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Published: September 2017      

Scandinavia’s mixed messages

Several new ports are being developed in Scandinavia as the region responds to the changing needs of the modern world.

The development of various new ports in Scandinavia comes as the region responds to changing cargo flows, the requirements of governments to have more environmentally friendly transport networks in place, and the need to move cargo handling activities away from congested city centres.

But news in the region continues to be dominated by ongoing labour problems at the APM Terminals-managed facility in Gothenburg, the region’s largest port. The dispute surrounds the demands of Section 4 of the Swedish Dockworkers’ Union (SDU), to have a collective bargaining agreement separate from the national one that Swedish ports have in place with the Swedish Transport Workers Union, and which APMT Gothenburg has signed up to.

Blockades

The past year has seen APMT Gothenburg face 14 blockades and nine days of strike action by the SDU, and take action to reduce its labour force on account of the declining container volumes. In May 2017, in what APMT described as a protective move, the company issued the union with notice of a partial lockout of staff if four future planned blockades went ahead. In early June, 160 redundancy notices were issued, and, after negotiations, this resulted in 140 staff leaving the group at the end of that month. Then, on 31 August, the terminal operator ended 70 temporary labour employee agreements.

And further downsizing is taking place, with a spokesperson telling WorldCargo News that “35 full-time port labour positions would be eliminated on 1 October, with another 35 staff leaving the company on 1 January 2018”.

Counting the cost

The dispute has cost the operator millions in lost revenue, and the port has suffered an unprecedented decline in traffic. Currently, the container terminal is only functioning at 40% of its realisable capacity, and several lines have withdrawn their operations, including the 2M alliance (Maersk Line and MSC), which has replaced one of its direct mainline Asia/Europe services with feeders.

Meanwhile, Hapag-Lloyd has transferred one of its two Gothenburg feeder shuttles to Varberg, and, apparently, even the ro-ro/ container ship operator ACL, which has called at the port since it was established in the mid-1960s, is considering leaving.

In H1 2017, Gothenburg’s container volumes slumped by 22% to 318,000 TEU, which was its lowest throughput in more than 15 years.

Magnus Kårestedt, CEO of Gothenburg Port Authority, is extremely concerned about the situation. “The consequences for Swedish trade are immense, as several services to key markets have been withdrawn, including direct services that are vital to both our country’s imports and exports,” he said. “A great deal of freight has shifted from sea to road, investments are failing to materialise, and jobs have disappeared.”

The APMT spokesperson agreed. “What we see and are concerned about is that every month the port labour conflict goes unsolved, Sweden’s national competitiveness in world markets is affected,” he said. “This is because all cargo has to be transhipped on the continent, instead of directly through Gothenburg, and that means it takes four to six days longer, and costs an extra €300-400 per container. We estimate the impact on Swedish businesses to be an extra SEK2-3B in transport expenses per annum.”

Customers have lost confidence in the terminal and port, and all of the hard work of the past decade in persuading mainline Europe/ Asia/Europe services to call direct will be lost completely if the dispute, which is now in its second year, is not settled soon.

Intransigence

While Kårestedt has welcomed the government’s inquiry into the dispute, he fears any legislation will take considerable time to come into effect. “In the interim period, we need an immediate local solution that will allow the port to regain its credibility,” he said. “It is unreasonable that a group of dockworkers in Gothenburg can block trade flows for an entire country in this way. National mediators have attempted to resolve the dispute on repeated occasions. APM Terminals has accepted all the proposals put forward by the mediators, whilst the dockworkers’ union has rejected them.”

Despite the difficulties and further poor throughput performances in the months of July and August, APMT told World- Cargo News that its ambition is to raise its operating performance to 80% of its normal capacity in the autumn. The terminal operator is also continuing to invest in the facility, with an estimated SEK250M earmarked to buy new straddle carriers, expand yard storage capacity, and install automated gate procedures.

Given the climate in Gothenburg, APM Terminals would have to be seriously considering terminal automation. The port authority, meanwhile, is also confident in its future, with a 10-year capital investment plan worth an estimated SEK4.3B. It includes the construction of a new cruise terminal, building of a specialised LNG facility, and development of a mixed container and ro-ro terminal. The latter project will cost in excess of SEK1B. It will be located on a 280-ha site in the Arendal Bay area of the outer port, with commissioning expected in 2022/23.

In addition, the port authority wants to build a second intermodal rail yard and develop a logistics park with approximately 1M m2 of storage and cargo processing space.

In other moves, the authority is seeking permission from the government to deepen channels and ship manoeuvring areas in the vicinity of the container and ro-ro terminals.

Seize the opportunity

The problems at Gothenburg mean lines are routing their cargo through other Swedish ports, such as Helsingborg and Stockholm.

Stockholm and the Yilport-run Gävle Port are certainly eyeing up the opportunities, and believe their respective capital improvement programmes will attract more carriers.

H1 2017 has seen strong growth in Gävle’s container traffic, and, while some is attributable to cargo transfers from Gothenburg, it has been the efficient operation of the Yilport Stockholm Nord intermodal rail facility that has made an enormous difference. This is because containers can be shipped seamlessly and cost-effectively to/from a large number of inland locations.

Yilport has a reputation of working closely with its customers, and this includes beneficial cargo owners. By treating its port assets and stevedoring services as part of the supply chain, the group can offer its clients ‘total logistics’ solutions.

Yilport is determined to develop Gävle as one of the largest ports in the region, and it continues to invest in its infrastructure and cargo handling facilities. Currently, the operator is spending SEK200M on building a new 320m berth and doubling the capacity of the port’s Gävle Container Terminal. It is hoped that the new quay will open during the summer of 2019.

Yilport is also active in Oslo, where it manages the port’s Sjursøya Container Terminal. Once again, the group has invested capital in new equipment and systems, and, by improving productivity levels and lowering cost, cargo volumes have picked up.

Critical mass

Strategically, Yilport is hoping to build a critical mass of cargo in the region, and, through its close relationship with cargo owners, help reshape supply chain networks across Scandinavia. On this basis, investment in other ports, logistics centres and depots cannot be ruled out.

In Stockholm an entirely new cargo handling complex featuring both container and ro-ro handling facilities is being developed at Norvik, which is located about 60 km south of the city.

Recently, Dutch company Boskalis was awarded the €60M contract to build the 1,100 km quay wall that will support seven berths with a draught alongside of up to 16.5m. Scheduled to open in H1 2020, Stockholm Norvik, as it will be called, will be capable of handling 0.5M TEU and 200,000 units of rolling cargo a year.

Hutchison Port Holdings (HPH), which has operated Stockholm’s existing container terminal at Frihamnen since 2009, has secured the management concession for the new facility. Clemence Cheng, managing director of the HPH’s European businesses, believes the move will give the group a stronger presence in the region.

“The new facility will be the nearest container terminal to the greater Stockholm area, a region that generates 45% of Swedish GDP,” said Cheng. “And, as the only deepwater container facility on the east coast of Sweden, Stockholm Norvik will deliver both economic and environmental benefits, by bringing ships and cargo closer to the country’s largest market, and reducing overland transport costs.”

Stockholm Norvik’s deep water is hugely significant, as it will allow the port to handle very large container ships, and give it an opportunity to handle mainline US, India/Middle East and even Far East (China) services. Currently, the Frihamnen terminal is limited to ships with a maximum carrying capacity of 1,500-1,800 TEU.

HPH will transfer all of its services to Stockholm Norvik once the complex is opened, as Ports of Stockholm (PoS), which owns the port, plans to redevelop Frihamnen for residential and leisure use.

Elsewhere in Stockholm, PoS is expanding the handling capacity of the Kapellskär ro-ro terminal by 50%.

Danish ambitions

In Denmark, the port of Esbjerg is keen to expand, and hopes to start both a public consultation exercise and environmental impact study on the project later this autumn. The area targeted for the new development is in the eastern part of the port.

The decision follows medium-term studies that suggest Esbjerg will need up to 1M m2 of additional land and 1 km of new quay between 2022 and 2030, to handle the projected increase in cargo volumes.

“The Port of Esbjerg must offer an infrastructure that matches the needs of our customers, in terms of quality, layout, and size,” commented Ole Ingrisch, a director at the port. “We anticipate growing demand for the port, and we must prepare for the future, and clarify the possibilities for continuing a stepwise expansion of the port. This will enable us to expand concurrently with the demand of our customers.”

Elsewhere in Denmark, the northeastern port of Frederikshavn, which handles mainly ferry traffic and bulk cargoes, is developing a new cargo handling complex. It will be built in phases, with the first stage due to be completed in mid-2018. This will comprise the construction of a 600m general purpose berth, with an initial draught alongside of 11m, but with the opportunity to dredge this to 14.5m. Additional land for industrial projects will also be brought on stream.

In phase 2, the port authority plans to build another 400m of quay, and will make a further 300,000 m2 of land available for industrial and logistics activities. Meanwhile, a 200,000 m2 site will be created for the deposit of spoil generated by the dredging programmes. Phase 3 will involve construction of another 1 km of quay with 12m water depth alongside, and the provision of 300,000 m2 of land for industrial enterprises. According to the port authority, the actual scheduling of the latter two stages of the planned development will be determined by demand.

New western port

Targeting the container market, the Port of Kalundborg, located on the west coast of the Danish island of Zeeland, has ambitions to become an alternative to Copenhagen Malmo Port (CMP) for the Copenhagen market. To this end, the Ny Vesthavn (new western port) is being created.

By 2019, the port area will be expanded to 30-ha, and there will be a new 500m-long berth with a depth alongside of 15m. A new container terminal will initially occupy 50,000 m2, which can be increased to 68,500 m2 at a later stage. Construction work will start after the summer.

To get the concept up and running, Kalundborg recently created a new post, container marketing manager, and appointed Mikael Knudsen, previously with Blue Water Shipping and Freja Transport, to fill it.

Carrier consolidation Norwegian style

Samskip Logistics has done what its arch rival Eimskip failed to do, by winning regulatory approval for the acquisition of Norway’s shortsea operator Nor Lines.

According to Samskip’s CEO, Ásbjörn Gíslason, its latest deal “ticks all the boxes”. In particular, it gives Samskip access to a more diverse cargo base in the country, and a much deeper presence in the northern and eastern (up to the Russian border) parts of Norway. In the past, Samskip’s service network had been focused on Oslo and ports in the Stavanger-Trondheim range.

“We have, until now, been focusing on container solutions, but the Nor Lines acquisition means we are able to widen our product scope,” he said.

“Nor Lines’ vessels can carry not just containers, but ro-ro cargo, palletised goods, project and heavy lift cargo.”

Gíslason believes the deal will give Samskip strong growth opportunities. “Combining the strength of our European set-up with the domestic strengths of Nor Lines, there is a real chance to increase traffic volumes on both north and southbound routes in/ out of Norway,” he said.

Despite its setback, Eimskip is determined to raise its profile in Norway, with the group’s president and CEO, Gylfi Sigfússon, stressing that alternative investment opportunities are being looked at in order to ramp up its business in Norway.

He argued that the Norwegian Competition Authority had defined the market in too narrow a way, and was wrong in its interpretation that Eimskip was the market leader in the transport of frozen fish in North Norway.

“I am very disappointed,” said Sigfússon, “It is my opinion that they made a mistake with this narrow minded decision.”...


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