

hubs are also likely to involve Valencia and Piraeus, and may also look at other new

alternatives such as Tanger-Med where cheaper vessel handling is extremely attractive if it

can be coupled with a productive facility.

Italian Strategy

Maersk Line currently operates a significant number of owned Mediterranean feeder vessels

for the more ‘mature’ markets, but also continue to utilise space on third party feeder vessels

if they don’t have sufficient owned volumes. In the future, there is also likely to be further

cooperation with MSC on feeder services, where the deployment of jointly ‘owned’ tonnage

can create the required economies of scale to make services attractive and almost risk free if

vessels are chartered for less than 12 months at a time.

With the introduction of larger tonnage onto the Asia-Europe strings, it remains most

likely that vessels currently deployed on this main arterial service will be cascaded to

secondary trades, such as the Transpacific Trade. Maersk already deploy a series of

owned feeder vessels in the Mediterranean and the likelihood is that both the size and

frequency of these feeder services will increase as soon as larger vessels have been

introduced onto the mainline services, which are likely to coincide with the widening of

the Panama Canal and the cascade of services to this part of the world. Maersk’s

volumes and service structures will be sufficient to justify at least two major hub port

investments in the Mediterranean region, although there currently doesn’t appear to be

a need to move the central Mediterranean hub away from Gioia Tauro.

It should also be noted that Maersk’s terminal operating arm, APMT, also has an

interest in developing the Vado Ligure site, which is due to be operational by 2018 and

it is highly likely that Maersk Line will utilise the facility for some services, if not all.

Mediterranean Shipping Company (MSC)

MSC is the second largest international container shipping line in terms of container

shipping capacity. Of the 500 containerships in the current fleet (2.5m TEU capacity), 68

per cent of vessels have been chartered-in and

32 per cent are owned. This also gives MSC plenty of flexibility to either increase or

decrease the size of vessels deployed, or even to pull out of non-profitable services.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Figure 4.17: MSC’s Fleet Development, 2007-2014 (‘000TEUs)


the capacity of the fleet has increased very rapidly – with an expansion of 106 per cent

recorded (in TEU terms) between the end of 2007and July 2014;

like Maersk Line, MSC’s fleet is heavily biased in favour of larger vessels and this is also

reflected in the company’s orderbook. This will also mean that MSC will be focused on

deepwater ports and a transshipment-intensive strategy.

After an impressive fleet growth in the last seven years, MSC has ceased orders at the time

of writing. It is clear that MSC are relatively content with the structure of their current fleet

and are continuing to look to take full advantage of the economies of scale and to maintain,

their market share particularly on the main arterial trades. In order to fill these vessels it will

be necessary to develop a significantly expanded transshipment presence in all the major

markets, but as part of the 2M Alliance will be able to maximise the efficiencies of the

tonnage deployed by sharing space with Maersk Line.


This line has expanded very rapidly at the global level and their role in the Mediterranean

has been a part of this strategy. MSC’s use of Gioia Tauro in the central Mediterranean is a

good fit with its 2M Alliance partner doing likewise. However, MSC’s call by the

16,600TEU MSC London at La Spezia gives hope for other Italian terminals that have the

capability of handling vessels of at least 12,500-16,600TEU., although these are unlikely to

be transshipment calls.

Italian Strategy

As part of recent cooperation with Maersk Line, MSC have a number of slot swap deals with

Maersk, whereby MSC take some slots on Maersk’s services in the Mediterranean and vice

versa. This form of exchange is likely to become more common place between the two

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partner lines, so that they can take advantages of the scale economies even on feeder services

as well as mainline services.

In the Mediterranean, MSC’s strategy is driven by their overall policy regarding the

size of vessels deployed on mainline services. Like all the major lines, MSC will order

more and bigger mainline vessels, which will result in the cascading of what are

currently deemed to be ‘large vessels’ onto secondary trades. Like Maersk, this will

result in the need for more and bigger feeders in the Mediterranean. MSC currently

operates with some owned and some third party tonnage in the region, with the

likelihood being that they will look to increase both the size and number of owned

feeder vessels deployed in the future, as well as taking advantage of any ‘double-

dipping’ opportunities that may appear on newly configured services. The possibility

of joint 2M or Ocean Three feeders in the Mediterranean should also not be

discounted.

CMA CGM

CMA CGM’s current fleet (July 2014) comprises 431 containerships and has an overall

capacity of 1.6m TEU. CMA CGM is the third largest international container shipping line

in terms of container shipping capacity (i.e. a combination of owned and chartered-in

vessels). Of the 431 containerships in the current fleet, 77.9 per cent of vessels have been

chartered-in and 22.1 per cent are owned. This gives CMA CGM plenty of flexibility to

either increase or decrease the size of vessels deployed, or even to pull out of non-profitable

services.


the capacity of the fleet has increased very rapidly – with an expansion of 286 per cent

recorded (in TEU terms) between 2005 and July 2014;

the total number of vessels (owned and chartered) remains stable at a little over 400 units,

meaning that the increase in capacity has been led by increase in average vessel size;

CMA CGM’s fleet is heavily biased in favour of larger vessels and this is also reflected in

the company’s orderbook.

A total of only three additional containerships (16,000TEU) are now on order. This

represents significantly less ambition, probably driven by the difficult financial situation in

the last years, and also because CMA CGM has recognised that it was heavily exposed by

virtue of its existing fleet and orderbook commitments to supply/demand balances on the

major east-west arterial trades and it is on these trades that market over-capacity is likely to

be most acute. CMA CGM is reducing their exposure to this, by reducing the number of

newbuilds they have on order in 2014. Their exposure will be further reduced with the

planned cooperation with OOCL and UASC, which will assist CMA CGM fill their ULCS’s

on main arterial trades.

CMA CGM has reported an operating profit of US$ 411.5 million in the third quarter of

2014 a very healthy return for a line that has suffered some financial concerns in recent

years, but which now appears to have turned the corner.

The Yildirim Group invested $500m in CMA CGM by acquiring five year ORA equity

notes, which gave them access to 20 per cent of CMA CGM’s share capital. In return, the

agreement enables CMA CGM to strengthen

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its equity base and secure the financing of its investment plan (the purchase of new vessels).

The issue has sustainably strengthened the Group’s equity funds, while providing additional

funds to support expansion.

Figure 4.18: CMA-CGM’s Fleet Developments, 2005-2014 (‘000TEUs)


At present, the line has a major transhipment hub port concentration at Marsaxlokk in the

central Mediterranean and Tanger Med in the West Mediterranean, but with a new alliance

introducing partners (UASC and China Shipping) with no real preference for any hubs in the

central Mediterranean, it would seem likely that the Ocean Three Alliance will look to

consider its hub port alternatives, which could provide an opportunity for a new gateway

hub.

Italian Strategy

Aside from some calls at Gioia Tauro on mainline vessels in the past, CMA-CGM has

usually served the rest of Italy – Northern Tyrrhenian Sea and Tyrrhenian Sea – with third

party feeder vessels. Additional CSCL and UASC volumes could make it more attractive to

form a joint feeder service for some of these areas.

In the Mediterranean, CMA CGM has hitherto been keen to control their own destiny

by operating a number of owned feeder vessels. Once the requirement for more and

bigger feeder vessels becomes evident as a result of the other two partner lines gaining

some ‘critical mass’, CMA CGM will have a tough decision to make as to whether to

combine volumes currently being shipped on third party feeder services such as those

deployed by X-Press Container Services or UFS.

On the one hand, their usual global policy has been to grow the size and frequency of

owned tonnage, but with limited funds currently available, it is possible that CMA

CGM will look instead to third party feeder operators to provide them with the

necessary additional feeder coverage.

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Alternatively, the new alliance with two other large shipping lines (UASC and CSCL)

could yet set some further collaboration between lines in terms of joint feeders in the

Mediterranean markets.

Evergreen

Evergreen has formally joined the CKYH Alliance on Asia-Europe trades, where it will

initially contribute 17 vessels, with COSCO providing 15, Hanjin 13, Yang Ming 9 and K-

Line 8.

The current fleet (July 2014) comprises 191 containerships (owned and chartered) and has an

overall capacity of 0.90m TEU.

Figure 4.19: Evergreen’s Fleet Development, 2007-2014 (‘000 TEUs)

Evergreen is the fourth ranked container shipping line in terms of container shipping

capacity (i.e. a combination of owned and chartered-in vessels). Of the 191 containerships in

the current fleet, 44.5 per cent of vessels have been chartered-in and 55.5 per cent are owned.

This is a similar ratio to that employed by Maersk Line and gives Evergreen plenty of

flexibility to either increase or decrease the size of vessels deployed.


the capacity of the fleet has increased 46 per cent since 2007, with a one-off decline of

10.2 per cent noted in 2009 during the economic slowdown;

unlike other major shipping lines, Evergreen have hitherto been keen to distance

themselves from the race for ever larger tonnage, preferring instead to concentrate on

operating vessels between 6-8,000TEU capacity. That is until recently when they have

ordered some 14,400TEU size tonnage. A total of four vessels are now under order, all of

them of 14,400 TEU capacity, to be delivered between 2014 and 2015;

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at the beginning of February 2015, Evergreen announced an order of 11 x 18,000TEU

vessels, for delivery from early 2018 to 2019;

details of Evergreen’s change of strategy, is further illustrated in Figure 4.20.

Figure 4.20: Evergreen’s Change of Heart on The Capacity of Vessels Deployed


In H1 2014, Evergreen reported an operating loss of US$50 million, which the company

hopes to turn around by taking advantage of economies of scale and through shared space on

alliance vessels.

Evergreen’s primary regional commitment is at Taranto, although volumes have been

declining steadily since 2008. With the added volumes that could be provided by other

members of the CKYHE Alliance, coupled with the change of heart in terms of the size of

vessels to order, additional owned feeder vessels are a distinct possibility in the future,

although it remains uncertain as to whether Taranto will remain their hub of choice.

Italian Strategy

There is no evidence of too many direct calls in Italy as yet, but with additional alliance

volumes and a need for a new, reliable gateway hub, there are a number of distinct

possibilities on the Northern Tyrrhenian Sea that could be of interest.

In the Mediterranean, the alliance with CKYHE could also prove useful. Evergreen

currently utilises a number of owned feeder or short-sea services and with the

introduction of larger tonnage expected on the secondary mainline services, in the

wider region, the need to deploy bigger feeder vessels is also highly likely. With some

additional cooperation with members of the CKYHE Alliance, to help to fill the feeder

vessels, there is more likelihood that Evergreen will agree to increase their feeder

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tonnage rather than use third party feeder services to take any overflow from the

feeder services they currently deploy.

Hapag-Lloyd

German carrier Hapag-Lloyd and Chilean operator CSAV have confirmed their intention to

merge, in what will create the fourth largest liner company in terms of capacity. Following

the integration, the carrier will operate a fleet of around 194 ships of a combined 1.0m TEU,

and transport around 7.5m TEU a year. In H1 2014 Hapag-Lloyd reported an operating loss

of US$234 million, which the company hopes to turn around through acquisitions and the

use of combined alliance volumes to maximize the scale economies of the G6 vessels

deployed.

Hapag Lloyd’s current fleet (July 2014) comprises 146 containerships and has an overall

capacity of 0.74m TEU. Details in the fleet development are shown in Figure Figure 4.21.

Figure 4.21: Hapag-Lloyd’s Fleet Development, 2007-2014 (‘000TEUs)

The total fleet represents an increase of 50.0 per cent in capacity terms on the end 2007

figures, with the fleet decreasing by four vessels;

Of the total deployed fleet, Hapag-Lloyd has 45.9 per cent of owned vessels and 54.1 per

cent chartered-in. As observed in the previous figure, the percentage of chartered vessels

has been increasing since 2009.

Hapag-Lloyd ordered only two vessels for delivery in 2014, each with 13,200 TEU capacity.

Doc. No. 14-1394-H1 Rev. 0 – March 2015



Hapag-Lloyd have recently merged with CSA, but their respective liner networks are largely

complementary, as CSAV is focused on the Latin America trades after it gave up most of its

East-West and North-South network in 2011. As a member of the Grand Alliance Hapag-

Lloyd has a primary central Mediterranean hub interest at Gioia Tauro, but with the 2M

Alliance likely to want to use MCT and with five other partner lines to think about in the G6

Alliance, it remains uncertain where Hapag-Lloyd and its G6 partners will concentrate their

Mediterranean hub activities, although it remains highly likely that two or three hub ports

will be utilised and they will also look to avoid conflict with either the 2M Alliance or the

Ocean Three Alliance, leaving the way open for other alternatives that can provide some

local and transit volumes as well as provide the necessary deep water to handle larger ships.

Ports on the Northern Tyrrhenian Sea are set to compete for this major business.

Italian Strategy

All G6 member lines have concentrated on offering their feeder services via third party

operators. This may change if an agreement can be reached between the six members as to

where to transship their cargo from.

In the past, as member of the Grand Alliance, Hapag-Lloyd were very keen to combine

volumes with member lines and it would seem even more likely, now that they have five

partners, that they will be keen to do so again in an effort to take advantage of the

economies of scale by operating slightly larger feeder vessels.

4.7 IMPACT OF ULTRA-LARGE SHIPPING LINE ALLIANCES

Although shipping lines want to operate bigger vessels in order to be able to take advantage

of the economies of scale and ship units with a lower unit cost, the actual total costs are more

expensive and any savings therefore rely on the shipping lines being able to fill the available

space.

However, the current global demand suggests that there is not yet the demand required for

lines to be able to fully utilise the new bigger vessels cost-effectively. Shipping lines have

therefore developed a number of strategies designed to ensure that their main aim, i.e. filling

their ships, is achieved. The main strategies are as follows:

shipping lines that are having financial difficulties either look to merge with other lines,

e.g. the recent merger of Hapag-Lloyd and CSAV, or look to concentrate on core

markets, e.g. Zim Line’s decision to exit the Asia-Europe trade and concentrate on

secondary trades such as the Caribbean;

the use of formal alliance agreements, or Vessel Share Agreements and less formal ‘slot

swap’ arrangements are designed by lines to allow like-minded lines to have access to

space on their vessels, in order to increase the level of utilisation on these vessels, thereby

reducing the slot costs. Typically lines reciprocate these arrangements with lines of

similar magnitude and a similar marketing mind set. Smaller lines tend only to be used to

fill smaller volumes of cargo, which can usually be arranged with slot purchases or slot

swaps.

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‘Marriages of convenience’ such as the aborted P3 Alliance, the new 2M Alliance, The

Ocean Three Alliance, G6 Alliance and the recently expanded CKYHE Alliance, where

lines that would normally not cooperate are entering into more formal alliances, are

examples of the lengths that lines are prepared to go to in order to ensure that they are

able to fill their ULCS’s and take full advantage of the economies of scale;

lines’ maintain their marketing differences by offering ‘add on’ services to differentiate

themselves from other carriers despite using the same mainline vessels. These can take

the form of offers of logistical assistance, feeder services or intermodal rail/road

opportunities etc.;

reports suggest that the total vessel capacity absorbed by slow and extra-slow steaming

has reached about seven per cent of the total fleet. Vessels have been asked to operate at

speeds as low as 14 knots on certain legs on the main arterial trades in order to save fuel

costs, whilst also absorbing additional tonnage and mitigating the additional cost of these

newbuilds.

However, reports since November 2014 are now suggesting that fuel costs are on the

decrease, which is likely to see a reverse in the slow-steaming trend, because the

economic benefits of doing so are being eroded. This will depend a great deal on the

percentage of vessels owned/chartered by each individual line. As well as being a useful

tool to save fuel costs, it has often been thought that the addition of more tonnage to

certain service rotations has suited some shipping lines that have a surplus

of available owned capacity to slow-steam. For them, this news will not provide the

same opportunity as for the lines that have chartered in additional tonnage to allow slow-

steaming, but that can now off-hire these vessels and maintain rotations at a more

“reasonable” speed, where fewer vessels are required;

the final option that shipping lines have to be able to ensure that they are able to

maximise the utilisation levels of the vessels they deploy is to put some vessels in lay-up.

This ‘parking’ of vessels is designed to reduce the money lost on vessels that are not

needed, but is only a short-term fix.

As already discussed, scale economies are only available when the vessel is well utilised –

otherwise the costs are very high – and hence the desire by like-minded shipping lines to

cooperate in alliances and share some of the fixed costs. The culmination of this desire for

cooperation was the recently aborted P3 Alliance, which was to have been between the three

main global container shipping lines.

It is also important to recognise that the Grand Alliance and the New World Alliance have

already been operating as The G6 Alliance since March 2012 on Asia-Europe trades with a

combined share of 29.5 per cent and on the Transpacific trade since May 2013 with a

combined share of 32 per cent.

Further consolidation is also imminent with the CKYHE Alliance having recently embraced

Evergreen and China Shipping and UASC set to join forces with CMA-CGM in the

proposed Ocean Three Alliance (CMA-CGM, CSCL and UASC), together with Hamburg

Sud taking slots on some services. This would effectively reduce the options on the Asia-

Europe services to just four alliances. Other examples of cooperation are as follows:

the Grand Alliance (Hapag-Lloyd, OOCL and NYK Line) and the New World Alliance

(APL, Hyundai Merchant Marine and Mitsui OSK Line) agreed to merge and form The

G6 Alliance with effect from December 2011;

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as a result of tactical moves by nine of the major shipping lines, the remaining carriers on

the Asia-Europe trade have also begun to look at further cooperation. The carriers in the

CKYH alliance already have individual slot arrangements, involving Hanjin with UASC,

Yang Ming with China Shipping and COSCO with PIL-Wan Hai, but with effect from

April 2014, Evergreen have extended the alliance to form the new CKYHE alliance.

The major change that has been noted in recent months has been the announcement that the

proposed new operational alliance between the three largest global carriers – Maersk Line,

Mediterranean Shipping Co. and CMA CGM for their Asia-Europe services (the so-called

‘P3 Alliance’) did not receive the formal ratification from the Chinese Ministry of

Commerce. The proposed Alliance was driven by concerns on the balance of supply and

demand on the Asia-Europe trades, where severe over-capacity is currently noted and will

continue to worsen, and which still exists now that the P3 agreement has been banned by the

Chinese.

Instead, three weeks after the P3 announcement on 10th July, Maersk Line and MSC, took

the decisive step of announcing a further co-operation agreement to replace the previous ‘P3

Alliance’, called the ‘2M Alliance’. The new ten-year VSA (although if like the P3

agreement, this is also likely to include a two year drop out clause) will supersede the P3

Alliance and is expected to start early 2015 (pending regulatory approval).

The impact was expected to be significant on CMA CGM, since the termination of the P3

service agreements left CMA CGM with a number of service gaps. However, as suspected,

CMA-CGM were extremely quick in identifying China Shipping and UASC as the most

obvious alternative partners and have subsequently announced the formation of the ‘Ocean

Three Alliance’, designed to compete with the 2M Alliance particularly on the main trade

lanes.

This change of Alliance structure will have a number of potential implications for various

ports and terminals, because each of the former P3 member lines have existing or planned

equity involvements in container terminals, which is where they are likely to focus their

ports of call where possible.

This way of consolidation in the container shipping sector is a means of pooling vessel

capacity by two or more carriers. This is done by either exchanging slot capacity or by

pooling vessels. Consortia have vessel sharing agreements on certain trades and usually also

jointly procure port and terminal services. Consortia serve to maximize the efficiency of

resources and optimize service levels (i.e. frequency, transit times). Due to strategic or

commercial changes and to mergers and acquisitions, consortia have tended to change on a

regular basis.

2M and Ocean Three Alliance Services

2M

On 16th July 2014, MSC and Maersk Line agreed to form a vessel sharing agreement called

2M, operating with a total capacity of 2.1m TEU, with the majority of the ULCS’s deployed

on the East-West services. With a surplus of vessels of most size types, 2M will be able to

offer improved schedule integrity and more weekly departures by adding additional vessels

to each service and as a result of building in more “slack” in each pro-forma schedule giving

sufficient buffer to allow for both slow steaming and recovery time from any unexpected

delays to ensure that vessels are always on time. It should also be recognised that as well as

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offering combined services, MSC and Maersk Line will also be operating their own services

on some trade lanes, in order to ensure that some of their niche markets are also covered.

The combined services include the following services calling at Mediterranean ports:

From Asia:

Lion service – Middle East and China to north Europe also calls at Tanger-Med and Gioia

Tauro;

Dragon service – Beirut, Gioia Tauro, La Spezia, Genoa, Fos, Barcelona and Valencia;

Jade service – Port Said, Marsaxlokk, Valencia, Barcelona and La Spezia;

Phoenix service – Pot Said, Koper, Trieste and Rijeka;

Tiger service – Port Said, Piraeus, Ambarli and Izmit;

Great Sea – Izmir, Novorossiysk, Odessa, Ilyichevsk, Constanta, Ambarli and Port Said.

From Transatlantic:

Medusec service – Algeciras, Valencia, Gioia Tauro, Naples, Livorno, La Spezia, Genoa

and Sines;

Medgulf service – Gioia Tauro, Naples, La Spezia, Barcelona, Valencia, Algeciras and

Sines.

Of these services there are a number that could call at Livorno instead of La Spezia and/or

Genoa or Fos when port developments are completed in Livorno.

Ocean Three

On 9th September 2014 CMA CGM, CSCL and UASC announced the creation of Ocean

Three with the signing of a combination of vessel sharing, slot exchange and slot charter

agreements. Their new combined services will enable increased geographic coverage and

optimised calls with competitive transit times to all major Asian, European and North

American ports.

The agreements relate to the following service routes: Asia-Europe, Asia-Mediterranean,

Transpacific and Asia United States East Coast and include the following calling at

Mediterranean ports:

FAL1 Service: Far East to North Europe through Malta hub (direct call) to provide

effective feeder services to North Africa, Adriatic and Mediterranean;

MEX1 Service: Far East/Middle East to Malta, Valencia, Barcelona, Fos-Sur Mer;

shortest transit time to Spain and France and feedering services to North Africa through

Malta;

MEX2 Service: Far East/Middle East to Port Said, La Spezia, Genoa, Fos-Sur-Mer,

Valencia; shortest transit time to Italy (Ningbo-Genoa 28days);

PHOEX Service: Far East to Malta, Koper, Trieste, Rijeka, Venice; the only direct call to

Venice from Asia;

AEGEX Service: Far East to Piraeus, La Spezia, Genoa, Barcelona, Valencia; linking

Greece to Spain and Italy.

Of these services, there is potential for Livorno to attract services currently calling at La

Spezia and Genoa , namely MEX2 and AEGEX.

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Potential agreements regarding Translantic trade services are still under discussion.

It should be noted that eighteen of the top twenty international container lines have

committed to the ULCS strategy (the exceptions are Zim Line and Wan Hai) and

during the market slowdown none of these orders were cancelled, only deferred. This

is further evidence that the majority of lines are committed to this strategy for the long-

term.

As at October 2014 (or Q4 2014), the total number of vessels on order stood at 469 with

a total tonnage of 3.49mTEU, 47 per cent of which can be accounted for by orders of

vessels over 12,000 TEU. Of these new orders, 21 vessels with capacity >8,000TEU

were delivered during 2014 (October-December); 131 during 2015; 65 during 2015 and

23 from 2017 onwards.

These developments will be manifested in the rapid introduction of much larger vessels

into secondary services. The role of these vessels will be as mother ships offering

transshipment hub port calls on the major arterial trades. In addition, regional ports

will increasingly be used to link distinct deepsea services for markets outside the

immediate region. The driving force of these developments will be the introduction of

larger vessels and the lines’ need to fill them.

Impact on The Port of Livorno

For Livorno, this means that the majority of mainline services will be controlled by

four main Alliance groups, which will increasingly be calling at fewer ports on their

main haul services in order to save money. This will have the added result of

increasing the amount of transshipment units handled at what few ports the main

Alliance groups call at. Of the four main Alliance groups, both 2M and Ocean Three

Alliance have their own terminal interests, so it is more likely (although not impossible)

that Livorno will only have an opportunity to attract vessels from the CKYHE or G6

Alliance, but will be able to offer improved port facilities at a port where the major

shipping lines, such as Maersk, MSC and CMA-CGM, are not having any priority

berthing advantages, which in itself is a very attractive selling point.

However, that said, both the 2M services and the Ocean Three Alliance services have

recently announced a number of vessel calls from Asia and the US into ports on the

Northern Tyrrhenian Sea, Tyrrhenian Sea and the Adriatic, all of which could be

potential calls for the newly developed Livorno facility and it is important that Livorno

does not ignore this opportunity entirely.

With the various planned port developments at Livorno, the possibility of being able to

compete with Genoa, La Spezia, Trieste, Gioia Tauro, Marsaxlokk etc. remains good

and the port has a better than average chance of attracting services operated by either

the CKYHE or G6 Alliances, whether mainline to Asia or US East Coast or feeder

vessels. There also remain some lines that are not yet aligned to main Alliances (such

as Zim Line or PIL-Wan Hai) and their volumes also offer a further opportunity for

Livorno.

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5 LIVORNO’S COMPETITIVE POSITION

5.1 INTRODUCTION

The competitive position of any port is the result of its physical capabilities, location and the

built-up costs versus alternative port facilities. This Section examines the physical attributes

of the facilities, plus the number of gantry cranes in operation and specifically the depth of

water available. Details of hinterland links are shown in Section VI and a full Built-Up Cost

Analysis provided in Section VII.

The primary purpose of this Section is to assess the competitive position of the Port of

Livorno against a series of ports where the primary focus could be either local/transit port

volumes or transshipment volumes. It is felt that Livorno’s primary competition falls into

the following categories:

other ports on the Northern Tyrrhenian Sea, i.e. La Spezia, Genoa (V.T.E. and SECH),

and Marseille-Fos;

secondary competition on the Tyrhennian Sea, including Naples, Salerno and

Civitavecchia;

other ports on the Adriatic Sea, i.e. Trieste, Venice, Ancona and Ravenna;

central Mediterranean transshipment hubs such as Gioia Tauro, Cagliari, Taranto and

Marsaxlokk;

gateway terminals such as Barcelona and Valencia.

The review will assess the following aspects for each of these terminal facilities and be

structured as follows:

current terminal facilities;

future planned developments;

productivity;

comparative container handling costs;

regional capacity developments, 2014-2025;

SWOT Analysis.

5.2 CURRENT TERMINAL FACILITIES AND PLANNED TERMINAL DEVELOPMENTS

The following analysis provides a review of the current terminal facilities at the port of

Livorno and its main competitors as well as with details of planned and confirmed terminal

developments by region.

Northern Tyrrhenian Sea

TableTable 5.1 provides details of the main existing port terminal facilities in the Northern

Tyrrhenian Sea, together with the two new planned facilities at Vado Ligure and The Europa

Platform (The subject of this Study). A map of the ports included in this sub-Section,

namely Livorno, Genoa, La Spezia, Savona and Marseille are illustrated in Figure 5.1.

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Table 5.1: Terminal Facilities of Livorno, Genoa, La Spezia and Marseille Ports

Table 5.1 Terminal Facilities of Livorno, Genoa, La Spezia and Marseille Ports

Port Terminal Area Quay Length Berth Depth Capacity

(ha) (metres) (metres) (000s TEU/y ear) Quay Cranes P PP SPP

Livorno Europa Platform 42.0 1,450 16.0 1,500 11 3 8

Genoa/Savona Vado Ligure 21.0 700 17.0 900 6 6

Livorno Darsena Toscana 38.4 1,430 11.8 900 9

Lorenzini 8.92 540 7.90-13 170 4 mobile

Terminal Porto

Commerciale 16 760 2

LTM 7.89 1,300

Sintermar 7 3 /+1 mobile

Genoa

SECH

20.6 + 2.6 by

end of y ear 526 14.5 500 5

Multipurpose

San Giorgio 20.6 1,600 11/12 draft 4 mobile

Messina 25.3 1,687

10/12.5

backdrop 7

Genoa Metal 10 925

up to 11m

backdrop 4

Rebora 12 1,056

V.T.E. 110 1,400 15 1,500 8 4

La Spezia

LSCT

28.6 internal +

5.20 ex ternal 1543 14 1,200 10+2 mobile

Terminal del Golfo

4.25 port area +

3.120 ex ternal 337 8-12 draft 220

1 STS + 2

mobile

Marseille-Fos 2XL1 231 15

2XL2 231 15

2XL3 228 15

2XL4 162 15

Terminal de

Mediterranee

Seay ard 2XL

Brule-Tabac berth

Med

Europe/Mourepiane 33 925 max draft 11.40 9.6 1 3

p = panamax ; pp = post panamax ; spp = super post panamax


Cranes

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Figure 5.1:Map of Ports on the Northern Tyrrhenian Sea and Other Primary Competition for Livorno

Livorno

Darsena Toscana is by far the largest facility in the port of Livorno with a berth length of

some 1,430m, nine quay cranes and capacity of 0.9m TEU. The main restriction is the

limited depth of water available. With only 11.8m, the terminal can only hope to handle

vessels of <3,000TEU, which is why there is a need for further developments at the port

facility. Without deepening the berth, Livorno will lose cargo to competing ports in the

Northern Tyrrhenian Sea who are readying themselves to be able to handle ULCS’s. Section

IX provides a “gap analysis” to show what will happen to Livorno volumes if no action is

taken to improve the facility.

In January 2015 before the return of the Israeli shipping company Zim Line and UASC,

there were further positive signals from the terminal Livorno DTT, which increased from an

average of 19-20,000 monthly moves to 28-30,000 monthly moves. DTT are also

concluding an important deal with Grimaldi and have recently exceeded 0.5m TEU/annum.

The combined additional volumes of Zim Line and UASC, coupled with new development

plans in the port could see a big increase in port volumes in the coming year.

A new deepwater container facility, The Europa Platform (which is the subject of this

analysis) is being designed to be operational in 2019 (although full capacity of 1.5m

TEU/annum is unlikely to be ready until 2021) and is expected to consist of the following

salient features, designed to attract the largest container vessels to the port:

Doc. No. 14-1394-H1 Rev. 0 – March 2015


one main berth of 900m length with the possibility of extending a further 220m (latter

will require dredging from 5.0m to at least 16.0m) and a feeder berth of 550m;

depth alongside of 16.0m at main berth and 13.0m at feeder berth;

approach depth of 15.0m to be dredged to 17.0m and a turning circle of 600m diameter

and 16.0m depth;

initial plan for nine STS gantry cranes are to be provided by the terminal operator,

although there is potential for this to be increased to eleven to improve terminal

efficiencies;

terminal area of 42ha adjacent to the main berth, plus the possibility of a further 30ha of

land which is currently not paved;

further possibilities to extend berth parallel to main berth although this will necessitate

moving the existing oil terminal and further dredging.

The order of the works at Livorno’s Europa Platform is as follows:

1. consolidate dredging material on platform (started in 2014/5);

2. remove the existing breakwater to be able to provide proposed turning circle free of

obstructions;

3. find private investor and operator in 2015 – launch private finance tender in April 2015;

4. seek agreement to build main pier and feeder pier from council of public work and

Ministry of Environment – if successful expect to start work in 2019;

5. private operator to provide further investment for land and shore-side equipment as well

as for the provision of water, electricity, terminal buildings etc.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Figure 5.2: Port of Livorno (Europa Platform)

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La Spezia

The Italian of La Spezia announced a ten per cent growth in cargo moved by rail in 2014,

raising the proportion of traffic by rail, mostly in containers, to 35 per cent. This suggests

that La Spezia is keen to develop its reach for transit cargoes from La Spezia.

In January 2015, an additional two STS gantry cranes designed for LSCT and to reach 23

rows wide has been ordered and are likely to be delivered in the middle of 2015. Also, at the

beginning of the year in February 2015, LSCT handled the MSC London – at a nominal

capacity of 16,600TEU, it is the largest the port has ever handled and a further sign that

LSCT are looking to compete for major trade lanes and major shipping lines. LSCT’s depth

of 14m alongside will have to improve if they are to be able to regularly handle vessels of

this size.

Contship Italia’s La Spezia Container Terminal’s (LSCT) acquisition of Speter S.p.A, was

completed in January 2015, as is the integration of the organisation, systems and processes.

The terminal has expanded services to include short sea trades linking Italy and North

Africa, handling containers, general cargo and bulk cargoes.

Figure 5.3: La Spezia Container Terminal

Genoa

The Port of Genoa is comprised of seven container facilities, of which SECH and Voltri

(VTE) are the stand out facilities with 14.5m and 15.0m depth alongside and capacity of

0.5m TEU/annum and 1.5m TEU/annum respectively.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Figure 5.4:PSA’s Voltri (VTE) Terminal

Figure 5.5:SECH Terminal

Recent developments in Genoa can be summarised are as follows:

by August 2014 investments in quayside equipment included two new super post-

panamax container gantries at VTE, upgrades to four cranes at SECH terminal, and a new

super post-panamax mobile harbour crane installed at Genoa Port Terminal, managed by

the Spinelli Group;

Doc. No. 14-1394-H1 Rev. 0 – March 2015


the Calata Bettolo container terminal is scheduled to be completed by April 2016 and

would boast a 625 m quay with a 17m draught, and will be equipped to handle 0.85m

TEU/annum. However, although the Government paid a large sum of money to create

the necessary land site, there would need to be further expense for modifications to the

breakwater and a need to also develop road and rail links in a busy city. With all this

considered, it would seem highly unlikely that this expensive project will go ahead in the

near future, if at all;

the EU Commission has assigned a total of €260m for 13 projects, including the Genoa

Port Authority, which will see improved access to the port of Voltri at a cost of €35m;

another proposal is for the reconfiguration of access by sea to the harbor basin of

Sampierdarena and the new 'master plan' for the port of Genoa, for a total cost of €11.5m.

Also on the list, among others, is the dredging plan to allow the transit of larger ships

from Bocca di Levante (€22.5 m). This is merely speculation at the current time;

a new railway line is to be developed which runs between Liguria and Piedmont, through

twelve municipalities in the provinces of Genoa and Alessandria. The planned route is

about 53 km, including 39 km of tunnels and 14 km of interconnections with the existing

rail network, for a total of 67 total kilometers of new infrastructure. The aim for this rail

line, according to the proposal, is to "allow a significant expansion for freight traffic,

increasing the connections between Genoa, with the system of the northern ports of the

Tyrrhenian Sea with north Italy and Europe”;

in August 2014 it was reported that the merger of Savona and Genoa port authorities is

far from a done deal. The Port Authority of Genoa is in favour of combining the two

ports, but rejects accusations that this is a bid for hegemony. Although there is clear

enthusiasm in Genoa for the merger, the authorities at Savona are yet to be convinced,

although noted that neighbouring ports share both the same problems and opportunities,

starting with the corridor serving the hinterland. Co-operation aimed at finding joint

solutions is essential and many synergies can be achieved, although that doesn't

necessarily imply that the port authorities need to merge;

Genoa can handle 3m TEU/year currently. In addition, both VTE and SECH are equipped

to accommodate the largest ships now working on the east-west trade routes.

Vado Ligure

Vado Ligure falls under the control of The Savona Port Authority and with the major Maersk

platform under construction will have an annual capacity of 900,000 TEU when finished in

2017. The first vessel expected to call is expected to be in 2018, although the proposed

merger of the port authorities of Genoa and Savona might negatively impact these plans.

The plan for the construction of a multipurpose platform in Vado Ligure will be realised

through project finance, with an investment of €450m (€300m earmarked by the State and

€150m by the work promoter, i.e. the syndicate of companies formed by APM Maersk,

Grandi Lavori Fincosit and Technital). The platform will expanse a surface of 210,000 m2,

have five STS cranes (22 rows reach) and will provide a container terminal with a 700m long

rectilinear quay and two deep water berths - one at the root of the pier (depth 15.00 m) and

the other one at the head (depth 20.00 m). The natural deep waters (a distinctive feature of

Savona-Vado harbour, if compared to the other ports in the Northern Sea) will allow even

the last-generation container vessels, with a capacity of more than 18,000 TEU, to berth

safely. APMT’s links with Maersk Line could also entice vessels/services from the 2M

Alliance to call at the facility, providing the new facility with the core cargo it needs.

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Figure 5.6: Planned Design of APMT’s Vado Ligure Project

Once unloaded, the cargo must be efficiently processed: to this purpose, a dedicated road

system and a new tollbooth are to be constructed. The most important challenge is

represented by the railway transport. In order to improve the efficiency of train loading-

unloading operations (40 per cent of the containers handled in the new terminal will be

forwarded from the port by rail, thanks to the rail shuttle service devised by the Port

Authority), the Port Authority and Maersk Line decided to adopt “Metrocargo”: an

innovative and high-performing horizontal loading/unloading system, which allows to

significantly reduce the “handling times” and the environmental impact of the operations.

The plant will be set up on the dedicated rail yard behind the platform.

Marseille-Fos

Last year was another record year for containerised traffic in Marseilles after it handled just

over 1m TEU. The port continues to benefit from improved industrial relations and

enhanced operations since the implementation of the French port reforms in 2011.

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Figure 5.7:Marseille-Fos

In December 2014 Marseille-Fos unveiled an ambitious €360m ($441m) growth strategy as

it looks to position itself as a viable alternative to the major ports in Europe’s northern range.

The French port’s vision up until 2018 is to offer its customers a “dynamic Euro-

Mediterranean logistics and industrial cluster”, in which the development of its box business

will be central to this theme. Under the proposed plans, the Marseille-Fos Port Authority

will develop the existing land between the two “Fos 2XL” container terminals, ‘Terminal de

Mediterrane’ and the Seayard Terminal, to create a dedicated quay for the handling of

containers.

Over five years, the port of Marseille Fos is expecting an ambitious seven per cent per

annum growth on containers to reach 1.5 million TEUs in 2018. After starting the two

container terminals "Fos 2XL" in 2012, a third, "Fos 4XL" is planned for 2018 with

Hutchison providing the port operations.

Despite these ambitious plans, the port of Marseille-Fos offer only peripheral competition to

the ports on the Northern Tyrrhenian Sea.

The Tyrrhenian Sea

Table 5.2 provides details of the main port terminal facilities in the Tyrrhenian Sea. A map

of the ports included in this sub-Section, namely Naples, Salerno and Civitavecchia are

illustrated in Figure 5.8.

http://www.lloydslist.com/ll/sector/containers/article450970.ece

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Figure 5.8: Ports on the Tyrrhenian Sea

Table 5.2: Terminal Facilities of Tyrrhenian Sea Ports

Naples

Although advertised as a port of call on the 2M Alliance’s Transatlantic MedGulf service,

Naples is typically served by feeder services and operated either with ship’s own gear or

with mobile cranes. With no planned developments and a great deal of competition from

ports in other Italian regions, it would seem that vessels >6,500TEU are unlikely to call. The

Table 5.2 Terminal Facilities of Tyrrhenian Sea Ports



Civitavecchia Roma Container

Terminal 23 730 15 draft 700

Naples

G. Bausan w harf +

Granili Quay 20.0 for all 3 850 4+3mobile

Flav io Gioia Pier 600 3 mobile

Salerno Container Terminal 12 890 9-12 max draft 2 3



Cranes

Doc. No. 14-1394-H1 Rev. 0 – March 2015


port will therefore be restricted to handling short-sea and feeder services with some limited

US trade involvement.

Figure 5.9: Naples Container Port

Salerno

With a limited draft alongside, Salerno has always struggled to attract deepsea vessels,

although in the 1990’s the P&ONL Famex and Gamex US flag services (formerly Farrell

Lines) offered services to the US east coast and US gulf coast. With a draft of 9.7m, it is

highly unlikely that deepsea vessels will call again and Salerno will have to concentrate on

handling feeder vessels, or some secondary trade lane services.

Figure 5.10: Salerno Container Terminal

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Civitavecchia

There is a three-year work plan developed between 2013 and 2015. Once wharf 25 is free of

cruise traffic, the RPR can be fully implemented which will be used to serve the Container

Terminal. The same Terminal will be upgraded with six new ship-to-shore gantry cranes and

capacity will increase to 700,000 TEUs with the goal of handling a total of 300,000 TEUs by

next year.

Figure 5.11: Civitavecchia Port

Adriatic Sea

Table 5.3 provides details of the main port terminal facilities in the Adriatic Sea relevant to

this study. A map of the ports included in this sub-Section, namely Trieste, Venice, Ravenna

and Ancona are illustrated in Figure 5.12.

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Figure 5.12: Map of Ports on The Adriatic Sea

Table 5.3: Terminal Facilities of Adriatic Sea Ports

Table 5.3 Terminal Facilities of Adriatic Sea Ports



Venice VECON 29 y ard 852m 400 4

Trieste Molo VII Container

Terminal

40.0 stacking

surface

770

operational+600

supporting

18 draft 650 7

Ravenna Setramar Terminal 4 mobile

Terminal Container

Rav enna 640 10.6 draft 280 y ard 1 mobile 4

AnconaAdriatic Container

Terminal5 1



Cranes

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Trieste

After changing hands several times (to Rotterdam’s ECT on privatisation in 1998, then to

Luka Koper in 2001), Trieste’s container terminal on Pier 7 was acquired in stages by TO

Delta during the course of 2004.

Following a terminal reorganisation, the replacement of four container gantry cranes with

four new 16-row outreach units in 2005 (and the upgrading of three remaining cranes in

2008), the renamed Trieste Marine Terminal (TMT) has a 770m quay with 17.35m depth

alongside for mainline vessels and a further 650m support quay, equipped with a total of

seven container gantry cranes. The removal of rail tracks at the centre of the terminal in

2009 and addition of two RMGs allowed stacking space to be increased, thereby boosting

capacity to 0.60m TEU/year.

In 2010, the Italian bank, Unicredit, and APM Terminals agreed a €1bn public-private

project with Friuli Regione Venezia Giulia and Generali (an insurance company) for a new

container port at Trieste/Monfalcone. The consortium will be granted a 35-year concession,

to be managed by APMT. A 1.6m TEU/year capacity is to be developed in the first phase.

Following dredging to accommodate 13,000 TEU vessels, capacity would be doubled to

3.2m TEU/year with the final phase raising capacity to 5.5m TEU/year. Significant

upgrading of road and rail connections is to be included. With the aim of handling 60 per

cent of inland moves by rail, European Rail Shuttle (Maersk’s railway company) and

Trenitalia are to form a joint venture.

2014 was a record year for the Port of Trieste, had record volumes in 2014 with them

witnessing a 10.3 per cent increase since 2013, achieving 0.5m TEU for the first time.

Figure 5.13: Port of Trieste

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Venice

The Vecon container terminal has a berth length of 852m with an alongside depth of 10.5m,

and there are four panamax container gantry cranes. There are plans to add a further 350m,

which will boost capacity by some 0.10m TEU/year, when the paving of associated yard area

is completed. An exchange of equity in 2008, between PSA Sinport and GIP (both operators

of container terminals at Genoa), gave GIP a 40 per cent holding in Vecon, with PSA

retaining 60 per cent.

In 2003, Mariner SpA, part of Malta’s Hili Group, and Marinvest, which has links with

MSC, acquired a multipurpose terminal called Terminal Intermodale Venezia (TIV) at

Venice’s Marghera harbour. A container area of over 6h was allocated within the terminal,

and mobile cranes, reach stackers and container tracking equipment were installed. MSC

vessels are typically handled at either Berth 10, which is 220m long and 9.6m deep, or

Berths 12-15 which provide 575m at 10.3m depth.

The need to deepen the port’s access channel and berths has become increasingly urgent in

recent years. As disagreements about the disposal of dredge spoil blocked efforts to deepen

the channel, prolonged silting has reduced its depth from 12.0 to 9.4m. The loss of the port’s

last direct deep-sea calls intensified efforts by the port authority to rectify matters to lure

them back, and some berths and channels were deepened to 11m in 2008-09.

In 2010, the port submitted a plan to government for a €1.3bn offshore terminal for tankers

and deep-sea containerships. The proposed location, eight nautical miles from the mainland,

has a 20m natural depth. A 1,400m quay and automatic handling system that would transfer

containers between containerships and barges, the latter shuttling to/from a new, 91h barge

terminal in Venice’s Porto Marghera. Capacity would be built up from 0.65m TEU/year

initially to 1.4m TEU/year of containers and 7mt/year of oil upon completiont.

Figure 5.14: Port of Venice Offshore Terminal Project

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The New Venice Container Terminal is expected to be fully integrated with the freight

villages located in the Veneto region and enable the Upper Adriatic port system to act as

main gateway for goods exchanged between Central and Eastern Europe and the Far East.

However, despite the advantage of naturally deep water, the concept of discharging

containers and then re-handling them on barges to Venice is flawed and will incur additional

handling fees. Coupled with the potential hazards of loading containers on barges without

lashings as is currently suggested and it would seem unlikely that this project will receive the

backing it is seeking from the Government to go ahead with the proposal.

Ancona

In December 2014, the European Union announced the plan to spend €34.6m on construction

of an additional 273m of dock, thereby increasing the berth length overall to 616m and

bringing the alongside depth to 14m.

Behind the new quay, the contract involves the construction of 35,000 m2 terminal yard,

allowing for the better management of the facility and increasing efficiency. There are also

plans to provide runways for gantry cranes.

Figure 5.15: Port of Ancona

Ravenna

In December 2014 Ravenna announced that it was pushing ahead with its Global Port Hub

(GPH) project, which will deepen the access channel and lead to the development of a much

larger container-handling facility. This is to be partially funded by the European Investment

Bank and includes an ambitious dredging plan from 11m to 14.5m and to relocate a much

bigger container terminal elsewhere in the port. The aim is to increase capacity to 0.65m

TEU/annum (twice the current level), with the help of investment in new systems,

infrastructure and equipment by the terminal operator – Contship Italia. The discussions

have been ongoing for the last five years.

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In 2014, two quay cranes with an outreach of 17 containers across were commissioned as

part of the investment program and the terminal now has the capability of handling

8,000TEU capacity vessels.

Figure 5.16: Port of Ravenna

Central Mediterranean Transshipment Hubs

The Italian ports of Cagliari, Gioia Tauro and Taranto as well as the Maltese port of

Marsaxlokk, continue to be the major transshipment hubs for the Central Mediterranean.

With annual capacities in the multi-million TEU/annum these facilities are well placed to

expand their market share of transshipment services for the region. The combined annual

capacity for these terminals is over 10m TEU’s. Together they represent the majority of the

transshipment market capacity within the Central Mediterranean with each of these facilities

operating the latest equipment. Being able to accommodate some of the largest vessels they

can each boast berthing lines in the thousands of metres and quay-side depths no shallower

than 15.5m. Marsaxlokk and Taranto are continuing with major development, whilst MCT

is largely sufficient with the equipment it has to meet the requirements of existing and future

ship sizes and volumes.

Table Table 5.4 details the main characteristics of the main central Mediterranean

transshipment hubs and it is clear from this that the Europa Platform is unlikely to compete

with these facilities for transshipment volumes, concentrating instead in the main on local

Italian volumes and some central European transit cargo.

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Table 5.4: Terminal Facilities of Transhipment Ports

Gateway Terminals

Although not direct competition for Livorno, gateway terminals in Barcelona and Valencia

will detract from the ability of Livorno to handle transshipment containers in particular.

Table Table 5.5 summarise the main technical characteristics of gateway facilities at

Barcelona and Valencia.

Table 5.5: Terminal Facilities of Barcelona and Valencia Ports

Table 5.4 Terminal Facilities of Transhipment Ports



Gioia Tauro Medcenter

Container Terminal

160 3,400 18 4,200 22 gantries +

1 mobile

Cagliari

Cagliari

International

Container Terminal

40 1,520 16 1,3007 gantries + 1

mobile

Malta Freeport Terminal 1 49 1,290 17north quay +

w est q being

dredged to 13m

2 7

Terminal 2 22 1,511 17 (ro-ro berth is

12.5)

11

Taranto Container Terminal 110 1,500 15,5 35.31 stacking

capacity

1 mobile 2 8



Cranes

Table 5.5 Terminal Facilities of Barcelona and Valencia Ports



Barcelona Terminal Muelle

Sur (TCB)

54 y ard

ex tension1,380 16 draft 1,300 6 8

Barcelona Europe

South Terminal

(BEST)-TerCat

60 y ard 1,000 16.5 draft 1,000 11

Valencia MSC Terminal

Valencia

35 770 16 draft 8 STS

Terminal Muelle de

Lev ante (TCV)

37 1,660 9-16m draft 2 4 3

Noatum Container

Terminal Valencia

106 (158) 1,780 (2,318) 16 150 10 ov er super

post panamax

1 4 4



Cranes

Doc. No. 14-1394-H1 Rev. 0 – March 2015


5.3 PRODUCTIVITY COMPARISON

In general terms, target productivity levels depend on the size (capacity) of the ports in

question and their location. This is less true of transshipment hubs that primarily have to be

able to compete with global benchmarks in order to develop a secure market role. The

terminals under review in this study are essentially a combination of some small to medium

capacity facilities and transshipment hubs (Gioia Tauro, Marsaxlokk and Cagliari).

It should be noted that the key benchmark is the availability of sufficient deepwater berthage.

In addition, the level of back-up land (terminal area) is also important to be able to assess

whether the space will be sufficient to handle the anticipated demand. In our experience, it

has often been possible to increase terminal throughput by intensifying land use, but it is far

more difficult to rapidly accelerate berth productivity.

In the traditional annual productivity comparison there are two approaches:

TEU per berth metre;

TEU per gantry crane.

There are various strengths and weaknesses of the two ‘traditional’ approaches to the

analysis of container terminal productivity.

Apart from the obvious advantages of this type of data being readily available and

transparent from the various ports and easily understood, the results generally can only

provide a guideline when used to compare port performance levels at the various container

terminals.

Annual Productivity – TEU per berth metre

Table 5.6 provides details of the total berth length for the container terminals under review.

Table 5.6: Total Berth Length (m) at Comparative Container Ports

Table 5.6

Total Berth Length (m) at Comparative Container Ports

Port Terminal 2010 2011 2012 2013 2014

Liv orno Darsena Toscana 1,430 1,430 1,430 1,430 1,430

Genoa SECH 526 526 526 526 526

VTE 1,400 1,400 1,430 1,430 1,430

La Spezia LSCT 1,438 1,388 1,500 1,500 1,543

Gioia Tauro MCT 3,011 3,011 3,391 3,391 3,391

Cagliari CICT 1,520 1,520 1,520 1,520 1,520

Taranto Container Terminal 1,500 1,500 1,500 1,500 1,500

Marsax lokk Terminals 1 & 2 2,258 2,258 2,258 2,258 2,581

Trieste Molo VII Trieste Marine 1,420 1,420 1,370 1,370 1,370

Venice Vecon 510 852 852 852 852

Source: Ocean Shipping Consultants/Ports/Articles/CI Yearbook

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The major differences in the total berth lengths of the ports under review for each of the

years under review are as follows:

in 2012, LSCT added 112m of feeder berth;

in 2012, a further feeder berth was added to the main berth at MCT, Gioia Tauro (380m);

in 2014, Marsaxlokk added 323m of quay;

Venice added 342m in 2011.

Of course, the level of productivity at a particular port (or terminal) will be influenced by the

stage of development of the specific location. That is to say, as new terminal capacity is

added in large tranches and demand tends to increase (or fluctuate) incrementally, the level

of recorded productivity will vary significantly on a year-by-year basis.

Despite these limitations, the measure of moves per berth metre is one of the most effective

measures of productivity. A target level of 1,000-1,250 TEU/berth metre/year is achievable

for medium sized ports with a high transshipment component, with some 1,500-1,750

TEU/berth metre/year being more appropriate for large ports and about 400-500 TEU/berth

metre/year for those smaller ports and terminals at the other end of the scale.

In this context, it is important to clarify the following definitions of a small, medium or large

container terminal:

small container terminals are terminals handling less than 2 million TEU per annum;

medium container terminals are terminals handling between 2 and 5 million TEU per

annum;

large container terminals are terminals handling more than 5 million TEU per annum.

Based on 2010-2014 volume data, Table 5.7 provides an indicative productivity measure in

terms of TEU per berth metre/annum for the ports under review.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 5.7: Annual Productivity TEUs per Berth Length (m)

Based on the earlier guidelines, it is possible to conclude as follows:

based on annual port volumes, Gioia Tauro should be considered a medium sized

terminal and should therefore be achieving productivity levels in excess of 1,000 TEU per

berth metre/annum, especially given a transshipment level of 97 per cent and is close to

achieving this in 2010 and 2013;

Marsaxlokk should be considered in the same category as Gioia Tauro, but regularly out

performs its main competition;

the majority of the other terminals reviewed fall into the small container terminal

category and as such should be achieving 400-500TEU/berth metre and of the sample of

ports reviewed only Taranto (low volumes) and Trieste have failed to reach these levels;

Livorno is currently achieving a “par” score, but there is still room for some

improvement.

Annual Productivity – TEU per crane

Crane moves per hour calculations can be misleading and depend on shift patterns, methods

of recording and meal breaks, so are not generally meaningful without detailed and focused

analysis. In the current context an overall view of TEUs handled per container gantry crane

(or equivalent) per year has been undertaken with this providing a useful starting point for

investigation.

Table Table 5.8 provides details of the number of ship-to-shore gantry cranes (or their

equivalent) at each of the ports under review.

Table 5.7.

Annual Productivity-TEUs per Berth Length (m)

Port Terminal 2010 2011 2012 2013 2014

Liv orno Darsena Toscana 439.50 446.01 383.95 391.03 403.83

Genoa SECH 602.41 532.36 622.06 618.69 850.46

VTE 700.68 814.37 869.19 823.25 809.15

La Spezia LSCT 787.30 852.05 739.55 773.61 771.15

Gioia Tauro MCT 946.95 765.52 802.45 910.47 618.40

Cagliari CICT 414.01 403.41 412.90 461.94 431.58

Taranto Container Terminal 387.93 402.94 175.64 131.54 98.49

Marsax lokk Terminals 1 & 2 845.66 1,045.17 1,124.89 1,217.89 1,123.60

Trieste Molo VII Trieste Marine 198.31 276.89 297.83 334.74 347.82

Venice Vecon 770.39 537.98 504.57 524.17 535.29

Source: Ocean Shipping Consultants/Ports/CI Yearbook

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 5.8: Total Number of STS Gantry Cranes at Comparative Container Ports

The major developments in the total number of gantry cranes at the ports under review are as

follows:

in 2012 MCT in Gioia Tauro added a further seven STS gantry cranes, before three of the

existing cranes were taken out of service in subsequent years;

the other terminals under review made no major changes.

Table Table 5.9 provides an indicative productivity measure in terms of TEU per gantry

crane per annum for the ports under review, based on volume data from 2010-2014.

A level of 100,000-150,000 TEU/gantry crane/year is a reasonable target for these markets,

on the assumption that one gantry crane is required for every 86-115m of quay (depending

on the LOA of the post-Panamax vessel type in question). Given that a minimum total berth

length of 700m is required to berth two fifth generation post-Panamax vessels, three to four

gantry cranes will be required in order to ensure that the maximum levels of productivity are

achievable.

It should be added that transshipment moves are generally considered to be easier and

quicker to make than moves for local import/export boxes. This means, that with other

matters equal, ports with the highest ratio of transshipment units should perform better.

However, other factors such as automation and better work practices, which are usually the

result of a terminal being operated by an international class terminal operator, also have a

significant impact on terminal performance levels.

Table 5.8

Total number of STS Gantry Cranes at Comparative Container Ports

Port Terminal 2010 2011 2012 2013 2014

Liv orno Darsena Toscana 8 10 10 9 9

Genoa SECH 5 5 5 5 5

VTE 10 10 10 10 10

La Spezia LSCT 10 10 10 10 10

Gioia Tauro MCT 18 18 25 22 22

Cagliari CICT 7 7 7 7 7

Taranto Container Terminal 10 10 10 10 10

Marsax lokk Terminals 1 & 2 23 22 21 20 20

Trieste Molo VII Trieste Marine 7 7 7 7 7

Venice Vecon 5 5 4 4 4


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Table 5.9: Annual Productivity- ‘000s TEUs per STS Gantry Crane

There is a distinct relationship between the ports that do more transshipment and the

higher productivity levels, as well as a link between higher port performance and

international terminal operators. This is particularly true of ports in the Mediterranean;

other ports with a high proportion of transshipment also performed within the set

guidelines at 100,000-150,000 TEU/ gantry crane/annum for example:

Gioia Tauro – 97 per cent transshipment and 140,000 TEU/gantry crane/annum in

2013,

Marsaxlokk – 86 per cent transshipment and 145,000 TEU/gantry crane/annum in

2014;

of the other ports, La Spezia, Voltri and Venice have all achieved more than 110,000

TEU/gantry crane/annum, and have a share of local, transit and transshipment cargo that

helps to improve their efficiencies. LSCT and VTE are also managed by international

terminal experts who are masters at being able to get the most out of small ports;

in this measure, Livorno has some considerable room for improvement, lagging behind its

competition quite considerably.

5.4 CONTAINER HANDLING COSTS

Table 5.10 compares the terminal handling costs for local import/export units and for

transshipment units for Livorno and its main competitors. Section VII will review the built-

up cost analysis of deep-sea container moves and so it is important to highlight the handling

costs not only for ports from which the containers can be railed/trucked to the final

destination, but also the transshipment costs so that a cost comparison for a feeder alternative

can be calculated and compared with the costs of a direct shipment.

Table 5.9

Annual Productivity-'000s TEUs per STS Gantry Crane

Port Terminal 2010 2011 2012 2013 2014

Liv orno Darsena Toscana 78.56 63.78 54.90 62.13 64.16

Genoa SECH 63.37 56.00 65.44 65.09 89.47

VTE 98.10 114.01 124.29 117.72 115.71

La Spezia LSCT 113.21 118.26 110.93 116.04 118.99

Gioia Tauro MCT 158.40 128.05 108.84 140.34 95.32

Cagliari CICT 89.90 87.60 89.66 100.31 93.71

Taranto Container Terminal 58.19 60.44 26.35 19.73 14.77

Marsax lokk Terminals 1 & 2 83.02 107.27 120.95 137.50 145.00

Trieste Molo VII Trieste Marine 40.23 56.17 58.29 65.51 68.07

Venice Vecon 78.58 91.67 107.47 111.65 114.02


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Table 5.10: Stevedoring Costs – 2014 – US$ - per 40’ Loaded Container

Costs of handling containers at Northern Tyrrhenian Sea ports are more or less in line with

one another, although handling costs at Voltri are the most expensive and those at Livorno

are the cheapest. There is also little difference between the transshipment rates for the three

major central Mediterranean transshipment hubs. Handling costs in Trieste are

representative of handling costs in the Adriatic, and Fos representative of more westerly port

costs such as those charged in Spanish ports. Salerno is generally seen to be cheaper than

most Northern Tyrrhenian ports (apart from Livorno) although its relative merits (relatively

shallow water and limited handling capacity) are such that shipping lines will only call here

for feeder services. Livorno’s charges slightly below the market level for similar ports, but

this will help to attract additional business especially when the new terminal is developed as

well.

5.5 REGIONAL CAPACITY DEVELOPMENTS, 2014-2025

Table 5.11 provides details of the known capacity developments for Livorno’s primary

competition in the Northern Tyrrhenian Sea region. Although there are other ports in the

Adriatic Sea and Tyrrhenian Sea, as well as a number of central Mediterranean

transshipment hubs, the terminals included represent the primary competition for the Italian

local import/export markets and to a lesser extent the international transit markets. It is

primarily the extension of the local Italian port volumes that will determine the success of

the Europa Platform project, coupled with some added value in central European cargoes

especially to/from Austria, Switzerland and Slovenia. Although parts of southern Germany

are also theoretically within reach, it would seem unlikely that German shippers or

consignees would agree to a routing via Italy.

Table 5.10

Stevedoring Costs - 2014

US$ - per 40' loaded container

Livorno SECH VOLTRI La Spezia Fos Trieste Salerno Gioia Tauro Marsaxlokk Taranto

Import / Export

40' container 137.94 171.00 188.10 182.40 216.60 155.04 176.70 na na na

Transshipment

40' container 110.58 228.00 136.80 131.10 131.10 124.26 108.30 153.90 149.91 151.05

Ty pically , these are prices discounted for v olume customers.

Transshipment full cy cle cost - v essel-y ard-v essel w ith discount for 100-340k box es.

Import/ex port - v essel-gate


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Table 5.11: Northern Tyrrhenian Sea Port Capacity Developments to 2025 – Million TEUs

These capacity development details will be used when developing the supply/demand

balance for Livorno in Section VIII of this Study, which will determine the necessity of this

additional capacity to meet the demand. It is clear from this review that there is a need for

the additional Europa Platform capacity.

5.6 SWOT ANALYSIS

Table 5.12 assesses the strengths, weaknesses, opportunities and threats for the Europa

Platform project. It is important that the Livorno Port Authority takes the maximum possible

advantage of this planned development and although a depth of 16.0m alongside may well be

suitable for the size of vessels currently calling at Livorno, this is an opportunity to “future

proof” the port against the introduction of bigger vessels on a number of different trade

lanes. Given also the additional depth that will be offered in Vado Ligure (17m) and is

already available in Trieste (18m), it is crucial that this opportunity to at least match the

competition is not lost. A failure to do so could result in the new facility being a far less

saleable commodity to prospective terminal operators and/or financial investors.

Although water depth is not the only criteria used to judge the viability of a new project, it is

one of the major considerations, because without a certain depth of water some shipping

lines may not be able to berth vessels of the size that they would want to or with the

utilisation rate that they would ideally be aiming for.

Detail of the respective depth of water offered at the major competing ports and what this

represents in terms of the maximum size of container vessel that can be accommodated is

illustrated in Figure 5.17: Link between Ports’ TEU Volumes, Depth and Evolution in Vessel

Size and Figure 5.18.

Table 5.11

Ligurian Sea Port Capacity Developments to 2025

- million TEUs

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Liv orno 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85

Europa Platform 0.50 1.00 1.50 1.50 1.50 1.50 1.50

SECH 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50

Voltri 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50

Other Genoa 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

Vado Ligure 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90

LSCT 1.90 1.90 1.90 1.90 1.90 1.90 1.90 1.90 1.90 1.90 1.90 1.90

Total 5.75 5.75 5.75 5.75 6.65 7.15 7.65 8.15 8.15 8.15 8.15 8.15


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Table 5.12: Livorno Europa Platform SWOT Analysis

Table 5.12

Livorno Europa Platform SWOT Analysis

Strengths Weaknesses Opportunities Threats

Planned relativ ely deepw ater in the near term Shallow er w ater than Vado Ligure and Trieste Improv e customs clearance times Failure to improv e w ater depth to 18.0m w ill lose

competitiv e adv antage to Vado Ligure and Trieste

Good potential for transit markets Productiv ity lev els low er than t/s hubs Potential to attract major lines w ith larger Accelerated dev eloment of Collata Bottolo

v essels - 18,000TEU possible

Significant local market in Liguria and north Italian Need for deeper w ater alongside (especially from Scope for dedicated/priority arrangements Failure to deepen port w ould hit competitiv e

regions 2018) w ith major lines position - loss of major opportunity

Ability to combine transit and import/ex port Customs reputation not good but potentially better Scope to further boost productiv ity

containers than Genoa

Reasonable cost structure Scope to combine local and transit business

Reasonable lev els of productiv ity Marginal potential for local transshipment

Good rail connection direct to the port Barge direct from terminal into hinterland


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Figure 5.17: Link between Ports’ TEU Volumes, Depth and Evolution in Vessel Size

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Figure 5.18: Comparative Water Depth (m) and Draft (m) of Major Livorno Port Competition

Section 7 will look in more detail at the built-up cost analysis of serving various towns/cities

via different ports, The deepsea cost is obviously a major part of this equation and one

heavily related to the depth of water available alongside at each port (although length of

berth, strength and size of quay and number and type of gantry cranes are also of relevance),

which determine the maximum size of vessel accommodatable and also therefore the cost per

slot onboard related to the economies of scale of each vessel size type.

5.7 CONCLUSION

The Livorno Port Authority is currently in a position of having the capability of deciding

precisely what facilities it should look to create as part of the Europa Platform Project.

Obviously, the additional depth of water compared with the original plans would ensure that

the port is “future proofed” against any expected vessel size changes in the mid to long term

and together with the potential for strong rail links into northern Italy and into parts of

central Europe, the future demand potential would be attractive to would be terminal

operator. With a capable terminal operator the terminal could go from strength to strength,

improving both

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6 ANALYSIS OF THE ITALIAN ROAD AND RAIL NETWORK

6.1 THE PORTS CONSIDERED

There are currently several ports that compete with Livorno for the forwarding of container

traffic into the immediate hinterland:

Port of Genoa – well placed to serve the north-western region of Italy, the port’s

strategic position allows for a potentially excellent connection to the European economic

and commercial hinterland;

Port of La Spezia – a major merchant port on Northern Tyrrhenian Sea, with a strong

container base;

Port of Venice – a primary port in the Adriatic Sea in terms of volume of commercial

traffic;

Port of Civitavecchia – located on the Tyrrhenian Sea, it is a multi-functional port that

handles several types of cargo including Ro-Ro, Ro-Pax, container and liquid/sold bulks;

Port of Marseilles – the largest French port on the Mediterranean Sea, its strategic

position allows for excellent access to the French hinterland and on into the rest of

Europe.

Figure 6.1: Main Competitive Port System


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6.2 ANALYSIS OF THE ITALIAN ROAD AND RAILWAY NETWORK

The Italian Road network

The Italian road network (minus municipal roads) currently has an overall length of 183,705

km and is divided into several different classes:

motorways (autostrade) – designed to handle very high volumes of traffic safely, these

form the long-distance road network in the country;

a-Roads (Strade Statali) – these represent national arteries and are managed by the

Government through ANAS. Many lead to national borders or connect main commercial

areas such as ports, airports, and freight villages, to the major urban areas;

regional Roads (Strade di interesse regionale) – these roads connect the provincial

main towns of the same region or municipalities;

provincial Roads (Strade provinciali) – these roads of secondary importance, owned

and managed by the province themselves;

The main structure of the Italian road system is formed by motorways and A-roads, which

represent the transit routes for medium to long distance connections.

The motorway network includes major road connections such as A1 Milano-Napoli and

A14 Bologna-Taranto that ensure the North-South connections along the Tyrrhenian and

Adriatic coasts. The cross-connections are A4 Torino-Trieste in the North, A24 Roma-

Pescara in the Centre, and the A16 Napoli-Canosa in the peninsular regions in the South.

Due to being the economic heart of the nation the motorway system in the north is very busy,

with the presence of many industrial areas and the local commercial network (Veneto,

Emilia Romagna and Lombardy). This area has a high concentration of logistics

infrastructure (freight villages in Bologna, Verona, Padua, Torino and Orbassano) including

the major ports of Genoa and Trieste, Venice, etc. (Figure 6.2).

The further south, the sparser the road network becomes and there are entire areas that are

not covered, especially in the centre of the country. In particular the cross-connections

between the two sides of the peninsula need further improvement.

Livorno is well served with road connections to the major hinterland regions to the north and

also has good access to the central Italian regions.

Critical issues of the Italian Road System

One of the main critical issues with the Italian road network has been a lack of upgrades due

to work having been put on hold for years. The works (according to the provisions of the so-

called "Legge Obiettivo") were aimed at increasing road safety through the preparation of a

specific plan, but often such works have been stopped due to lack of funds.

In Italy, approximately 90 per cent of goods and passengers are transported by road. This

obviously causes congestion on some routes, with high external costs in terms of

environmental pollution and in time spent for the travel, as well as an increased risk of

accident.

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Figure 6.2:Italian Motorway Network

6.3 THE ITALIAN RAIL NETWORK

The railway network managed by RFI has an extension of 16,701 km. The lines are

classified as follows:

Fundamental Lines – Characterised by a high volume of traffic and high quality of the

infrastructure. They include the international routes and the connections between the

main Italian cities;

Complementary Lines – With lower volumes of traffic, these form the connection

between regions, and the connections between these regions and the main routes;

Junction Lines – developed to serve high traffic areas, these connect fundamental and

complementary lines located within metropolitan areas.

At present complementary lines represent 56 per cent of the network and they are present

mainly in the Southern regions. The fundamental lines include North-South connections and

those cross-connections linking the Tyrrhenian and Adriatic Sea. The double track lines


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represent 45 per cent of the total with most of them electrified (7,431 km). The diesel

traction lines all have single track.

Critical issues of the Italian Railway System

The inherent weakness of the railway system is the main critical issue within the Italian

logistic system, especially when considering that hinterland transport has an increasingly

higher impact on the total cost of transport and is a crucial competitive element.

In fact, the infrastructure network for rail transport has critical elements that are both

structural and interconnected, which generate a strong divergence between the rail networks

capacity and the demand for rail transport. With regard to structural aspects, there has been

a significant lack of infrastructure development in the South region, which has seen little

extension in network coverage and is technologically outdated and inefficient compared to

the networks of the Centre or Northern regions (at the end of 2011, less than 60 per cent of

the network was electrified, with a reduced double track coverage, equivalent to 29.4 per

cent of the total).

Provision of effective rail capacity will be a key factor in determining the hinterland reach of

Livorno.

The existing limitations of the rail network hamper the transport of containerised goods.

These limitations include the following issues:

capacity shortfall in some strategic nodes, in particular along the international crossing

points, which cause considerable bottlenecks. These severely restrict access to Italian

industry and limit the efficiency of cross border container movements;

scarce railway infrastructure in the ports, which is responsible for the high costs of rail

activities within port areas (shunting in port typically accounts for 30 per cent of the

overall cost of a train).

Substantial development of the infrastructure and organisational/technological systems are

necessary to remove capacity constraints.

The Position in Marseille/Fos

At present, Livorno has very limited interaction with the southern French markets.

However, in the future increased competition between the Livorno (and Italian Northern

Tyrrhenian ports) and Marseille will be noted. The analysis now briefly considers road and

railway connections that are realistically viable for connecting the Italian border

(Ventimiglia) with the Marseilles.

The road network that connects the Port of Marseilles to Italy is well structured and does not

have any apparent critical issues (A8 up to Aix-en-Provence and A51 that joins A7 connects

Marseilles port with Ventimiglia).

The railway network that serves the Port of Marseilles is primarily designed to link it with

the north of France; the connections towards the East (Marseilles-Toulouse-Nice-

Ventimiglia-Genoa) currently make it possible to meet the transport demand.

A major issue is found at the Italian border where the rail network into The Alps reduces to a

single-track segment that is shared by both passenger transport and cargo, with the former

always taking precedence. This has been the major constraint in developing cross-border

container flows.

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6.4 PORT ROAD AND RAIL CONNECTIONS

The following sections summarise the infrastructure, roads and railways for the competing

ports.

Port of Livorno

Road Network

The main access to the Port of Livorno is the A12 “Genova-Livorno-Rosignano”. Along its

route there are numerous and important connection nodes with other motorways such as A11

Firenze-Mare (in turn connected to A1 Milano-Napoli), A15 Parma-La Spezia, A10 Genova-

Ventimiglia and A7 Genova-Milano.

The A-road that directly serves the town is the S.S.1 Aurelia, which goes through the

Province of Livorno for more than 90km, occupying the whole Tyrrhenic Corridor. This road

connects the area with the north of Italyvia its junction with the SS62, and then with the A 15

Parma-La Spezia and the SS 63 in the direction of Reggio Emilia. Also, towards the East,

connections are possible from the Aurelia thanks to the Pisa junction which connects the

S.S.12 of Abetone and Brennero, which goes all the way to the Province of Modena, and the

S.S.67 Tosco-Romagnola, which goes through Empoli, carries on towards Florence and

Pontassieve, turns towards Forlì and finally reaches Ravenna.

An alternative/complementary artery in Aurelia is the S.S. 206 Pisana- Livornese. This road

has approximately 35 of its 41.5km in the Province of Livorno, starting from S. Giusto (Pisa)

and running parallel to Aurelia it then joins the same S.S. 1 Aurelia, north of Cecina.

The four lane Variante Aurelia plays an important role for traffic flow. This connects to

motorway A12 north of Livorno, and reaches Rosignano that runs parallel with the A12

section Collesalvetti-Rosignano and continues to a few kilometres beyond Grosseto, where it

stops for 30km restarts and finishes neat Civitavecchia.

The “Strada di Grande Comunicazione (S.G.C.)”, along the Arno Valley corridor, is

fundamental for the cross-penetration of traffic. Firenze-Pisa-Livorno with four lanes runs

along the left bank of the river Arno and, near Cascina. It splits into two sections: the first

section runs towards Pisa joining the A12, whereas the second section runs towards Livorno,

crossing the S.S. 1 and joining the port area directly in the industrial port (Darsena Toscana-

Darsena no. 1).

The junctions of S.G.C. Firenze-Pisa-Livorno running through the Freight village “A.

Vespucci” near Guasticce connects it directly with this important artery and the industrial

areas that it serves.

Rail Network

The railway network that serves the port of Livorno includes the following lines:

“Tirrenica” – Genoa-Rome Line, which provides the ability of routing to the north

towards the western Alpine passes (Ventimiglia, Frejus and Sempione) and to the south

towards the Centre and South of Italy. The Pisa junction in the north and the Vada

crossroads in the south are located off this line;

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Firenze-Pisa Line that runs parallel with River Arno, connecting the important centres of

Empoli and Pontedera and that, through the Florence junction, is connected with the

central ridge Milan/Bologna-Florence/Rome/South of Italy and to the system of minor

Apennines passes. Amongst these are the Transapennines itinerary formed by the line

"Faentina", which is also used for some specific connections between Livorno and

Ravenna;

Line Prato-Pistoia-Lucca-Pisa Line;

"Pontremolese" – La Spezia/Sarzana-Pontremoli-Parma/Fidenza Line, with Apennines

Pass along the Tirreno-Brennero corridor which joins at Sarzana on the Tirrenica;

The minor line Pisa-Collesalvetti-Vada which joins at Vada on the Tirrenica southbound

and has access to the station of Pisa northbound, and Livorno Calambrone-Guasticce-

Collesalvetti Line (which is essential for the future for the operation of the Freight village

A. Vespucci of Guasticce), which at Collesalvetti could join the line Pisa-Collesalvetti-

Vada, for the North-South routings. The line is currently managed as a feeder line for the

Livorno-Guasticce whereas it is not used along the section Guasticce-Collesalvetti, where

the upgrade of the canals in the area caused the interruption of the track at several

locations. The line is used as a feeder line for transports towards the industrial area of

Stagno and, in the future, towards the Freight village.

These lines provide The Port of Livorno with a comprehensive range of routing options

towards the national inland and onwards towards Central and Northern Europe.

Livorno – critical infrastructure issues

The most important issue is the completion of the Tyrrhenic multimodal motorway corridor

with the construction of the motorway section between Rosignano and Civitavecchia and the

construction of the Maroccone-Chioma stretch of the Variante Aurelia motorway.

In addition, construction of the Variante Aurelia section between Rosignano and

Civitavecchia is being completed by the Government in order to finally bring the motorway

to a completion.

The road system closest to the port has some issues that can be summarised with the

following objectives:

the immediate connection of the port areas with the port hinterland areas (reorganisation

of port crossings);

overcoming the connection limits between the internal areas: between the historic port

and the commercial port and between the various parts of the industrial port;

separation between the flows of commercial, tourist, and town traffic by using S.

Orlando for the commercial traffic, the Valessini and Zara crossing, and via delle

Cateratte for the tourist/town traffic;

doubling the lanes in via L. Da Vinci to separate commercial from light traffic.

With regard to the rail network, the crossing of the Apennines forms the most critical aspect

of the railway connections. Although the Bologna Transapennines route could have good

traffic capacity, the northbound and north-westbound rail connections are limited by the

Pontremolese line, which has gradients that limit the performance of the locomotives and

reduce the transport capacity of the individual trains.

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The capacity of the railway system along the Tyrrhenic route is fairly uniform along the

whole Tuscan section.

The possible use of the lines Firenze-Bologna for the transport of goods from the Livorno

Tyrrhenic area towards Triveneto and Austria (Tarvisio) highlights a further possible critical

issue. For the cross-line Pisa-Firenze, on the section Empoli-Bivio Olmatello, the regional

service to and from Siena has significant traffic congestion and is currently undergoing a

four-track upgrade development.

It should also be noted that the line Prato-Pistoia-Lucca-Pisa-Viareggio is inadequate along

the section Pistoia-Viareggio due to a single track and it not being electrified.

Port of Genoa

Road Network

Genoa is connected by the A10 motorway to Ponente (West) and France, the A7 and A26

motorways to the North and Pianura Padana and A12 motorway to Levante (East). The

Genova Ovest exit can be used by both commercial traffic to rapidly reach the port terminals

located in the Sampierdarena area and by private traffic to reach the Maritime Station and the

Ferry Terminal. The commercial vehicles going to the VTE must use the Genova-Voltri toll

plaza.

Rail Network

The rail system servicing the port of Genoa consists of the lines: Torino-Genova/Milano, the

Genoa branch line and the Ventimiglia-Savona-Genova-Roma coast line.

The backbone of the railway system is formed by a coast route and two valley routes. The

main valley route is Val Polcevera-Valle Scrivia, where there are two distinct lines that

converge at Ronco Scrivia, and the construction of a third line, dedicated to the transport of

goods. The connection of this route with the coastal route is at the Sampierdarena and

Principe junctions, where the internal sections leading to the Port of Genoa are also

connected.

The Valle Stura line, which is of inter-regional interest and currently undergoing

development, does not have its own connection with the coastal route. However, through the

foothill connection of the Mele-Borzoli-Rivarolo line, it reaches the Sampierdarena junction.

The road link of the Port of Voltri with Rivarolo goes through the station of Borzoli, and it is

designed to run through the third pass.

In the future, Rivarolo should have a traffic junction specialised for the transport of goods.

The Sampierdarena and Principe junctions connect at a T-junction, which is a very

inefficient structure. In the Genova Principe station the traction unit exchange must be

carried out for the trains coming from Milan and going West towards Liguria and vice versa.

The following junction on the Padana route is Arquata Scrivia, outside of the provincial

territory, where the routes to Alessandria-Torino and Pavia-Milano depart.

Genoa – critical infrastructure issues

At present, the capacity of the Voltri terminal is 24 trains per day. Outside of the port, the

railway connections are difficult due to the absence of the third pass. The network on

corridor 24 Genoa-Rotterdam, besides having a strong gradient that penalises a lot the goods

traffic in terms of efficiency, is still not completely fitted with the ERTMS signaling system

(European standard).

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Another infrastructural issue regards the railway connection towards Ventimiglia where

goods flow is significantly slowed due to the infrastructure limitations in both directions.

With regard to the road transport, there are serious congestion problems on the Genoa

motorway junction. The ordinary road system is currently undergoing development to

facilitate increased motorway connections. However, on the motorway network and in

particular on the Genoa junction roads, development to relieve congestion has been

suspended with the timing of resumption unknown.

Port of La Spezia

Road Network

The Port of Spezia can be reached directly by motorway thanks to the exit “La Spezia-Santo

Stefano Magra” at the crossing between A12 and A15. A motorway link connects the dry

port logistic area of S. Stefano di Magra with the provinces main town and its port area.

The municipal territory of La Spezia is crossed by S.P. no. 1 / S.S. no. 1 "Aurelia" and then it

utilises a network that is mainly formed by the S.S. no. 330 ("di Buonviaggio"), by the S.S.

no. 331 ("di Lerici"), by the S.S. no. 370 ("Litoranea delle Cinque Terre") and by the S.S. no.

530 ("di Porto Venere”).

Rail Connections

La Spezia is well connected to the rail network. It is at the crossing between the Tyrrhenic

line (Genoa-La Spezia-Piss-Livorno) and the Pontremolese line (Parma-La Spezia).

Figure 6.3: Accessibility Port of La Spezia

La Spezia – critical infrastructure issues

The rail transport of the Port of La Spezia is divided into two main sections. The first route

towards Genoa suffers from the same critical issues outlined for the Port of Genoa; indeed

the northbound connections mainly go through the junction of the Northern Tyrrhenian main

towns and are therefore affected by the same issues as earlier mentioned.

The second route (Pontremolese line) is oriented towards the transport of goods between the

north Tyrrhenian Sea and the industrial areas of northern Italy and the centre-east of Europe

while also reaching the passes of Brennero and Tarvisio. The Pontremolese line for


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connecting the Port of La Spezia also suffers from the same issue as was highlighted for the

port of Livorno.

Port of Civitavecchia

Road Network

The port of Civitavecchia enjoys a strategic position with regard to the port access

infrastructure. From the port basin it is possible to rapidly access the motorway A12

Genova-Roma and the A-road SS 1 Aurelia, which runs along the Tyrrhenian coast up to the

border with France. Besides the Aurelia, the port is connected to the SS 675 Umbro-Laziale

that makes it possible to reach Orte, where there is a freight village base for traffic from the

North and Centre of Italy. Along this axis, preliminary planning for the final section of the

connection between the port of Civitavecchia and the Orte ISO container junction has begun

with hopes of completing the East-West road route.

Rail Connections

The port is connected with the Torino-Genova-Civitavecchia-RomaNapoli-Reggio Calabria

Line and with the Civitavecchia-Capranica-Orte Line, which is partially closed, but it is

expected to be reopened and it will allow the direct connection between the port and freight

village areas.

Civitavecchia – critical infrastructure issues

The port is preparing for the re-launching of goods via rail from the port to the hinterland

and 1.5km away there is also the Civitavecchia freight village, which is currently only

connected with the road network. The northbound railway connections are not upgraded and

do not facilitate the transport of goods northbound.

In addition to this, the current layout of the port of Civitavecchia requires a substantial

reorganisation of the railway system, among which the restoration of the Orte-Civitavecchia

Line as far as the East-West ridge connecting with the Orte freight village

Port of Venice

Road Network

The Port of Venice is directly connected to the national and European road network

(corridors I, V and Adriatic-Baltic).

The incoming/outgoing goods traffic of the Marghera port section, where the commercial

and industrial terminals are located, as well as the companies that operate in the port, goes

through via dell’Elettricità and is connected by the road network through the A-road Romea

(SS309-E55), the Regional Road Padana Superiore (SR11), and the A4 and A27 motorways.

These connections link the Port of Venice to the European corridors Lisbon-Kieve, Berlin-

Palermo, Adriatic-Baltic.

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Figure 6.4: Road Accessibility of the Port of Venice

In order to increase the road accessibility, new roundabouts are to be developed, as well as

the arrangement of the crossings with the major traffic roads. The construction of an

overpass and the extension of the connection links with the long-distance roads are to be

completed in addition to the re-planning of the Port internal road system (such as the

extensions in via dell'Azoto and via dell'Elettronica).

Rail Connections

The port of Venice has more than 200km of internal railway network, its own freight yard,

and is connected with the rest of Europe through rail corridors of international relevance.

The rail network is directly connected to the different terminals with rail lines going all the

way to the quays. The network serves both the commercial and industrial traffic for the

Marghera port.

Figure 6.5: Railway Accessibility to the Port of Venice



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Marghera railway station, through the hinge Venezia-Mestre, connects the Port of Venice

with the international rail network. At Marghera railway station the arriving/departing trains

can stop or transit after loading/unloading.

From the Port of Venice, trains can easily reach important European destinations. There are

four main road connections: Venezia-Milano-Torino-Lione; Venezia-Udine-Tarvisio-

Vienna; Venezia-Padova-Bologna-Roma; Venezia-Trieste-Lubiana-Budapest.

Venice – critical infrastructure issues

The following are the critical issues for the port:

the non-electrification of the incoming second track at the Venezia-Mestre station;

the need for a direct connection between the Peninsula of Chemical-Fusinae and the line

Venezia-Milano to bypass the Mestre junction;

the lack of suitable rail equipment for the container terminal and for the Distripark.

6.5 ACCESSIBILITY TO PORTS

The major ports have good access to both the road and railway networks within Italy. The

following table provides a brief overview of the accessibility of each port on the basis of a

qualitative scale based on the summary of the road and railway infrastructure equipment.

Table 6.1: Road and Rail Network Accessibility

Road accessibility Rail

accessibility Connections

with

Towards NORTH

Towards SOUTH

Freight villages

Port of Livorno Good Inadequate Adequate Good

Port of Genoa Adequate Inadequate Adequate Good

Port of La Spezia

Good Inadequate Adequate Good

Port of Venice Good Adequate Good Good

Port of Civitavecchia

Adequate Good Adequate Adequate


As can be seen from the above table, the ports of Livorno, Genoa and La Spezia have

inadequate road infrastructure for southbound connections. However, this has a limited

impact on these ports attractiveness because the container traffic is mainly directed towards

the industrialised areas of Northern Italy.

With the exception of Venice, nearly all southbound railway connections run along the same

railway line, with each port being affected by the same difficulties resulting from this.

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6.6 MAIN IMPROVEMENT WORKS TO THE ITALIAN ROAD NETWORK

The main developments expected for the road network that could improve access for the

ports being overviewed in this analysis are:

Motorway Nuova Romea;

TiBre-Autocamionale della Cisa;

Motorway A1 Milano-Napoli – Variante di Valico;

The Tyrrhenian Corridor.

The infrastructure developments for road network will have differing benefits for the access

to the ports currently under review. The following table shows the impact he road works

will have on the access to ports with a qualitative scale that goes from “0” (no impact) to

“+++” (maximum impact).

Table 6.2: Impact of road network works on ports

Road works

Port

Genoa La

Spezia Livorno Civitavecchia Venice

Motorway Nuova Romea 0 0 0 0 +++

TiBre - Autocamionale della Cisa ++ +++ ++ 0 0

Motorway A1 Milano-Napoli – Variante di Valico

0 0 ++ ++ 0

Tyrrhenian Corridor + + +++ +++ 0


Through a multi-criteria analysis an assessment was made to ascertain which port would

expect to receive greater benefits from road network developments. The multi-criteria

analysis was conducted through a weighted summation in which the same weights were

assigned to all developments. The obtained results are evaluated on a scale between 0 and 1,

assigning for each port a value that identifies the greater benefit obtained during the

development.

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Figure 6.6: Benefits to Ports from Road Infrastructure Works

Figure 6.6 shows the result of the multi-criteria analysis between the ports considered on the

basis of the potential benefits that can be obtained from developments to infrastructure. As

the figure above shows, the port of Livorno is in the best position to benefit from the

development of the national motorway system.

6.7 MAIN IMPROVEMENT WORKS TO THE ITALIAN RAILWAY NETWORK

The main improvements planned comprise the following:

increase of the maximum permissible length for the trainsets on the network. This is

necessary to guarantee greater cost-effectiveness for goods services – particularly for

container trains to lengths (modules) of up to 750m;

the adaptation of the gauges on the main goods lines for the PC80 container traffic;

development of the railway connection between the core network ports and the main ISO

container terminals.

The works expected by 2017 are the following:

Mediterranean Corridor:

Completion of PC80 Torino-Trieste,

Module 750m Torino-Trieste;

Rhein-Alps Corridor:

PC80 Chiasso and Luino lines,

Module 750m lines Chiasso, Luino and Domodossola via Arona and Borgomanero;

Scandinavia-Mediterranean Corridor (Northern Tyrrhenian Sea Ports):

PC80 Brennero -Livorno / La Spezia,

Module 750m;


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Baltic-Adriatic Corridor:

Module 750m,

Enhancement Udine connection;

Scandinavia-Mediterranean Corridor (Adriatic port and ports in the South):

PC80 Ancona-Bari-Taranto,

Module 650 m.

The aim of the developments is to increase the loading gauge and the maximum station

module of the trains in order to increase the container and semi-trailer traffic connection to

the north of Europe.

Figure 6.7 and Figure 6.8 highlight the current railway network and the improvement works

expected and in progress.

Figure 6.7: Development of Railway Infrastructure - Modules Until 2017


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Figure 6.8: Development of Railway Infrastructure - Gauges until 2017

In the longer term, the Terzo Valico of Giovi is a new high-capacity speed line that will

make it possible to increase the connections of the Northern Tyrrhenian port system with the

main railway lines in the North of Italy and the rest of Europe. The work is part of the Rhein

- Alps Corridor, which is one of the corridors of the strategic transport trans-European

network (TEN-T core network) that connects the more densely populated and more

industrialised regions of Europe. This will be critical for the longer term development of the

reach of the ports under review.

Figure 6.9: Rhein-Alps Corridor and Terzo Valico di Giovi


Source: COCIV

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The infrastructural interventions expected on the railway network will define railway access

to the ports. These benefits will have a varying impact.

The following table shows the impact of the rail works on the access to ports with a

qualitative scale that goes from “0” no impact to “+++” maximum impact.

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Table 6.3: Impact of Railway Network Works on Ports

Railway works

Port

Genoa La

Spezia Livorno Civitavecchia Venice

Mediterranean Corridor

+++ + + 0 +++ Completion of PC80 Torino-Trieste

Module 750 m Torino-Trieste

Rhein-Alps Corridor

++ + + + + PC80 Chiasso and Luino lines

Module 750 m lines Chiasso, Luino and Domodossola via Arona and Borgomanero.

Scandinavia - Mediterranean Corridor (Northern Tyrrhenian Sea Ports)

+ +++ +++ + 0 PC80 Brennero – Livorno / La Spezia

Module 750 m.

Baltic-Adriatic Corridor

+ + + + +++ Module 750 m

Enhancement Udine connection

Scandinavia-Mediterranean Corridor (Adriatic port and ports in the South)

0 0 0 0 0 PC80 Ancona-Bari-Taranto

Module 650 m.


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A multi-criteria analysis was also conducted for the rail network which defines which port

will gain the most benefits from the development on the railway network.

The multi-criteria analysis was conducted through a weighted summation with the same

weighting being assigned to all rail works.

Figure Figure 6.9 shows the result of the multi-criteria analysis that is the classification

between ports considered on the basis of benefits obtained from the developments. The

obtained results are evaluated on a scale between 0 and 1, assigning for each port a value that

identifies the greater benefit obtained from the development.

It is concluded that all ports will benefit from the infrastructure developments except for the

port of Civitavecchia, which obtains fewer benefits from the developments.

Figure 6.10: Ports with Major Benefits From Railway Infrastructural Works

6.8 THE ITALIAN FREIGHT VILLAGE SYSTEM

The Italian freight village system is characterised by the presence of a high number of nodes

that have different characteristics – not only in terms of volumes handled and physical

dimension of the spaces, but also in terms of quality and type of services on offer.

To date in Italy there are 23 freight villages (see Figure 6.11). The most significant portion

of freight villages are in the North, particularly in Veneto (Verona, Rovigo, Padova), in

Emilia Romagna (Parma and Bologna) and in Piedmont (Torino, Rivalta Scrivia). In the

regions of the Italian centre, the operating freight villages are the ones of Livorno, Prato, Jesi

and Civitavecchia (Orte).


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Figure 6.11: The Italian Freight Villages System

The Piedmontese logistic system integrates with the Northern Tyrrhenian ports. This

territory is characterised by the presence of two incomplete European corridors, which give

the area a strong potential and an interesting development prospective.

The Northern Tyrrhenian port represents one of the main models of the national ISO

container (and inter-port) system and is focused towards the freight village of Rivalta

Scrivia.

La Spezia which is orientated towards the Brennero axis with active connections on the

freight villages of Verona, Bologna and Padova, as well as on the inland terminal of Melzo.

In the North-East the ports are affected by their relationship with Austria and they are among

the few ports that use the railway mode to ship across the border. A strategy of specialisation

of the freight villages in this region have been adopted both on the basis of the type of

handled load, and on the basis of the main traffic routes. In this context, there is a plan for

strengthening the commercial relationships between the port of Venice and the freight

village of Padova by developing the canals between Padova and Venice.

The central region is characterised by a freight village logistic system where different

regional networks from Tuscany, Lazio, Umbria and Marche coexist.

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Figure 6.12: Ports and Linked Freight Villages

6.9 THE ROLE OF FREIGHT VILLAGES IN THE ITALIAN LOGISTIC SYSTEM

As the previous chapter highlighted, the Italian logistic system is structured via various

freight villages and although their emphasis is for rail connectivity they play an important

role also for the distribution of the goods by road.

The freight villages have been selected on the basis of several factors including the

connections with the ports, their relative location and the relationship with respect to the

final destination of the shipped goods.

Road Transport

The following tables highlight the distances in kilometres between the competing ports and

the main freight villages as well as the related transport costs on the same routes with regard

to road transport.


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Table 6.4: Distance Matrix-Road

Km Rivalta Scrivia

Bologna Int.

Padua Int.

Milan Turin Verona

PN Orte

Livorno 231 195 309 298 342 323 306

Genoa 65 297 364 147 166 283 443

La Spezia 155 206 318 223 267 219 341

Civitavecchia 474 358 472 555 582 491 85

Venice 382 204 92 246 393 168 505


Rail Transport

A similar approach has been taken for rail transport, with the following table showing the

railway distance between the ports that are the object of the analysis and the main freight

villages used to connect the most important Italian internal markets.

Table 6.5: Distance Matrix-Railway

Km Rivalta Scrivia

Bologna Int.

Padua Int.

Milan despatch.

Turin despatch.

Verona PN

Orte

Livorno 244 185 306 322 341 298 n.a.

Genoa 75 302 351 179 167 281 n.a.

La Spezia 157 215 330 250 249 271 n.a.

Civitavecchia 477 417 538 553 573 531 n.a.

Venice 376 148 28 247 405 110 n.a.


Distances for International Shipments

The nations under review for this analysis are Switzerland, Austria and Germany.

Although at present there are very few goods that actually reach other European countries

from Italian ports, the associated distances involved have been analysed. From this analysis

the cost of transporting goods from the ports in question to several non-Italian cities has been

estimated.

The fact very few goods cross the border is the result of the infrastructure limitations

highlighted in the previous sections as well as a lack of port infrastructures that are suitable

to receive the ULCSs in conjunction with this, which will potentially become an even more

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significant issue in the future when more of the larger vessels call at Italian and Northern

Tyrrhenian ports on a regular basis.

Figure 6.13: Italian Ports and European Cities

International Road Transport

The table below shows the road distances in kilometres between the considered ports and

suggested European cities.

Table 6.6: Distance Matrix-European Cities

Km Vienna Innsbruck Munich Graz Zurich Bern Zagreb

Livorno 926 563 724 734 582 610 696

Genoa 981 524 629 799 420 424 751

La Spezia 938 469 604 756 501 533 708

Civitavecchia 1092 740 875 910 839 910 862

Venice 557 333 428 375 593 665 327



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International Rail Transport

The table below summarises the railways distances in kilometres between the considered

ports and European cities.

Table 6.7: Railway Distance Matrix-European Cities/km

Km Vienna Innsbruck Munich Graz Zurich Bern Zagreb

Livorno 939 567 718 820 606 562 741

Genoa 987 555 711 867 446 397 789

La Spezia 961 538 695 848 528 480 769

Civitavecchia 1172 800 956 1052 840 800 974

Venice 586 443 548 466 603 594 388


Detailed cost estimates of both road and intermodal transport from the main competing

Italian ports to major Italian markets and to European markets are detailed as part of the

overall built-up cost analysis in Section 7.

6.10 CONCLUSIONS

The ports under consideration are generally well connected to their major hinterlands

by road. There are some significant bottlenecks but investment is underway or

planned to alleviate these constraints.

Livorno is well placed in this regard and enjoys relatively good access not simply to the

northern hinterland but also to the central Italian markets.

The situation with regard to rail is more problematic. There is a well-established and

mature rail network, but this has been restricted by a lack of investment for freight

operations (particularly for containers). Further investment is planned, but attention is

required both for investment in new capacity and the modernisation of operating

practices. There is very little international rail movements of containers and, in the

longer run, the position of all ports (including Livorno) will depend upon the extension

of the hinterland to the north by means of intermodal trains.

Investments in both road and rail capabilities will significantly extend Livorno’s

hinterland. The freight village network is an important aspect of domestic

containerised goods distribution and Livorno is well connected into this system.

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7 BUILT-UP COST ANALYSES

7.1 INTRODUCTION

Aside from the physical availability of container handling facilities and the adequacy of

hinterland links, the key determinant of the level of demand will be the comparative costs

involved. This Section develops an analysis of the current structure of delivered container

costs in the two markets that are of immediate significance for Livorno, namely:

the Italian import/export markets by region;

the potential transit markets to central European countries and in particular Switzerland,

Austria, Slovenia and Southern Germany.

The following approach is taken:

the comparative cost structures involved in introducing a direct call to Livorno. This is

based upon the transport costs associated with individual shipments to different

destinations within northern Italy and central Europe and is compared with routings via

other Northern Tyrrhenian Sea ports as well as ports on the Tyrrhenian Sea and Adriatic

Sea;

a parallel analysis is developed concerning the scope for transshipment hub operations in

the region and compares transshipment costs via Gioia Tauro, Marsaxlokk, Taranto and

Cagliari with direct calls at Livorno and other ports on the Northern Tyrrhenian Sea;

against the background of underlying transport costs comparisons, the overall strategic

considerations that are relevant for the direct call versus feedered decision are detailed.

The analysis is developed on the basis of current costs (2014).

7.2 NORTH ITALIAN INLAND MARKETS

The greatest potential for containerised trade growth for the Livorno market lies with trade to

the US east coast and from Asia.

An analysis of current cost structures has been developed that identifies representative

through-transport costs from major trading partners to representative Livorno markets for

containers shipped via Livorno (for local cargoes), and for containers shipped via central

Mediterranean transshipment hubs (Gioia Tauro, Cagliari, Taranto and Marsaxlokk), for

transshipment volumes.

The following analyses focus on deepsea shipping costs, stevedoring costs and inland

distribution costs. It is the total of these costs that will determine the true underlying

competitive position. The resulting figures highlight the importance of cheap bunkers in the

overall shipping costs as well as the importance of the inland cost elements. The analysis is

based upon costs collated for 2014.

Deep-Sea Shipping Costs

A review has been undertaken of the transport costs for different deepsea vessels that are

utilised for shipping containers between various trading regions and the Mediterranean

markets. The scale economies available from the introduction of larger vessels are clearly

illustrated in Table 7.1. 18,270TEU capacity vessels have also been added in view of the

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recent deployment of vessels of this magnitude by Maersk Line and other major shipping

lines on the main arterial trade lanes.

Table 7.1: Deep-Sea Containership Trading Costs 2014

The oversupply of container shipping capacity (especially in the larger size ranges) has

resulted in shipping lines seeking to absorb excess capacity by slowing down trading speeds.

This has also been stimulated by relatively expensive bunker prices (although recent data –

from October 2014 to February 2015 - suggests that fuel costs are starting to decrease). In

the current market, shipping lines are faced with excess tonnage and have developed some

slow multi-port itineraries that will absorb some of this capacity. The degree to which this

strategy will survive a recovery in freight rates and improved utilisation remains uncertain,

Table 7.1

Deep-Sea Containership Trading Costs 2014

2000TEU 3500TEU 4500TEU 6800TEU 8500TEU 10800TEU 12500TEU 14500TEU 18270TEU

Capacity - TEUs 2000 3500 4500 6800 8500 10800 12500 14500 18270

Capital Costs

New build Price - mUS$ 25.0 35.5 40.0 57.5 76.5 90.0 112.0 130.0 162.0

Daily Capital Charge - $ 10,307 14,636 16,491 23,706 31,539 37,104 46,174 53,595 66,788

Operating Costs

Manning - US$/day 3,200 3,650 3,650 3,650 3,650 3,650 3,650 3,800 4,100

Repair & Maintenance - US$/day 1,096 1,568 1,734 2,456 2,903 3,238 3,573 3,948 4,353

Insurance - US$/day 655 936 1,035 1,466 1,733 1,933 2,133 2,350 3,100

Admin/Other Charges* - US$/day 1,000 1,100 1,100 1,200 1,200 1,200 1,300 1,475 1,650

Total 5,951 7,253 7,519 8,773 9,486 10,021 10,656 11,573 13,203

Fuel Costs

HFO - US$/tonne 355 355 355 355 355 355 355 355 355

MDO - US$/tonne 610 610 610 610 610 610 610 610 610

Consumption At Sea 18 knots 18 knots 19 knots 19 knots 19 knots 19 knots 19 knots 19 knots 19 knots

HFO - tonnes/day 32.8 50.3 53.5 79.5 98.6 113.0 136.5 153.5 163.5

MDO - tonnes/day 2.0 2.5 2.5 2.8 2.8 3.0 3.2 3.2 3.2

Consumption In Port

HFO - tonnes/day 0 0 0 0 0 0 0 0 0

MDO - tonnes/day 2.0 2.8 2.8 2.8 2.8 3.0 3.2 3.2 3.2

Fuel Costs At Sea - US$/day 12,864 19,382 20,518 29,931 36,711 41,945 50,410 56,445 59,995

Fuel Costs In Port - US$/day 1,220 1,525 1,525 1,708 1,708 1,830 1,952 1,952 1,952

Total Costs at Sea - $/day 29,122 41,270 44,527 62,409 77,736 89,070 107,239 121,613 139,985

Total Costs in Port - $/day 17,478 23,414 25,535 34,186 42,733 48,955 58,782 67,120 81,943

Per TEU at Sea - $/day 14.56 11.79 9.89 9.18 9.15 8.25 8.58 8.39 7.66

Per TEU in Port - $/day 8.74 6.69 5.67 5.03 5.03 4.53 4.70 4.63 4.49

Per FEU at Sea - $/day 29.12 23.58 19.79 18.36 18.29 16.49 17.16 16.77 15.32

Per FEU in Port - $/day 17.48 13.38 11.35 10.05 10.05 9.07 9.41 9.26 8.97

* ex cludes agency , marketing and liner serv icing costs.


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although the level of the short-term orderbooks for the major shipping lines, suggests that the

need for slow-steaming is likely to remain for the next 2-3 years at least. Trading speeds for

deepsea operations have been calculated on the basis of current operating regimes, but with

the latest fuel prices in Singapore (US$ 355/t for HFO and US$610/t for MDO).

Under current cost conditions, the at sea costs of transporting a forty foot container (FEU)

are placed at between US$29.12 and US$15.32 per day, depending upon the size of deepsea

vessel that is deployed. It is important to note that scale economies offer declining returns.

One of the main elements as far as the built-up cost analyses is concerned, is the price of

fuel. Indeed, in recent years this has become an overriding consideration for the shipowners’

profitability. Figure 7.1 illustrates the bunker price developments from 1976-2015 and

indicates the rapid increase in the price of fuel over this 39-year period. Recent indications

are that the IFO price per tonne will decrease during 2014-15, based on the recent chargeable

rates in Rotterdam and Singapore.

Figure 7.1: Long Term IFO Bunker Price Development 1976-2015

The implications of these expenses are further illustrated in Figure 7.2. This further

highlights the trading costs associated with various vessel sizes and the impact in terms of

US$/day that the various bunker costs have on a shipping lines profitability.

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Figure 7.2: Total At-Sea Trading Costs at Different Bunker Price (21 Knots)

Although this a key issue for shipping lines, it is questionable whether Livorno could benefit

in any significant way by developing itself as a bunker provider – although the provision of

LNG as a bunker fuel may be worth some further consideration. However, the lack of

bunkering facilities at Livorno will not be a major constraint in developing the port as a

major container handling facility.

Examples of Deep-Sea Shipping Costs

This is, of course, only one aspect of the transport cost calculation and other cost sectors are

considered below.

The method used in calculating deepsea shipping costs is summarised in Tables 7.2-7.3,

which show the position with regard to deepsea Asian containers shipped into Italian ports

from Singapore and deepsea US east coast containers shipped from Italian ports to New

York shown in Tables 7.4-7.5.

The data presented reflects the size of vessel that could currently be berthed at each of the

competing Italian ports and other competing facilities for the services under review. The

maximum possible vessel sizes that can be handled at each of the facilities is shown in Table

7.6. It is also important to stress that there also needs to be a requirement for main shipping

lines to put vessels of this magnitude into the region for local Italian and central European

transit volumes. The smaller the vessels are that are eventually enticed to make a call, the

less the differential between the cost of the calls and the less chance of lines moving to

Livorno from existing routes.

Although details of current services calling at Livorno are nowhere near the size of vessels

required for the scale economies discussed, it should be recognised that the situation after the

ordering of additional ULCS’s is likely to be significantly different to the situation we have

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today. It remains quite possible that some shipping lines would look to make a call at a

Northern Tyrrhenian Sea port from Asia with vessels of 18,000TEU+ capacity.

For Livorno, the cost is US$72.14 cheaper if an 18,000TEU vessel can be attracted

compared with a maximum 6,800TEU vessel. This is quite a significant differential, but

needs to be taken as part of the whole built-up costs to show any true value and compared

with other competing ports.

Similarly, for the American trades it is clear that if 8,500TEU vessels were handled at

Livorno, they would be US$17.16 cheaper than if a 4,500TEU vessel were handled (subject

to their being a need for vessels of this size).

It is clear that the differentials in deepsea shipping costs under review are relatively high and

that scale economies are – and will remain – the driving factor in port choice for the longer

haul trades.

In considering these costs, some further remarks are necessary with regard to the impact of

the current level of oversupply in the container market. In summary, the following should be

noted:

major shipping lines have too many large vessels – higher bunker prices have been a

pretext for this decision. This is set to continue with the introduction of more, larger

vessels being included in the orderbooks of all the major shipping lines;

in order to absorb excess tonnage, trading speeds have been slowed and new multiport

itineraries have been introduced. This is also set to continue for the short-term, in view of

the continuing need to absorb tonnage;

direct services have been introduced earlier than volume growth would usually justify.

The introduction of 18,000TEU vessels on main arterial trade lanes is a case in point.

Although volumes are on the increase, vessels of around 10,500TEU are more justifiable,

given the level of demand;

as the market moves back towards equilibrium, after the next wave of newbuilds have

been introduced, it can be anticipated that port concentration will be reasserted. Faster

deepsea services will be reintroduced and pressure to increase feedering and

transshipment will intensify. Establishment of correct network solutions in advance of

these developments will be in the interests of the major lines and will influence the size of

vessels deployed on main and secondary trade lanes.

It is also apparent from this review that it will be the inland delivery costs that are the critical

factor in determining competitive cost structures for the end users (the shippers).

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Table 7.2: Deep-Sea Shipping Costs from Singapore to Trieste, La Spezia and Genoa

Table 7.2.

Deep-Sea Shipping Costs from Singapore to Trieste, La Spezia and Genoa

Vessel Capacity - TEUs 4500 6800 8500 10800 12500 14500 18000 4500 6800 8500 10800 12500 14500 18000 4500 6800 8500 10800 12500 14500 18000

Load factor - % 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95

Ocean haul length - nm 7,116 7,116 7,116 7,116 7,116 7,116 7,116 7,217 7,217 7,217 7,217 7,217 7,217 7,217 7,255 7,255 7,255 7,255 7,255 7,255 7,255

Sea day s 16.47 15.61 15.61 15.61 15.61 15.61 15.61 16.71 15.83 15.83 15.83 15.83 15.83 15.83 16.79 15.91 15.91 15.91 15.91 15.91 15.91

Port (and canal) day s 4.28 4.87 5.59 6.56 6.52 7.25 8.51 4.28 4.87 5.59 6.56 6.52 7.25 8.51 4.28 4.87 5.59 6.56 6.52 7.25 8.51

Cargo size - box es 2,850 4,307 5,383 6,840 7,917 9,183 11,400 2,850 4,307 5,383 6,840 7,917 9,183 11,400 2,850 4,307 5,383 6,840 7,917 9,183 11,400

Sea costs per day $44,527 $62,409 $77,736 $89,070 $107,239 $121,613 $139,985 $44,527 $62,409 $77,736 $89,070 $107,239 $121,613 $139,985 $44,527 $62,409 $77,736 $89,070 $107,239 $121,613 $139,985

Port costs per day $25,535 $34,186 $42,733 $48,955 $58,782 $67,120 $81,943 $25,535 $34,186 $42,733 $48,955 $58,782 $67,120 $81,943 $25,535 $34,186 $42,733 $48,955 $58,782 $67,120 $81,943

Vessel Sea costs $733,464 $973,903 $1,213,085 $1,389,961 $1,673,498 $1,897,797 $2,184,507 $743,874 $987,726 $1,230,303 $1,409,689 $1,697,251 $1,924,733 $2,215,512 $747,791 $992,927 $1,236,781 $1,417,112 $1,706,187 $1,934,867 $2,227,177

Vessel Port costs $109,289 $166,524 $238,828 $321,145 $383,482 $486,461 $697,684 $109,289 $166,524 $238,828 $321,145 $383,482 $486,461 $697,684 $109,289 $166,524 $238,828 $321,145 $383,482 $486,461 $697,684

Port dues $109,450 $199,000 $215,500 $235,500 $255,500 $281,120 $315,000 $109,450 $199,000 $215,500 $235,500 $255,500 $281,120 $315,000 $109,450 $199,000 $215,500 $235,500 $255,500 $281,120 $315,000

Canal Charges $217,533 $362,555 $425,678 $425,678 $582,847 $630,720 $695,967 $217,533 $362,555 $425,678 $425,678 $582,847 $630,720 $695,967 $217,533 $362,555 $425,678 $425,678 $582,847 $630,720 $695,967

Voy age Cost $1,169,736 $1,701,982 $2,093,091 $2,372,284 $2,895,327 $3,296,098 $3,893,157 $1,180,146 $1,715,805 $2,110,309 $2,392,012 $2,919,079 $3,323,034 $3,924,163 $1,184,063 $1,721,006 $2,116,787 $2,399,434 $2,928,016 $3,333,168 $3,935,828

Cargo size in FEUs 2,138 3,230 4,038 5,130 5,938 6,888 8,550 2,138 3,230 4,038 5,130 5,938 6,888 8,550 2,138 3,230 4,038 5,130 5,938 6,888 8,550

Cost per FEU - $ $547.24 $526.93 $518.41 $462.43 $487.63 $478.56 $455.34 $552.12 $531.21 $522.68 $466.28 $491.63 $482.47 $458.97 $553.95 $532.82 $524.28 $467.73 $493.14 $483.94 $460.33


Singapore to Trieste Singapore to La Spezia Singapore to Genoa

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 7.3: Deep-Sea Shipping Costs from Singapore to Livorno, Salerno and Fos

Table 7.3

Deep-Sea Shipping Costs from Singapore to Livorno, Salerno and Fos


Load factor - % 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95


Sea day s 16.67 15.79 15.79 15.79 15.79 15.79 15.79 15.83 15.00 15.00 15.00 15.00 15.00 15.00 17.20 16.29 16.29 16.29 16.29 16.29 16.29


Cargo size - box es 2,850 4,307 5,383 6,840 7,917 9,183 11,400 2,850 4,307 5,383 6,840 7,917 9,183 11,400 2,850 4,307 5,383 6,840 7,917 9,183 11,400

Sea costs per day $44,527 $62,409 $77,736 $89,070 $107,239 $121,613 $139,985 $44,527 $62,409 $77,736 $89,070 $107,239 $121,613 $139,985 $44,527 $62,409 $77,736 $89,070 $107,239 $121,613 $139,985


Vessel Sea costs $742,328 $985,673 $1,227,746 $1,406,759 $1,693,723 $1,920,732 $2,210,907 $704,913 $935,993 $1,165,864 $1,335,855 $1,608,355 $1,823,922 $2,099,472 $765,725 $1,016,741 $1,266,443 $1,451,099 $1,747,108 $1,981,272 $2,280,593


Port dues $109,450 $199,000 $215,500 $235,500 $255,500 $281,120 $315,000 $109,450 $199,000 $215,500 $235,500 $255,500 $281,120 $315,000 $109,450 $199,000 $215,500 $235,500 $255,500 $281,120 $315,000

Canal Charges $217,533 $362,555 $425,678 $425,678 $582,847 $630,720 $695,967 $217,533 $362,555 $425,678 $425,678 $582,847 $630,720 $695,967 $217,533 $362,555 $425,678 $425,678 $582,847 $630,720 $695,967

Voy age Cost $1,178,600 $1,713,752 $2,107,752 $2,389,082 $2,915,552 $3,319,033 $3,919,558 $1,141,184 $1,664,072 $2,045,870 $2,318,177 $2,830,183 $3,222,223 $3,808,123 $1,201,997 $1,744,820 $2,146,449 $2,433,422 $2,968,936 $3,379,573 $3,989,244


Cost per FEU - $ $551.39 $530.57 $522.04 $465.71 $491.04 $481.89 $458.43 $533.89 $515.19 $506.72 $451.89 $476.66 $467.84 $445.39 $562.34 $540.19 $531.63 $474.35 $500.03 $490.68 $466.58


Singapore to Livorno Singapore to Salerno Singapore to Fos

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 7.4: Deep-Sea Shipping Costs from New York to Trieste, La Spezia and Genoa

Table 7.4

Deep-Sea Shipping Costs from New York to Trieste, La Spezia and Genoa


Load factor - % 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95


Sea day s 12.48 11.82 11.82 11.82 11.82 11.82 11.82 10.53 9.98 9.98 9.98 9.98 9.98 9.98 10.47 9.92 9.92 9.92 9.92 9.92 9.92


Cargo size - box es 2,850 4,307 5,383 6,840 7,917 9,183 11,400 2,850 4,307 5,383 6,840 7,917 9,183 11,400 2,850 4,307 5,383 6,840 7,917 9,183 11,400

Sea costs per day $44,527 $62,409 $77,736 $89,070 $107,239 $121,613 $139,985 $44,527 $62,409 $77,736 $89,070 $107,239 $121,613 $139,985 $44,527 $62,409 $77,736 $89,070 $107,239 $121,613 $139,985


Vessel Sea costs $555,664 $737,818 $919,020 $1,053,018 $1,267,823 $1,437,749 $1,654,957 $469,083 $622,855 $775,822 $888,942 $1,070,277 $1,213,726 $1,397,090 $466,300 $619,159 $771,220 $883,668 $1,063,927 $1,206,525 $1,388,801


Port dues $109,450 $199,000 $215,500 $235,500 $255,500 $281,120 $315,000 $109,450 $199,000 $215,500 $235,500 $255,500 $281,120 $315,000 $109,450 $199,000 $215,500 $235,500 $255,500 $281,120 $315,000

Canal Charges

Voy age Cost $774,403 $1,103,342 $1,373,348 $1,609,663 $1,906,805 $2,205,330 $2,667,641 $687,822 $988,379 $1,230,150 $1,445,587 $1,709,258 $1,981,307 $2,409,773 $685,039 $984,684 $1,225,548 $1,440,313 $1,702,909 $1,974,106 $2,401,485


Cost per FEU - $ $362.29 $341.59 $340.15 $313.77 $321.15 $320.19 $312.00 $321.79 $306.00 $304.68 $281.79 $287.88 $287.67 $281.84 $320.49 $304.86 $303.54 $280.76 $286.81 $286.62 $280.88


New York to La Spezia New York to GenovaNew York to Trieste

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 7.5: Deep-Sea Shipping Costs from New York to Livorno, Salerno and Fos

Table 7.5

Deep-Sea Shipping Costs from New York to Livorno, Salerno and Fos


Load factor - % 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95


Sea day s 10.56 10.00 10.00 10.00 10.00 10.00 10.00 10.88 10.31 10.31 10.31 10.31 10.31 10.31 10.13 9.60 9.60 9.60 9.60 9.60 9.60


Cargo size - box es 2,850 4,307 5,383 6,840 7,917 9,183 11,400 2,850 4,307 5,383 6,840 7,917 9,183 11,400 2,850 4,307 5,383 6,840 7,917 9,183 11,400

Sea costs per day $44,527 $62,409 $77,736 $89,070 $107,239 $121,613 $139,985 $44,527 $62,409 $77,736 $89,070 $107,239 $121,613 $139,985 $44,527 $62,409 $77,736 $89,070 $107,239 $121,613 $139,985


Vessel Sea costs $470,010 $624,086 $777,357 $890,700 $1,072,393 $1,216,126 $1,399,852 $484,441 $643,247 $801,223 $918,046 $1,105,318 $1,253,463 $1,442,830 $451,251 $599,178 $746,330 $855,150 $1,029,592 $1,167,588 $1,343,981


Port dues $109,450 $199,000 $215,500 $235,500 $255,500 $281,120 $315,000 $109,450 $199,000 $215,500 $235,500 $255,500 $281,120 $315,000 $109,450 $199,000 $215,500 $235,500 $255,500 $281,120 $315,000

Canal Charges

Voy age Cost $688,749 $989,611 $1,231,685 $1,447,345 $1,711,375 $1,983,707 $2,412,536 $703,179 $1,008,771 $1,255,551 $1,474,691 $1,744,299 $2,021,044 $2,455,514 $669,990 $964,702 $1,200,659 $1,411,795 $1,668,573 $1,935,169 $2,356,665


Cost per FEU - $ $322.22 $306.38 $305.06 $282.13 $288.23 $288.02 $282.17 $328.97 $312.31 $310.97 $287.46 $293.78 $293.44 $287.19 $313.45 $298.67 $297.38 $275.20 $281.02 $280.97 $275.63


New York to Livorno New York to Salerno New York to Fos

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 7.6: Comparison of Maximum Size of Vessels Accommodatable at Various Ports

Table Table 7.6 details the main competition for Livorno, highlighting the maximum size of

vessel that can currently be handled (For Europa Platform the current planned depth and our

recommended depth are included). Cells highlighted in green are the current and future

vessel sizes that can be handled at each port facility, whereas cells in red highlight the size of

vessels for each of two trade lanes that cannot be handled. Cells in yellow are ‘marginal’ in

terms of whether they can be handled or not.

It can be seen that although the vast majority of the terminals under review can handle the

current US east coast services without too much difficulty, the challenge arises with the

expected future increase in vessel sizes on this trade lane and also on the Far East-

Mediterranean services. When vessel sizes increase, it becomes clear that Vado Ligure and

Trieste offer the most competition to the Europa Platform project.

Stevedoring charges

OSC have been reviewing these developments since the early 1990s, and the following

assessment provides a summary of market developments. The methodology focuses on the

specific, component cost sectors involved in container handling. Once these costs have been

identified, the competitive position for transshipment containers is then analysed.

With regard to container stevedoring, the starting point for the review is an identification of

the charge made for container handling. This constitutes the 'headline rate' that is quoted by

the stevedore for the basic operation of container shipment. In simplified terms, this

represents the movement of a container from a vessel to the yard and then reloading on

another vessel.

It only makes sense to compare individual terminal tariff and costing structures if a similar

requirement can be identified. Each customer calling at the major regional hub ports

generates a specific requirement and it is apparent that these are never identical.

Furthermore, the pattern of typical customers is seen to differ fairly significantly between

ports. In order to minimise these differences, a representative deepsea liner customer has

been selected, and the key details are as follows:

Table 7.6

Comparison of Maximum Size of Vessels Accomodatable at Various Ports

Terminal Depth (m) Max.Capacity (TEU) Required-USEC Required-FE Required-USEC Required-FE

Current Current Future Future

Europa Platform 16.0 (18.0) 12,500 (18,400) 4,500 8,500 8,500 18,400

Darsena Toscana 11.8 3,000 4,500 8,500 8,500 18,400

Vado Ligure 17 18,400 4,500 8,500 8,500 18,400

VTE 15 8,000 4,500 8,500 8,500 18,400

SECH 14.5 6,400 4,500 8,500 8,500 18,400

LSCT 14 5,000 4,500 8,500 8,500 18,400

Trieste 18 18,400 4,500 8,500 8,500 18,400

Fos 15 8,000 4,500 8,500 8,500 18,400

Salerno 9.7 2,500 4,500 8,500 8,500 18,400

Civ itav ecchio 14 5,000 4,500 8,500 8,500 18,400


Doc. No. 14-1394-H1 Rev. 0 – March 2015


Annual volumes: 50,000-75,000 containers;

Calls per annum: 52;

Average consignment: 964-1442 containers;

Vessel size: 4,500-6,800TEU vessels;

TEU : FEU box ratio: 50 : 50.

Loaded : Empty ratio: 80 : 20

It should be noted that these volumes are primarily appropriate for the higher volume

transshipment hub ports, in other ports a somewhat smaller consignment size may be more

representative. The real fixed costs in the equation relate to port dues and vessel charges,

which will thus differ widely on the basis of consignment size (number of containers). Over

time, the average vessel size has increased sharply, as has the typical consignment size

handled.

There will be some minor differences in charges for container handling for alternative sizes

and annual container volumes, but in order to maintain ease of direct comparison and to

simplify the number of alternatives, these charges have been focused on for the market as a

whole.

The data summarised in Table 7.7 presents the conclusions of a detailed series of reviews of

the development of container handling charges in the major competitive deepsea terminals

for the period since 2005. Container handling costs are detailed in terms of dollars per

container and do not include additional charges for special containers or specific rates for

empty boxes. These figures are replicated in Section 5, where further analysis of the rates is

provided.

Table 7.7: Stevedoring Costs- 2014 – US$ - per 40’ Loaded Container

Inland Costs

Inland costs are by far the most significant cost sector in the chain. Table 7.8 provides a

summary of distances between various competing ports and representative central European

destinations. These destinations have been chosen based on the most common routes used

by a series of major shippers. The relative importance of different costs within the transport

chain is of very great significance in determining the scope for services via each of the ports

competing with Livorno (Europa Platform).

Table 7.7

Stevedoring Costs - 2014

US$ - per 40' loaded container

Livorno SECH VOLTRI La Spezia Fos Trieste Salerno Gioia Tauro Marsaxlokk Taranto

Import / Export

40' container 137.94 171.00 188.10 182.40 216.60 155.04 176.70 na na na

Transshipment

40' container 110.58 228.00 136.80 131.10 131.10 124.26 108.30 153.90 149.91 151.05

Ty pically , these are prices discounted for v olume customers.

Transshipment full cy cle cost - v essel-y ard-v essel w ith discount for 100-340k box es.

Import/ex port - v essel-gate


Doc. No. 14-1394-H1 Rev. 0 – March 2015


Chapter 6 provides details of the current main hinterland links from the competing ports to

the main logistics hubs in northern Italy, but this Section will expand on this current situation

by assuming that better rail connections into central Europe will be available in the future

and so additional transit volumes not only to points in northern Italy, but also to points in

central Europe need to be examined and their total built-up costs determined.

Table 7.8: Distance (km) Matrix between Ports of Interest and Indicative Destinations

These distances are now used to generate a cost comparison matrix for both road and rail

connections. It is envisaged that there will be an improvement in long distance road and rail

links from Italian ports in particular and so detailed costs have been based on similar costs

associated with road/rail haulage from north European ports where the road and rail systems

are thought to be more advanced.

Table 7.9 provides indicative road haulage rates.

Table 7.9: Total Road Transport Cost (€)

Table 7.8

Distance (km) Matrix between Ports of Interest and Indicative Destinations

Ports/Destination Milan Bologna Padua Rome Turin Parma Munich Basle Vienna Budapest

Livorno 300 190 298 326 349 196 724 640 899 1020

Genoa 142 300 363 513 171 206 631 474 961 1082

La Spezia 223 217 325 420 272 119 638 563 925 1047

Fos 549 707 770 926 398 613 1026 687 1367 1489

Naples 776 586 694 222 872 659 1122 1115 1295 1417

Salerno 816 626 734 262 912 699 1162 1155 1335 1456

Rome 585 395 503 0 682 468 931 925 1104 1226

Trieste 421 295 188 672 544 359 496 741 479 558

Venice 275 156 49 535 405 220 502 602 587 709

Ravenna 290 76 172 352 409 173 634 629 713 834

Source: Michelin Website

Table 7.9

Total Road Transport Cost (€)


Livorno 1,020 657 1,014 1,105 1,180 677 2,479 2,163 2,979 3,406

Genoa 497 1,020 1,225 1,709 594 711 2,235 1,634 3,172 3,599

La Spezia 767 747 1,102 1,410 928 419 2,207 1,918 3,060 3,490

Fos 1,874 2,375 2,574 3,063 1,389 2,078 3,425 2,312 4,479 4,903

Naples 2,543 1,942 2,284 764 2,844 2,174 3,723 3,651 4,207 4,633

Salerno 2,669 2,069 2,411 896 2,969 2,300 3,847 3,775 4,331 4,752

Rome 1,939 1,329 1,677 na 2,246 1,564 3,129 3,060 3,617 4,045

Trieste 1,413 1,004 651 2,215 1,808 1,212 1,754 2,633 1,700 1,952

Venice 938 544 178 1,779 1,361 757 1,773 2,093 1,995 2,432

Ravenna 987 272 597 1,190 1,374 601 2,194 2,128 2,394 2,825

Source: Ocean Shipping Consultants, Ports

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Haulage rates have been calculated based on a series of actual road haulage quotes and then

these quotations used to derive a cost per km that was then applied to the remaining links.

This is not an exact science (some rates could be reduced with volume discounts) and so a

“line of best fit” was derived for the costs per km. This is illustrated in Figure 7.3

Figure 7.3: Road Costs Estimation-FEU

For comparison purposes, Table 7.10 provides indicative intermodal rates for the same

inland links. It is generally believed that the road rates will be the cheapest option for the

relatively short distances (<500km), whereas longer haul distances are generally cheaper via

rail. Road transport is relatively expensive in Italy but is still used for short distances

(<500km) because of the unreliability of rail and its poor frequency and lack of space. It

should also be recognised that any rail haulage also includes a final delivery by road, which

adds to the overall cost of this mode of transport.

Table 7.10: Total Rail Transport Cost (€)

Table 7.10

Total Rail Transport Cost (€)


Livorno 1,096.00 796.80 1,090.56 1,166.72 1,229.28 813.12 2,249.28 2,020.80 2,725.28 2,534.20

Genoa 666.24 1,096.00 1,267.36 1,675.36 745.12 840.32 1,996.32 1,569.28 2,730.55 3,039.10

La Spezia 886.56 870.24 1,164.00 1,422.40 1,019.84 603.68 2,015.36 1,811.36 2,638.75 2,949.85

Fos 1,773.28 2,203.04 2,636.20 2,641.30 1,362.56 1,947.36 2,896.30 2,148.64 3,068.68 3,317.56

Naples 2,390.72 1,873.92 2,403.64 883.84 2,651.84 2,072.48 2,759.62 2,744.15 2,921.80 3,170.68

Salerno 2,499.52 2,195.56 2,526.04 992.64 2,605.60 2,181.28 2,848.02 2,832.55 3,003.40 3,250.24

Rome 1,871.20 1,354.40 1,648.16 na 2,135.04 1,552.96 2,654.05 2,638.75 2,719.84 2,781.04

Trieste 1,425.12 1,082.40 791.36 2,336.32 1,759.68 1,256.48 1,629.12 2,295.52 1,582.88 1,797.76

Venice 1,028.00 704.32 413.28 1,735.20 1,381.60 878.40 1,645.44 1,917.44 1,876.64 2,208.48

Ravenna 1,068.80 486.72 747.84 1,237.44 1,392.48 750.56 2,004.48 1,990.88 2,219.36 2,548.48


Doc. No. 14-1394-H1 Rev. 0 – March 2015


Details of the cheapest inland haulage options are summarised in Table 7.11 and converted

to US$ in order to provide a comparative part of the full built-up cost analysis. Rates shown

in green are road rates and those in red are rail rates.

Table 7.11: Cheapest Option Matrix (US $/FEU)

It is clear from this that Livorno direct is the most cost-effective option for cargo to/from

Bologna and Rome;

direct options to/from all three deepwater ports (Europa Platform, Vado Ligure and

Trieste) offer the most cost-effective routes to the destinations under consideration.

The Feedering Alternative

Despite suggestions of a direct call at Livorno or other Italian ports on the Northern

Tyrrhenian Sea, Tyrrhenian Sea or Adriatic Sea, in addition to direct services, the Italian

market is currently more often served by feeder services from central Mediterranean hub

ports such as Gioia Tauro, Cagliari, Taranto and Marsaxlokk for delivery to feeder ports and

then onward overland delivery to final inland destinations.

The built-up cost analysis now looks at the feedering alternative – i.e. the comparative costs

of feedering via the aforementioned hubs to ports in the Northern Tyrrhenian Sea in contrast

to the direct Livorno options. Once again, the analysis is considered for the same

representative inland destinations. Details of the deepsea costs for the main trade lanes to a

comparative transshipment hub under review are shown in Table 7.12.

In the current market it is apparent that the feedering option is broadly competitive versus

direct calls that are made with the smaller size of mainline tonnage. It should be noted that,

with current volumes, it makes sense to serve Livorno as part of a broader Mediterranean

feeder rotation, especially for lines with a limited presence in the local market itself. Smaller

shipping lines or lines with only a limited market presence will typically review their

volumes on at least a quarterly basis – so this volume requirement can be the subject of

short-term reappraisal. It is also possible that some lines with only a limited market presence

would look to combine volumes in some form of joint approach, but often the requirements

of each line can be so diverse as to make the designing of an owned feeder rotation for an

Table 7.11

Cheapest Option Matrix (US$ / FEU)


Livorno 1,162.97 749.41 1,155.52 1,259.75 1,345.10 772.17 2,564.18 2,303.71 3,106.82 2,888.99

Genoa 566.21 1,162.97 1,396.94 1,909.91 677.14 810.05 2,275.80 1,788.98 3,112.83 3,464.57

La Spezia 874.28 851.63 1,256.03 1,607.22 1,058.38 477.62 2,297.51 2,064.95 3,008.18 3,362.83

Fos 2,021.54 2,511.47 2,934.40 3,011.08 1,553.32 2,219.99 3,301.78 2,449.45 3,498.30 3,782.02

Naples 2,725.42 2,136.27 2,604.09 870.51 3,023.10 2,362.63 3,145.97 3,128.33 3,330.85 3,614.58

Salerno 2,849.45 2,358.50 2,748.08 1,020.92 2,970.38 2,486.66 3,246.74 3,229.11 3,423.88 3,705.27

Rome 2,133.17 1,515.14 1,878.90 na 2,433.95 1,770.37 3,025.62 3,008.18 3,100.62 3,170.39

Trieste 1,610.90 1,144.33 741.82 2,524.74 2,006.04 1,382.14 1,857.20 2,616.89 1,804.48 2,049.45

Venice 1,069.61 619.86 203.11 1,978.13 1,552.00 862.96 1,875.80 2,185.88 2,139.37 2,517.67

Ravenna 1,125.67 310.08 680.95 1,356.22 1,566.73 684.76 2,285.11 2,269.60 2,530.07 2,905.27


Doc. No. 14-1394-H1 Rev. 0 – March 2015


alliance particularly taxing, usually resulting in lines deciding to do their own thing with

third party feeders.

Shipping lines will initially look to enter into a new market by utilising space on

common/third party operated feeder vessels, before then looking to start their own dedicated

feeder services, which will prove more cost-effective than common feeders, when the line

has sufficient volume. The next stage is then for the line to develop sufficient volume to

make a direct call into a specific market more cost-effective than a dedicated feeder service.

The size of vessels on the direct service can then be adjusted further if/when the necessary

volume is apparent.

For the Italian market, the focus is between containers fed from a transshipment hub port

versus direct shipments. When volumes increase, the direct option rapidly becomes more

attractive.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 7.12: Deep-Sea Shipping Costs from Singapore and New York to Gioia Tauro

Table 7.12

Deep-Sea Shipping Costs from Singapore and New York to Gioia Tauro

Vessel Capacity - TEUs 4500 6800 8500 10800 12500 14500 18000 4500 6800 8500 10800 12500 14500 18000

Load factor - % 95 95 95 95 95 95 95 95 95 95 95 95 95 95

Ocean haul length - nm 6,192 6,192 6,192 6,192 6,192 6,192 6,192 4,343 4,343 4,343 4,343 4,343 4,343 4,343

Sea day s 14.33 13.58 13.58 13.58 13.58 13.58 13.58 10.05 9.52 9.52 9.52 9.52 9.52 9.52

Port (and canal) day s 4.28 4.87 5.59 6.56 6.52 7.25 8.51 4.28 4.87 5.59 6.56 6.52 7.25 8.51

Cargo size - box es 2,850 4,307 5,383 6,840 7,917 9,183 11,400 2,850 4,307 5,383 6,840 7,917 9,183 11,400

Sea costs per day $44,527 $62,409 $77,736 $89,070 $107,239 $121,613 $139,985 $44,527 $62,409 $77,736 $89,070 $107,239 $121,613 $139,985

Port costs per day $25,535 $34,186 $42,733 $48,955 $58,782 $67,120 $81,943 $25,535 $34,186 $42,733 $48,955 $58,782 $67,120 $81,943

Vessel Sea costs $638,225 $847,443 $1,055,568 $1,209,477 $1,456,197 $1,651,371 $1,900,852 $447,644 $594,387 $740,364 $848,314 $1,021,361 $1,158,253 $1,333,237

Vessel Port costs $109,289 $166,524 $238,828 $321,145 $383,482 $486,461 $697,684 $109,289 $166,524 $238,828 $321,145 $383,482 $486,461 $697,684

Port dues $109,450 $199,000 $215,500 $235,500 $255,500 $281,120 $315,000 $109,450 $199,000 $215,500 $235,500 $255,500 $281,120 $315,000

Canal Charges $217,533 $362,555 $425,678 $425,678 $582,847 $630,720 $695,967

Voy age Cost $1,074,497 $1,575,523 $1,935,574 $2,191,800 $2,678,026 $3,049,672 $3,609,503 $666,383 $959,912 $1,194,692 $1,404,958 $1,660,342 $1,925,834 $2,345,921

Cargo size in FEUs 2,138 3,230 4,038 5,130 5,938 6,888 8,550 2,138 3,230 4,038 5,130 5,938 6,888 8,550

Cost per FEU - $ $502.69 $487.78 $479.40 $427.25 $451.04 $442.78 $422.16 $311.76 $297.19 $295.90 $273.87 $279.64 $279.61 $274.38


Singapore to Gioia Tauro New York to Gioia Tauro

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The cost structures for these alternatives are summarised in Table 7.13 and Table 7.14 for the

Far East and US East coast deepsea trades under review, using Gioia Tauro as being typical

of a major transshipment hub. Deepsea costs for each port option are based on the largest

vessel that can be handled at Gioia Tauro (18,400TEU for Far East and 8,500TEU for US

east coast future demand) and feeder rotations use a typical feeder size of 1,500TEU.

Table 7.13: Total Built-up Costs for the Feeder Options Serving Major Markets ex Far East (via Gioia Tauro)

Table 7.14: Total Built-up Costs for the Feeder Options Serving Major Markets to US East (via Gioia Tauro)

It is apparent that the direct Livorno option is currently much cheaper than is a shipment via

the Mediterranean transshipment ports, even when the lower cost feeder option is included in

the review. Considered simply from this narrow unit cost perspective, the direct call is the

favourable option, even without allowing for the upside potential of larger vessels calling at

Livorno. However, there are other significant considerations relating to volumes and critical

mass for a particular shipping line or consortium.

The overall cost comparison for Livorno is summarised in Table 7.15 and Table 7.16, which

illustrates the comparative delivered costs ex Singapore (and to New York) to various Italian

Table 7.13

Total Built-Up Costs for the Feeder Option Serving Major Markets ex Far East (via Gioia Tauro)


Deepsea Costs 422.16 422.16 422.16 422.16 422.16 422.16 422.16 422.16 422.16 422.16

Transshipment Stev edoring 153.90 153.90 153.90 153.90 153.90 153.90 153.90 153.90 153.90 153.90

Feedering 244.89 244.89 244.89 244.89 244.89 244.89 244.89 244.89 244.89 244.89

Final Stev edoring 137.94 137.94 137.94 137.94 137.94 137.94 137.94 137.94 137.94 137.94

Inland Deliv ery 1162.97 749.41 1155.52 1259.75 1345.10 772.17 2564.18 2303.71 3106.82 2888.99

Total 2121.87 1708.31 2114.41 2218.65 2304.00 1731.07 3523.08 3262.61 4065.72 3847.89


Table 7.14

Total Built-Up Costs for the Feeder Option Serving Major Markets to US East Coast (via Gioia Tauro)


Deepsea Costs 295.90 295.90 295.90 295.90 295.90 295.90 295.90 295.90 295.90 295.90

Transshipment Stev edoring 153.90 153.90 153.90 153.90 153.90 153.90 153.90 153.90 153.90 153.90

Feedering 244.89 244.89 244.89 244.89 244.89 244.89 244.89 244.89 244.89 244.89

Final Stev edoring 137.94 137.94 137.94 137.94 137.94 137.94 137.94 137.94 137.94 137.94

Inland Deliv ery 1162.97 749.41 1155.52 1259.75 1345.10 772.17 2564.18 2303.71 3106.82 2888.99

Total 1995.61 1582.04 1988.15 2092.38 2177.73 1604.81 3396.81 3136.35 3939.45 3721.62


Doc. No. 14-1394-H1 Rev. 0 – March 2015


and central European destinations and contrasts the cost of direct shipments with feedered

containers from central Mediterranean hub ports shown in Table 7.13 and Table 7.14. The

cheapest direct built-up cost options are highlighted in green, all of which are cheaper than

the feeder alternative.

Table 7.15: Direct Cost Options ex Far East

For the Far East services, it has been assumed that Trieste, Vado Ligure and The Europa

Platform are served by 18,400TEU vessels, VTE, SECH and Fos by 8,500TEU vessels,

LSCT by 4,500TEU vessels and Salerno by 2,000TEU.

It is clear from Table 7.15 that the ability to handle the largest vessels has a huge bearing on

the total built-up cost of serving a number of inland destinations, nine out of ten of which are

better served by a deepwater facility. The rest of the cost distinction is largely a result of the

geographical position of the port in relation to the final destination or origin of the cargo. In

this respect, Trieste is better placed to handle some of the more distant central European

cities, whereas Vado Ligure and the Europa Platform will be better placed to handle some of

the northern Italian cargo.

For the US east coast services, it has been assumed that the largest vessel likely to be

deployed on such a service in the short-term will be vessels of 8,500TEU. This will

therefore reduce the advantage of the deepwater ports until such time as much bigger

tonnage is cascaded onto these services, although in the mid to long-term a deepwater

advantage will be crucial to this trade lane as well.

Table 7.16 highlights the built-up costs on this basis and highlights a much wider split in

terms of the cheapest built-up cost options than is envisaged for the Far East trade services

where the ship size revolution effect has progressed much further.

Table 7.15

Direct Cost Options ex Far East


Europa Platform 1759.34 1345.78 1751.88 1856.12 1941.47 1368.54 3160.55 2900.08 3703.19 3485.36

Vado Ligure 1214.65 1811.40 2045.37 2558.34 1325.57 1458.48 2924.24 2437.41 3761.26 4113.00

VTE 1278.60 1875.36 2109.33 2622.29 1389.52 1522.43 2988.19 2501.36 3825.21 4176.96

SECH 1261.50 1858.26 2092.23 2605.19 1372.42 1505.33 2971.09 2484.26 3808.11 4159.86

LSCT 1608.79 1586.15 1990.55 2341.73 1792.89 1212.14 3032.03 2799.47 3742.69 4097.34

Trieste 2221.28 1754.71 1352.20 3135.12 2616.42 1992.52 2467.58 3227.27 2414.86 2659.83

Fos 2769.77 3259.69 3682.63 3759.31 2301.55 2968.22 4050.01 3197.68 4246.52 4530.25

Salerno 3904.15 3413.20 3802.78 2075.62 4025.08 3541.36 4301.44 4283.81 4478.58 4759.97


Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 7.16: Direct Cost Options to US East Coast

7.3 CONCLUSION

Direct calls at deepwater port facilities clearly offer the most cost-effective way of serving

the northern Italy regions and the more distant regions of central Europe. On a unit cost

basis, the arguments still clearly favour direct shipments rather than feeder services, although

it should be recognised that some shipping lines do not have the necessary volume to make a

direct call economically viable and so will have to use the more expensive feeder option.

This means that together with Vado Ligure and Trieste, the Europa Platform remains well

placed to offer cost-effective solutions to any number of destinations, particularly on trade

lanes where the ULCS’s are already being deployed and where the port’s deepwater

advantage can be maximised. This is the case on the main arterial trade lanes such as Asia-

Europe, but vessels of this magnitude, i.e. >18,000TEU have yet to ‘cascade’ onto secondary

trade lanes such as the US east coast services, where it is only likely that vessels will

increase to 8,500TEU capacity in the mid-term, because of demand restrictions as well as US

port restrictions in terms of the vessel sizes that they can handle. These issues will be

resolved in the long-term and the deepwater ports will again be well prepared for

accommodating the larger tonnage. Once the Panama Canal widening has been completed in

2016, an initial increase in the average size of vessels in the US is envisaged. There are only

a limited number of relatively deepwater ports in the region at present and this should mean

that vessels up to 8,500TEU capacity could call at this time, but larger vessels are likely to

be introduced thereafter after further port developments on the US east coast.

Although this Section has concentrated on the cost effectiveness of various cargo routeings,

it is important to stress that this is not the only factor that shipping lines will assess in order

to determine which ports they serve, although in truth these too are also driven by financial

requirements, because of the expensive nature of the ULCSs they operate:

terminal efficiency, i.e. the number of containers that can be handled per hour. This

affects the amount of time spent in port and therefore the cost of a port stay. The more

productive a port can be on a regular and reliable basis, the cheaper the port stay and also

the slower a vessel needs to sail between ports to meet the next berthing window, giving

further fuel savings;

Table 7.16

Direct Cost Options to US east coast


Europa Platform 1605.98 1192.41 1598.52 1702.75 1788.10 1215.18 3007.18 2746.71 3549.82 3331.99

Vado Ligure 1057.86 1654.62 1888.58 2401.55 1168.78 1301.69 2767.45 2280.62 3604.47 3956.22

VTE 1057.86 1654.62 1888.58 2401.55 1168.78 1301.69 2767.45 2280.62 3604.47 3956.22

SECH 1040.76 1637.52 1871.48 2384.45 1151.68 1284.59 2750.35 2263.52 3587.37 3939.12

LSCT 1378.47 1355.82 1760.22 2111.41 1562.57 981.81 2801.70 2569.14 3512.36 3867.02

Trieste 2106.09 1639.51 1237.01 3019.93 2501.22 1877.33 2352.38 3112.08 2299.67 2544.63

Fos 2535.52 3025.44 3448.38 3525.06 2067.30 2733.97 3815.76 2963.43 4012.27 4296.00

Salerno 3698.89 3207.94 3597.52 1870.36 3819.82 3336.10 4096.18 4078.55 4273.32 4554.71


Doc. No. 14-1394-H1 Rev. 0 – March 2015


customs clearance – it is again important to ensure that once a container has been

discharged, it is not delayed unnecessarily with customs and security checks that delay

the final delivery date/time of a consignment, which could (depending on the commodity)

effect the output of a factory production line;

frequency, reliability and capacity of intermodal services – particularly for distances of

>500km it is likely that the containers will be moved from the quay via rail. In order not

to lose the benefit of a quick discharge on the quayside, it is imperative that the rail

providers have the necessary capacity and frequency of services to ensure that the

containers are not left waiting for a connection;

frequency, reliability and capacity of road haulage – the same is true for road haulage

options for distances <500km;

further volume discounts are also possible to offer to major clients in order to reduce their

built-up costs and guarantee some core port volumes.

In the future, there will remain some local and international competition challenges for

The Europa Platform particularly with Trieste and Vado Ligure locally and north

European ports for central European destinations, but there remain sufficient

incentives to call at The Europa Platform to warrant the interest of an international

terminal operator and/or major shipping line to further investigate the possibility of a

direct call.

Once a major operator, together with shipping line volumes are secured, then the

Europa Platform future is secured. It is imperative therefore that the Port Authority

can attract such a client, because without it there is no future.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


8 LIVORNO FORECAST TO 2035

8.1 INTRODUCTION

Regional demand forecasts have been developed in Chapter 3, with three macro-economic

cases (Base, Low and High) for the period of to 2035. This forecast will allow for an

identification of the Base Case for the Italian Northern Tyrrhenian Sea region under review,

taking into account all competing facilities in the region (such Livorno, Genoa and La

Spezia) as well as the core likely range of macro-economic outcomes. This defines the

general background against which the position of the specific Livorno terminal will be

assessed.

Demand forecasts will now be further developed for Livorno (and the Europa Platform) in

isolation. This will be done for local, transit and any potential transshipment flows and

calculated in relation to the regional forecast already identified. The output for the Port of

Livorno will be on the basis of a TEU forecast for local, transit and some limited

transshipment.

The approach taken is to consider the potential market share of Livorno within this market.

Of course, this will be modified by a review of the specific position for individual lines at the

port as well as the impact that port developments in Livorno, Genoa and Vado Ligure will

have when considering the ability of the newly developed terminals to handle larger vessels.

This will give a realistic range of top-down estimates of demand.

8.2 LIVORNO DEMAND TO 2035

Table 8.1 indicates the demand forecast for the port of Livorno from 2014 to 2035. The

Livorno container facilities currently represent the following share of the Northern

Tyrrhenian ports market:

13.8 per cent of the local import/export market;

0 per cent of the international transit market (to central European countries);

16.0 per cent of the relatively small transshipment market.

It is envisaged that the current share of each of the constituent parts of the Northern

Tyrrhenian Sea market will remain constant for the years 2015 to 2019, after which time the

developments at the Europa Platform will start to have an effect on the annual flows by

attracting larger tonnage. With its deeper water and better hinterland connections, both to

parts of northern Italy for an increased share of the northern Italian regions cargo volumes

and also ‘international’ transit to parts of central Europe as identified in Chapter 3 and 6,

larger vessels are expected to call at the facility and an increased share of the market result.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 8.1:Forecast Total Livorno Port Demand to 2035

Table 8.1

Forecast Total Livorno Port Demand to 2035

- '000TEUs

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Base Case

Import/Ex port 519.5 596.0 610.9 629.5 648.4 664.6 834.3 1004.1 1065.5 1127.0 1188.4 1249.8 1299.9 1349.9 1399.9 1449.9 1499.9 1570.9 1641.9 1712.8 1783.8 1854.8

Transit 0.0 0.0 0.0 0.0 0.0 0.0 54.9 109.8 133.4 157.0 180.7 204.3 234.8 265.3 295.9 326.4 356.9 392.2 427.5 462.8 498.1 533.3

Transshipment 58.0 58.8 60.3 62.1 64.2 66.3 70.8 75.3 79.1 82.8 86.6 90.4 94.4 98.5 102.5 106.6 110.6 115.5 120.4 125.2 130.1 135.0

Total 577.5 654.8 671.2 691.6 712.6 730.9 960.0 1189.1 1278.0 1366.8 1455.7 1544.6 1629.1 1713.7 1798.3 1882.9 1967.4 2078.6 2189.7 2300.8 2412.0 2523.1

High Case

Import/Ex port 519.5 607.5 635.9 669.8 689.9 707.1 887.7 1068.3 1133.7 1199.1 1264.4 1329.8 1383.0 1436.2 1489.5 1542.7 1595.9 1671.4 1746.9 1822.4 1897.9 1973.4

Transit 0.0 0.0 0.0 0.0 0.0 0.0 55.6 111.2 135.5 159.8 184.1 208.3 239.9 271.5 303.0 334.6 366.1 403.1 440.1 477.1 514.1 551.1

Transshipment 58.0 60.0 62.8 66.1 68.3 70.6 75.3 80.1 84.1 88.2 92.2 96.2 100.5 104.8 109.1 113.4 117.7 122.9 128.1 133.2 138.4 143.6

Total 577.5 667.5 698.6 735.9 758.2 777.7 1018.6 1259.6 1353.3 1447.0 1540.7 1634.3 1723.4 1812.5 1901.6 1990.6 2079.7 2197.4 2315.1 2432.8 2550.5 2668.2

Low Case

Import/Ex port 519.5 585.2 594.7 608.1 626.3 642.0 806.0 969.9 1029.3 1088.6 1148.0 1207.3 1255.7 1304.0 1352.3 1400.6 1448.9 1517.5 1586.0 1654.6 1723.1 1791.7

Transit 0.0 0.0 0.0 0.0 0.0 0.0 53.8 107.6 130.2 152.9 175.6 198.2 227.3 256.4 285.5 314.6 343.7 356.3 369.0 381.6 394.3 406.9

Transshipment 58.0 57.8 58.7 60.0 62.0 64.1 68.4 72.7 76.4 80.0 83.7 87.3 91.2 95.1 99.0 102.9 106.9 111.6 116.3 121.0 125.7 130.4

Total 577.5 643.0 653.4 668.1 688.3 706.0 928.1 1150.2 1235.9 1321.6 1407.2 1492.9 1574.2 1655.5 1736.8 1818.1 1899.5 1985.4 2071.3 2157.2 2243.1 2329.0


Doc. No. 14-1394-H1 Rev. 0 – March 2015


It is also recognised that the developments at Vado Ligure will have a similar impact on the

ratio of containers being handled at other ports in the Northern Tyrrhenian Sea market and in

particular Voltri, SECH and LSCT. With the deepsea advantage of both Europa Platform

and Vado Ligure, there is likely to be an increase in the size/type of vessels calling at these

two ports, which will result in a greater share of local cargo being handled at these two

facilities at the expense of the share of cargo being handled at both the existing terminals in

Genoa and La Spezia.

Following the initial “ramp-up” expected in the first few years of partial operation from

2019-2021, the Livorno share of the Northern Tyrrhenian Sea port market is expected to

increase as follows:

the share of the local market is expected to reach 20 per cent by 2021 before increasing

further to 23 per cent in 2025; 25 per cent in 2030 and 28 per cent in 2035;

the share of the international transit market is expected to reach 20 per cent in 2021

before then increasing to 30 per cent in 2025; 40 per cent in 2030 and 50 per cent in

2035;

although of relatively minor importance, the transshipment share at Livorno is likely to

increase to 17 per cent in 2021; 18 per cent in 2025; 19 per cent in 2030 and 20 per cent

in 2035.

Livorno demand is expected to increase from 0.58m TEU demand in 2014 to between 0.64-

0.67m TEU demand in 2015; 0.93-1.02m TEU in 2020; 1.49-1.63m TEU in 2025; 1.90-

2.08m TEU in 2030 and 2.33-2.67m TEU in 2035.

The Livorno demand is further illustrated in Figure 8.1.

Figure 8.1: Livorno Port Demand (‘000 TEUs), 2014-2035

Doc. No. 14-1394-H1 Rev. 0 – March 2015


With the unreliable nature of transshipment volumes being such that volumes can easily

move from one transshipment hub to another, it is important to disregard these volumes

when considering the supply/demand balance for the Northern Tyrrhenian Sea region.

Figure 8.2 illustrates the total demand for Livorno without any transshipment volumes.

Figure 8.2: Livorno Port Demand (‘000TEUs) Less Transshipment, 2014-2035

8.3 SUPPLY/DEMAND BALANCE TO 2025

It is not only difficult to assess planned capacity developments beyond a five year time span

because of the lack of reliable information beyond this timeframe, but also because terminal

operators are becoming much more circumspect. Terminal operators are often only looking

to increase their capacity when there is sufficient demand to do so. This cautious approach is

understandable given the potentially large sums of money required to develop terminal

capacity in a significant way, but it means that we can only really offer a confident appraisal

of the supply/demand balance for Livorno and the Northern Tyrrhenian Sea region until

2020 with a much more cautious analysis to 2025 due to data between 2020-2025 being

much more unreliable.

The supply/demand balance for the region has been dealt with in Chapter 3. For Livorno in

isolation, the introduction of the Europa Platform project will provide much needed capacity

from 2019 (but particularly from 2021) onwards at a time when the capacity of Livorno was

beginning to look stretched.

Detail of the Livorno supply/demand balance are shown in Figure 8.3 and with demand

excluding any current or future transshipment volumes. With the introduction of the

additional capacity in Livorno, the port will avoid any potential initial congestion challenges

from 2018 and will also have sufficient capacity to meet future demand until around 2030/31

when Base Case projections (without transshipment) suggest that the port will be 79.0 / 83.6

per cent utilised and once again in need of further capacity to avoid any potential operational

delays.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Figure 8.3: Livorno Port Supply /Demand Balance (‘000TEUs), 2014-2025

8.4 CONCLUSION

The outlook for Livorno if the port is not developed will be problematic. The trend towards

the introduction of much larger vessels into the trades will see the limited facilities at the

port increasingly marginalised. This will result in a decline in container volumes and a

reduction to feeder port status. This will see much higher costs for regional cargo owners

and act as a disincentive for regional development.

The additional capacity developments planned in Vado Ligure, plus the existing capacity at

established Genoese facilities at Voltri and SECH add to the improvement in the competitive

position of the major competitors in the region meaning that there really is no alternative for

Livorno but to go ahead with the planned expansion plans.

However, the total capacity available can also be somewhat misleading since it is the

importance of deepwater capacity, rather than the total capacity that is key to Livorno’s

future prosperity. In this respect, Livorno with the Europa Platform, and Vado Ligure are

the two main facilities in the region that can handle the largest type of container vessels

(although Vado Ligure has a further depth advantage over Livorno) and are best placed to

attract the main clients.

It is important to reiterate that whilst Livorno will be well placed to take advantage of the

deepwater capacity, it makes sense to future proof the port at this stage against any potential

requirements for deeper vessels in the coming years. Vado Ligure and Trieste are already

better suited to withstand any such future developments and so it is prudent for Livorno to

deepen to 18.0m alongside the main berth to ensure its continued competition with these port

facilities.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


9 LIVORNO GAP ANALYSIS

9.1 INTRODUCTION

The purpose of this Section is to assess the likely impact of The Port of Livorno taking no

action in terms of terminal developments. This “do nothing” approach will be assessed

based on the following criteria:

Livorno is able to maintain its existing trade share until 2019 when new deepwater

facilities become available at Vado Ligure and vessel size issues become more acute;

at this point, Livorno is gradually expected to lose its share of local import/exports, transit

containers and transshipment containers as shipping lines start to switch to those

deepwater facilities where larger vessels can be handled. Details of the competitive

position of the new facility are shown in Chapter 5.

9.2 GAP ANALYSIS

Table 9.1 assesses the likely loss of cargo volumes from 2019 onwards and compares the

planned Livorno demand forecast from Chapter 8 with a much lower expected demand based

on no port developments.

It is assumed that the port will maintain its current market share of local and transshipment

cargo from now until 2018 when the Vado Ligure deepwater development is expected to be

operational. At this point it is reasonable to assume that:

Livorno’s share of the local market will reduce, initially by the same share that we have

assumed it will increase if Europa Platform and the deepwater facility were to go ahead,

i.e. by 6.2 per cent, down from 13.8 per cent share to 7.6 per cent in 2021. With no

deepwater berthage to attract shipping lines, cargo will gradually move to other facilities

that are better equipped to handle larger vessels. The share of local cargo in Livorno will

continue to drop to five per cent in 2025; three per cent in 2030 and just 2 per cent in

2035;

no European transit cargo is likely to develop with no rail developments expected and no

shipping lines operating ULCSs calling at the port with just feeder vessels with minimal

cargo volumes calling;

with no deepwater berthage, what little share of transshipment there is will reduce

considerably and eventually fall to nothing by the end of the forecast period. Some

feeder volumes will remain and so the share is likely to reduce from the current market

share of 16 per cent to just three per cent in 2021; two per cent in 2025; one per cent in

2030 and zero on 2035.

The port world is full of examples of facilities that have failed to take such an opportunity to

make the required adjustments to the port in order to allow the port to accept larger vessels.

This has generally resulted in marginalized volumes and reduced revenues.

Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 9.1: Forecast Total Livorno Port Demand to 2035 – “Do Nothing Approach” – ‘000TEUs

Table 9.1

Forecast Total Livorno Port Demand to 2035 - "Do Nothing Approach"

- '000TEUs

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Base Case

Import/Ex port 519.5 596.0 610.9 629.5 648.4 664.6 523.1 381.5 354.1 326.6 299.2 271.7 253.4 235.0 216.7 198.3 180.0 170.5 161.0 151.5 142.0 132.5

Transit 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Transshipment 58.0 58.8 60.3 62.1 64.2 66.3 39.8 13.3 12.5 11.7 10.9 10.0 9.2 8.4 7.5 6.7 5.8 4.7 3.5 2.3 1.2 0.0

Total 577.5 654.8 671.2 691.6 712.6 730.9 562.9 394.8 366.6 338.3 310.0 281.7 262.6 243.4 224.2 205.0 185.8 175.1 164.5 153.8 143.1 132.5

High Case

Import/Ex port 519.5 607.5 635.9 669.8 689.9 707.1 556.5 406.0 376.7 347.5 318.3 289.1 269.6 250.1 230.5 211.0 191.5 181.4 171.3 161.2 151.1 141.0

Transit 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Transshipment 58.0 60.0 62.8 66.1 68.3 70.6 42.3 14.1 13.3 12.4 11.5 10.7 9.8 8.9 8.0 7.1 6.2 5.0 3.7 2.5 1.2 0.0

Total 577.5 667.5 698.6 735.9 758.2 777.7 598.9 420.1 390.0 359.9 329.9 299.8 279.4 258.9 238.5 218.1 197.7 186.4 175.0 163.7 152.3 141.0

Low Case

Import/Ex port 519.5 585.2 594.7 608.1 626.3 642.0 505.3 368.6 342.0 315.5 289.0 262.5 244.7 227.0 209.3 191.6 173.9 164.7 155.5 146.3 137.2 128.0

Transit 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Transshipment 58.0 57.8 58.7 60.0 62.0 64.1 38.4 12.8 12.1 11.3 10.5 9.7 8.9 8.1 7.3 6.4 5.6 4.5 3.4 2.2 1.1 0.0

Total 577.5 643.0 653.4 668.1 688.3 706.0 543.7 381.4 354.1 326.8 299.5 272.2 253.6 235.1 216.6 198.0 179.5 169.2 158.9 148.6 138.3 128.0


Doc. No. 14-1394-H1 Rev. 0 – March 2015


Table 9.2: Forecast Total Livorno Port Demand Variance to 2035 - ‘000TEUs

Table 9.2

Forecast Total Livorno Port Demand Variance to 2035

- '000TEUs

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Base Case

Import/Ex port 0.0 0.0 0.0 0.0 0.0 0.0 311.3 622.5 711.4 800.3 889.2 978.1 1046.5 1114.9 1183.2 1251.6 1319.9 1400.4 1480.9 1561.3 1641.8 1722.3

Transit 0.0 0.0 0.0 0.0 0.0 0.0 54.9 109.8 133.4 157.0 180.7 204.3 234.8 265.3 295.9 326.4 356.9 392.2 427.5 462.8 498.1 533.3

Transshipment 0.0 0.0 0.0 0.0 0.0 0.0 31.0 62.0 66.6 71.2 75.8 80.4 85.2 90.1 95.0 99.9 104.8 110.8 116.9 122.9 128.9 135.0

Total 0.0 0.0 0.0 0.0 0.0 0.0 397.1 794.3 911.4 1028.5 1145.7 1262.8 1366.6 1470.3 1574.1 1677.9 1781.6 1903.4 2025.2 2147.0 2268.8 2390.6

High Case

Import/Ex port 0.0 0.0 0.0 0.0 0.0 0.0 331.2 662.3 756.9 851.5 946.1 1040.7 1113.5 1186.2 1258.9 1331.6 1404.4 1490.0 1575.6 1661.2 1746.9 1832.5

Transit 0.0 0.0 0.0 0.0 0.0 0.0 55.6 111.2 135.5 159.8 184.1 208.3 239.9 271.5 303.0 334.6 366.1 403.1 440.1 477.1 514.1 551.1

Transshipment 0.0 0.0 0.0 0.0 0.0 0.0 33.0 66.0 70.9 75.7 80.6 85.5 90.7 95.9 101.1 106.3 111.5 117.9 124.3 130.8 137.2 143.6

Total 0.0 0.0 0.0 0.0 0.0 0.0 419.8 839.5 963.3 1087.0 1210.8 1334.5 1444.0 1553.5 1663.0 1772.5 1882.0 2011.1 2140.1 2269.1 2398.2 2527.2

Low Case

Import/Ex port 0.0 0.0 0.0 0.0 0.0 0.0 300.7 601.3 687.2 773.1 859.0 944.9 1010.9 1076.9 1143.0 1209.0 1275.1 1352.8 1430.5 1508.3 1586.0 1663.7

Transit 0.0 0.0 0.0 0.0 0.0 0.0 53.8 107.6 130.2 152.9 175.6 198.2 227.3 256.4 285.5 314.6 343.7 356.3 369.0 381.6 394.3 406.9

Transshipment 0.0 0.0 0.0 0.0 0.0 0.0 30.0 59.9 64.3 68.8 73.2 77.6 82.3 87.1 91.8 96.5 101.2 107.1 112.9 118.7 124.6 130.4

Total 0.0 0.0 0.0 0.0 0.0 0.0 384.4 768.8 881.8 994.8 1107.8 1220.7 1320.6 1420.4 1520.3 1620.1 1720.0 1816.2 1912.4 2008.6 2104.8 2201.0


Doc. No. 14-1394-H1 Rev. 0 – March 2015


The variance between the two demand forecasts (the Livorno demand forecast is shown in

Table 8.1:Forecast Total Livorno Port Demand to 2035in the earlier Section) provides the

“gap analysis” for the “do nothing” approach and is shown in Table Table 9.2. The figures

highlighted in red are the port volumes that the port will lose by taking no action when

compared with the demand forecast expected with the terminal development.

Figure 9.1 further illustrates the expected dramatic decline in Livorno port volumes if no

action is taken.

Figure 9.1: Livorno Revised Demand Forecast “Do Nothing” Approach

9.3 CONCLUSION

It is clear from Table 9.1 and Table 9.2 that a failure to develop the port of Livorno will

result in a continuous reduction of container volumes from 2019 and for the balance of the

forecast period as cargo and shipping lines will move to those bigger and deeper ports that

are able to handle the larger vessels that will be deployed in the region in the near future.

This reduction will continue until eventually Livorno will not be able to offer a sustainable

business case based on its declining container volumes.

In the short-term, Livorno would still be able to attract cargo volumes similar to what it does

today (0.3m TEU), but by 2025 in particular, the number of ULCSs delivered to all major

shipping lines will mean that any port that doesn’t have the capability to handle these ships

will lose significant amounts of business and continue to do so for the balance of the forecast

period.

Livorno really has no choice. It either develops to meet the future needs of the shipping

lines, or it becomes nothing, but a feeder outport or niche provider with no sustainable

future.

Penfold/Migliaccio/FCS/FLM/VR/GBP:plp

Documents

Livorno Port Authority Livorno, Italy · 2015. 5. 15. · Livorno Port Authority Livorno, Italy Financial Engineering Plan for the Development of the Logistic Node of Livorno through