Bloomberg News

Baltic Container Jump Dulls Hamburg’s Euro Pain: Freight Markets

September 01, 2011

Sept. 1 (Bloomberg) -- Russia and other Baltic Sea states are cushioning Europe’s biggest container ports from the worst of the region’s debt crisis as their booming economies more than compensate for slowing growth in countries using the euro.

Hamburg reported a 17 percent jump in first-half volumes, led by a 51 percent surge in trade with Russia, Poland, Estonia, Latvia and Lithuania, and Rotterdam in the Netherlands posted a 9.8 percent gain. Box throughput rose only 3.9 percent in Algeciras, Spain, and fell 0.7 percent in Gioia Tauro, Italy.

Growth in Baltic volumes is being led by demand for trans- shipment, in which cargo to and from less-developed harbors is sent via west-European ports served by bigger vessels with a greater variety of long-distance routes. Bremerhaven in Germany and Antwerp, Belgium, are also benefiting from a trend that’s aiding port operators including Hamburger Hafen und Logistik AG, Eurogate GmbH, DP World Ltd., Hutchison Whampoa Ltd. and Cosco.

“Some Baltic countries such as Sweden are mature economies which are not showing the same weaknesses as others,” said Neil Davidson, a port adviser at Drewry Shipping Consultants Ltd. in London. “More significantly there are emerging economies, the most important of which in container terms by far is Russia.”

Hamburg Advance

Hamburger Hafen rose as much as 3.7 percent to 24.70 euros and was trading at 23.95 euros as of 11:43 a.m. in Frankfurt, valuing the company at 1.74 billion euros ($2.48 billion).

While Europe’s sovereign debt crisis has prompted bailouts for Greece, Ireland and Portugal, together with concern that Italy and Spain will also need rescuing and a slowdown in core euro-zone economies, most Baltic economies are still rebounding. Though Sweden, Finland, Denmark, Poland and the three former Soviet republics of Estonia, Latvia and Lithuania are members of the European Union, only Finland and Estonia use the euro.

German gross domestic product rose 0.1 percent in the second quarter and France’s economy stagnated. Euro-area exports fell a seasonally adjusted 4.7 percent in June from the previous month, the EU’s statistics office in Luxembourg said Aug. 16.

By contrast, Russian GDP grew 4.2 percent in July and 3.8 percent for the year. Polish expansion averaged 4.1 percent in the four quarters to March 31, and Latvian GDP rose 5.3 percent in the second quarter following the EU’s worst slump in 2009.

In Hamburg, Europe’s third-largest container port after Rotterdam and Antwerp, Baltic Sea states contributed 22 percent of traffic in the first half, up from 20 percent a year earlier, accounting for four-fifths of the 29 percent share for Europe as a whole. That makes the Baltic the port’s second-most important market after northeast Asia, which has more than 40 percent of volumes, and the region posted the highest growth rate at 31 percent, versus 14 percent for China, Japan and Korea.

Rotterdam Leads

Russia is Hamburg’s third-biggest container trading partner after China and Singapore, contributing 276,000 standard boxes, or 20-foot equivalent units, in the first half out of an East European total of 505,000. Nordic states provided 443,000 TEUs.

“Hamburg is the most important port for container traffic between the Baltic countries on one side and Asia on the other,” Hamburger Hafen, which handles two-thirds of containers at the port, said in response to questions. “This position won’t be affected by currency turbulence.”

Total volumes in Hamburg stood at 4.3 million in the half, compared with almost 6 million in Rotterdam, where the harbor operator said Aug. 17 that throughput remains above forecasts because of “significant” gains in trans-shipment, especially with Russia, plus new services to East Asia and South America.

Italian Exposure

Some south-European ports are also being sustained by trans-shipment demand, according to Drewry’s Davidson. Algeciras near Gibraltar and the Spanish Mediterranean port of Valencia, where first-quarter box numbers gained 8.6 percent, are being buoyed by trade with West Africa, where “volumes are growing strongly,” he said, while the island of Malta and Gioia Tauro in the toe of Italy benefit from flows with Black Sea nations.

Mediterranean ports not engaged in onward trade with high- growth markets are most at risk, Davidson said, citing Genoa and La Spezia, northern Italy, as falling into that category.

Baltic demand may not be sufficient to sustain Hamburg and Rotterdam should the European economy tip into recession.

While Bremen-based Eurogate, Europe’s No. 1 port operator, has experienced no hit on volumes yet, according to spokeswoman Corinna Romke, economic turmoil in the euro-area and the U.S. will probably begin to impact in the fourth quarter, said Rico Luman, a transport economist at ING Groep NV in Amsterdam.

Still Cyclical

Eastern European won’t remain immune if the crisis deepens, he said, with only Poland still growing during the last slump, and then largely because of restricted exposure to world trade.

“Most of these economies are very much cyclical or dependent on commodity prices,” Luman said. “For the time being, these countries look to be in a different position, but a euro-zone recession might lead to a fierce downturn in flows.”

Still, Swedbank AB last week raised its growth forecasts for Latvia, Estonia and Lithuania after first-half output “exceeded expectations,” and Hamburger Hafen said any reversal that does occur will be short-lived based on the last recession.

“The long-time tendency of above-average growth in Central and East European countries was only interrupted for a short time during the last economic crisis,” Hamburger Hafen said. “Trade volumes rose again, fast and strong.”

--With assistance from Sabine Pirone in London. Editors: Chris Jasper, Chad Thomas.

To contact the reporter on this story: Niklas Magnusson in Hamburg at nmagnusson1@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net; Angela Cullen at acullen8@bloomberg.net


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