Carriers move to deeper ports with lower box costs

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

30 Nov 2009

After reporting a 26 percent drop in container traffic in the first nine months of this year, Hamburg port is bracing for a further fall in throughput as two major lines begin slashing services. China Shipping, the seventh largest container line, is gradually cutting calls at Hamburg Port, according to Eurogate, operator of a key container terminal at the port.
The world's third largest container shipping line, CMA CGM, is also cutting back services. It has already shifted several services, including its Russia operation, to the Belgian port of Zeebrugge.
Hamburg port relies heavily on traffic between Asia and Europe, as well as the Baltic Sea region. With Asia's exports and the Baltic Sea region's growth having been badly hit by the economic crisis, Hamburg has been "hit three times as badly as the average port in the North Sea", said Klaus-Dieter Peters, chief executive officer of Hamburger Hafen und Logistik AG (HHLA), the main port operator at Hamburg.
According to Rudolf Schmidt, a shipping analyst, the reason for China Shipping's cutback in services is due to Hamburg's high container handling fees.
The costs of offloading a container from a ship to a feeder vessel costs around US$300 in Hamburg, about $90 more than in Rotterdam.
Another problem is the draught of the Elbe River. It has shipping lines such as CMA CGM, which has newbuilding orders for several 13,000 TEU vessels, deeply concerned. A CMA CGM spokesman said it was difficult to load cargo such as timber, metal or paper on large ships, as the vessels were finding it difficult to navigate the river.
Jumbo ships can pass each other only at a few points along the Elbe River, making the time slot available increasingly shorter, explained HHLA chief Peters.
Michael Behrendt, Hapag-Lloyds' chief in Hamburg, said the large vessels ordered by lines need more than 14m drought to enter a port. Ships with a maximum draught of 12.5m can now enter Hamburg, but only at high tide can ships of over 14m draught clear the port.
To stem the cutback in services, shipping association Hafen Hamburg has been calling for lower fees and charges. The Hamburg port authority is closely monitoring moves by arch-rival Rotterdam, which recently announced a seven percent discount for container handling from next year.
HHLA boss Peters warned that only cost-saving measures for port customers such as a "market-oriented tariff structure and a quick adjustment of the water depth" can maintain and improve the port's competitiveness.
But Hamburg's economic tsar, senator Axel Gedaschko does not share such sentiments. He claimed Rotterdam's port fees were higher than at Hamburg, and called for an "effective strategy of incentives" in tandem with the port authority and federal government, to keep the shipping lines calling at the German flagship port.
"One way to keep the lines in Hamburg is to offer them lower costs if they bring
in more boxes," said Gedaschko. His mantra is that only those who bring in more containers should earn more profits.
HHLA reported a one-third decline in its container business during the first three quarters of the year compared with the year earlier. It blamed the drop in traffic on inaction on the part of politicians in getting the Elbe River dredged to enable vessels of more than 13,000 TEUs to enter the port.
Klaus-Michael Kuehne, executive chairman and majority owner of logistics company Kuehne + Nagel, sounded the alarm at the recent opening of a logistics centre in Obergeorgswerder.
Hamburg port would be left behind in the race by its competitors in the North Sea region if something is not done quickly, he told Hamburg Mayor Ole von Beust.
Hamburg's container handling fees and other charges are much too expensive compared with Rotterdam, Kuehne complained. He also criticised the city for doing "too little" to expand and modernise port infrastructure, such as deepening of the Elbe River.
There was strong criticism of the increase in costs this spring. Critics said hiking charges in a crisis was a big mistake.
The political haggling over the deepening of the Elbe River also puts Hamburg at a disadvantage compared to its main competitors of Rotterdam, Antwerp and Zeebrugge, the critics said. Port experts said that once cargo traffic migrated to another, better accessible port, it would not be easy to win it back.
The work related to the deepening of the river ought to have begun long ago but because of legal and political delays, it will now begin at the end next year at the earliest and take two years to complete.
The opposition to the deepening of the Elbe comes chiefly from the neighbouring state of Lower Saxony where local residents have been protesting that the dredging would lead to irreparable damage to the river banks.

Source: CargonewsAsia