Spectre of European Container Port Congestion: Analysis

The North European ports of Rotterdam and Hamburg are experiencing significant congestion, an echo of the issues last seen around the world during the boom of the early/mid 2000s – before the global financial crash took over. The causes of the current congestion are numerous, but poor carrier schedule reliability is high on the list. Are these port congestion problems just temporary, or indicative of a new paradigm for the industry? Drewry Maritime Research considers possibilities in their latest 'Container Insight Weekly'.

The current congestion difficulties  of Rotterdam and Hamburg are partly because terminal capacity is being affected by work to upgrade existing facilities (such as installing new cranes at the ECT Delta terminal) and also because, in general, terminal capacity continues to be  strained by much greater peaks in volumes created by larger container ships.

However, another big factor causing problems for terminal operators is deteriorating carrier schedule reliability. If ships arrive ‘out of window’, then terminal operators may not have a berth available or the necessary number of cranes to handle their cargo efficiently.

Average reliability across all carriers in the Asia-Europe trade lane has declined from a high of 83% on time port calls in mid-2012 to just 51% in the first quarter of 2014, with on-time  arrival being defined as within 24h of the advertised date published before loading.

In Hamburg, the increased volume peaks caused by larger vessels, coupled with schedule reliability issues, have reportedly caused a doubling of average dwell times for export containers. There have also been delays in truck and rail handling. Truckin g companies have imposed a Traffic Congestion Surcharge, set at 40 Euro per transport within Hamburg city limits and 80 Euro per transport outside of Hamburg city limits. There is an intention to implement a truck booking appointment system in order to control and smooth out demand – not for the first time.

Carriers are also reacting. The G6 Alliance recently announced its intention to shift the German call of its Transatlantic‐Transpacific Pacific Atlantic 1 (PA1) pendulum from Hamburg to Bremerhaven due to congestion in Hamburg. Meanwhile, in Rotterdam, feeder operator Team Lines has announced that with delays of up to 48 hours being experienced at the ECT Delta terminal, and the possibility that this problem may last for several months, it may have to introduce a congestion surcharge or omit some calls. This follows earlier notifications relating to Hamburg. Unifeeder has also alluded to similar issues.

There are a number of reasons for the carriers’ recent schedule reliability issues, including bad weather. However, dysfunctional networks due to the implementation of new or extended alliance arrangements are also a key factor. The process of altering services, ships and partners appears to have had a significant adverse effect as carriers shuffle vessels in anticipation of new alliance and service structures. The geographical expansion of the G6 Alliance into the Transatlantic, and the addition of Evergreen to the CKYH Alliance between Asia and Europe are two cases in point.

In this respect, the huge variation in the reliability performance of individual carriers is highly significant. Figure 2 [displayed here] shows the wide range for Q1 2014 around a (low) average reliability across all carriers of just 50%.

For ports and terminals, the implication of widely differing carrier performance is highly significant. In Rotterdam for example, it is Hutchison’s multi-user ECT facilities which have the congestion issues, whereas the APM Terminals facility in the same port is not congested. At least in part, this must be a reflection of the fact that the majority of the traffic for APM Terminals is still from Maersk Line, the highest performer in terms of reliability. By contrast, ECT handles a much wider range of services for numerous carriers and alliances, and poor timekeeping by one carrier or alliance has a knock on effect for others in terms of terminal operations.

What is the outlook for congestion in the key Northern European ports? There is some good news. Rotterdam for example has two new deep sea terminals opening later this year, whilst in Germany, Wilhelmshaven remains an under-utilised asset.  The implementation of the now abandoned P3 Alliance would most likely have impacted the schedule reliability of its three members, but this is no longer an issue. However, the volume peaks caused by larger vessels are not going to go away, and further alliance developments seem likely, even if the P3 is not happening.

Many issues relating to long import dwell times also still have to be resolved. They may no longer have been important during the economic depression, but cargo growth is back, so they are on the front burner again.

Drewry’s View
Further congestion problems are likely to be seen in North European ports in the coming months as alliance developments affect schedule reliability. Longer term, much depends on what the steady-state reliability performance of the alliances ends up being.

Source: Drewry Maritime Research