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Ship Shape

Following last week’s announcement of a review for London’s Gateway port scheme, the big surprise is that most of the world’s port authorities and shipping operators are retaining their plans for expansion despite the credit crunch.

A straw poll of major developments worldwide indicates that schemes continue to move forwards, with plans to build new infrastructure and more operational superstructure for containers and bulk capacity. 

Some very large projects are in hand. Schemes in Europe include the completely new container port of Wilhelmshaven in northern Germany and the 1,000ha expansion of the giant port of Rotterdam where the Maasvlakte 2 project has just starting dredging and reclamation work.

Billion dollar investments in wharf and terminal upgrades at coastal ports in the US are proceeding. Also underway are a range of port developments or expansions in Africa, Latin America and India. 

Part of the explanation may lie simply in the reluctance of companies to make negative announcements when market uncertainty is high. Certainly some of them, including DP World from Dubai, admit that all their schemes are under review and will be monitored closely in the light of world economic developments. London Gateway is an example. But carrying at least as much weight for operators and ports is the huge growth in trade and movement in the last decade, especially in containers.

Figures for just the first eight years since 2000 show more than a doubling of capacity from 236.5M 20ft equivalent units (TEU) to an estimated 534M last year. According to projections based on this kind of growth, demand will reach 800M TEU by 2015. 

That, naturally enough, has been modified by the economic crisis: though initially in 2008 the impact on shipping activity was not immediate, signs of a downward curve have emerged. “The industry saw positive growth overall in 2008, but this masked the fact that in the fourth quarter, volumes declined by 2%,” says Drewry Shipping Consultants ports director Neil Davidson. “For 2009, it looks like the global container port industry will see its first ever year of negative growth, of  minus 4% to minus 8%.”

Despite the slowdown, port authorities are wary of being caught out by the relentless long term demand for increasing quay space. “We don’t want cargo demand to overtake the space we have as it began to in the 1990s,” says a spokesman for the Port of Long Beach, California.

Long Beach is the second largest container port in the US. Together with its competitor, Los Angeles Port, which immediately adjoins it, Long Beach has plans for billions of dollars in investment. “Projects include the electrification of several wharves to allow ships to shut down their diesels in harbour, which is important for the environmental impact of the ports,” says the Long Beach spokesman. “We are also reclaiming land to expand the size of a major wharf first built in the 1920s.”

Wharves will also be deepened to modern 18m depths and other infrastructure will be upgraded. This will included a major bridge across a main entry channel into the complex, allowing the larger ships to enter on all tides.

Both west coast ports, which feed into the US heartland via rail links, say that they will continue work on their projects.  “Our philosophy is to continue improving terminals so that we are well positioned when everything improves again,” says a Los Angeles port spokesman. Trade through these ports has fallen heavily in recent months, and is down 25% in 2008 overall, largely because both get much of their business from China. “We have a healthy financial reserve built up over the last decade and a good credit rating,” says a Long Beach spokesman. “The downturn will not last forever.” 

It could even be something of an advantage, since easing demand temporarily allows the space for the improvements to made. For similar reasons the developers of the new Wilhelmshaven deep water container port north west of Bremen in Germany say there are no plans to stop work on the £855M four wharf project due to open in 2011. 

Regional governments from Bremen and Nieder Saxon are building the 1,725m long 18m deep quay facility on a greenfield site. Germany’s federal railway is upgrading lines to the scheme. Rotterdam harbour in the Netherlands also insists that it is “full steam ahead” for its Maasvlakt 2 project which will create a 1,000ha reclamation on the North Sea coast with 20m container berths able to operate 24 hours a day.

Five major dredgers recently began work. “We aim to finish by 2013,” says a Port of Rotterdam spokesman, “so this is clearly a long term project and hopefully things will have changed by then”.  

Projects for new terminals are also under construction elsewhere in the world especially by the four biggest operators. One of the world’s largest is APM terminals which has projects in Ecuador, Africa and India as well as Rotterdam. It says that “these are long term schemes which require perhaps 10 years of planning, design, funding, land acquisition and construction.  “We need to keep going. The economy will be rebounding at some stage and we want to be stronger in order to take advantage.” 

“The Chinese investment in Africa in recent years for example has created a major increase in demand,” says APM spokesman Tom Boyd. “India’s growth too has meant new demand. Right now a new port of Pipavav on the west coast is in the process of expansion.”

Hong Kong based operator HPH has also declared that it is “proceeding with all our global developments from Felixstowe in the UK to on going projects at our other locations including Barcelona, two ports in Mexico, Panama, Karachi, Alexandria, Vietnam and Huizhou”.

But if the global economy continues to slide, so too eventually could be many other schemes. But for the moment ports continue to expand.

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