In Port News 06/04/2015
Interest in direct calls in the Baltic is building. The Russian economy is down – reflected in container transhipment volumes in Maersk’s hub port of Gdansk – but the economies of other countries ringing the Baltic are on a positive curve.
The European Commission, for example, foresees GDP growth in Poland increasing by 3.2% this year compared with 2014, by 3% in Lithuania, 2.9% in Latvia, 2.3% in Estonia and similarly by 2.3% in Sweden. This is significantly better than the forecast European average of 1.7% and there is the expectation that in 2016 the majority of these countries will fare even better. The one dark cloud on the horizon is how much of an impact the situation in Russia will have.
In terms of container growth, independent analysts forecast strong growth, seeing a scenario where Baltic volumes move up from around the 7m teu mark in 2012 to 12m teu by 2020. While some dip is expected due to the Russian crisis, growth is expected to remain relatively bullish spurred on by the progressive integration of key Baltic nations with the European Union, major infrastructure developments, growing foreign direct investment (FDI), improving educational standards, rising consumer demand and a flowering entrepreneurial spirit.
Another strong sign of confidence in the future are the steps recently taken and in planning to prepare for the introduction of direct container liner services into the Baltic operated by high capacity container vessels, ships of 10,000 teu and above. To some extent, the outward signs appear relatively low key but the preparations taking place behind the scenes can be described as very comprehensive.
Follow the leader
Maersk Line is the innovator in this respect of course being the first liner operator to deploy a high capacity vessel into the Baltic and now deploying its 18,000 teu Triple-E vessel design on its Asia-Europe (AE10) route with calls at Gdansk, Poland; Aarhus, Denmark; and Gothenburg, Sweden. Under its 2M Alliance with MSC it has also recently initiated a new deep sea direct service between Japan and the port of Gothenburg with the first vessel calling Gothenburg in late February. While Gothenburg effectively sits on the edge of the Baltic this latter service is nevertheless an indication of the growing confidence of lines in the idea of deploying liner services directly into the Baltic.
The G6 alliance has, of course, in the past openly stated its interest in operating directly into the Baltic with high capacity vessels. It was basically prevented from doing so in the past by the non-availability of deep draft port capacity sufficient to accommodate vessels offering a capacity of around 14,000 teu. It was interested in calling at DCT Gdansk but the terminal’s ‘sitting tenant’ Maersk Line, who utilises the lion’s share of the terminal’s phase 1 capacity, was not keen to share the limited resources there with another line.
DCT has now embarked upon the terminal’s second phase development which will upgrade its deepwater capacity and it will be interesting to see under these new circumstances if there will be room for any party other than Maersk and its new consortia partner MSC. DCT has struggled to get away from the title given to it by one wag of being the cheapest terminal acquired by Maersk without actually buying it.
G6 is understood to have looked around elsewhere for a hub including Gdynia but was basically stymied at the first post due to draft and turning circle considerations. As pointed out by a senior shipping executive: ‘’What you need in a hub port is a central location good for feeders on a weekly cycle. As such locations like Stockholm are just a bit too far away, Gdynia is good but as yet the port authority hasn’t got its act together – a lot of dredging needs to be done and a large enough turning circle put in place.’’
Baltic Container Terminal (BCT), the ICTSI subsidiary is currently installing new quay cranes able to work vessels of up to 15,000 teu, and is known to be keen to press ahead with adapting the port to receive larger vessels as soon as possible. The Gdynia port management has developed a plan to dredge the port but this is not imminent in terms of implementation raising fears that Gdynia will miss out on the big ship opportunities, reducing its status as a container handling centre. There is recognition at a stevedoring level that what needs to be done needs to be done today; implementation at a later date comes with the risk of business loss and the ensuing loss of jobs etc.
Act now
Around the Baltic, advocates of the ‘sooner rather than later’ school of thinking regarding providing the marine access required to accept the larger vessels are not in the minority. Underpinning the implementation of all the planned developments is the recognition that the Baltic Sea will progressively be the province of larger vessel operations. Maersk and MSC are visible believers in the big ship system but there are known to be a significant number of other lines now active in the Baltic that favour the step up to this class of operation. The underlying economics of the system are favourable, the reduced slot cost is attractive and promotes highly effective competition against other modes of transport. The cascading down of vessels is also in play providing lines with another incentive to adopt the system.
Gdansk has to-date seized the initiative in the Baltic in terms of realising a big hub concept. It is equally apparent, however, that lines are looking for alternatives other than Gdansk where Maersk exerts a powerful influence. This spells ‘opportunity’. So too does the reality that there is scope for select high capacity services into the Baltic with vessels featuring a capacity of 10,000 teu-12,000 teu. These encompass services such as direct ones to South America or the Middle East/India.
The hesitance of some port management bodies and other government agencies to press ahead with the implementation of vessel access upgrade work to facilitate the handling of larger vessels may stem from the fact that while the Baltic has long been talked about as a region that has the potential for big ship operations it has taken time for this to become a reality.
It is, however, now clear that the Baltic will be the scene of increasing Asia-linked direct big ship services as well as select high capacity services on other trade routes. Accordingly, those that do act now and put the capacity in place to secure this business will reap the associated rewards. Conversely, those that do not act, especially to consolidate an existing position, can be expected to pay a heavy price. Fortune, as they say, favours the brave.
