Risk management factors make La Spezia the Med port to watch

ANYONE familiar with a map of western Europe, but unfamiliar with the routings of Asia-Europe cargo flows, would think the quickest way to European hinterland markets from Asia via Suez, would be via a Mediterranean port

06 November 2019 - 19:00
ANYONE familiar with a map of western Europe, but unfamiliar with the routings of Asia-Europe cargo flows, would think the quickest way to European hinterland markets from Asia via Suez, would be via a Mediterranean port.

The idea of going past Gibraltar, crossing the stormy Bay of Biscay then navigating one's way through the busiest waterway in the world, the English Channel, would seem counterintuitive at the very least.

Yet this has been the traditional way, because of the long-developed and historical road, rail and barge options linking the big northern European ports of Le Havre, Antwerp, Rotterdam and Hamburg with central and southern Europe.

But that is not necessarily so today, according to Contship Italia, the group managing its two northern Italian gateway ports, La Spezia and Ravenna. It is because of an increasing awareness and growing demand to improve the management of risk and the security of the global supply-chain. This is now a feasible option following investment in trucks, locomotives and rolling stock, as well as improvements in the infrastructure in southern Europe, for example, between Italy and Switzerland.

The Port of La Spezia, almost equidistant between Livorno and Genoa on the north-eastern Italian coast, has been leading the charge through its growing rail connectivity and is now planning for the future with a port development plan that will enable it to handle bigger ships and growing volumes.

Following the deployment within the last decade of 14,000-TEU ships, Asia-Med rates traditionally higher than those to N Europe have been on a par and in some cases even lower. Furthermore, 10 per cent lower Terminal Handling Charges are exacted in Italian ports.

And of course, there is the saving of 2,000 nautical miles from Suez to La Spezia, compared to turning the ship around in Rotterdam. With all the talk today of carbon emissions, there is far greater awareness and importance placed on environmental impact than there was 10 years ago. This now matters to the ecologically sensitive supply chain providers, shippers and consignees alike.

Much has changed in the past 10 years, says Daniele Testi, marketing and corporate communications director of the Contship Italia, part of Eurokai the German-listed company which also owns 50 per cent of Eurogate Group. Contship Italia is celebrating its 50th anniversary this year and has been operating the container terminal in since 1971.

Bigger ships can now access the recently dredged port, with a 15-metres alongside its Fornelli East pier and the objective is to go to 16 metres at the new Garibaldi berth, development of which will commence next year.

'As for the south-Europe hinterland, we are currently offering Austria, Switzerland, and southern Germany via our intermodal platform in Milan, allowing customers to take advantage of a range of benefits when routing their cargo via La Spezia Container Terminal,' he said.

'And of course, you can save time,' he told a gathering of Hong Kong shipping interests. 'For example, Hong Kong to La Spezia, we are talking 23 days at sea, plus three days overland to move a container by train to Basel or Munich. Compared to Rotterdam, which is 34 days, means you can potentially save seven or eight days. That's a huge 23 per cent of the total transit time,' said Mr Testi.

La Spezia, he pointed out, was the first port in Italy to handle the 14,000 TEU ultra-large containerships back in 2011. So, when we consider the new tonnage coming from Asia we are today capable of handling 16,600 TEU, which is the biggest size ship to call La Spezia Container Terminal.

'La Spezia has a massive rail capability, operating up to 200 trains a week including one train every eight hours between La Spezia and Milan from where we have overnight connections to Basel, Zurich, Munich, Vienna and Lyon. For example, if a container is discharged in La Spezia on Saturday, it will be delivered on Monday to the door of the customer in Zurich or Basel,' Mr Testi said.

La Spezia serves the highly productive northern regions of Lombardy, Veneto, Emilia Romagna and Tuscany, where almost 50 per cent of Italy's GDP is generated. 'That means connectivity to an area that moves 40 million tonnes of imports and 21 million tonnes of exports,' he said.

'We have a plan to expand the capacity of La Spezia with US$230 million of private investment that will increase our capacity, currently 1.4 million TEU, to just over two million TEU as well as further increase the ratio moving by rail, from our present 32 to 50 per cent', said Peter Hill, sales and business development director at Contship.

Very few, if any, other ports in Europe can say the same, he said. 'Once the two new berths are completed we will be able to offer four deep sea berths including the capability to handle the biggest ships on the water. There will be a level of automation in the yard areas as well as extended on-dock rail capability. Rail is the only way to get containers out of the port quickly and efficiently connecting with the key regions in South and Central Europe' he said.

While cost is important, an alternative view was taken by Migros, the Swiss supermarket giant that looked at its supply-chain corridor and took the initiative to review its risk management in case of delays, congestion and disruption and decided to restructure its Asian import flows by splitting volumes between northern and southern ports.

'Migros, is a huge Swiss retail company with 140,000 employees and was the first trend-setter to utilise the southern gateway option for the cargo sourced from Asia and the Indian subcontinent. Why? Well, actually they were not talking about costs, they were talking about value and better risk management,' said Mr Testi.

'The risk was that the supply chain was getting more fragmented and more global and therefore, more challenging to control. They didn't want 100 per cent of their cargo moving through a single corridor because of potential problems that could affect the shelf-life of their products' he said.

In the beginning, Migros shipped a small percentage of cargo through La Spezia to test the efficiency of the alternative corridor. Once the results were assessed, it was clear they had to better manage the efficiency of their supply-chain and its inherent risks. They now move 50 per cent via the southern gateway.

Risk-management is becoming a big topic in Europe. Climate change means lower water levels on the Rhine, one of the main arteries for barges moving containers from Rotterdam to southern European destinations such as Switzerland. This is impacting barge capacity, forcing some carriers to implement low-water surcharges.

As for infrastructure upgrades, there is the Swiss-Italian Gotthard rail tunnel expansion. 'Capacity will almost double. At present, our train operates at 550 metres in length and a payload of 1,600 tonnes. From the start of 2021 we will be able to offer 750 metres trains with a 2,000-tonne capacity, which means an increase of almost 30 per cent. Same cost, but the ability to move more containers, which will be a huge benefit for our customers,' he said.

Giving an overview, Mr Hill said: 'This is one of the natural terminals for the new Silk Road and indeed the signing of the Belt and Road MOU during President Xi Jinping's state visit to Rome last March laid the foundation for the close cooperation between Italy and China to build an accessible, safe and sustainable corridor between Europe and Asia.

'The system can promote Euro-Asia integration, leveraging on the strategic position of our expanding connectivity with the rest of Europe supporting a robust supply-chain via our La Spezia gateway' said Mr Hill.

'The Italian government is keen on developing the southern gateway which is steadily growing as the logical choice for Asian operators as an alternative corridor to deliver goods beyond the Alps to Switzerland, Austria and southern Germany. Our customers can count on an operator such as Contship, that has now achieved 50 years of experience,' he said.

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