Amsterdam Preso 2009 Final

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Port Finance Amsterdam Fighting Recession with a Diversified Portfolio Richard Szuflak www.euroports.com

description

Fighting Recession with a diversified Portfolio: the presentation shows that diversified ports are watering the economic recession better than ports focused on single cargo.

Transcript of Amsterdam Preso 2009 Final

Page 1: Amsterdam Preso 2009 Final

Port FinanceAmsterdam

Fighting Recession with a Diversified Portfolio

Richard Szuflak

www.euroports.com

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Introduction

The purpose of this paper is to assess the impact of the current

economic recession on volumes at European ports;

We will look at different ports and trades and try to see if some have

been impacted more than others;

And we will try to discuss a conclusion – if there is one…

Three small points before starting:

• This is not a scientific work. This presentation aims at providing trends

rather than detailed analysis;

• Finding meaningful and coherent statistics is sometimes a challenge;

• Obviously transhipment hubs and gateway ports do not treat the same kind

of volumes however in this work we compare ports between themselves

irrespective of their main businesses, traffic line or dependence on key

industries.

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Purpose of the paper

The economic recession affects all businesses;

Port operations, like any other segments of the economy, have been

hurt;

In today’s presentation, we will try to see how ports have been affected;

Are the effects been different for different ports?

Is there a resilient model?

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The Basics

GDP growth always has been a proxy for seaborne traffic

and port handling;

Everyone here has seen this graph showing that world

seaborne trade is growing faster than world GDP;

Seaborne Trade Grow

Faster than GDP

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GDP is going down

When GDP is down, what effect this has on port traffic?

Source: Eurostat 15 may 2009 (Euro Area and EU)Source: IMF April 2009

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Economic Production is going down too

Source: Eurostat 13 May 2009

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Total Traffic in some of the largest European ports

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All ports claimed to have had a strong first half of 2008;

Followed by a slower second half – ie after the summer and increasingly

towards the year end;

However most ports have recorded a positive growth in 2008;

That was on top of an average growth of 5% in 2007 for those ports;

All cargo Containers RORO

Ports 2007 2008 % H2/H1 2008 H2/H1 2008 H2/H1 2008

Rotterdam 407 421 +3.5% -2.5% -1.4% -4.9%

Antwerp 183 189 +3.5% -3.2% -4.6% -8.9%

Hamburg 140 140 -0.0% -2.3% -2.3% n/a

Marseilles 96 96 -0.0%

Amsterdam 88 95 +7.9%

Le Havre 79 80 +1.6%

Algeciras 75 70 -6.6%

Bremen 69 75 +7.9%

Top 8 1 137 1 166 +2.6%

Volume in mtons

Ranking based on Total Traffic at each port

H2 2008 witnessed

the start of a slow

down. Container

and RORO trades

were hit the most.

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In Q1 09 the trend accelerated somewhat

95.0

41.8

29.423.4

18.0

94.0

37.3

27.320.9 19.3

01020304050

60708090

100

R otterdam Antwerp Hamburg Marseilles Amsterdam

Q 1 08 Q 1 09In million tons

-10%-1% -10%-7% +7%

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We turn our attention on Container Trade

Top 10 container ports in Europe is shown below;

The 2007 growth for those 10 ports was +13%

2008 still posted a gain;

But that was a strong deceleration against 2007;

PORT 2007 2008 %

Rotterdam 10.8 10.8 -0.2%

Hamburg 9.9 9.7 -1.9%

Antwerp 8.2 8.7 +6.0%

Bremen 4.9 5.5 +12.0%

Gioia Tauro 3.4 3.4 +1.5%

Algeciras 3.4 3.4 -0.3%

Felixtowe 3.3 3.2 -3.0%

Valencia 3.0 3.6 +18.3%

Le Havre 2.6 2.5 -5.4%

Barcelona 2.6 3.6 +36.4%

Top 10 52.1 54.3 +4.2%

Volume in mteus 2,590

1,955

2,738

2,030

2,250

1,700

0

500

1,000

1,500

2,000

2,500

3,000

R otterdam Antwerp

Q 1 07 Q 1 08 Q 1 09

-18% -16%

Q1 09 vs Q1 08 showed tremendous

slowdown at the top two ports.

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This is a Global Trend

7.21

6.27

2.07

2.77

2.13

6.97

5.62

2.082.56

1.93

6.02

4.6

1.742.3

1.53

0

1

2

3

4

5

6

7

8

S ingapore Hong-K ong Antwerp R otterdam L os Angeles

Q 4 07 Q 4 08 Q 1 09In million TEU

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Further Comments

Not all ports are equals:

some have posted gains in Q1 09 like Valencia (+6.5%)

some have limited the downturn like Genoa (-3.7%)

Some have been awfully affected like Barcelona (-28%)

To navigate through the storm, many ports have decided to freeze port

charges and dues

In some cases, those charges will even be reduced;

For Q1 2009, a decrease of 15 to 20% of container trade seems more or

less the average.

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What About Dry Bulk Trade in Europe?

Some of the largest bulk ports in Europe is shown

below;

The 2007 growth for the top 10 ports was +13%

However 2008 saw (again) a strong decline;

Q1 2009 vs Q1 2008 for the top two ports resulted in a

dramatic decrease!

PORT 2007 2008 %

Rotterdam 90.6 94.9 +4.7%

Amsterdam 51.2 50.8 -0.8%

Hamburg 30.0 26.8 -10.5%

Dunkirk 27.6 26.8 -2.7%

Antwerp 24.5 27.3 +11.6%

Taranto 22.0 21.8 -1.0%

Gijon 18.3 16.9 -7.8%

Ghent 17.1 18.0 +5.3%

Top 8 281.2 283.3 +0.7%

Constanza and Immingham are missing in this list

Volume in mtons

19,845

6,630

15,249

3,950

0

5,000

10,000

15,000

20,000

25,000

R otterdam Antwerp

Q 1 08 Q 1 09

-23% -40%

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Further Comments

Main bulk ports traditionally serve power stations and steel mills;

A smaller fraction goes into the agriculture industries (agribulk, grain,

fertilisers);

A combination of huge decrease in European steel production, halt of

construction industry as well as less coal imports have hit bulk trade very

hard;

This is of course linked with electricity consumption, automotive and

constructions industries;

Q1 2009 shows a decrease of 20 to 30% on average;

In theory, bulk trade should indicate the restart of the economy.

Baltic Freight Index is seen more and more by analysts as a proxy to

estimate the state of the world economy.

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Heavy Bulk impacted more than containers because of steel production sharp decrease

Container trade experienced a decrease, on average, by 15-20% for

a number of ports in Europe;

Bulk trades have been impacted too, but we have two categories

here:

• Ports with a strong reliance on imports for steel plants have been

very affected:

– Marseilles: -51% and Dunkirk: -33% but -67% for ores

– Taranto: -52%

– All Spanish ports: -30%

- Ports with a larger hinterland or larger product-mix

– Amsterdam: -7%

– Rotterdam: -23% (but -55% for ores and + 23% coal)

If ports with a better cargo mix are doing better, is it then possible to

look if ‘generalist’ ports have done better than others?

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How ‘Generalist Ports’ have traded?

We will now turn our attention to generalist ports: what are generalist

ports?

Generalist ports have a ‘balanced’ flow of traffics between dry bulk, liquid

bulk, general cargo and containers and with no strong dominant cargo

line;

The method is a bit ‘empiric’ – so forgive me for my choice - but the idea

is to select ports having a relatively balanced flow between different

cargo – and no steel plant around…

We have selected 4 ‘candidates’:PORT Bulk Liquid Containers

and GC

Zeeland ports 39% 36% 26%

Valencia 18% 6% 76%

Rouen 47% 40% 13%

Rostock 17% 22% 61%

Proportion of traffics in % (2008)

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This small sample shows inconsistent results but yet the fall in traffic seems less significant than other ports

PORT 2007 2008 %

Zeeland ports 33.4 33.6 +0.6%

Valencia 53.3 58.7 +10.1%

Rouen 22.2 22.7 +2.3%

Rostock 26.5 27.3 +3.0%

Top 10 135.4 142.3 +5.1%

Volume in mtons

-12% -16%

Rostock Zeeland Valencia Rouen

+4% excepted grain exports

-3% +12%*

Performance Q1 09 vs Q1 08

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To Sum-up

2008 vs 2007 Q1 09 vs Q1 08

(average)

Sample of Top 8 European ports (all cargo): +2.6% +5% to -15%

Sample of Top 8 Container ports: +4.2% - 15% to -20%

Sample of Top 8 Dry Bulk ports: +0.7% -20% to -40%

Sample of 4 generalist ports: +5.1% +10% to -15%

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Is there a winning model?

Ports are very diverse and it is hard to see anything else than common

sense;

Container trade is down and seems to go down 3X faster than GDP;

Bulk trade (specifically heavy bulk like coal and iron ore) has been

hammered by the production shutdowns in steel plants;

Bulk ports with a more diverse cargo exposure or servicing a large

hinterland are holding better than ports solely exposed to the steel

industry;

Although our sample is very small, generalist ports seems to hold a bit

better – but this should be tested on a greater sample.

Basically, this is a validation of the old saying: don’t put all your eggs in

the same basket!

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History Shows…that there is hope!

During past recessionary

periods growth reduced for

periods of 1-2 years;

In the recessions of the early

1980s and early 2000, world

maritime growth was

reduced/flat or negative;

However this recession seems

considerably worse.

Following a recession a strong

rebound in growth experienced

re-capturing the long-term trend

once the recessionary period

was over;

It has to be seen if it will be the

case again;

Strong

Rebound

2009?

2010?

2011?

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A few words on Euroports

www.euroports.com

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EUROPORTS is a diversified port operator with capabilities across all cargo segments.

Industrial

Operations

12%

General Cargo &

Roro

26%

Containers

9%

Bulk Liquids

6%

Minor Bulk

26%

Heavy Bulk

21%

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Rauma

Varna

EUROPORTS is Built Along 3 Main Freight Corridors

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How did Euroports go through the storm?

Euroports is a recently formed company which has aggregated port

companies with long presence in port operations (sometimes 100 years in

business);

Across a very long horizon, we would see that Euroports’s companies

have regularly increased its volumes over the years (+2.5% per year);

Losses across the portfolio are always recovered by cargo gains in

another facilities or sectors;

Cargo Split Euroports Excl. Industrial Activities, China

and RORO

0

10,000

20,000

30,000

40,000

50,000

60,000

2000 2001 2002 2003 2004 2005 2006 2007 2008

Heavy Bulk Minor Bulk GC and Containers Liquids

The impact of the current recession is

limited at an annual volume decrease of

10% across the portfolio.

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Thank You

www.euroports.com