Despite the drop in trade with Russia, the total cargo throughput at the Port of Rotterdam still increased slightly year-on-year
Total cargo throughput increased by 0.8% over the first half of 2021
Russia: Container volumes stagnant, coal, liquefied natural gas (LNG) and oil throughput down
Port Authority's total revenue and operating performance increased
Energy transition: business investment decisions around 3 billion euros
Solutions to nitrogen issues remain a pressing issue
Overview of the Port of Rotterdam in the first half of 2022
The total cargo throughput of the Port of Rotterdam in the first half of this year was 233.5 million tons, an increase of 0.8% compared to the same period in 2021 (231.6 million tons). The Ukraine war caused major changes in many tectonic plates. For example, both LNG and coal imports have risen sharply as an alternative to reducing European pipeline imports of Russian gas. Crude oil throughput increased, while refined products declined. Iron ore, agricultural products and container throughput were lower than a year earlier. Container shipments to and from Russia have stalled, and ongoing bottlenecks in global container logistics have resulted in a diversion of cargo from large container ports to smaller ones. Imports of Russian coal, crude oil, refined oil products and LNG have declined in recent months due to the foreseeable sanctions on Russian coal and oil. Companies are increasingly importing from other countries.
Allard Castelein, CEO of the Port of Rotterdam Authority, said:
Europe is heavily dependent on Russian energy. The current geopolitical situation makes Europe very vulnerable. We cannot take for granted the availability of energy and raw materials at reasonable prices. A positive development is the series of concrete measures we have taken in recent months to make our energy supply more sustainable and to further increase our energy independence, notably through investment decisions to build a large biorefinery and Europe's largest Green hydrogen factory. The industry as a whole has pledged to invest 3 billion euros in the energy transition in the past six months. In addition to the fragility of the European energy system, nitrogen emissions remain a major bottleneck. Several major projects, including the carbon dioxide capture and storage project Porthos, are being delayed or threatened with delays due to uncertainties and constraints related to nitrogen emissions.
The Port Authority had a good financial position in the first half of the year. Total revenue rose by 6.3% (€24.6 million) to €412.2 million, while operating expenses fell by 2.4% (€3.1 million), mainly due to lower sand mining expenditures. The total investment in the first half of 2022 amounts to EUR 117.1 million, including the capital injection of the participation interest (first half of 2021: EUR 100.5 million). The most important investments in the first half were the construction of the quay wall in Amaliahaven and the reclamation of the land at Alexiahaven in the second phase of the Maas Plains port area.
Vivienne de Leeuw, Chief Financial Officer of the Port of Rotterdam Authority, said:
Our healthy financial position will be critical to continue investing in traditional hardware facilities such as wharves and quays in the coming years, especially in the infrastructure of the energy transition. In addition, we will continue to invest in digitalization. By maintaining our position as a port with world-class infrastructure, we will ensure that the Port of Rotterdam remains an attractive location for businesses to invest in their transition.
dry bulk
The dry bulk segment grew 4.4% in the first half. Among them, the throughput of agricultural products fell by 15.1%. This is because it is always heavily influenced by the size of the harvest in different parts of the world. In addition, one of the processing enterprises also had a strike. Another factor is less processing of agricultural products due to high energy costs. High energy costs also led to lower production in Germany's steel industry, so iron ore imports fell by 20.6%. Imports of coke from the steel industry were flat. Coal throughput for power plants has grown substantially. Overall, this resulted in a 29.7% increase in coal throughput. Coal is currently cheaper than natural gas, and it also reduces reliance on Russian gas. Other dry bulks increased by a staggering 30.1%. This is largely attributable to expensive container shipping: goods such as industrial minerals and fertilizers are more frequently shipped in bulk.
liquid bulk
In the first half of the year, liquid bulk shipments increased by 4.6%. Among them, crude oil rose 4.3%, mainly due to Russian oil entering India through Rotterdam. Refiners in Northwest Europe are turning to non-Russian oil, causing Russian oil to find its way into other markets. Throughput of refined products fell by 9.4%, mainly due to a structural decline in fuel oil imports and re-exports. LNG rose 45.8%. Demand for LNG is currently very strong as an alternative to natural gas from Russia entering Europe via pipeline.
Other liquid bulks increased by 22.5%, partly due to a shift from tank container shipping to chemical tankers, and partly due to hoarding by chemical buyers. They do this to ensure an adequate supply of raw materials given the uncertainty in the transport chain.
Import sources of coal, crude oil, refined oil products and LNG saw visible changes in the second quarter. Companies are sourcing these energy products and raw materials less and less from Russia and instead source them elsewhere in the world.
Containers and Breakbulk
Container throughput decreased by 4.4% (in TEU, the standard unit of containers). By weight, it was down 8.9 percent. The difference between the two is attributed to an increase in the number of empty boxes. There are two main reasons for the decline in container throughput. The first is the reduction in container traffic to and from Russia due to sanctions, coupled with uncertainty about continued trade with Russian parties, and the cessation of liner services to Russia. Second is the continued disruption of container logistics. Two years ago, the Covid-19 pandemic led to lockdowns and changes in consumption patterns. Container ships are no longer able to comply with their schedules, causing disruptions before and after shipments. To make up for the time, larger ships now frequently cancel port calls on their itineraries (9.4% fewer calls to Rotterdam compared to pre-COVID-19) and unload more containers per call (+18.5%). This has resulted in a peak of operational activity at the terminals, which in turn has caused containers to stay on average longer at those already very busy terminals as vessel arrival times are less reliable. Based on these developments, shipping companies currently call smaller ports for transshipment more frequently than larger ports such as Rotterdam. Currently we have established an advisory platform to monitor developments together with all players of the container industry in Rotterdam and to respond in the best possible way.
Ro-Ro cargo volumes rose by 16.8%. With the Brexit transition period coming to an end on 1 January 2021, this figure is quite eye-catching. At the time, the end of the Brexit transition period led to an increase in ro-ro cargo volumes in late 2020, before a decline in early 2021.
Other breakbulk throughput rose sharply by 17.7%. A major factor is the import of steel and non-ferrous metals. The Russian-Ukrainian conflict has caused prices of steel and non-ferrous metals to soar. And replacements were quickly found, especially suppliers from Asia, where the Covid-19 pandemic actually caused demand for steel to decline. As a result, imports of steel and non-ferrous metals to the Port of Rotterdam have grown. In addition, high container shipping rates mean more goods are shipped in breakbulk.
Financials of the Port of Rotterdam Authority
Compared with the first half of 2021, the Port of Rotterdam Authority’s revenue in the first half of 2022 increased by 24.6 million euros to 412.2 million euros. Port dues revenue increased by 16.1 million euros. This is mainly due to the increase in the number of ships, resulting in an increase in the price per ton of throughput. Rental contract revenue increased by EUR 6.2 million, mainly due to contract indexation. Operating expenses fell by 2.4% (3.1 million euros) to 124.4 million euros in the first half of 2022. Especially with the shift to new concessionaires in 2022, sand mining costs have fallen. The total investment (including the capital injection of the participation interest) amounted to 117.1 million euros. The most important investments in the first half of 2022 are the construction of the quay wall in Amaliahaven (€32.7 million) and the reclamation of the second phase of the Maas Plain port area (€19.8 million). In June 2022, a dividend of 122.7 million euros, including tax on dividends for fiscal 2021, was paid to the city of Rotterdam and the Dutch central government.
Digitizing
Data sharing and process digitization are the keys to solving the most common challenges in logistics. Therefore, the Port Authority is investing in the development of digital tools and procedures. All inland shipping, rail and near-ocean operators in North West Europe are now connected to the planning tool Routescanner platform, as are several ocean-going lines. They share sailing and driving routes directly on the Routescanner platform, so the tool is becoming a globally neutral platform for showcasing container routes. In addition, 15,000 inland shipping calls have been arranged using the Nextlogic planning tool, which went live in October last year. We are working together with the players in the logistics chain to implement a comprehensive plan in the Port of Rotterdam and connect new partners. In addition to investing in digital platforms to improve Rotterdam's logistics chain, we are also investing in data solutions to optimize the port's infrastructure. For example, the Port Authority is working with Delft University of Technology to develop a new data platform for retaining structures.
Progress in the energy transition
The preparation time for large projects is long. In recent years, a large portfolio of energy transition projects has been established. It is now becoming clearer how abstract climate goals will be shaped in concrete European and national policies and regulations, so this will also make it clearer for various projects. A number of important investment decisions have been made in the past six months, most notably a large biorefinery and Europe's largest green hydrogen plant. In addition, companies have made decisions to expand ammonia import terminals, increase battery recycling capacity, build truck hydrogen refueling stations, and implement shore power projects. These investment decisions by the industry total around EUR 3 billion. This means that the energy transition is taking place on a large scale. In addition, the Port Authority has decided to accelerate the reduction of the agency's own carbon emissions during this six-month period. Our goal is to reduce our own carbon emissions by 75% by 2025 and 90% by 2030 compared to 2019.
Nitrogen emissions issue slows transition
Three years after the Dutch Council of State ruled on nitrogen deposition, uncertainty over rules such as "construction exemptions" and restrictions related to nitrogen emissions remain a major concern. This can be an obstacle to the energy transition, although energy transition projects often reduce not only carbon emissions, but also nitrogen and other emissions in Rotterdam or elsewhere in the supply chain. It should be noted that industry in Rotterdam accounts for only 1% of nitrogen deposition in vulnerable natural areas in the Netherlands.
Outlook for the second half of the year
The current geopolitical situation is creating many uncertainties. A reliable energy supply in Northwest Europe cannot be taken for granted. High energy prices are the main factor behind the sharp rise in inflation. A recession could follow. This makes forecasting throughput in the second half of the year very difficult. In the energy transition that is so important to the future of the port and the achievement of national climate goals, the necessary steps are still expected to be taken in the second half of the year. And addressing the nitrogen issue will be especially important if we are to continue making progress.
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