Urgent need to expand container capacity in the Port of Antwerp – Realy?

A Simple Mind Viewer’s…. or KIS (Keep It Simple)

When Jacques Vandermeiren – CEO of the Antwerp Port Authority – pleads for more container capacity, the question is not how much but where and how. Is there still enough surface area between the Dutch border and the Antwerp Port area to create sufficient storage capacity? Should the expansion then only focus on quay wall capacity – because that gives space to receive more 21,000 TEU sea-going container vessels – or are phases 2 and 3 of container logistics also taken into account, i.e. the needed storage yard capacity and the transit to the final destination? Do the expansion plans also include sufficient quay and storage capacity for inland navigation? Or will we just go ahead and make Antwerp the bottleneck on the landward side? The shipowners do not want to see the problem. Once the container has been unloaded, it is no longer their problem, and if the containers remain at the terminal for too long, they will issue an additional storage invoice to the customer. The terminals do not see the problem either; full is full and they simply do not accept new containers until they have space again. And if the containers remain at the terminal too long because they cannot load them, they make a storage invoice to the shipping company – who then passes it on to the shipper. And so all parties remain in a vicious circle on their “burning platform”. What all parties especially excel at is finger-pointing, passing the buck and looking for artificial excuses – it is Corona, it is the Suez incident, blablabla. Attempts, for example, to share essential information with each other in order to make the logistical process run more efficiently are ignored.

Today, there are the waiting times for ships – ocean vessels, feeders and inland navigation – due to lack of berth capacity. Does the Port of Antwerp really need more container capacity? Yes, but today almost all parties asking for more container capacity have acute tunnel vision that only focuses on the sea – port route. Containers are now more frequently supplied by ships with a capacity of 21,000 TEU. If we put that in one line, that is a row of containers from Antwerp to Ostend, or 126 km. Fortunately, these 21,000 containers are not all discharged in one port, but on average, these ships call at three European ports and discharge approximately 5,000 containers in Antwerp, which, depending on the sailing area, represents an estimated 7,000 to 8,000 TEU – a row from Antwerp to Brussels or approximately 48 Km. What does this mean for Antwerp? In the first place, a shortage of quay length. A 21,000 TEU vessel requires more than 400 metres of quay. Most container terminals are still built on the basis of 320-metre ships. Secondly, 7,500 TEU based on 4 high requires a storage area of 62,000 square metres or 6.2 Ha. Thirdly, there is rarely a single container ship of 21,000 TEU to unload and load but the 3 major Antwerp container terminals each handle 2 to 3 of these ships at the same time. The “good” news is that the same ships also load containers and can thus relieve the pressure on the terminal’s storage capacity, were it not for the fact that you first have to unload a ship before you can load it, and the pressure on the storage capacity during the unloading and loading operations is exorbitant. And then? Those unloaded containers do not have the container terminal as their final destination and that is where the problem really lies.

There are 4 ways to get containers moved from the terminal. 1) by road, 2) by rail, 3) by another seagoing vessel and 4) by inland barges. On average, containers remain at the Terminal for 5 to 7 days. Removal by road is hampered by landside congestion and a shortage of road transport capacity due to a lack of drivers. Not all terminals have sufficient rail connections of their own and loading a train is always a combination of different destinations so that the wagons have to be rearranged at a later point to join a train to the final single destination. For other sea-going vessels – also called feeders – and inland vessels – also called barges – the same problem – shortage of berths – arises again. The average waiting time for a barge to get a berth is 4 to 7 days. The good news for Antwerp is that in Rotterdam it is now between 7 and 10 days’ waiting.

Philippe Oyen – chairman of the ASV – Antwerp Shipping Association – mentioned a number of other bottlenecks in his exposé during the “Get Together” this week. These included the “Law Major” and the irresponsible stubbornness of the port unions to continue applying 20th century rules to the 21st century logistics world. In container shipping, that problem is solving itself – container terminals where people no longer work but everything is robotised, warehouses where people no longer are needed to handle goods – so who needs Unions ? And they looked at it and had another beer, enjoying their union immunity.

The reputable British shipping consultant Drewry has raised its forecast for the collective gross profit of container shipping companies for this year for the third time, now to around USD 150 billion. That is more than five times the highest profit in the history of container shipping to date. In the second quarter of this year alone, container shipping realised an operating profit (ebit) of over 39 billion dollars, almost eleven times as much as last year. Shipowners will be able to use the pennies when they have to comply with the future EU Co2 emission standards that are on the table.

The market will adapt, although it will take 3-5 years before the impact is felt and near-shoring will be a major driver – both in the EU and the USA. The Chinese will feel it then. The European and US industry, logistics and ports have now learned their lesson – or maybe not – but JIT and controlled supply chain will start to shift. No more floating warehousing. Studies by the Antwerp University – Christa Sys and Van Elslander – have already proven that production and supply from low-wage countries such as Romania, Bulgaria, Turkey – and perhaps also the Maghreb – is not more expensive…. , closer to home and more controllable. And that was a study of 2019 when a 40FT Shanghai / EUR still cost $6,000 and not $20,000 as it does today. Suppliers of components “close to the waist”  , shorter and less risky supply routes… And MSC buying “vintage” ships by the dozen, Maersk, CMA-CGM, COSCO having hallucinatory newbuilding programmes…. Within 3-5 years, they will be sailing with half-empty 21,000 TEU vessels and the empty containers will be piling up sky-high everywhere.

My daily contacts with inland navigation tell me that in Antwerp and Rotterdam they are confronted with waiting times of one week to 10 days, the terminals are at 110% of their yard capacity and the shipping companies, the inland navigation operators and the terminals send “surcharges” to their customers as the only solution. On some trades, these “surcharges” represent 25% of the total maritime transport price. And we all know who is footing the bill when doing groceries. There is no longer any limit to the shipowners’ creativity in passing on their own failures. Quite a feat for those shipowners – if they lose control over the goods flows and fail in their job, they earn even more. Perhaps we should subject the shipowners to KPIs and confront them with the consequences of their failing, i.e. recover the costs of their failure from the shipowners. But then again, they are also good at finding excuses – Corona, Suez incident etc….

The Future ?

Data-Sharing. Who: All stakeholders should share vital information with each other so that goods can move faster, more efficiently and in synchro-modality. Every day that a container can move faster to its final destination, 25% more terminal storage capacity is freed up.

Concession coupling. Who: Antwerp Port Authority – Concessions for operating container terminals must apply and reinforce the conditions relating to multimodal capacity. To this end, the 50/20/30 rule must be enforced, i.e. a minimum of 50% must be transported by barge, 20% by rail and 30% by road. The concessionaire must adapt its infrastructure, superstructure, quay and terminal capacity to this rule. This means that at all times 50% of the quay capacity is allocated with priority – not exclusivity – to inland shipping. There is sufficient rail capacity to form frequent trains which, after rescheduling, go on to direct trains to their final destinations. On the road transport side, sufficient gates should be provided which, in combination with reservation systems, can provide efficient handling.

Synchro-modality. Who: the Container Terminal Operators. They are the ‘spider in the web’ and must offer synchro-modality to their customers. This means that the Terminal Operator, on the basis of the information provided by the stakeholders, offers a synchro-modal product which brings the container from the seagoing vessel stowage position to its final destination by the Terminal Operator. He himself determines the transport mode, which can be a combination of road, rail and/or inland shipping, and the time by which the goods are expected at their destination with an element of cost.

All three are jointly needed to start improving.