Spanish ports are going through some hard times this year. Having finished 2016 on a positive note, their performance has been significantly compromised in February and March by the dockworkers’ strike, vastly announced but hardly taken place, still having urged some shipping lines to implement contingency plans and re-route their vessels to alternative ports in the Mediterranean region. We have visited the Port Authority of the Algeciras Bay (APBA: La Autoridad Portuaria de la Bahía de Algeciras) and discussed the impact of the current trends and the port’s future strategies with Mr. J. Javier López, Head of Commercial Division.
APBA manages both ports of Algeciras and Tarifa strategically located in the south of the Iberian Peninsula, in Andalusia. Tarifa is basically a fishing port, specialized today in passenger and Ro-Ro traffic from the port of Tangier Ville, Morocco, whereas Algeciras is the 4th largest European port in terms of total throughput. In 2016 Algeciras set the record by handling 103 mln tonnes, thus joining the pool of the major European ports: Rotterdam, Antwerp and Hamburg. In terms of containers, the port’s last year throughput was 4.76 mln TEU, which made it the first Mediterranean container port and #5 in Europe.
However, in the first quarter of 2017, the port’s volumes dropped 8%, with container traffic in particular declining by 14%. Mr. López commented: “In fact, this fall of 8% is completely related with the decrease in container traffic. Obviously, it was caused by the process of negotiation on the stevedoring reform which in its turn provoked some shipping lines to divert their vessels upon the notices of the dockworkers’ strike action. Personally, I don’t think there has been a significant impact for the port in terms of the cargo volume loss. Rather, the terminals that operate here as well as the shipping lines have suffered large operational losses due to having to organize changes on a short notice in order to avoid possible disruptions in their services.”
Indeed, as we wrote earlier, Maersk Line has estimated that 10 weeks of dockworkers conflict in Spanish ports resulted in EUR 12 mln of direct operating costs for the company, not including the loss of customers caused by the crisis.
“Of course, any changes in a regular service of such a large shipping company, especially changing a transshipment port, lead to significant operational and logistical costs associated with the change”, says Javier López. “However, I want to make it clear: this has not been motivated by the port itself nor by any exterior factor.”
Later this week Iñigo de la Serna, Spain’s Minister of Public Works and Transport, is expected to present to the Parliament a second draft of a new law on stevedoring reform. The first one was rejected in mid-March by the Congress, the lower house of Spain’s Parliament, thus terminating the strike actions.
“If we reach an agreement that will satisfy all the parties involved – and I am absolutely sure we’ll find one – the result will be very positive for all Spanish ports”, comments Javier López on his expectations of the outcome. “It will be a very important final decision influencing the competitiveness of all the terminals situated in Spain and especially that of the port of Algeciras, which handles a huge part of transhipment volume. The cost of stevedoring services has a very significant impact on the cost of container handling. Whoever offers the best stevedoring services, has the competitive advantage. Therefore, I believe that it will be a very positive factor for the competitiveness of Algeciras, the factor that will be very beneficial for its future.”
Indeed, the competition in the region may soon intensify, as the port of Piraeus has recently announced an ambitious goal to become container port #1 in the Mediterranean within two years.
Javier López admits that these plans to convert the port into a large logistic hub for the region make sense: “The port of Piraeus has received important investments from Cosco shipping line, that purchased 67% of the port’s shares, and it is very well situated to attend all containerized cargo flows of the eastern Mediterranean and of the Black Sea. Of course, the stevedoring sector in Greece also has to be largely reformed, as the labour costs there are also relatively high, and it is not an easy process either. But Piraeus definitely has prospects of becoming a large port of reference of the Mediterranean: it has the support of a big shipping line, such as Cosco, and is associated with large alliances that will determine the future of container services. This means that within 3-4 years the port of Piraeus can indeed become a big player on the Mediterranean field.”
However, it is unlikely to compete with Algeciras. “On the Far East – North Europe trade we differentiate the logistic platform of Piraeus and that of Algeciras,” continues Javier López. “They serve quite different markets. One port attends the East Med and the Black Sea and the other – the West Med, the northern and western coasts of Africa. In Algeciras, the largest cargo flows come either from Asia or from South America. I don’t suppose that Piraeus will grow as far as the western borders of the Mediterranean.”
Coming back to the results of the first quarter of 2017, Mr. López remarks that all major Spanish ports experienced a decline in container traffic due to the same factors: “Valencia has a bit different nature of container traffic, influenced by import – more than Algeciras. But its fall in the throughput was also impacted by the strike and by the negotiation process with the stevedores. The port where the container traffic has fallen less is Barcelona. Also, it should be noted that to compare the volumes with those of last year is strictly speaking not correct, as last year we were still handling Hanjin calls until September. Therefore, all these ports – Valencia, Algeciras, Barcelona – all go with their normal volumes. Yes, we’ve seen a slight drop in the initial months of the year, but we believe this will not be repeated.”
“After all, the cargo traffic of Algeciras is very well diversified. Apart from containers, we have Ro-Ro cargo, which is generated by the flows coming from the ports of Tangier Med, Tangier Ville of Morocco y Ceuta (Spanish autonomous city in the northern Africa). Besides, there is traffic generated by large industries: refineries (in the Gibraltar region there is located Spain’s second largest petrochemical cluster with Cepsa, Repsol and other refineries), steel producers (Acerinox), Endesa power plant that receives coal to produce electricity. All these customers generate another part of the port’s traffic – dry bulk, liquid bulk and general cargo – and used to be the main part of the port’s client base before it started handling containerized cargo in 1975.”
Although the official data on April throughput is yet unavailable, Mr. López says that the Port of Algeciras has returned on an upward trend and in April there was no change in any shipping service. “What is important is that the port and terminals operate in their habitual regime, the vessels arrive according to schedule and since the beginning of 2017 we haven’t lost any service, nor any of 28 shipping lines that call Algeciras. The fall in volumes can be explained by the change in the structure of planned vessel calls, but not because some shipping line has decided to leave the port of Algeciras due to its fault. Moreover, last Friday a new line started calling our port – OOCL – within the Ocean Alliance service from the USA. And at the end of June, we expect here the largest container vessel, Madrid Maersk (20,568 TEU).”