ECONOMIC ANALYSIS OF
BREAK BULK
FLOWS AND ACTIVITIES
IN BELGIAN PORTS
Press conference, Brussels
15 March 2012
Title: Economic Analysis Break Bulk flows and activities in Belgian ports
Report prepared for ING
Authors: Indra Vonck & Theo Notteboom (ITMMA , University of Antwerp, www.itmma.ua.ac.be)
Publication date: 15 March 2012
ISBN 978 94 9135 901 9
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Definition
Breakbulk is general cargo, loaded into a ship/ transport mode as individual or bundled pieces, not stowed into a container, or not transported in ship sized liquid or dry bulk loads.
Cuxhaven
Wilhelmshaven
Eemshaven
Hamburg
Emden Bremerhaven
Delfzijl
North Sea Canal/Amsterdam
Rotterdam
NETHERLANDS
Zeeland Seaports
Zeebrugge
Ostend
Dunkirk
Calais
Antwerp
Ghent
BELGIUM
Le Havre
Rouen
FRANCE
GERMANY
Content
• General perspectives on the break bulk market
‐
‐
‐
The origins
Containerisation
Breakbulk in its present form
• Break bulk developments, with focus on Belgium
‐
‐
‐
‐
‐
Steel products
Fruit products
Forest products
Project cargo market
Coffee and cacao market
• Break bulk in Belgian Seaports
‐
‐
‐
‐
‐
The port of Antwerp
The port of Zeebrugge
The port of Ghent
Break bulk traffic in Belgian and other European ports
Intrinsic cargo handling values
• Key findings and recommendations
1600
80%
1400
70%
1200
60%
1000
50%
800
40%
600
30%
400
20%
200
10%
0
0%
Container penetration
Million tonnes
Containerisation: World general cargo traffic and container penetration
Non‐containerized
cargo
Containerized cargo
Container penetration
Containerisation in a selection of North‐European ports
100%
90%
70%
60%
50%
40%
30%
20%
10%
0%
1980
1981
1982
1983
1984
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
Degree of containerization
80%
Antwerp
Bremen/Bremerhaven
Dunkirk
Zeebrugge
Hamburg
Rotterdam
Le Havre
Break bulk in its present form
The break bulk sector has not disappeared but changed in nature becoming a specialized sector
Steel products
Coil
Pipes
Plates
Forest products
Timber
Paper
Cellulose
Fruits and vegetables
Banana
Pineapple
Exotic fruits
Bagged
Coffee
Tobacco
Cacao
Rice
No less than 150 break bulk cargo types
Each of these groups is traded in its own specific way. Project cargo Others
Boilers
General cargo
Windmills
Non‐ferro
Break bulk in its present form
Fleet
The break bulk fleet is highly diversified.
Ship operators are mainly investing in specialised ships that still offer some degree of versatility. Most ship operators follow a business model that runs on a combination of cargos. Break bulk in its present form
Fleet
Evolution of the world merchant fleet (in million dwt)
The break bulk fleet is relatively old in age
Break bulk in its present form
Fleet
The average vessel size for break bulk vessels is on the rise
The real growth in the sector will occur in the segment of project and heavy lift carriers. Very few demolitions are expected due to the relatively young nature of this sector. Distribution of the order book on January 2012 (based on number of vessels)
Content
• General perspectives on the break bulk market
‐
‐
‐
The origins
Containerisation
Breakbulk in its present form
• Break bulk developments, with focus on Belgium
‐
‐
‐
‐
‐
Steel products
Fruit products
Forest products
Project cargo market
Coffee and cacao market
• Break bulk in Belgian Seaports
‐
‐
‐
‐
‐
The port of Antwerp
The port of Zeebrugge
The port of Ghent
Break bulk traffic in Belgian and other European ports
Intrinsic cargo handling values
• Key findings and recommendations
Break bulk in its present form
Steel products
Distribution of global steel production in 2011 (% based on thousand metric tons)
ROW
12%
South Korea
5%
Both production and prices of steel are on the rise
In 2011 an all‐time high was reached with a global production of 1.5 billion tons
Ukraine
2%
Russia
5%
China
46%
India
5%
Brazil
2%
Japan
7%
USA
6%
EU 27
12%
Many of Europe’s steel plants are located in seaport areas.
In Belgium, a lot of the production is sent to other facilities for value‐adding activities and finishing. The final products are distributed across Europe to main buyers in a.o. Germany, France, the UK, Turkey and Switzerland. India, China, Scandinavia and Russia are key markets for Belgian ports. Break bulk in its present form
Fruit products
Total worldwide trade and seaborne trade of perishable reefer cargo by commodity, 2009
The fruit market in Europe shows only little growth. The power within the chain resides with the distributor. Belgium is the main fruit gateway for Europe and even Russia
Break bulk in its present form
Forest products
Major seaborne forest products trade routes
•
•
•
•
•
•
Consumption of forest products is on the rise
Consolidation (StoreEnso, UPM Kymmene, SCA, etc..) .
Power shifts towards the suppliers. The actual trading is disappearing.
Ports are becoming storage and distribution facilities (specialized terminals).
The paper industry is driven by volume generation also known as the ‘fill the mill’ concept. The number of ports of call is relatively low
Break bulk in its present form
Project cargo
Project cargo: knocked down plants, new industrial manufacturing plants, power generation equipment, equipments for the oil & gas industry, diesel engines, mining equipment, breweries, etc..
Consolidation of cargo at ports + industrial packaging of the goods. Need for professional interlocutors. Market parties increasingly aim for a “one‐stop shop”
approach provided in‐house or in collaboration with others in the industry. The project cargo market typically has a lag‐effect which can vary depending on the region, but could be 8 months or longer both in the up and down cycles
Despite the recent consolidation, the sector still has a large amount of operators like Hanssy, Conti lines, Hanse Heavy Lift, OHT, Rolldock, Fairstar, BBC Chartering, etc..
Break bulk in its present form
Coffee and cacao
Major seaborne cacao trade routes 90% transported in containers, but still handled in a very traditional way
The power in the chain shifts from year to year (cf. impact harvest)
Big food corporations start to integrate into the other links of the supply chain. The biggest cacao exporters are Côte d’Ivoire, Ghana and Nigeria. The biggest trade flow is between the African continent and Europe with Germany, France, United Kingdom and Belgium being the largest importers. Content
• General perspectives on the break bulk market
‐
‐
‐
The origins
Containerisation
Breakbulk in its present form
• Break bulk developments, with focus on Belgium
‐
‐
‐
‐
‐
Steel products
Fruit products
Forest products
Project cargo market
Coffee and cacao market
• Break bulk in Belgian Seaports
‐
‐
‐
‐
‐
The port of Antwerp
The port of Zeebrugge
The port of Ghent
Break bulk traffic in Belgian and other European ports
Intrinsic cargo handling values
• Key findings and recommendations
Conventional general cargo in the European port system
Total European port throughput
2008: 4.26 billion tons
2009: 3.76 billion tons (-11.7%)
2010: 4.04 billion tons (+7.4%)
Million tons of maritime traffic
1600
1400
2008
2009
2010
316 ports
1200
‐3.9%
+1.4%
1000
800
600
352 ports
266 ports
‐19.8%
400
200
135 ports
+13.6%
‐14.0%
+10.3%
340 ports
‐12.0%
+9.5%
‐19.6%
+9.5%
0
Roro
Conventional general cargo
Liquid Bulk
Cargo segment
Dry Bulk
Containers
Break bulk traffic in Belgian and other European ports
Share of Belgian ports in total port throughput at various geographical scales
Share of Belgian ports in break bulk cargo throughput at various geographical scales
Break bulk traffic in Hamburg‐Le Havre range
70000
Rouen
60000
Dunkirk
Le Havre
50000
Hamburg
Bremen/Bremerhaven
Zeeland Seaports
40000
Amsterdam
Rotterdam
30000
Ostend
Ghent
20000
Zeebrugge
Antwerpen
10000
Vlaamse havens
0
1980
1981
1982
1983
1984
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
Total throughput of conventional general cargo (in 1000 ton)
80000
Break bulk traffic in Hamburg‐Le Havre range
Break bulk traffic in Antwerp
100,00%
Break bulk now represents about 8% of total port volume
90,00%
80,00%
70,00%
60,00%
Conventional
50,00%
Containerised
40,00%
Dry bulk
30,00%
Liquid bulk
20,00%
10,00%
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
0,00%
2% 3%
3%
Dry bulk carriers
9%
Tankers
22%
Gas tankers
Container vessels
25%
6%
General cargo vessels
Fruit carriers
RoRo vessels
30%
Others
25% of all ships calling at the port
are general cargo vessels (figures 2010)
Break bulk traffic in Antwerp
14.000.000
Traffic in tons
12.000.000
•
Steel: 55 à 60% of total
Steel
10.000.000
Non‐ferro
8.000.000
4.000.000
Forest products ‐
paper
2.000.000
Fruit
0
0
0
0
2
1
0
0
2
2
0
0
2
3
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
Index evolution
200
180
160
Steel
140
120
Non‐ferro
100
Forest products ‐ wood
80
60
Forest products ‐ paper
40
20
Fruit
2010
2009
2008
2007
2006
2005
2004
2003
0
2002
Forest products under pressure
Forest products ‐ wood
6.000.000
2001
•
Fruit less affected by crisis
2000
•
Break bulk in Ghent
Proportion of break bulk cargo to other cargo in Ghent is 10%, the highest of any port in Belgium
Steel products: 90% of break bulk flows, vehicles and machinery (8%), agricultural products (2%) Break bulk traffic in Ghent
Traffic in tons
3.500
Agricultural products
2.500
2.000
Products of the steel industry
1.500
Chemical products
1.000
RoRo, machinery and heavy lift
500
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Index evolution
160
140
120
Steel products
100
Agricultural products
80
Chemical products
60
40
RoRo, machienery & heavy lift
20
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
0
2000
Throughput tonnes*1000
3.000
Break bulk traffic in Zeebrugge
2%
4%
Conventional general cargo represents
a modest 2% of total port traffic
16%
Containers
RoRo
Liquid bulk
53%
25%
800000
Traffic in tons
700000
600000
500000
Agricultural products
400000
Food industry
300000
Metal industry
200000
Chemical products
100000
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
Dry bulk
General cargo
Throughput figures in perspective: break bulk cargo as generator of employment and value‐added •
Intrinsic cargo handling values: per ton handled conventional general cargo is the largest generator of dock‐related jobs although large difference might exist among commodities and ports. Rotterdam Rule
1 ton of conventional cargo in the port = 2.5 tons of oil products = 3 tons of containers = 4 tons of cereals = 7.5 tons of other bulk = 8 tons of roro traffic = 10 tons of coal = 12.7 tons of iron ore = 15 tons of crude oil
Antwerp Rule
1 ton of fruit = 1.5 tons of cars and vehicles = 1.6 tons of other conventional cargo = 3 tons of forest products = 3 tons of other roro = 3.5 tons of coils and ferro = 5 tons of other liquid bulk = 7 tons of containers = 8 tons of fertilizers = 10 tons of other dry bulk = 11 tons of ores and coal = 12 tons of cereal = 47 tons of crude oil. Range rule
1 ton of roro = 1 ton of conventional cargo = 2 tons of other liquid bulk = 3 tons of containers = 5 tons of dry bulk = 18 tons of crude oil. •
Antwerp: conventional general cargo represents 8% of total volume, but 40% of total dock work Content
• General perspectives on the break bulk market
‐
‐
‐
The origins
Containerisation
Breakbulk in its present form
• Break bulk developments, with focus on Belgium
‐
‐
‐
‐
‐
Steel products
Fruit products
Forest products
Project cargo market
Coffee and cacao market
• Break bulk in Belgian Seaports
‐
‐
‐
‐
‐
The port of Antwerp
The port of Zeebrugge
The port of Ghent
Break bulk traffic in Belgian and other European ports
Intrinsic cargo handling values
• Key findings and recommendations
Key developments
Ports are increasingly competing not as individual places that handle ships but within transport networks or supply chains. The competitiveness of seaports in the various break bulk markets is not only dependent on out‐of‐the‐pocket cost considerations. Reliability, capacity considerations, proven expertise, quality of information services and a commercial and customer‐oriented approach characterized by a clear ability to think along with the customer are becoming ever more important to compete effectively in the break bulk cargo handling markets. Environmental issues are having an ever‐larger impact on break bulk shipping and ports. Increased competition from other (often smaller) ports. Zeeland Seaports is a typical example. Competitive analysis
Geographical location and nautical accessibility: •all three ports are located centrally in the European Union, in the middle of the Blue banana. •Over 60% of the EU spending power is located in an area stretching 500 km from the ports. •Some concerns remain in the area of the availability and cost of pilotage and towage services and the impact of the priority given to other vessels (mainly ultra large container vessels) on break bulk vessel operations. Competitive analysis
Hinterland accessibility: •The wider Belgian port region faces accessibility challenges due to dense traffic around the port cities and economic centres in the near or more distant hinterland. •Developments in major inland ports such as Liège and the development of the Seine‐Nord Canal are expected to boost the use of barges in the break bulk cargo trade. Competitive analysis
Cargo generating capacity: •Belgian ports are ideally positioned to act as gateways towards the European hinterland. •The presence of knowhow, availability of backhaul/return cargo and the ability to cope with peak supply make Antwerp a premium option. •While Ghent can fall back on a large break bulk base volume generated by the local industry, the port is also increasingly attracting gateway cargo. •Zeebrugge is more of a gateway and distribution platform for break bulk cargo. Competitive analysis
Availability of space: •Antwerp has the largest covered warehousing capacity in the Hamburg‐Le Havre range. The Antwerp Port Authority is challenged to ensure that the necessary land is in place for further growth in the break bulk cargo handling market. •In Ghent, there are currently three major projects developing new sectors in the port: Kluizendok, De Nest and Rieme‐Noord. •The location of the port of Zeebrugge near rural and agricultural zones has made the port authority to look for growth potential inside the inner and outer port areas. Competitive analysis
Dock labour
•Up to 70% of the operating costs of break bulk terminals are linked to dock labour. •Flexibility, productivity, quality and cost efficiency of dock workers is key
•Remuneration for dockers are considered high, but Belgian dockers show a high labour productivity. •‘Major Act’, but still quite a number of differences between local port regulations (Codex). There is a feeling that arrangements have been implemented in a more flexible way in Zeebugge and Ghent than in Antwerp.
–
In terms of the hiring system, the possibility to have half shifts, the mobility between job categories and shifts, the recognition process of new dockers and weekend work Competitive analysis
Dock labour (continued)
•Growing concerns on a possible mismatch between the market evolutions and some of the practical arrangements in the dock labour system. •Social dialogue to improve the competitive position of the ports
even further in a.o. the labour‐intensive break bulk markets. •While a number of steps in the modernisation of dock labour have
already been taken, further steps need to be considered as part of a broader strategy in the port community to co‐operate among stakeholders in view of decreasing the total cost for this labour‐
intensive mode of transport, without giving in on quality and efficiency. •Innovation and port labour Concluding remarks
Break bulk cargo handling market should not be considered as a marginal activity in Belgian ports, but a value‐adding sector with a high level of competence‐building and expertise. Break bulk terminals are no longer quayside areas where cargo is simply shifted from land to sea. They have become vital links in global supply chains and international transport networks. An efficient and competitive break bulk cargo handling market in the Belgian ports supports the competitiveness of (Belgian) export‐oriented firms and commodity traders. The government at different administrative levels has the duty to support timely and purposeful when opportunities arise which can fulfil the different needs of the ports in the break bulk cargo segments. Concluding remarks
An even stronger customer‐based and dedicated break bulk approach in Belgian ports is required in order to face the effective commercial strategy of a number of the competing ports
The stakeholders should ensure a continuous improvement in training and development of know how in order not to fall behind in dealing with the quality requirements in the break bulk cargo segment.
The sense for innovation and knowledge transfer in the break bulk sector can be further strengthened by a good port cluster management that enhances knowledge exchanges among companies in and outside the port. Thank you for your attention!