FINISHED VEHICLE LOGISTICS
EUROPEAN PORTS REVIEW
Volatility at Europe’s leading finished vehicle handling ports was made worse in 2020 by the impact of restrictions caused by the Covid-19 pandemic in the first half of the year and then by resurgent demand in the second half. Marcus Williams reports
The impact of the Covid pandemic on operations at Europe’s main vehicle handling ports in 2020 saw volumes drop on average by a quarter, though with some notable variances in either direction.
The outbound supply chain was badly disrupted by the end of the first quarter and vehicles were stranded in the supply chain through April and May as lockdowns spread through the region. Capacity at the vehicle handling terminals was tested by a number of factors as vehicles in the pipeline were delivered to ports with no prospect of onward delivery to dealerships. There were also stringent safety protocols that had to be worked out and put in place to manage staff at the vehicle terminals, which increased processing times.
These Covid-related disruptions came on top of an economic uncertainty that had been affecting vehicle sales in Europe (and globally) beforehand. New car registrations increased by 1.2% across the EU in 2019, reaching more than 15.3m units in total and marking the sixth consecutive year of growth. However, the rate of growth had been slowing since 2015. Capacity constraints that were already affecting the ports were made worse by the dealer shutdowns and further exacerbated by the fact that many of the ports also handle general ro-ro freight, which was disrupted too. However, the fact that some ports did handle other goods was also an advantage as it offset losses incurred by the disruption to automotive volumes.
The uncertainty over trading conditions between the European Union and the UK ahead of the Brexit deadline at the end of 2020 was another factor affecting vehicle movements in Europe, though for some ports it was the acceleration of exports to the UK ahead of this deadline that actually bolstered the recovery of throughput in the second half of the year, notably at Zeebrugge and Vigo ports.
Leading automotive executives will be discussing finished vehicle logistics in Europe, including maritime movements, at the forthcoming Automotive Logistics and Finished Vehicle Logistics Europe Live conference, which takes place online on April 20-21 this year
Adapting to change
Despite the impact on throughput, Belgium’s port of Zeebrugge maintained its position as Europe’s busiest vehicle handling port in 2020. The second quarter of the year saw half the number of vehicles handled as in the first quarter but volumes recovered through the second half of the year, with a strong fourth quarter showing volumes back above 700,500. That, in part, was driven by a sharp increase in UK vehicle imports ahead of the Brexit deadline on December 31.
The main challenges for Zeebrugge as the global reach of the Covid-19 pandemic started to affect the automotive industry in Europe in first half of the year were a shortage of terminal capacity and delays in the handling of the cars.
Terminal capacity was in short supply as EU dealerships closed and vehicles were left at the terminals for a longer period than usual. Zeebrugge port authority responded by providing extra temporary storage capacity for the terminal operators and facilitated the lay-up of vessels in port.
Delays were also caused by strict hygiene and safety measures for workers. As well as requiring social distancing on the transport used to get workers to their stations, the restrictions also necessitated the disinfection of new cars following their loading or storage, all of which added time to the processing.
Nevertheless, according to the port authority, operations were maintained at 100% and it took only a limited amount of time for the companies and workforce to adapt to new working conditions.
“There were some concerns due to a lack of personal protection equipment,” says a port authority spokesperson. “But this was only an issue in the first half of the year. Once used to the new situation, it all went more smoothly.”
Again, constraints on the availability of staff in the second half of the year because of strict quarantine measures were only temporary, according to the port.
New car volumes per quarter through Zeebrugge in 2020
Zeebrugge’s balance of different cargoes – ro-ro, containers and liquid bulk – has helped it weather the Covid storm.
“When one sector is suffering, it is usually buffered by another sector,” explains the port’s spokesperson. “In 2020, when ro-ro was suffering, containers and liquid bulk grew. It allows the port authority to shift focus to the sector which is in need of support.”
Building for the future
Zeebrugge port’s many infrastructure projects also proceeded unabated in 2020. Some of the highlights last year included the construction of a turning bridge over the connecting dock between the Hanze and Bastenaken terminals. The bridge will support the future increase of traffic within the port. Structural works on the connection between the terminals is expected to be finished by the end of May this year, after which further dredging work will be carried out.
Negotiations on the corporate merger of the port of Zeebrugge with the port of Antwerp have continued through the year and on March 1, 2021 the cities of Bruges and Antwerp reached an agreement. That merger is expected to be complete by next year, subject to registration and approval by the competition authorities. It is still too early to assess what impact that merger will have operationally on the finished vehicle sector, according to the ports, though each is expected to stay focused on their own strengths.
Top 10 European FV ports
Fluctuation and uncertainty
Meanwhile, Antwerp port authority is working through the current volatility in trade and on recovering the volumes it lost in 2020. According to the port authority, social distancing rules necessitated by the Covid pandemic in the first half of 2020 made it tough to work in a productive way and volume fluctuations were hard to predict. That in turn made planning for loading and discharging operations harder, as well as for yard capacity planning, according to the port authority.
Volume fluctuations and vehicle production forecasts continued to be uncertain into the second half of the year for Antwerp but productivity was restored, in part as distancing rules were adjusted and more people were allowed to work together.
Antwerp port was able to maintain staff numbers throughout the year and found no increase in absenteeism because of ill health despite the pandemic. What is more, according to the port authority, the lessons learned from the pandemic will make the port more responsive in the face of future disruption.
“Flexibility has always been one of the main traits of the port of Antwerp,” says the port’s spokesperson. “Port companies and personnel proved to be extremely resilient and adopted change quickly during this crisis, so volatility in the future will surely be met with professionalism and speed to market.”
That flexibility meant the port was able to respond quickly and gain enough visibility to plan for continued operations.
New car volumes per quarter through Antwerp in 2020
A two-speed 2020
Amongst the other main performers in the northern part of Europe, BLG Automobile Logistics’ terminals at the port of Bremerhaven in Germany saw less of a decline than some of its competitors, though they were still down 19% in terms of import/export volumes.
The repercussions of the Covid pandemic hit volumes in the second quarter of 2020 and affected all forms of logistics business, says Stefan Nousch, director of sales and marketing at BLG Automobile Logistics. That included government regulations and restrictions in response to the pandemic globally, which affected manufacturing, ports, shipping and the outbound supply chain.
At the same time, however, Nousch says the economic downturn has also weighed down maritime trade flows.
“The decrease in production and consumption activities led to slowdown in maritime trade, which in turn reduced shipping demand and port traffic in the first half of 2020,” he points out.
Challenges of a different sort followed the downturn in the second quarter, when the increase in exports to the Asian region, especially China, had everyone working at full speed by the end of the year to cover customer demand.
Nevertheless, Nousch says Covid-19 underscores the fact we are living and working in extraordinary and unprecedented times.
“The decisions made during this crisis carry immense weight,” says Nousch. “BLG management was reacting to this unprecedented challenge [with] different tools and instruments, like roadmaps, to guide a response and to help prepare for the future.”
BLG Autoterminal Bremerhaven by numbers
240 hectares terminal capacity
95,000 total vehicle storage capacity
50,000 vehicle units of covered storage
45,000 vehile units of uncovered storage
8 multistorey car parks
16 rail tracks and headramps
BLG also operates terminals at Bremen and Cuxhaven
Ongoing efforts at Emden
The port of Emden, also in Germany, remains the third busiest on the continent even though it exclusively handles VW Group volumes. These dropped by 26% in 2020, in line with a number of other finished vehicle handling ports in Europe.
As elsewhere, identifying, agreeing and establishing effective protective measures for staff was one of the main concerns as the coronavirus hit operations.
“Adjusting the number of operational staff at the beginning of the pandemic and then also at the re-start has been (and is still) an enormous task,” says a spokesperson for VW. “The reason is that, at the beginning of the pandemic there were no reliable short- or medium-term planning figures available, but measures had to be taken, which then only took effect with a time lag. The main task at present is to synchronise the overall requirements of all parties involved under pandemic conditions.”
VW worked with its terminal operator EVAG to manage the volatility in vehicle movements to and from Emden as the year went on, and that is something it is still doing, says VW’s spokesperson.
“Volkswagen and EVAG reduced the daily loading capacity at re-start of operations in Q2 by spreading the volume over the week to reduce daily peaks,” he says. “This is still an ongoing process and will last as long as pandemic preparedness arrangements for staff need to be maintained.”
Covid and Koper
Further south, in the Slovenian port of Koper, Covid-19 had a big impact on vehicle flows too, especially on the import side. However, by the second half of the year port terminal operator Luka Koper reported a compensating boost in exports, thanks to prior investments in greater storage capacity which afforded it more flexibility.
“The second half of 2020 was more encouraging, with more export volumes handled for the Far East,” says its spokesperson.
As with other terminal operators, Luka Koper managed to maintain normal operations during the pandemic, while adhering to health and safety procedures. The company says its vehicle inventory management IT system ACAR helped it manage the volatility in volume flows through the year by optimising work processes and standardising communications with its partners.
Investments in vehicle ro-ro facilities continued last year. In May, Luka Koper finished the construction of additional railway sidings (4 x 700 metres), specifically designed for loading/unloading finished vehicles. In June the company also completed a dedicated ro-ro berth adjacent to the sidings.
Vigo bucks the trend
Koper’s performance in 2020 put it into the top five for the first time, ahead of Spain’s vehicle handling ports even though the main Spanish ports were still well represented in the top 10.
Most notable is the fact that the port of Vigo recorded an increase in vehicle handling of 6% last year, in contrast to significant losses at Barcelona (-38%) and Santander (-31%). That increase was because of a second half that saw a spike in vehicle exports. In fact, it was the largest movement of vehicles in the port’s history, according to Vigo Port Authority. That was at least in part driven by a drive to get vehicles into the UK ahead of the Brexit deadline at the end of 2020. In the months of September and November Vigo saw increases in exports of 43% for both months.
Those increases brought their own challenges, however, according to David Castro, commercial manager at Vigo Port Authority.
“The second semester meant a tremendous increase in exports, the main difficulty being to provide shipping services, since the docks were almost permanently occupied,” says Castro. “[However], the rapid departure of vehicles, together with the decrease in imports, made it possible to cope with this large increase in volume, highly concentrated in a short period of time.”
Vigo Port Authority is overseeing the reorganisation of entry and exit points at the vehicle terminal to make throughput more fluid. It has also recovered an area of 70,000 sq.m, previously under concession to the Vigo Free Trade Zone Consortium. That has increased the terminal's capacity for vehicle handling.
The first half of 2020 presented different problems for Vigo. The suspension of ro-ro vessel traffic because of Covid led to extended dwell times for vehicles in port, which stretched capacity. Vigo saw volume throughput drop 80% for both April and May.
Short-term concerns in Barcelona
Barcelona, which saw volumes drop above the European average for 2020, made a priority of controlling debt burdens as Covid-19 knocked out volume throughput.
“The port authority started a programme of delaying debt from every company working in our grounds and, for port terminals, we implemented discounts depending on how the pandemic impacted on the activity of every kind of terminal,” says Lluís Paris, commercial manager at the Barcelona port authority.
Beyond the Covid pandemic there is concern for throughput at Barcelona given the closure of the nearby Nissan Zona Franca plant at the end of 2021 and the fact that Mercedes X-Class production there has already been shelved.
“We all wish to have a clear idea about the future, but there are far too many unknown issues which are extremely influential to our market,” says Paris.
Those issues include the longer-term impact of Covid-19 on the Spanish economy and how that will affect vehicle imports. There is also the question of what happens to the industrial space when Nissan exits the Zona Franca plant at the end of 2021. More immediately, the shortage in the supply of semiconductors is affecting production at several automotive locations, including the Stellantis (former Groupe PSA) plant in Zaragoza. Though there are potential bright spots on the horizon with development of EV projects in the area, such as those planned by Ford, Renault and Seat/Cupra.
The port does not expect vehicle throughput to return to 2019 numbers until 2022 or 2023. However, the port and its terminal operators have proven their ability to deal with any future volatility through the pandemic and digital tools have been central to that.
“Digitalisation working groups have very much increased their activities and several projects are being accelerated, especially the automation of terminal gates in connection with customs house, road transport companies and OEMs,” says Paris.
Barcelona port authority has the flexibility to give terminal operators an additional 23 hectares of storage space in the vicinity of their operations at the port. Paris also points out that developments at those terminals are proceeding apace, with Autoterminal developing its technical centre, and Setram implementing mega-truck deliveries and pick-ups as a way of giving improved service to its customers.
New car volumes per quarter through Barcelona in 2020
Onwards, upwards and outwards
Santander port on Spain’s north coast has also been working on infrastructure and facilities to bring greater storage capacity and flexibility to its operations, despite the disruption caused by the pandemic. For the last two years the port has been developing a 75,000 sq.m vertical storage park, with the first phase due for completion in 2021 and the second phase before the end of the 2022.
The port has also reclaimed 40,000 sq.m of land south of Raos Docks and is investing €1.1m in developing it for additional storage, a project that is expected to be complete in the next few months.
In terms of other projects, Santander port authority is working with terminal and transport operators on alternative logistics chains for automotive spare parts and components.
“In that sense, the possibility of developing synergies with the Llano de la Pasiega, a new regional logistics project, with road, maritime and rail transport connectivity, is under study,” says Santander’s ro-ro cargo manager, Patricio Arrarte Fuentes-Pila. “To that end, different working groups with the best partners who are currently operating in our port in the maritime, road and rail transport sectors, have been created.”
With direct relevance to finished vehicle movements, one of the most important projects the port authority at Santander has completed involves a new quality control system, coordinated with Puertos del Estado, which manages Spain’s state-owned ports, Comunidad Portuaria, Spain’s port community body, and the Spanish Association of Automobile and Truck Manufacturers (Anfac).
New car volumes per quarter through Santander in 2020
The port of Santander was not spared of disruption in 2020 either, as it lost 30% of throughput compared to the previous year. The port authority says Covid also delayed some of the projects that were ready to launch. The restrictions imposed by the health authorities meant the number of drivers involved in the handling of vehicles was greatly reduced, and this led to the increase in the time required for their processing.
Latent demand at Piraeus
The Greek port of Piraeus saw both import and transshipment volumes drop in 2020. The latter resulted both from reduced demand from the main markets in the eastern Mediterranean – in particular Turkey and Egypt – and reduced sales in Europe. Local (import) volumes were down by around 28% because of the restrictive Covid measures imposed by the EU and the suspension of production in international vehicle assembly plants in the first and second quarters.
“As a result, car passenger registrations in EU in 2020 declined by 23.7% and this impacted transshipment volumes in Piraeus from both European and Asian production sites,” explains the Piraeus Port Authority.
Imports of cars to Greece dropped by more than 30% in the eleven months of 2020 against 2019. However, the PPA’s spokesperson drew optimism from the fact the figures in April and May last year were radically reduced (80.2% and 67.5% respectively) but quickly recovered in September.
“This quick turnaround from the reductions recorded in the second quarter of 2020 indicates that there is latent demand,” says the PPA’s spokesperson. “Provided pandemic measures ease on a more permanent basis there will be a recovery in demand and imports of cars in 2021.”
The recovery of transhipment volumes in 2021 will depend again on the economic conditions of the neighbouring Mediterranean countries, particularly Turkey, Egypt, Levant and the Black Sea area.
As reported last year, Piraeus is now benefitting from a supply chain IT system provided by German systems expert Inform, which will improve operations at the port’s car terminal by providing greater operational transparency. Carmakers and logistics providers will be able to track the location and delivery time of each vehicle via a web portal and the system will be able to optimise operational processes in the vehicle compounds using real-time data and advanced planning.
Europe’s leading vehicle handling ports are still weathering a phase of instability caused by the pandemic but once it is over, they are unanimous in their ambitions to make good on the investments in infrastructure and technology that have continued and will afford them greater capacity, flexibility and sustainability in operations, including for the growth in EV volumes as Europe moves toward its zero-carbon market goals.
A longer version of this year’s European port's review will be available at automotivelogistics.media