Now Med ports threaten to divert cargo from Europe's Northern Range to provide q
Time:2023-11-16 11:28:09

The comparative modernity of northern Europe's road and rail networks has long made it a clear favourite for pickup and delivery over the more primitive links available to Mediterranean ports.

But times they are a changing. There has always been the obvious turnaround back-to-Asia advantage of landing cargo at Med ports. It obviously beats going round the Iberian Peninsula, crossing the stormy Bay of Biscay to the northern range along the congested English Channel.

This has been so much part of conventional thinking that it gave rise to the marketing zone called the "Blue Banana" that takes in north west England through the Benelux along with the German Rhineland.

Later versions of the schematic map, take in southern Germany, Alsace-Moselle in France in the west and Switzerland and northern Italy.

Lately, there have been changes. Much in the way Asian cargo has been diverted from California via Panama to the east and Gulf coasts of America from California, there has been a notable shift to the Mediterranean ports from Europe's Northern Range.

There have been several contributing factors, but the latest being the increase in regulatory hassle that might be minimised by unloading at one EU port rather several.

Whatever the reason, containerized trade between Asia and the Mediterranean surged for the third straight month this year with demand growth far outstripping growth on the Asia–North Europe route.

Container Trades Statistics (CTS) show volume shipped from Asia to the East Mediterranean and Black Sea jumped 39 per cent year on year to 297,000 TEU in June, while Asia–west Med volume rose 21 per cent to 279,908 TEU. By contrast, Asia–North Europe volume grew just 3.1 per cent to 915,284 TEU for the month.

According to Sea-Intelligence Maritime Analysis, European imports “have clearly rebounded” after a year-long depression. 

“This marks the fourth consecutive month of growth into the continent and saw a year-over-year growth of 3.9 per cent,” Sea-Intelligence noted, adding that total growth in imports to North Europe and the Mediterranean from Asia reached 12 per cent in June, “which certainly qualifies as a market rebound.”

Volume growth has been particularly robust in the Asia–East Mediterranean trade, rising 38 per cent year on year in May and 38.5 per cent in April. Shipments from Asia to the west Mediterranean rose four per cent in May and 21.7 per cent in April, CTS data shows.

While the Asia–Mediterranean volume comparisons are flattered by the weak demand last year, second-quarter volume on the trade lane has overtaken cargo carried by container lines in the same period of pre-Coved 2019. 

From April through June, shippers in the West Mediterranean brought in 812,000 TEU from Asia, almost six per cent more than in the same three-month period in 2019, while Asia–East Mediterranean/Black Sea volume of 901,000 TEU was up 7.1 per cent. Asia-North Europe volume, on the other hand, fell 3.7 per cent to 2.6 million TEU in the second quarter.

Said CTS chief executive Nigel Pusey: “After a weak start to the year, every month since March has shown a strong increase in volume into the Mediterranean.”

That “normalisation” of volume has dragged rate levels down from the record highs of last year, but Asia–Mediterranean pricing continues to hold up far better than its northern counterpart, even with a seemingly successful August rate increases on the Asia–North Europe trade.

Reasons for favouring Med ports over the traditional Northern Range option have been apparent for decades. In the year 2000, the Port of Barcelona sent delegations to the Far East to woo beneficial cargo owners (BCO) to choose the Catalan ports to discharge its Asian EU-bound cargo, citing the quick turnaround. But the disadvantages could not be concealed, that the rail line in Spain were of a different gauge than those of the EU necessitating costly intermodal transfers.

While that was a deal-breaker for most BCOs, there were other discouraging factors. Spain was a little too far west to be a useful alternative as it required a longer overland journey. Why not Marseille with its access to the French wine trade or Genoa with its proximity to Vienna, Turin, Milan and Budapest.

But there have been many changes since those Barcelona press conferences in the year 2000. Rail gauges have been mitigated. Rail freight from China now runs through Duisburg, Germany and extends all the way to Madrid. There has been much road and bridge buildings and tunneling since. Harbors have been dredged. Even the US west coast to east coast switch has played a part. That's because cargo collected in Singapore and Colombo runs west via Suez rather that east via Panama through the Med to reach the US east coast.

In the year 2000, the biggest ships ran to 10,000 TEU; in the year 2023, they run to 24,000 TEU. Another factor is the wealth of the world has increased enormously. Few noticed, but the UN's global goals to eradicate extreme poverty set for 2020 were actually achieved in 2012. This has impacted the size of consumer culture worldwide, increasing the number and value of goods sold.

There is also the phenomenon of way porting that has developed since the volume of US east coast-bound cargo started to build. At first 10,000-TEU ships could only access northern range ports and too few ports on the American eastern seaboard could dock them. So they dropped off their US-bound boxes at Red Sea and Med ports to be picked up by smaller ships that could access more harbours than what all considered megaships back then. But that has become less important since because of extensive dredging worldwide.

A beneficiary of the trend is the Port of La Spezia, equidistant between Livorno and Genoa on the north-eastern Italian coast with its growing rail connectivity and its ability to handle the biggest ships.

Another selling point for carriers is that there is a saving of 2,000 nautical miles from Suez to La Spezia, compared to turning the ship around in Rotterdam. With the current carbon craze, there is far greater importance placed on environmental impact than there was 10 years ago.

Bigger ships can now access the recently dredged port, with a 15-metres alongside its Fornelli East pier and the objective is to go to 16 metres at the new Garibaldi berth.

"As for the south-Europe hinterland, we are currently offering Austria, Switzerland, and southern Germany via our intermodal platform in Milan, allowing customers to take advantage of a range of benefits when routing their cargo via La Spezia Container Terminal," said Contship Italia CEO Matthieu Gasselin.

The MSC Nicola Mastro is the first 24,000 -TEUer to touch an Italian gateway. This ability to address all operational needs and confirms the competitive factors of the "Spezia System".

Said Mr Gasselin: "To stay competitive, it is crucial to anticipate market demands. The fact that the Nicola Mastro chose the La Spezia Container Terminal gateway confirms our readiness for the future. I thank MSC for their trust in the 'Spezia System' and all colleagues for their excellent teamwork in this record-breaking circumstance."

One can see without difficulty how the La Spezia story may multiply in other areas of the Med going forward, much in the way Savannah, Georgia, became models for similar development along America's Eastern Seaboard nearly 20 years ago.