“This is where it's at!”

Interviewer: Figures from the first half of 2019 show positive growth: In addition to a six percent increase in the transshipment of seaborne cargo to 34.6 million tons, container handling has risen by 6.4% to 2.3 million TEU. Are you confident enough to make a prediction for the second half of the year?

Axel Mattern: The transshipment figures you cited for the first quarter started this year off on a positive footing. Results from the first six months have been amazing for the port of Hamburg. None of our major competitors among the North Range ports can claim increases of 7.5 percent in the transshipment of containers. Total turnover of 69.4 million tons – an increase of 4.1 percent – is quite respectable too. We are incredibly satisfied and expect growth in the transshipment of seaborne cargo of around four percent and in container handling of around five to six percent, in spite of the difficulties in predicting the effects on world trade of the ongoing trade war and currency disputes between the US and China.

Four new regularly scheduled services to North America were launched at the start of this year: This is one reason the US has suddenly become number 2 in container transshipment. Is this welcome development stable in light of the expected economic tensions between China and the US?  

The increase in container handling to 4.7 million TEU in the first half of the year is primarily the result of the four new regularly scheduled services operated by THE Alliance, which have connected the Hanseatic city with ports in the US, Canada and Mexico since the start of the year. In the first half of the year, a total of 283,000 TEU of container shipments destined for the US were handled in Hamburg. The United States of America has become Hamburg’s second most important trading partner when it comes to container transportation. There are 14 regularly scheduled direct services between Hamburg and 29 ports in the US, Mexico and Canada. At this time, we are not seeing any major impact on foreign trade with the US. I really hope that the two economic powerhouses, the US and China, can come to an agreement and not slide into a full-blown trade and currency conflict. That would result in profound damage to those two countries themselves. I am counting on reason to prevail.

Europe’s leading ports face infrastructure changes and are planning extensive investment. One reason for this is the continual growth in the size of ships – the MSC Gülsün, for example, was brought into service last July and has a capacity of 23,000 TEU – which poses a significant challenge in terms of structural adjustments to transshipment terminals, harbor depth, etc. Do you see an end to this trend on the horizon, and is Hamburg ready for these changes?

Everyone in Hamburg involved in handling large container ships and bulk freighters, and not just the Hamburg Port Authority, the transshipment terminals and the pilots, are of course very well prepared. Ships with a capacity larger than 20,000 TEU are already arriving in Hamburg. The port is currently preparing itself for container ships with a capacity of 23,000 TEU so that these giants can be safely piloted into harbor. But we must be allowed to pose the question of whether further growth in the size of ships makes sense. We believe ships should have a maximum length of 430 meters. After all, handling ships of this size is not really a very attractive prospect for shipping companies. These larger transshipment volumes mean more time sitting idle in port, which means higher fees, and shipping agents will also have to expect a reduction in the number of sailings, all of which are factors that by all accounts should place some natural upper limit on ship capacities.

Shipping has faced a challenging market situation recently given the disconnect between supply and demand. The branch is trying to consolidate through mergers and alliances. The past several years have demonstrated in a profound way how overdue this was. How do you at the port of Hamburg view these developments? Do you think that this phase is nearly over, or will there be additional takeovers and mergers in the near future?

I don’t think this process of consolidation is quite finished yet, but it’s difficult to say what we will see in the next few years. Basically I think that shipping companies are themselves responsible in large part for the imbalance in the market. It seems really risky to me to order new and larger ships at a favorable price from subsidized shipyards in the Far East and then hope that you can fill them with enough cargo and operate them at reasonable cost. When I see the number of orders for large container ships made public by some shipyards, I find myself asking whether this industry has learned anything.

A little while ago there was discussion about combining or promoting closer cooperation among the northern German seaports. Do you see a possibility on the horizon over the longer term for pooling resources, with the goal of becoming Europe’s new number one?

You know, that conversation has been played out. What we are talking about here is combining port services, and people forget that what we’re dealing with here are hundreds of mostly private companies that all want to make their own decisions about whom they’ll collaborate with. There has already been exchange and cooperation for a while now with respect to the various responsibilities and challenges that are shared by port authorities. In terms of transshipment, for example, there is Eurogate, a company that operates container terminals in three separate locations in Germany. Wherever engagement and cooperation across locations makes economic sense, it is already happening. Some kind of quasi-state-owned cooperative of all German ports is just not a serious proposition.

cargo-partner has been active in maritime freight for 35 years and considers Hafen Hamburg a key partner in providing its services. What’s more, cargo-partner’s nearby location underlines the port’s importance as the company’s “gateway to the world.”  What distinguishes working with a mid-sized transportation services provider like us from working with the industry’s so-called “big players”?

The question of a company’s size, let alone assigning importance to it on the basis of that, never comes into play for us at Hafen Hamburg Marketing. Our members include small family companies working next to global corporations, and we believe that the resulting mix of demands and requirements push us to be even more innovative and successful. We are proud to collaborate with cargo-partner and we have deep respect for the company’s performance and innovative energy. Decision-making channels are shorter and clearer in mid-sized transportation service providers. Decision-makers are often right there on site, which allows for more personal exchange. That’s a solid basis for long-term, stable partnerships.

International shipping will have to adhere to stricter environmental regulations issued by the International Maritime Organization starting January 1, 2020. The sulfur content of fuel burned on the high seas will be limited to 0.5 instead of the current 3.5. Alternatively, sulfur will have to be filtered from the exhaust with the use of so-called “scrubbers.” How is Hafen Hamburg responding to this environmentally friendly measure and do you see a long-term alternative in LNG (Liquified Natural Gas)? Would an increased demand for LNG terminals represent an infrastructure challenge in your opinion?

First, the new upper limits on sulfur are another standard step in response to climate change that will move us away from heavy fuel. The shipping industry and ports fully accept that. The Hamburg port is already able to service ships in an environmentally friendly way by connecting them to the land-based power grid or using LNG and mobile power units that are placed on a ship while it’s in port. Plans have already been introduced in the Hamburg metropolitan region to build LNG and transshipment terminals. In my opinion, the Brunsbüttel port on the Elbe River, just outside of Hamburg, offers ideal conditions for the chemical industry that is already located there. But we have to wait to see what investors and politicians decide.

Heavily dependent on exports, China has invested massively in the “New Silk Road” and is looking to provide trans-Asian transportation corridors as an alternative to the longer routes plied by container ships. Is this a challenge or are the 2,100 hinterland connections from Hamburg by container train actually a huge advantage?

I’ll first address the question of scale in terms of trade with China. Each year more than 2.6 million containers are transferred on Hamburg’s docks. There are more than a dozen regularly scheduled services connecting Hamburg to all important Chinese ports. This is where it’s at! The volume of goods transported between Hamburg and China by train over land, around 120,000 TEU last year, is still very small in comparison. Transportation by train is of interest when it comes to time-sensitive products, which can be costly to send by other means, for example as airfreight. Hamburg has the advantage of being Germany’s largest universal port with direct sea connections to China and to Europe’s largest railway ports at the same time. Hamburg offers excellent transportation connections of all types and with various frequencies of service for goods being shipped from or to China. I see only advantages for Hamburg that will allow it to further expand its leading role as Germany’s China hub.

In addition to expanding rail traffic across Asia, China has acquired the port of Piraeus, which it has expanded, and financed the construction of new tracks through the Balkans to Central Europe. At the same time, the southern ports of Koper and Trieste have increased their transshipment numbers. Are there circumstances in which Hamburg might have a long-term geographical disadvantage compared to other regions in Europe?

The only thing I can say about China’s investment in Piraeus is that it was a very brave and also very expensive decision for the Chinese. Only time will tell if it will pay off in the end. Here’s the thing about a geographical disadvantage. When Hamburg offers more than a dozen direct connections to Chinese ports and a port in the Mediterranean handles maybe one departure per week, for example, then the circumstances are such that it’s quicker and, from the perspective of total costs, cheaper for a shipping agent to choose the sea route from Hamburg. He’ll also find a more than capable operator among the numerous possibilities in Hamburg for hinterland connections. A logistics hub like Hamburg can guarantee the services of the highest quality to meet all needs related to the transportation of goods. What I am trying to say is that distance alone is not a sufficient criterion for making a decision when it comes to arranging efficient transportation chains.

Digitization offers unexpected opportunities and is profoundly affecting a growing number of business sectors, including the transportation industry. What do you make of this development and what strategies guide Hafen Hamburg’s actions in this area? Do you think the port – Germany’s largest contiguous industrial area – is “on course” in its implementation of digital technologies?

Hamburg is already a leader when it comes to digitization. Driverless cars on the street, submersible drones, paperless customs – the future has already arrived in Hamburg. The port’s traffic – by rail, water and road – is already being controlled digitally today. 5G is setting new benchmarks with respect to infrastructure networking and on how active players manage their traffic. The HHLA – the port’s largest operator – is participating in the Hyperloop start-up to research new technologies for container transportation. Hamburg is leading the way in a number of areas or, true to form, contributing in real ways to discovering and charting new courses.

Do you think the Hanseatic city’s long tradition of maritime trade provides an advantage? Do you see benefits in the mindset?

Yes, because over its 800-year-long history, the port of Hamburg has had to continually reinvent itself and address new challenges. The port and the surrounding region have developed a particular strength and innovative drive as a result. If political decisions allow us to continue this tradition and ensure that we enjoy favorable operating circumstances, then I have no worries about the future of Hamburg as a port and a center for logistics.

Thank you for the interview!