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The Ramifications of the Crisis: Revising Future Expectations Theo Notteboom ITMMA - University of Antwerp and Antwerp Maritime Academy Jean-Paul Rodrigue Department of Global Studies & Geography, Hofstra University Terminal Operators Conference - Europe Valencia (Spain), June 8-10 2010. Outline.

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  1. The Ramifications of the Crisis:Revising Future ExpectationsTheo NotteboomITMMA - University of Antwerp and Antwerp Maritime AcademyJean-Paul RodrigueDepartment of Global Studies & Geography, Hofstra UniversityTerminal Operators Conference - EuropeValencia (Spain), June 8-10 2010

  2. Outline • Towards an economic recovery in Europe? • Towards a new hierarchy in the European container port system? • Towards a paradigm shift?

  3. 1. Towards an economic recovery in Europe? World trade and manufacturing output Source: EU

  4. 1. Towards an economic recovery in Europe? GDP growth (q-o-q) in EU GDP growth (index) in EU Source: EU

  5. 1. Towards an economic recovery in Europe? Industrial production - world Industrial production - EU Source: EU

  6. 1. Towards an economic recovery in Europe? Investments in capital goods in EU Private consumption in EU Source: EU

  7. 1. Towards an economic recovery in Europe? Increased need for factoring in uncertainty/risk in business strategies

  8. Outline • Towards an economic recovery in Europe? • Towards a new hierarchy in the European container port system? • Towards a paradigm shift?

  9. How serious is the throughput issue?The European case The bubble effect?

  10. Container throughput development and various forecasts, Antwerp Source: Notteboom

  11. Top 15 European container ports = port gained places in ranking (2008-2009) = port lost places in ranking (2008-2009)

  12. Taking a medium-term view on traffic development: Winners and losers during the period 2006-2009 THE MAIN WINNERS THE MAIN LOSERS Source: ITMMA – own compilation

  13. Med and UK succeeded in reversing recent decline in market share

  14. Changes in Container Traffic at Some Major European Ports, 2008-2009-Q1 2010 • Growth differences mainly explained by: • Consolidation of volumes on trunk lines • End of capacity constraints in some ports • Major inter-port shifts in transhipment business • Russia effect Source: statistics individual port authorities

  15. Trade volumes per route to/from Europe: Mixed results Inventory replenishment or an underlying recovery in demand ? Source: based on data EELA

  16. Revisiting transshipment in Europe Hamburg Rotterdam Bremerhaven Antwerp Le Havre Zeebrugge Barcelona Taranto Cagliari Valencia Sines Piraeus Algeciras Gioia Tauro Malta Tanger Med

  17. Market shares of ports in the West-Med according to diversion distance from the main route

  18. The immediate hinterland as the backbone for port volumes • Containers: challenge of co-modality and cargo bundling on short distances Containerized cargo by road, rail and barge

  19. Harlingen Groningen Leeuwarden Veendam Drachten Seaport in Extended Rhine-Scheldt Delta Alkmaar Meppel Inland Container Terminal (barge or multimodal) Zaandam Beverwijk Kampen Almelo Amsterdam Hengelo Growth region European Distribution (outside seaport system) Netherlands Hillegom Utrecht Ede Zutphen ROTTERDAM A. a/d Rijn Logistics corridors Valburg Nijmegem Gorinchem Oss Germany Oosterhout Emmerich Den Bosch Duisburg Tilburg Gennep Zeeland Seaports Moerdijk Dortmund Krefeld Zeebrugge ANTWERP Helmond Venlo Duesseldorf Deurne Ostend Neuss Meerhout Dunkirk Dormagen Born Genk Willebroek Cologne Ghent Wielsbeke Stein Grimbergen Bonn Belgium Brussels Avelgem Liège Lille Andernach Valenciennes Koblenz France Mertert Lux The immediate hinterland as the backbone for port volumes • Competition but also synergy between regional ports • Increasing role of inland/dry ports

  20. Ports increasingly compete for more distant hinterlands Gateway port Multi-port gateway regions 1. Extended Rhine-Scheldt Delta 2. Helgoland Bay 3. UK SE Coast 4. Spanish Med 5. Ligurian Range 6. Seine Estuary 7. Black Sea West 8. South Finland 9. Portugese Range 10. North Adriatic 11. Gdansk Bay 12. Kattegat/The Sound Transhipment/interlining port (transhipment incidence >75%) Gateway port also handling substantial transhipment flows Multi-port gateway region 8 Main shipping route 12 11 2 1 3 Americas West Germany South Poland/ Czech Republic/ Slovakia/Hungary 6 Bavaria Alpine region Americas Northern Italy 7 South France 10 5 9 Madrid and surroundings 4 Main shipping route Middle East – Far East

  21. Keeping Track of the Big Picture: Emerging Global Maritime Freight Transport System

  22. Outline • Towards an economic recovery in Europe? • Towards a new hierarchy in the European container port system? • Towards a paradigm shift?

  23. The Double Squeeze on Ports and Maritime Shipping Maritime Shipping Overcapacity New terminals coming online New ships coming online (+ cancellations) • Contestability for gateways • Contestability for hubs Rebalancing Supply Demand Port Operations Lower profitability Less pressures on terminal resources Less financial appeal

  24. M&A activity in terminal operating industry • Expected net returns on investment grossly overrated on assumptions that: • container throughput figures would go through the ceiling • container handling facilities would be in short supply • prices would rise steeply. • Since 2008: no major terminal transactions • Max 8 to 10 times EBITBA • Shipping lines’ divestment in terminals?

  25. A more prudent approach to plot sizes of capacity extensions? • Deurganckdock • 5.3 km quay wall, • 326 ha, 44 GC • 8m TEU • Rotterdam: Euromax • 5.5m TEU, 2.3m TEU in 1st phase • Rotterdam: Maasvlakte I & II • Le Havre: Port 2000

  26. Rebalancing risk • Globalization and the growth of the shipping industry appear to have skewed the perception of risk downward. Source: Rodrigue, Notteboom and Pallis (2009)

  27. The “Calm” after the Storm: A Paradigm Shift for Maritime Container Trade and Ports

  28. The “Calm” after the Storm: A Paradigm Shift for Maritime Container Trade and Ports

  29. Will we get back to a ‘business as usual’ scenario? • No: the ‘business as usual’ practices between 2002 and 2008 were highly ‘unusual’. • Medium-term perspective (3-5 years): • Sustained pressure on terminal rates due to restructuring/consolidation of shipping services and memory effects in terminal overcapacity situation. • Actors will continue to show cautious in competitive bidding processes. • Long-term perspective (>5 years): • Strategic port sites remain scarce goods. • Terminals will regain status as interesting investment objects, but with a more realistic risk assessment.

  30. CONCLUSIONS • Mid-term problems to a ‘recently enlarged port sector’ with investors rediscovering risk • Provide opportunities: • to develop corrective actions as good days will be back. • to revisit growth expectations as trade growth is not exponential.

  31. Topics for Discussion • How solid are the growth fundamentals for the shipping industry? • Which sectors and regions are the most vulnerable? • Who is likely to default next? • Signs of divesture? • What could be the “new normal”?

  32. Thank you for your attention ! theo.notteboom@ua.ac.be jean-paul.rodrigue@hofstra.edu

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