November 2013
European seaports: the
growing logistics opportunity
2 Advance - European Seaports
© London Gateway
Advance - European Seaports 3
Introduction
Since the publication of our original white paper ‘European
Seaports: Future Logistics Hotspots’ in 2008, the world has gone
through a deep recession followed by an uneven recovery.
Despite challenging economic conditions, global container
throughput managed to fully recover in just one year following the
14% fall in 2009, while long-term projections indicate continuing
growth. Although there remain downside risks, such as weaker
economic growth in emerging markets, European ports will
continue to be under pressure to deliver additional capacity for
growing container volumes.
Key take-aways
•
The importance of container sea ports in global
supply chains is increasing due to renewed
growth in world trade and container throughput,
along with changes in global supply chains.
•
The competition between ports is intensifying
as they strive to attract shipping lines and cargo
owners. More and more, the competitive advantage
of a port is determined by nautical accessibility,
cargo handling capacity, the provision of valueadding services and efficient multi-modal hinterland
connections.
•
Port-centric logistics is gaining momentum as
a source of competitive advantage for cargo
owners, as they increasingly recognise the benefits
that can be derived from locating distribution facilities
at, or close to, the ports through which they import
or export.
•
These factors are combining to drive increasing
demand for port-centric logistics real estate,
although how this demand will unfold will vary
depending on the location and attributes of different
ports, and the availability of suitable land for
development.
•
This evolving logistics landscape will drive new
opportunities for port owners/operators, cargo
owners, real estate developers and investors.
Many of the drivers impacting on maritime transport explored
in our 2008 report remain in place. However, some trends have
intensified over the past few years and a new hierarchy of port
locations has started to emerge across Europe.
In this short paper we provide a high-level update on the European
container port landscape, how it is changing and the impact these
changes will have on logistics real estate markets.
80%
of global trade in volumes terms is
handled through seaports worldwide
74%
of EU trade is
transported by ship
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The role of container seaports is becoming
increasingly important in global supply chains
Renewed growth in world trade, along with a number of global
mega trends, is adding additional complexity to global supply
chains. Seaports are the main gateways for this trade and
are increasingly becoming the focus of global supply chain
strategies.
Global container port throughput rose from around 90 million
TEU in 1990 to 590 million TEU in 2012, an increase of more
than 550%. This steady increase was only interrupted following
the global financial crisis in 2009 when container volumes fell
14%. This loss was recovered a year later and overall port
throughput has returned to unbroken growth ever since.
The latest forecasts from industry experts indicate that global
container port volumes could double by 2030, although
average annual growth of 3% to 5% would mark a slowdown
over past growth rates. Much of this growth will take place in
Asian ports. Even so, European container port throughput is
still expected to increase by more than 50% by 2030, from 95
million TEU in 2012 to around 150 million TEU in 2030.
Evolution of European Port Container Throughput
160
140
120
Million TEU
Source: Alphaliner, Drewry Shipping Consultants, Hamburg Port Authority,
local port websites
80
60
40
20
2030
2012
2011
2010
2009
2008
2007
2006
2005
2000
1995
0
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Increasing competition between ports –
Europe’s port landscape is changing
In 2012, 58% of total European container port throughput was
concentrated in just 10 ports, up from 30% in 2001, with the
share of the top three ports remaining stable at close to onethird. Despite this growing concentration of port throughput,
changing dynamics in maritime transport, along with increasing
feeder services from larger transhipment hubs to smaller ports, is
nurturing a shifting port landscape.
In the last two years, throughput growth has been led in particular
by a number of Baltic Sea ports where economic growth, along
with portside and landside infrastructure improvements, has
sustained increasing throughput. In contrast, significant growth
in ports around the Mediterranean and the UK has mainly been
driven by recovering volumes following slowing activity in the
years prior to 2010.
The competitive advantage of a port is increasingly determined
by a number of physical conditions: nautical accessibility,
cargo handling capacity and efficient multi-modal hinterland
infrastructure. In addition, warehouse real estate that supports the
provision of value-adding services and economic growth in a port’s
direct hinterland is often a decisive factor in attracting shipping
lines and cargo owners.
Going forward, growth across European container ports will
continue to be highly diverse. Some locations will benefit more
from new trade patterns than others, as only a limited number of
larger ports offer the full range of winning attributes. Meanwhile,
many smaller ports are likely to benefit from growing feeder traffic
thanks to their proximity to important customer markets.
Port Throughput Growth Rates 2010- 2012
Source: Hamburg Port Authority, Drewry Shipping Consultants, local port websites
< 0%
0-10%
10-20%
Hamina-Kolka
> 20%
Gothenburg
Liverpool
Gdynia
Tilbury
Felixstowe Bremen
Thamesport
Southampton
Rotterdam Hamburg
Zeebrugge
Antwerp
Le Havre
Lisbon
Barcelona
Klaipeda
Gdansk
Novorssirsk
Constanta
La Spezia
Livorno
Valencia
Algeciras
Riga
Koper
Genoa
Marseilles
St Petersburg
Amnarli
Naples
Cagliari
Gioia Tauro
Marsaxlokk
Izmir
Plareus
Mersin
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Drivers of change
Different economic growth dynamics
Continued strong economic growth across Central and Eastern
Europe is leading to a growing middle class which will drive
retail sales and therefore sustain increasing inland-bound traffic
into the region. This is likely to benefit Baltic, Black Sea and
East Mediterranean ports in close proximity to their respective
consumer markets, as well as those gateway hubs offering
excellent infrastructure connections into those regions.
Economies of scale: ultra-large container ships nautical access and portside infrastructure
Shipping lines are seeking the benefits of efficiency and
economics of scale to minimise costs by introducing larger ships.
In our 2008 report, we highlighted that the first 15,000 TEU ships
would become operative by 2010 and that shipping lines were
already eyeing the potential of an 18,000 TEU class. The first
18,000 TEU Malacca-Max ship was introduced this year and
shipping lines now envisage further extending ship capacity to
20,000 TEU.
Indeed, based on Alphaliner’s latest order book data, the share of
ships carrying in excess of 10,000 TEUs is forecast to increase
from 13% in 2012 to almost 20% by 2016. These ships would be
able to carry half of today’s global maritime trade. According to
shipping industry experts, ships of this size require a minimum of
14 metres depth operating capacity (as opposed to 15.5 metres
officially quoted by ship designs), extended berth length, adequate
port turning cycles and specialised portside cargo handling
equipment.
However, very few ports will be capable of accommodating these
mega ships due to restrictions in nautical access, port handling
capacity and adequate landside transport infrastructure. This will
increasingly drive the bulk of cargo through a limited number of
gateway ports.
The evolution of container ships
TEU: twenty-foot equivalent units, length x width x depth below water in metres
Source: The Geography of Transport Systems, Jean-Paul Rodrigue
Early container ship (1956-)
500 – 800 TEU, 137 x 17 x 9 m
Fully Celluar (1970-)
1000 – 2500 TEU, 215 x 32 x 12.5 m
Panamax Max (1985-)
3400 – 4500 TEU, 290 x 32 x 12.5 m
Post Panamax (1988-)
4000 – 5000 TEU, 285 x 40 x 13 m
Post Panamax Plus (2000-)
6000 – 8000 TEU, 300 x 43 x 14.5 m
New Panamax (2014-)
12500 TEU, 366 x 49 x 15.2 m
Triple-E (2013-)
18000 TEU, 400 x 59 x 15.5 m
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New shipping routes: the partial opening of the
Arctic Northeast Passage
The impact of the Panama Canal extension on shipping routes
and consequently ports, primarily along the US coast, has been
widely discussed (see also research by Jones Lang LaSalle:
Panama Canal’s impact on U.S. industrial real estate).
By contrast, the fact that climate change has made the Arctic
Northeast Passage – a route to the north of Russia through the
Bering Strait, East Siberian Sea and Vilkitsky Strait - accessible
for maritime transport during parts of the year has so far gone
largely unnoticed. Yet, this could have an important impact as
it significantly reduces the maritime distance between Asia and
Europe and is likely to shift the focus back on North Range ports
(from Le Havre to Hamburg). The first ship on this route completed
the journey between South Korea’s Busan port and Rotterdam in
only 21 days, almost two weeks shorter than the traditional Suez
Canal route.
Arctic route vs. Suez Canal route
Meanwhile, another alternative route, the so called ‘New Silk
Road’, the inland rail connection between mainland China
and Duisburg in Germany, offers a similar fast connection
(approximately three weeks of transit) and eliminates infrastructure
hurdles from China’s inland factories to its coastal region. Although
now in regular service, cargo volumes remain tiny compared to
today’s mega-ships and do not represent serious competition to
Europe’s ports.
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Infrastructure development
Large-scale investment in port and hinterland infrastructure will
be necessary to tackle the implications of increasing traffic, larger
ship sizes, and required hinterland connectivity. A large number of
seaports across Europe, including established gateway hubs as
well as smaller regionally-focused ports, have put in place a series
of ambitious expansion plans and infrastructure developments.
Europe’s three largest ports (Rotterdam, Antwerp and Hamburg)
are working to significantly increase capacity:
• Maasvlakte 2 at Rotterdam will be fully operational by end 2014, increasing the port’s container annual handling capacity to around 25 million TEU; Maasvlake 2 Distripark will provide additional significant potential for port-centric facilities;
•
Hamburg plans to upgrade its infrastructure and enhance efficiency at its terminals, and is exploring a number of development sites for potential expansion to boost annual capacity to 25 million TEU by 2025; and
• Antwerp plans to develop new facilities along with new hinterland infrastructure over the next 15 years.
Along the Baltic, Black Sea and East Mediterranean coastlines,
several developments are planned and most provide significant
potential for port-centric development. Examples include:
• a new deep-sea terminal at Gdansk in Poland, adding
an additional 3.0 million TEU capacity, and around
500,000 sq m of port-centric logistics directly adjacent;
• port and landside infrastructure improvements at the port
of Rijeka in Croatia including an intermodal terminal and logistics complex;
•
a minimum of seven new terminals along the Turkish coast with a combined capacity in excess of 7.0 million TEU while, the Transportation and Communication Strategy 2023 commits the government to significant multi-modal and logistics infrastructure development; and
•
a new deep-sea port at Lake Donuzlav in the Ukraine, which is to be built on the site of existing port Yuzhny along with significant hinterland infrastructure development to facilitate trade between the Ukraine and Asia.
A further significant impact on the future European port landscape
will come from two major new port developments, namely
Wilhelmshaven’s JadeWeserPort in Germany and London
Gateway, on the north bank of the river Thames just 40km east of
Central London. Both schemes offer unrestricted deep-sea access
and the newest port equipment to handle mega-ships.
•
The first berth of the port at London Gateway has just opened. The port will have an ultimate annual capacity
of 3.5 million TEU when fully built out; the adjacent London Gateway Logistics Park provides 860,000 sq m
of logistics development potential.
•
The first phase of JadeWeserPort became operational
in mid-2012 offering an initial 2.7 million TEU capacity that could be expanded to a maximum of 10.8 million TEU in three future phases; in addition 160 ha are currently under development for logistics and industrial services with land for expansion available during the future phases.
Many port locations across the West Mediterranean are planning
improvements to their portside and landside infrastructure,
and some are increasing the number of feeder connections, in
particular towards North Africa. However, growth in inland-bound
traffic is likely to remain limited when compared to ports elsewhere
as many of these ports are mainly transhipment hubs.
Only 20 European ports
are currently able to
accommodate 18,000 TEU
ships; most are located
along the Northern
European coastline.
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Port-centric logistics is
rapidly gaining
momentum
The introduction of the container has not only impacted the
shipping industry. The relative ease of moving containers
inland, coupled with low transport costs, has encouraged the
development of distribution centres at greater distances from
ports. This location strategy requires containers to be moved
inland with an additional back-journey to the port to return empty
containers. However, significantly increased transport costs,
along with rising road congestion, is leading cargo owners or their
logistics providers to rethink this location strategy.
Port-centric logistics, whereby facilities are set up at or close
to a port, is becoming increasingly important due to a growing
recognition of its supply chain benefits which include:
•
•
•
•
•
reduced transport costs;
increased certainty of delivery times/speed-to-market;
reduced risk of damage;
responsiveness to increasing environmental pressure; and
better capacity utilisation by permitting cargo owners to fully load containers which, if transferred to large goods vehicles, would in some cases exceed the maximum permitted weight for road transport.
However, the port-centric approach is not applicable for all supply
chains or port destinations. For example, there are no particular
benefits at transhipment hubs with no or minimal gateway traffic
moving into the hinterland.
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A new wave of port-centric logistics real
estate demand
The growing importance of port-centric logistics is increasingly
recognised by port owners/operators who have started to embrace
the promotion of port-centric logistics development to boost
competitive advantage. Planned warehouse development at or
adjacent to ports - or at inland ports directly connected via barge
or rail - has already started to intensify and, over the next few
years, significant new warehouse supply could come on stream.
Jones Lang LaSalle estimates that warehouse stock within the
regions of ports that had an annual throughput of over 500,000
TEU in 2012 (excluding ports that are predominantly transhipment
hubs) amounts to over 50 million sq m, which is more than 20%
of the estimated total European stock. Clearly, not all of this
stock is directly linked to port activities, but as ports usually have
substantial economic impacts on their wider regions, we can
assume that a sizeable amount of this stock is related to maritime
supply chains.
How much port-centric warehouse demand will be generated
is clearly dependent on how far the adoption of port-centric
logistics will drive relocation to ports or well-connected inland
ports. However, by comparing existing stock with today’s port
throughput, a projected increase to around 150 million TEU by
2030 would be likely to generate demand for between 20 to 30
million sq m of additional warehouse space to 2030 - excluding
additional relocation demand.
Not all port locations offer the opportunity for significant real estate
development as they suffer from land restrictions directly adjacent
to the port. Real estate development linked to these ports may
therefore need to move to a more distant location. To provide the
benefits of port-centric facilities, these areas need to be directly
connected to the port via rail or barge, which is the case with
many inland ports that offer multi-modal connections.
In contrast, new deep-sea container ports and many of the smaller
Baltic, Black Sea and East Mediterranean ports offer significant
port-centric logistics development opportunities, which are often
directly promoted through port owners/operators. As a result,
these locations will increasingly come into the focus of shipping
lines, cargo owners and logistics service providers.
Select port-centric logistics operations and
their benefits
• Tesco – Teesport, UK:
cutting about 12,000 lorry journeys a year
• Asda – Teesport, UK:
saving an annual £12 million on supply chain
costs along with 2 million road miles
•
Marks & Spencer - London Gateway, UK
(under negotiation):
serving as a hub for 50% of the retailer’s UK stores
and shortening the time from port to store from two weeks to three days
• Sumitomo Warehouse - Antwerp, Belgium:
shifting to more barge transport to avoid delays
that occur on roads
• NYK Logistics - Gothenburg, Sweden:
allowing for a more efficient distribution of imported goods throughout Scandinavia
•
Canon – Rotterdam, Netherlands:
looking at the possibility to develop a 70,000 sq m
facility at Maasvlakte 2 Distripark in order to
improve supply chain efficiency
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Implications for port owners/operators, cargo
owners, real estate developers and investors
Changing dynamics in maritime transport, along with the expected
growth in containerised port throughput and inland-bound traffic,
will put significant pressure on governments, local municipalities
and port and terminal owners/operators to provide the required
capacity and infrastructure to support this growth.
Port and terminal owners/operators need to recognise the growing
importance of the availability of warehouse real estate as a factor
influencing port choice, and work with real estate developers
to provide well-connected real estate supply in order to attract
shipping lines and cargo owners to their ports.
Cargo owners should evaluate the opportunities for port-centric
logistics to see if, and where, they can realise supply chain
benefits.
Real estate developers and investors should consider investing in
and around port locations but also recognise that, in a changing
and more competitive port landscape, some ports are better
positioned to win than others.
Further suggested reading from Jones Lang LaSalle:
Polish Container Ports: Adding Depth to the Logistics Market
Ports, Airports and Global Infrastructure report
Panama Canal’s impact on U.S. industrial real estate
Business Contacts
Philip Marsden
EMEA Head of Logistics & Industrial
London
+44 (0)207 087 5390
[email protected]
Report Contacts
Alexandra Tornow
Associate Director
EMEA Research
Frankfurt
+49 (0)69 2003 1352
[email protected]
Jon Sleeman
Director
EMEA Research
London
+44 (0)20 7087 5515
[email protected]
November 2013
Advance publications are topic-driven white papers from Jones Lang LaSalle that focus on key real estate and business issues.
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