Ports as System Integrators, Not Just Ship Service Providers – Part 3

In terms of price it does not appear that the hiring of a ULCC is more favourable than that of an 8,000 Teu vessel, nor that insurance costs or customs duties are more convenient. Certainly, such a large cargo unit released in such a short space of time – 24 hours – into the port infrastructure and the transport network may pose problems for the territory, and these may become serious unless the port is endowed with frequent railway services, terminals and tracks of a certain dimension and adequate connections to the main line. Unfortunately the inland growth that companies seemed to have embarked upon a few years ago, when establishing logistics firms, lasted a short time. Today they do not care what is happening away from the quayside. The AP Moeller group is the only one to have a logistics company of a certain size: Damco, which has more than 10,000 employees worldwide and turnover of 3.3 billion dollars in 2012, mostly from outside Europe, its services aimed mainly at group companies (the company itself made two major takeovers in 2012, leading to a negative cashflow result, but strengthening its position in the air cargo sector). MSC has never gone into logistics, CMA CGM has recently merged its intermodal transport companies in Greenmodal Transport, and appears to want to relaunch its CCLog. Beyond these there is only NYK as a company having an operative interest in the entire supply chain, through Yusen Logistics. Companies have a land logistics presence in Asian or North American markets, but in Europe they cannot compete with the networks and know- how of Kühne&Nagel for instance, or DB Schenker, DHL-Deutsche Post, DSV, Panalpina, which control millions of containers and can make this strength tell when choosing the companies to handle such traffic. They are the main beneficiaries of the collapse in freight rates, and so are today in a very favourable position in the supply/demand market. Their balance sheets do not appear to have felt the effects of the crisis, while small and medium international shippers have been crippled. Their fate, it appears, has been sealed by the bankruptcy of larger retailers – their clients – as demonstrated firstly by the German case of Karstadt and Schlecker and then by the UK outbreak. (13) As long as freight rates remain so favourable to the shipper, the latter will not be complaining too much about any company faults. A recent Drewry report on the quality of services provided by carriers showed an improvement in punctuality but, as “Lloyd’s List” points out, also a deterioration in relations between carriers and shippers, owing to sudden cancellations and itinerary changes, which were happening above all in late 2012. (14) The consequences of these actions, which do not appear to consider the problems they cause to land traffic, for instance on the organisation of intermodal services, substantiate the impression, gained over the last few years, that shipping companies do not care about the difficulties being experienced on land and in local territories. This is another reason why port policy should not show itself to be a slave to the wishes of companies. It should not think solely of the maritime side, failing to play the role of mediator and integrator between land and sea, between maritime business and logistics, which should be a specific task of policymakers. The faults of shipping companies are felt most keenly by small and medium operators, traders, NVOCCs, international shipping agents, medium-sized 3PLs, which are often highly specialised and capable of offering excellent service quality. The bigger the ship, the more the negative effects of the poor service are felt, as happens in all systems where size sees a growth in rigidity. (15) In late 2012 insurance company Allianz conducted a vast survey on experts from the sector in order to compile a classification of risks most perceived by enterprises. Results came in from 529 experts from all over the world. Supply chain disruption turned out to be the risk most feared (by 46% of respondents), followed by natural disasters (43%). (16) This shows that the more companies are globalised the more important the dependability of logistical services becomes. Megacarriers are a cause for concern especially to insurers. The Association of Experts in Maritime Casualties is following very closely the development of shipbuilding and management techniques. In recent years builders have placed emphasis mainly on engine power, load-carrying capacity, fuel consumption; less attention has been paid to “modernising manoeuvrability characteristics”. How do these giants of the sea react when they are often forced to move in restricted port spaces, entrance channels, when confronted by an unexpected or unforeseen obstacle? There remain unknown factors, causing “concern among maritime insurers that are very much aware of the fact that naval gigantism is currently not adequately considered in their assessment of risk and relative valuation of corresponding insurance premiums”. (17) On the website of the Baltic and International Maritime Council (BIMCO) debate on limits to naval gigantism is very lively. (18)
 
11. UNCTAD, “Review of maritime transport 2012”.
12.  MDS Transmodal, NAPA, Market study on the potential cargo capacity of the North Adriatic ports system in the container sector, Final report, January 2012.
13.  Isabel Lesto, Going bust. When 13 high street names collapse in 12 months, where does that leave the freight service providers?, “Lloyds List”, 31 January 2013. The Wikipedia entry Highstreet Holding in German has a wealth of information on the retail crisis.