Bloomberg News

German Naval Base Becomes Weapon in Giant-Container War: Freight

October 13, 2011

(Updates with depth of Le Havre port in eighth paragraph.)

Oct. 13 (Bloomberg) -- Germany’s chief naval base during two world wars will be transformed into its only deepwater port as part of a 950 million-euro ($1.3 billion) plan to stop a new generation of container “superships” diverting to Rotterdam.

Wilhelmshaven’s JadeWeserPort terminal, due to open next August, will have a depth of 18 meters (60 feet), independent of the tide, allowing it to handle vessels that measure 430 meters long, carry 18,000 boxes and need at least 16.5 meters of water.

Rotterdam, Europe’s largest port, is the only harbor in the region east of France that’s deep enough for the new container giants, with Hamburg and Bremerhaven, the biggest in Germany, required to dredge channels to accommodate them. Wilhelmshaven’s location east of the Dutch city may also help win a bigger slice of transfer traffic from high-growth Baltic and Russian markets.

“Ports that cannot handle the biggest vessels will have problems,” said Emanuel Schiffer, co-chairman of Eurogate GmbH, Europe’s top independent container-terminal company and operator of the new site. “If the largest ships cannot go to Germany they’ll concentrate on Rotterdam, and over a period of time you will also lose other services, so this is essential for us.”

Too Shallow

More than 150 vessels with a capacity above 10,000 boxes will join the global fleet between 2011 and 2014, Bremen-based Eurogate estimates. Most colossal will be 20 ordered by A.P. Moeller-Maersk A/S, the leading container line, each 30 percent bigger than the largest afloat today. Maersk has options for 10 more of the same size, valuing the total purchase at $4 billion.

The maximum draft for ships using Hamburg, Germany’s No. 1 container port and the third-largest in Europe, is 14.5 meters, which may be increased by 1 meter if the River Elbe is deepened -- still too shallow to handle the largest vessels at full load. Antwerp in Belgium, the regional No. 2, has a depth of 15.56 meters upstream and 14.8 meters downstream, which dredging could boost to no more than 15 meters, according to its website.

Hamburger Hafen und Logistik AG handles two-thirds of boxes that go via Hamburg, while operators at Antwerp include DP World Ltd. of Dubai and Hong Kong-listed Cosco Pacific Ltd. Li Ka- shing’s Singapore-based Hutchison Port Holdings Trust runs three Rotterdam sites through its Europe Container Terminals unit.

Le Havre, at the mouth of France’s Seine River, is currently the Dutch port’s only true deep-water rival in the so- called North European Range, at 17 meters deep.

High Seas Fleet

JadeWeserPort will feature a 1.7-kilometer quay able to accommodate four large container ships and cover an area the size of 500 football pitches. The terminal will have an initial capacity of 2.7 million standard boxes a year, and that could later double, making it Europe’s fourth-biggest container port.

Established as a naval base in 1869 by Wilhelm I of Prussia, Wilhelmshaven owes its status as Germany’s only natural deepwater harbor to its position on the Jade Bight, a bay on the North Sea. The departure point for the High Seas Fleet before the Battle of Jutland in World War I, the town of 80,000 people also built the Tirpitz, Europe’s biggest battleship, and today ranks as Germany’s largest naval base, second-largest army base and No. 1 oil port, its municipal website says.

JadeWeserPort’s position means that the distance from the open sea -- 43 kilometers -- is less than for most other container terminals in the region. Hamburg lies 110 kilometers from the ocean, while Antwerp is sited 80 kilometers up the Schelde River, extending transit times to shipping lanes.

Coastal Pull

Wilhelmshaven’s location 300 kilometers nearer the Baltic Sea than Rotterdam and 430 kilometers closer than Antwerp may also help win custom from companies that carry cargo onwards to the region on smaller ships, such as Marseille-based CMA CGM SA -- the world’s third-largest container line -- Rederi AB TransAtlantic of Stockholm and Montagu Private Equity LLP’s Unifeeder A/S, said ING Groep NV economist Rico Luman.

“The harbor’s main advantage is its position on the coast,” Luman said from Amsterdam. “While shipping companies in general will get an extra choice of where to drop off their containers, shippers to Scandinavia, the Baltics and Russia are most likely to benefit. Rotterdam has regained market share in those markets in recent years and this will probably now come under pressure.”

Asian Roadshow

Competition will intensify amid looming overcapacity among container shippers and at terminals as economies slow, he said.

While Wilhelmshaven has a prominent place in German naval history, it’s less well known as a trading hub, and Eurogate has sought to publicize the port via an Asian “roadshow,” lobbying shipping lines, logistics companies and politicians in nine cities in countries including China, Japan, Korea and Taiwan.

Germany is increasingly reliant on Asian exports, the bulk of which, worth 71 billion euros in 2009, are moved by sea. That flow from companies such as Siemens AG is buoying GDP that grew only 0.1 percent in the second quarter as concern about the euro crisis and a global slump dulled demand at home.

Germany’s export-driven economy has turned its harbors into major employers, with at least 450,000 jobs linked to Hamburg and the two Bremen ports, they estimate. JadeWeserPort plans to employ 1,000 people in the port and 1,000 in a logistics zone.

Eurogate’s Schiffer said JadeWeserPort won’t strip trade from Germany’s existing terminals, where the company also has operations, given an anticipated jump in overall cargo volumes, with the enhanced deepwater capacity actually more likely to safeguard industrial operations and services currently concentrated within the 70-kilometer radius that encompasses Hamburg, Bremen, Bremerhaven and Wilhelmshaven.

“It’s not a question of us taking something away,” Schiffer said. “It’s about maintaining our position.”

--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


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus