The port of Rotterdam in the Netherlands is arguably Europe’s most important trade hub, handling everything from dry bulk vessels and container ships to liquid-bulk cargoes and fuel barges.
In the first half of 2009, however, the volume of goods flowing through the authority fell by some 13.4 per cent to 185m tonnes. As the port stated at the time:
“Only the handling of mineral oil products showed an increase, up by 17% or 5 million tonnes, to over 35 million tonnes. All other categories of goods were way down: agribulk (-19%), ores and scrap (-61%), coal (-14%), other dry bulk (-28%), crude oil (-4%), other liquid bulk (-20%), roll on/roll off (-14%), other general cargo (-27%) and containers (-15%). Expressed in figures, container throughput fell by 15% to 4.6 million TEU (20-foot units).
So what to make of the port authority’s latest announcement on Thursday? (via Reuters):
AMSTERDAM, Nov 12 (Reuters) – Rotterdam port, Europe’s biggest, will give a once-only rebate in 2010 on tariffs for sea and inland harbour dues to stimulate markets and strengthen its competitive position, the authority said on Thursday.
It said on balance, the sea and inland harbour dues will go down by 5 percent in 2010, which is the first time in at least 20 years that the port has lowered its tariffs, and is due partly to the economic downturn.
“We have been able to find a good balance between the present difficult position of the customers and the long-term investment needs of the port authority,” the port’s chief executive Hans Smits said in a statement.
Could it be that shipping is under such duress the port authority has opted to slash tariffs for the first time in 20 years simply to stimulate activity?
The analysts over at JBC Energy are more optimistic. They see it as the port trying to gain a competitive advantage just as the market begins to turn. Note the Baltic Dry index rose 5.5 per cent on Thursday, and was up 32.4 per cent in the last two weeks alone. As they explained:
Port authorities stressed the fact that the rebate will be a one-off as it wanted to find a balance between offering relief to its customers during the crisis and at the same time secure earnings for the longer term expansion of the port. This move is expected to increase the port’s competitive position and enhance trade volumes the ARA region.
However, while the volume of total goods handled at the port fell by 12% in the first 9 months compared to last year, volumes of oil products grew by a strong by 21% to 54 million tonnes in the respective period as refiners in the region were building stocks while prices were low. Maritime activity seems to be picking up as spot rates for VLCCs carrying Middle Eastern Crude to Asia rose by over 80% week-on-week to around $18,500 per day due to a lack of available ships.
The market has tightened slightly upon increased interest from Japanese traders to book vessels, while ship owners have raised their rates to remain profitable with bunker fuel prices still being relatively high. The development of the Baltic Dry Index supports the impression that global goods trade is starting to improve again slightly as the index rose by about 70% from the beginning of October to 3,768 points, reaching its highest level since June 2008.¤
Many analysts — like SocGen’s Albert Edwards — look to shipping as a leading indicator of global trade. So is this genuinely a sign that things are looking up for the real economy? Or should we still be worried about stories like this?
Related links:
Welcome to the sub-marine crisis - FT Alphaville
An AP Moller-Maersk ouch for global trade – FT Alphaville