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OBOR and the European container port system: towards continuity or - - PowerPoint PPT Presentation

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OBOR and the European container port system: towards continuity or disruption in the current port hierarchy? Theo NOTTEBOOM and Zhongzhen YANG Transportation Management College, Dalian Maritime University, China Conference on Logistics and

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OBOR and the European container port system:

towards continuity or disruption in the current port hierarchy?

Theo NOTTEBOOM and Zhongzhen YANG

Transportation Management College, Dalian Maritime University, China

Conference on “Logistics and Maritime Studies on One Belt One Road”

10-11 May 2016, The Hong Kong Polytechnic University, Hong Kong Plenary Session B

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Notteboom & Yang

HK, 9-11 May 2016

Contents

  • 1. Recent developments in the European port system
  • 2. Current situation OBOR: considerations for EU ports
  • 3. Possible impact on port hierarchy in Europe
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Notteboom & Yang

HK, 9-11 May 2016

  • 14%
  • 12%
  • 10%
  • 8%
  • 6%
  • 4%
  • 2%

0% 2% 4% 6% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Percentage growth compared to the prrevious year

Total throughput GDP growth EU27/EU28

Year-on-year growth in total EU28 port traffic (basis = ton) and EU GDP

2015: 3.69 billion tons

Traffic peaked in 2008: 3.83 billion tons

Source: Notteboom (2016)

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Source: Eurostat

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65 70 75 80 85 90 95 100 105 110 115 120 125

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Index evolution - 2008 = 100

Containers Liquid bulk Dry bulk Conventional general cargo Roro traffic Total

Are we back at pre-crisis traffic levels?

Index evolution of throughput in the EU port system (2008=100)

Container volumes managed to get well above the 2008 level Dry bulk: no recovery Total throughput is still about 4.6% below the 2008 level Liquid bulk saw a minor drop in 2009, but records further traffic decline after 2009

Source: Notteboom (2016)

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Regional shares in total TEU of the European container port system

Source: Notteboom (2016)

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Share in total container throughput

Hamburg-Le Havre range Mediterranean range UK range Atlantic range Baltic Black Sea

Atlantic range Hamburg-Le Havre range Scandinavia Baltic Mediterranean UK / Ireland Black Sea Other

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HK, 9-11 May 2016

Transhipment incidence in ranges of European port system

0% 10% 20% 30% 40% 50% 60% 70% Hamburg-Le Havre range Atlantic range Mediterranean range (EU) UK Baltic Black Sea (EU) TOTAL EU Transhipment incidence (%) 2004 2008 2012

Atlantic range Hamburg-Le Havre range Scandinavia Baltic Mediterranean UK / Ireland Black Sea Other

Source: Notteboom (2014)

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Middle East – Far East Main shipping route

Americas Americas Transhipment/interlining port (transhipment incidence >75%) Multi-port gateway region Main shipping route Gateway port Gateway port also handling substantial transhipment flows

1 2 9 3 6 7 5 4 10 8 11 12

Main stand-alone gateways

UK Germany France Belg. NL Ireland Romania Sweden Spain Croatia Hungary Czech Republic Slovakia Serbia Bosnia& Herz. Alb. Greece Bulgaria Turkey Lithuania Latvia Estonia Norway Finland Ukraine Belarus Russia Portugal Mace. Den. Austria Switz. Italy Poland

Multi-port gateway regions (% in European TEU traffic)

Nantes-St-Nazaire Bordeaux Bilbao Brest Marseille-Fos Sines Lisbon Leixoes Valencia Malaga Algeciras Cadiz Barcelona Tarragona Cagliari Gioia Tauro Taranto Naples Thessaloniki Piraeus Constantza Le Havre Rouen Marsaxlokk Genoa Livorno La Spezia Savona Venice Ravenna Trieste Koper Varna Burga s Vigo Gijon Santander Ferrol

(A) Antwerp (B) Zeebrugge (C) Ghent (D) Rotterdam (E) Amsterdam (F) Dunkirk (G) Southampton (H) Felixstowe (I) Thamesport (J) Tilbury (K) London Gateway (L) Bremerhaven (M) Kotka (N) Hamina (O) Helsinki (P) Wilhelmshaven

(A) (B) (C) (D) (E) (F) (G) (H) (I) (J) Lübeck Gdansk Gdynia Hamburg (L) Teesport Hull Grangemouth Belfast Dublin Cork Liverpool Aarhus Göteborg Szczecin Copenhagen Malmö Helsingborg Oslo Bergen Tallinn Klaipeda St-Petersburg Ventspils Riga Rauma Turku Stockholm (M) (N) (O) Sevilla

Morocco Algeria Tunisia Cyprus Malta

(P) Rijeka 2008 2012 2014 2015

  • 1. Rhine-Scheldt Delta

24.7% 24.1% 23.4% 23.8%

  • 2. North Germany

16.8% 15.8% 15.4% 14.8%

  • 3. Seine Estuary

2.9% 2.6% 2.6% 2.6%

  • 4. Portugese Range

1.4% 1.8% 2.4% 2.4%

  • 5. Spanish Med range

6.9% 6.7% 6.4% 6.6%

  • 6. Ligurian Range

4.5% 4.1% 4.1% 4.4%

  • 7. North Adriatic

1.6% 1.9% 2.0% 2.2%

  • 8. UK Southeast Coast

7.4% 6.4% 6.8% 7.6%

  • 9. Gdansk Bay

0.9% 1.7% 2.0% 1.8%

  • 10. Black Sea West

1.7% 0.9% 0.8% 0.9%

  • 11. South Finland

1.6% 1.4% 1.2% 1.2%

  • 12. Kattegat/The Sound

1.9% 1.7% 1.6% 1.6% ALL 12 multi-port gateway regions 72.1% 69.0% 68.8% 70.0% Stand-alone gateways 16.6% 20.2% 20.1% 19.2% West Med hubs 11.3% 10.7% 11.1% 10.8%

Source: Notteboom (2010; 2016)

Setubal (K)

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Middle East – Far East Main shipping route

Americas Americas

Transhipment/interlining port (transhipment incidence >75%) Multi-port gateway region Main shipping route Gateway port Gateway port also handling substantial transhipment flows Multi-port gateway regions

  • 1. 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

1 2 11 6 5 10 4 9 7 3 8 12 Madrid and surroundings West Germany Bavaria Alpine region South Poland/ Czech Republic/ Slovakia/Hungary Northern Italy South France

Corridor-based competition among multi- port gateway regions creates routing flexibility for goods flows to/from inland economic centres

Source: Notteboom (2009)

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The intermodal challenge

Hinterland coverage:

Advances in intermodal solutions for local/regional hinterland (extended gates, etc..)

Going beyond the ‘comfort zone’ remains difficult

Trunk lines to gateway ports: large scale co-modality is concentrated

More than half of total European container traffic by rail is concentrated in 6 ports

About 90% of European container traffic by barge is linked to Antwerp and Rotterdam

Overcoming the critical mass challenge by bundling cargo from multiple ports in inland centres

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Notteboom & Yang

HK, 9-11 May 2016

Contents

  • 1. Recent developments in the European port system
  • 2. Current situation OBOR: considerations for EU ports
  • 3. Possible impact on port hierarchy in Europe
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Notteboom & Yang

HK, 9-11 May 2016

One Belt, One Road (OBOR)

Launched in September/October 2013 by Xi Jinping to “break the connectivity bottleneck” in Asia

Cultural/historical, geo-economic and geo-political motives

March 2015: ‘One Belt, One Road’ initiatives action plan.

Already 60 countries involved (impacting 4.4 billion people)

Bottomless funding possibilities?

Silk Road Fund: USD 40 bln

Asian Infrastructure Investment Bank (AIIB): registered capital of USD 100 bln (of which USD 50 bln from China)

New Development Bank: USD 50 bln

CITIC-group: USD 113 bln support

Etc..

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Land-based Silk Road Economic Belt (one Belt) and 21st century Maritime Silk Road (one Road)

(source: Xinhua net)

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Source: Merics

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List of 83 EU seaports in the Core Network

Key port in maritime silk road CT investments by Chinese interests China Cosco Shipping Group SIPG CMHI (via 49% in Terminal Link) CT investments by large Asian global terminal operators PSA (Singapore) HPH (Hong Kong)

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The ambitions of Piraeus

Fast grower in container business:

3.36 million TEU in 2015 compared to 880,000 TEU in 2010

2016: Cosco acquires majority stake in Piraeus port

280.5 million euro for the initial acquisition of a 51%

Another 88 million euro within five years for the remaining 16%, provided it has implemented the agreed investments in the port.

Connecting Piraeus via rail:

December 2014: by 2017, rail link between Budapest and Belgrade financed by Chinese companies, which will be connected to Macedonia and Piraeus

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The ambitions of Venice

New Container Terminal and Offshore Terminal VOOPS: Venice Offshore Onshore Port System

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New CT

(1.4 mln TEU – 1st phase)

Offshore facility Venice in 2015: 560,301 TEU

Lagoon

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HK, 9-11 May 2016

19 (C) Preparations for new services via Iran and Turkey:

February 15, 2016: first train between eastern Zhejiang Province and Tehran. Turkey needs to complete a 75km section of rail between Turkey and Georgia.

(A) Trans- Siberian line:

  • half of total

volume linked to China (420,000 TEU in 2014)

  • Russian RZD

plans to invest $6 billion by 2020 to increase speed

  • Hasan-Rajin

project (Trans- Korean Railway). (D) Operational and administrative issues

Different gauges than Russia, unified CIM/SMGS railway bill, General Terms and Conditions ‘TransEurasia’, digitalization, etc.

Eurasian landbridges

(B) Many new China-Europe services via Russia:

  • January 2008: “Beijing-Hamburg Container Express” (15 days, 6,200 miles)
  • Summer 2011: Chongqing – Duisburg/Antwerp/Rotterdam (16-18 days; 11,179km)
  • September 2013: Suzhou – Manzhouli – Warsaw Rail service (13 days, 11,200 km)
  • January 2015 – Yiwu (Zhejiang Province) – Madrid (3 weeks, 8,111 miles)
  • August 2015: Xiamen-Chengdu-Europe Express Rail to Lodz in Poland (15 days)
  • September 2015: first trial train Changsha-Hamburg (15 days)
  • April 2016: Wuhan-Lyon (16 days, > 11,000 km)
  • Others: Zhengzhou (Henan)-Hamburg, Kunming-Rotterdam, Harbin-Hamburg

Volume passing from China to Europe across Kazakhstan: 13,200 TEU in 2013 and 46,100 TEU in 2015 (data Kazakhstan Railways KTZ).

(E) New intermodal

  • pportunities:

rail-sea and rail-air

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Notteboom & Yang

HK, 9-11 May 2016

Eurasian landbridges

Freight transport options between China and North-Europe: Filling the gap?

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3 to 4 $ per kg.

  • eing: 615 cubic meter

1 TEU = 11,000 kg TEU = 35 cubic meter apaciteit Boeing 17.6 5 10 15 20 25 30 35 40 1 4 16 64 256 1024 4096 16384

Typical transit time between China and North-Europe in days Unit capacity in TEU or volume/weight equivalent (log. scale)

$

$

Boeing 747-400 full freighter Train on Eurasian landbridge Container vessel Q2 2008 at 23 kn Container vessel Q2 2015 at 18 kn

$

$

Size of circle = freight rate (all-in) in $ per TEU or volume/freight equivalent

Source: Notteboom (2015)

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HK, 9-11 May 2016

Example of competitiveness of Eurasian rail services

  • vs. water route: the

impact of the value

  • f containerised

cargo

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1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000

Freight and time costs (USD per FEU) Value containerised cargo (USD per FEU)

Total costs (freight and time costs) - Chongqing - Brussels

Eurasian rail vs. maritiem route (Yangtze river/Suez route)

Chongqing - Brussels (rail) Base case Chongqing - Brussels (water) Higher maritime freight rate (+100%) Chongqing - Brussels (water) Base case Chongqing - Brussels (water) Short port dwell time (-50%)

1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000

Freight and time costs (USD per FEU) Value containerised cargo (USD per FEU)

Total costs (freight and time costs) - Chongqing - Brussels

Eurasian rail vs. maritiem route (Yangtze river/Suez route)

Chongqing - Brussels (rail) Base case Chongqing - Brussels (rail) Short transit time (-30%) Chongqing - Brussels (water) Base case Chongqing - Brussels (rail) Longer transit time (+30%)

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Current vs. most favourable scenario

22 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000

Freight and time costs (USD per FEU) Value containerised cargo (USD per FEU)

Total costs (freight and time costs) - Chongqing - Brussels

Eurasian rail vs. maritiem route (Yangtze river/Suez route)

Chongqing - Brussels (water) Base case Chongqing - Brussels (rail) Base case Chongqing - Brussels (water) Least favourable case Chongqing - Brussels (rail) Most favourable case

Base case = current situation (Q1 2016) Water - least favourable case = higher freight rates, higher fuel surcharges Rail – most favourable case = shorter transit times, lower rail rates

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Notteboom & Yang

HK, 9-11 May 2016

Contents

  • 1. Recent developments in the European port system
  • 2. Current situation OBOR: considerations for EU ports
  • 3. Possible impact on port hierarchy in Europe
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Middle East – Far East Main shipping route

Americas Americas Transhipment/interlining port (transhipment incidence >75%) Multi-port gateway region Main shipping route Gateway port Gateway port also handling substantial transhipment flows Main stand-alone gateways

UK Germany France Belg. NL Ireland Romania Sweden Spain Croatia Hungary Czech Republic Slovakia Serbia Bosnia& Herz. Alb. Greece Bulgaria Turkey Lithuania Latvia Estonia Norway Finland Ukraine Belarus Russia Portugal Mace. Den. Austria Switz. Italy Poland

Nantes-St-Nazaire Bordeaux Bilbao Brest Marseille-Fos Sines Lisbon Leixoes Valencia Malaga Algeciras Cadiz Barcelona Tarragona Cagliari Gioia Tauro Taranto Naples Thessaloniki Piraeus Constantza Le Havre Rouen Marsaxlokk Genoa Livorno La Spezia Savona Venice Ravenna Trieste Koper Varna Burga s Vigo Gijon Santander Ferrol

(A) Antwerp (B) Zeebrugge (C) Ghent (D) Rotterdam (E) Amsterdam (F) Dunkirk (G) Southampton (H) Felixstowe (I) Thamesport (J) Tilbury (K) London Gateway (L) Bremerhaven (M) Kotka (N) Hamina (O) Helsinki (P) Wilhelmshaven

(A) (B) (C) (D) (E) (F) (G) (H) (I) (J) Lübeck Gdansk Gdynia Hamburg (L) Teesport Hull Grangemouth Belfast Dublin Cork Liverpool Aarhus Göteborg Szczecin Copenhagen Malmö Helsingborg Oslo Bergen Tallinn Klaipeda St-Petersburg Ventspils Riga Rauma Turku Stockholm (M) (N) (O) Sevilla

Morocco Algeria Tunisia Cyprus Malta

(P) Rijeka Setubal (K)

Impacts on port hierarchy in Europe: more competition

Eurasian rail connections via Russia

  • Small volumes, strong growth
  • Main focus on top 3 EU container ports + rail hubs
  • Rail traffic impact on top 3 ports: +5 to +15%
  • Rail-sea intermodal on China-WAfrica & China-SAm route

Eurasian rail connections via Iran/Turkey

  • Longer term impacts mainly for SE European ports

Key south European ports in OBOR

  • Widening area of influence;
  • Unlikely to get a strong position in core

hinterland regions of NW-European ports

NW European ports

  • OBOR as a way to enhance positions in

distant hinterland regions;

  • Long-term shifts in manufacturing base

along OBOR will decrease container share of East Asia

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Future outlook: terminal investments

1.

More Chinese terminal investments in Europe, mainly through China Cosco Shipping Group and China Merchants Holdings International

2.

Terminal strategy linked to new Ocean Alliance (CMA CGM, COSCO Container Lines, Evergreen and OOCL; starts in April 2017)

3.

Role of ‘windows of opportunity’ as new terminal developments are limited in number

4.

Going beyond Piraeus and Venice as key ports in OBOR strategy?

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Notteboom & Yang

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Abundancy of academic opportunities

Impact OBOR policy on location behavior firms and trade flows

Run OBOR scenarios in models on global container flows and port competition (cf. logit models) to verify expected impacts on port’s competitive position

Port connectivity impacts of changing maritime and land networks

Analyse retention, variation and selection mechanisms at the level of development paths in port hierarchy (e.g. role of politics, regulation and market player tactics and

strategies)

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Notteboom & Yang

HK, 9-11 May 2016

Thank you for your attention!

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