Container transport: a look ahead

Some 500 million containers are currently travelling the planet. That number should continue to increase because of growing demand from emerging markets and because of the increasing amount of goods moving in containers. For a look ahead, PortInfo spoke with professors Claude Comtois of the University of Montreal, Peter Raimondo of Champlain College, Jean-Paul Rodrigue of Hofstra University, and Brian Slack of Concordia University.

 

 

Despite the economic slowdown that has affected the majority of western countries, containerized cargo transportation will continue to grow in the medium term. For 2012 alone, freight forecaster Drewry expects a 4.3% increase in the number of containers handled globally.

According to the experts that PortInfo spoke with, China-Europe, the world’s leading containerized trade route, will hold on to first place in the coming years. The Intra-Asia trade route also will remain extremely busy. But on an international scale, markets will change, the experts say. Traditional consumption markets in North America and Western Europe have reached a stage of maturity. In North America, buying power has changed but today is about the same as it was 10 years ago. “There is a limit as to what people can consume. We must turn to other markets,” said Jean-Paul Rodrigue, who holds a PhD in transport geography and is a professor at Hofstra University, in the State of New York.

New markets

There are many promising new markets. One of them is Latin America, said Claude Comtois, a professor at the University of Montreal and member of the Interuniversity Research Centre on Enterprise Networks, Logistics and Transportation. Brazil and Chile are experiencing solid economic growth, as are Mexico and Colombia, which has invested substantially to develop its logistics infrastructures.

According to a study by Ocean Shipping Consultants entitled North European Containerport markets to 2025, on the other side of the Atlantic several Baltic Sea countries that have not been affected by the economic difficulties in the euro zone are posting impressive growth: 4.3% in Russia in 2010 and 2011; 3.9% and 4.4% in Poland during the same period; and 5.8% and 4% in Sweden. Overall, Northern European container ports handled 57.9 million TEUs (20-foot equivalent unit containers) in 2011, an increase of 22% over 2009. In the Mediterranean, Turkey is an attractive market of 70 million consumers whose buying power continues to increase.

In Asia, certain countries in the southeast, such as Vietnam, will have a role to play along with China, the professors say. The Chinese model is based on inexpensive labour and massive exports. But salaries paid to Chinese workers are increasing, while consumption in western markets is slowing down. Nonetheless, China remains a major player. Containerized cargo traffic in China reached 164 million TEUs in 2011, up 11.4% over the previous year, according to official Chinese government statistics. During the first six months of 2012, total traffic through Chinese ports increased by only 7.2%, down 6.1 percentage points compared to the same period last year, the Chinese government said.

According to the experts, India, the other Asian giant, is certain to become a major destination for container ships in due course. But it must first find a solution to problems such as port congestion and delays in the modernization of its port infrastructure and rail system. “A container can sit two to three weeks in a port,” Prof. Rodrigue said. Power failures affected some 300,000 people in July, paralyzing trains, public transit and communications, illustrating that the most populous democratic country in the world still has much to do in order to provide a stable commercial environment.

In Africa, certain countries are beginning to emerge, piquing the interest of maritime industry companies. Rodolphe Saade, executive officer of CMA CGM, forecasts that maritime traffic in Africa will grow by 8 to 10% annually. “The difficulty today is that European markets are no longer growing. We very much believe in the future of African countries and we want to participate in this growth,” he told Jeune Afrique magazine in July.

New products

In the beginning, containers transported consumer goods. But more and more products previously moved in bulk are now being transported in containers. Such is the case for grain, wood and paper, said Brian Slack, a geography, planning and environment professor at Concordia University in Montreal. Moving grain in containers is more expensive than moving it in bulk, but like other types of containerized cargo it is sealed and protected from rodents, insects and bacteria. It arrives at its final destination in better condition than if it had moved in bulk. Also, producers can ship smaller volumes. They can also diversify production and offer specialty products with a greater value added that can reach smaller customers throughout different markets around the world. “This approach can mean the difference between developing or not developing an export market,” Prof. Rodrigue said.

The impact of Inland Ports

The proliferation of Inland Ports will help increase the flow of containerized cargo traffic, according to a study carried out by Prof. Rodrigue for The Van Horne Institute. The study is entitled The Containerization of Commodities: Integrating Inland Ports with Gateways and Corridors in Western Canada. (http://www.canadiansailings.ca/?p=4240). These hinterland transshipment hubs can sometimes be located more than 300 km from a port. They receive containers that arrive in port by ship and then are loaded onto trains. Far from congested roads, the goods in these containers are then shipped out to their final destination by train, truck or airplane. Accordingly, the practice of transloading the contents of import containers into 53-foot domestic containers will emerge. The contents of three regular containers will fit into two domestic containers, which will reduce trucking costs.

Avoiding road congestion often found around ports will save time and fuel while reducing the impact on the environment. Maritime carriers will be able to pick up their empty containers closer to the port instead of seeing them disappear for undetermined periods of time into the hinterland. Ports will need less space to store containers. All of this points to an increase in containerized cargo transportation into the future.

Fuel and the environment

While fuel can represent more than 50% of the operational cost of a container ship, it will always be less expensive to move goods by vessel over long distances than by airplane, truck or train. On the environmental front, regulations are becoming more and more stringent. While the marine mode has always received a better environmental report card than the other modes of transport, the industry must remain vigilant and not take this comparative advantage for granted. For example, new truck models burn fuel in such a manner that they pollute less than a barge, Prof. Comtois said. “The trucking industry will not roll over and play dead,” he said.

The movement is global. On July 1, the Port of Los Angeles became the first North American port and the first in the Pacific region to join 14 European ports to adopt an international program to improve air quality. The Environmental Ship Index, developed by the International Association of Ports and Harbors’ World Ports Climate Initiative, rewards ocean carriers that bring their most recent and less-polluting ships into port. Trends such as this are developing quickly and will be the norm over the long term.

For its part, the Port of Montreal is a partner in the Green Award program. Its objective is to improve security and reduce greenhouse gases. The program gives rebates to ships that have obtained Green Award certification. The ships benefit from a reduction on port dues. Dry bulk carriers and tankers are eligible for certification. “But we are told that certification is coming for container ships,” said Lyne Martin, environment director for the Montreal Port Authority.

The “Panama” factor

The impact of the Panama Canal expansion on container traffic remains to be seen. “There will be a new network framework but it is too early to define it,” Prof. Comtois said. All of the experts we spoke to are of the same opinion. For more on this subject, please read the interview with Professor John Taylor in this report. More to come …

The Port of Montreal would like to thank the following people for their contributions to this report:

Claude Comtois, a professor at the University of Montreal and member of the Interuniversity Research Centre on Enterprise Networks, Logistics and Transportation. Jean-Paul Rodrigue, who has a PhD in transport geography and is a professor at Hofstra University in Hempstead in the State of New York.
  Peter Raimondo,a logistics and supply chain management instructor at Champlain College in Longueuil, Quebec, and a former chairman of freight conferences supplying container services between Europe and Canada. Brian Slack, a geography, planning and environment professor at Concordia University in Montreal.