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2018: A Good Year for European Ports

February 28, 2018

The North European economies continue their strong growth as consumer confidence remains solid.  The latest Purchasing Manager’s Index for the Eurozone, at nearly 60, indicates a continuing sense of well-being by industry.

 

While a bit weaker than in the last few months, it reflects strong orderbooks and optimism and with a backlog of orders the pressure is on finding labour.  At the same time retail sales remain healthy and inflation is not an issue.

 

This is reflected in the projections from our port models which indicate that 2018 imports will expand by 5.5 per cent in Northern Europe, up from 2.2 per cent in 2017.  Exports are showing less growth at 3.9 per cent compared to seven per cent last year.

 

There are a few warning signs on the horizon, such as a lower Chinese PMI, which causes our models to reflect a slightly weaker growth in export volumes in the second half of the year while imports are projected to strengthen.  The geo-political uncertainties and the volatility of the stock market, not considered in our models, could well influence the confidence levels going forward.

 

The impact on the ports and terminals will be greater turnover of container movements per vessel call, already exacerbated by the appearance of the ultra large ships. As HMM have now jumped on the bandwagon with its large order of 22,000 TEU ships we expect that the pressure on The Alliance to stay competitive will cause another order of similar ships before the year-end.

HMM has also announced a new express service from the Far East with ten older 4,600 TEU ships. A bold move possibly as a negotiating position vis-à-vis 2M. Given the number of announced ports of call they will be steaming faster than the rest of the competition.  The question is, do shippers really care about voyage time or are they more focused on reliability – a real challenge for HMM.

 

Within the North European ports tracked, Rotterdam is picking up market share in both imports and exports mostly at the expense of Hamburg and Bremerhaven. As 2018 progresses this shift may well continue.

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