Has the time come for turnarounds in the Asia-Europe trade to happen in the Med?
 For old ports in southern Europe - Barcelona, Genoa, Venice, Spezia and others in the Adriatic and Aegean, the opening of a southern gateway into Europe is about to dawn.
What has been long dismissed as a pipedream by seasoned cynics of the north, who can see why this cannot be remains the big hope if not an expectation of European southern ports.
What Northern Range ports fail to appreciate is that world shipping has changed so profoundly ashore and afloat that old southern dreams are making a comeback just as ancient northern verities have been eroded by new realities.
One new believer is the United Nations Conference for Trade and Development (UNCTAD), whose latest annual report to the UN General Assembly sees a new dawn for southern European ports, and darker days ahead of ports of the Northern Range.
How long, many ask, can the counter-intuitive and abundantly self-evident folly prevail of having Asian cargo emerge from Suez and go all the way to Gibraltar, only to go around the Iberian Peninsula to plunge into the worse marine traffic in the world in the English Channel while burning the most expensive eco fuel.
When instead, mega ships in the 15,000 to 20,000-TEU range, could so easily emerge from Suez and discharge cargo at Marsaxlokk, Malta, which already handles 3.06 million TEU a year or Ambarli (3.09 million TEU) or Mersin (1.42 million TEU) in Turkey or Piraeus (3.37 million TEU) in Greece or all of them in turn, escaping the Emissions Control Area of the northern seas.
Or such ships might just as well put into Gioia Tauro (3.03 million TEU a year), Genoa (2.07 million TEU), Marseilles-Fos (1.25 million TEU), Barcelona (1.95 million TEU), Spezia (1.57 million TEU), Valencia (4.60 million TEU) Algeciras (4.51 million TEU). Each one is a substantial port. These ships can go safety back to burning basic bunker.
The traditional rebuttal, if not refutation, of this southern approach is that all the road and rail infrastructure is in the highly urbanised European north - not in the more pastoral south. But this is far less true today than 20 years ago, what with EU road and rail improvements, not to mention the costly environmental mandates ships must endure throughout their circumnavigation of the Iberian Peninsula, and their long costly crawl along the English Channel and back again.
What adds weight to what to many still see as an outlandish suggestion, are parallel developments which encourage development of this southern gateway into Europe. One factor is China's "Belt and Road" infrastructure initiative which is now very much afoot. Other factors to assess are the widened Suez Canal and growing presence of 15,000 to 20,000-TEU megaships plying this trade lane.
Specifically, consider that Cosco Shipping Ports (nee Cosco Pacific), has bought controlling interests in major container terminals at Valencia and Bilbao at the western end of the Med. These include Noatum Port Holdings, encompassing two container terminals, Noatum Container Terminal Valencia (NCTV) and Noatum Container Terminal Bilbao (NCTB). Also included are two rail terminals, Conterail Madrid and Noatum Rail Terminal Zaragoza (NRTZ).
In the eastern Med, as we all know, Cosco already has Piraeus container terminal near Athens, and fully intends to boost its volume 35 per cent to five million TEU by 2018. That's a lot of volume coming through in less than six months.
Cosco's stated aim, which we can assume is China's aim, is to turn Greece into a transshipment hub for rapidly expanding trade between Asia and Eastern Europe. "If we reach that level, Piraeus port would be among the world's 30 largest container ports," port managing director Fu Cheng Qiu told Reuters.
Official data showed Piraeus terminals II and III operated by the Hong Kong-listed CSP handled 329,600 TEU in August, representing a year-on-year increase of 32.3 per cent. Records were broken each month last summer, with 314,000 TEU in June and 323,300 TEU in July.
Further, a new 300,000-dwt capacity floating dock has arrived from Shanghai, to become the centre piece of a large ship repair base, planned by port's the new owners. The dock is capable of handling almost any ship afloat.
Little is said about the Valencia-Bilbao purchase at his early stage, but it is clear that China's state-owned might is behind Cosco and Beijing's Belt and Road ambitions hope to encompass Africa. As an African trading partner, China has already surpassed the US by volume.
The United Nations sees this development too. Plain and simple, UNCTAD, in its Review of Maritime Transport, sees China's Belt and Road Initiative as a takeover bid of the Asia-Europe trade. If China has its way the trade will be Med-based, no longer focused on Europe's northern range ports from Le Havre to Hamburg, says UNCTAD.
Also, maritime connections linking China to the Port of Piraeus, Greece, through the Indian Ocean and Suez Canal are expected to provide an alternative to ports such as Antwerp, Belgium; Hamburg, Germany; and Rotterdam, the Netherlands, while cutting 10 days off the journey to Central or Eastern Europe.
The expanded Suez Canal is likely to benefit from the new traffic to be generated by the initiative, and trade flows from Iran stemming from the removal of international sanctions and the oil trade expected to result from the growing importance of the refinery market in India.
Surface transport offers alternative logistics options for business and trade, especially for high value added and time-sensitive goods. Several railways that already operate between China and Europe provide an advantage with regard to average travel days, which hover at 15 against 30 days at sea. In addition, rail compares favourably with air with regard to shipping costs, and constitutes a more environmentally friendly mode of transport.
Many initiatives are taking place at national level too. For instance, to help reduce rail freight bottlenecks, in 2016 Germany's federal transport ministers approved measures to allow longer, 740-metre, freight trains to operate. Italian government launched a EUR255 million (US$283.8 million funding scheme allowing for subsidies to rail freight operators. In January 2017, Spain approved an 850 million budget for a rail investment programme with the intention of improving access to ports, in particular to Barcelona.
Beyond European borders, the EU also participates in several research projects aimed at improving and developing rail freight from China, or as it is called the Eurasian landbridge. Again, a trend that subtracts cargo from the northern range.
The Near2 project, for instance, was carried out to assess policy and operational issues with a view to increasing rail freight between the EU, Russia, China and other Asian countries, as an attractive alternative to air and sea.
Add to this there are logistics overland routes active and promising to become more active as time goes on, which contributes to the critical mass needed to realise the Med hub to displace the northern range that dominates the Asia-Europe trade today. These routes run through the Balkans into Turkey and involve Deutsche Bahn building a railway from Jeddah on the Red Sea across the breadth of Saudi Arabia to Damman on the Persian Gulf that will connect with another railway being built along the Gulf coast from Kuwait to Dubai and perhaps Oman.
While diminished somewhat since the widening of the Panama Canal, the wayporting option is still alive, that is dropping off cargo anywhere from Salalah in Oman to Tangiers in Morocco, and having it picked up by ships small enough to access some of the smaller but richer ports in North America. In this role North African ports are competitive because they can do little else of a non-gateway nature. Montreal in Canada is one such recipient of wayported cargo, 1,000 miles from the sea, but within easy rail and road reach of its more prosperous rival Toronto, as well as the smaller, but affluent Canadian capital of Ottawa.
With much dredging done on the Savannah River, and raising of the Bayonne Bridge in New York to provide greater air draft, fewer major east coast ports are inaccessible to 10,000-TEUers, thus narrowing the prospects for old panamaxes which are more suited to this trade. The residual wayporting trade, which stands to expand, as Africa's fortune increase, is a feeder trade to East Africa, southern Africa and West Africa, for which ports like Salalah and Djibouti can service East Africa and southern Africa, while Port Said, Damietta and Tangiers can serve West Africa - and any North American ports still in need.
Whether Europe's northern range will one day be eclipsed by a collection of smaller Mediterranean ports is a question that will undoubtedly raise sniggers and sneers, but such expressions are similar to the guffaws that greeted suggestions that predicted the demise of New York's fingers piers, which have long since disappeared and replaced by a totally obscure place in New Jersey called Port Elizabeth. And who would have thought and obscure village in rustic Suffolk, a county noted for its bucolic scenery, would largely replace the great Port of London.
There are more than a few today who think profound change is coming to trade patterns of Europe, bringing about a restructuring so profound that it may well see the eclipse of Europe's Northern Range in ways some think unimaginable. |
