Editorial:
A three-tier port market in the medium term

EU’s road-to-sea initiative is a contradiction in terms as more and more small and medium size ports are forced out of the logistics chain.

Competition between ports for shrinking cargo volumes gets fiercer by the month, and it may well be that the regulators have inadvertently created what we have earlier termed “ports of convenience”. The whole of Europe is now promoting the politically correct idea that more cargo should transfer from road to sea. Some ports will lose in a very competitive world of logistics, no matter what legislation is passed in Brussels and imposed on the European countries regardless of their individual characteristics.
The obvious result – in the medium term – is the creation of a three-tier port market. It is hard to tell if this is caused by government interference or as a direct result of market forces. So far the multi-tier market is most obvious for unitised cargoes, where efficient port handling is the difference between loss and profit for operators.
Most ports in North Europe are owned by the local municipality where politicians run the show and call the tune. Port management and political control is a bad combination and not conducive to efficient planning. Politicians will be fiercely protective of their own port and are repelling all boarders if national or international bodies try to interfere.
However, the ports no longer call the tune. They are not a terminal, but more like somewhere where everything moves through. Ports used to say that they are the link between land and sea, but the distinction has become fuzzier over the years. Most cargo owners, shippers and shipowners now regard the port as an important link in the logistics chain. Therefore ports must be managed as a link and not an end in itself.
The large majority of ports do not see it this way, at least not yet. Yet there is a contradiction in terms when the EU talks passionately about getting more cargo from land to sea. The real world may see more and more smaller and medium sized ports being left out of the logistics chain, forcing road transport to travel longer distances to get to the ports which are acceptable to the big, global operators. When discussing this with politicians, one gets the impression that they – the politicians – decide the cargo flow, not the market forces. They are wrong. What is worse, they know it. In fact, it is a myth that politicians and regulators are innovative. This is perhaps more true in the transport industry than anywhere else. In a fiercely competitive environment, only the best will survive, and any weak link in the chain will disappear.
It is not without reason that the bigger ports are jostling for position, while at the same time maximising on their inherent advantages. Contrary to the thought flogged by Brussels, all big ports are not the same and cannot be treated the same. Rotterdam would not survive on Dutch business alone, just as Felix-stowe and Southampton could not rely on UK business to survive. There is only so much cargo to go around and all ports cannot have their own bit of the cake. There is already a feeder system linking the medium size ports to the bigger ones.
What is now required is to link the medium size ports to the smaller, national ports through a coastal service. This would make sense if the road-to-sea initiative were to develop into more than a slogan. Plans for such a coastal express system – fully containerised – exists today. It is costly to implement, but would make sense in the long run. Perhaps it is only wishful thinking to believe that politicians would come to think differently of their individual port, in a new light so to speak.

//Petter Arentz
Editor

Back to SSG 12, 13 June