Container shipping has been the fastest growing sector of the maritime industries during the last two decades. As outlined by Drewry Shipping Consultants (2006) a number of fundamental drivers underlie demand growth in container shipping. First of all, organic growth is spurred by increasing economic activity, trade liberalisation, reduced import tariffs, globalisation and outsourcing. This organic growth is compounded by the fact that breakbulk cargo is increasingly being carried in containers (substitution effect), by changes in carriers’ scheduling strategies (for example an increased focus on transhipment) and by port development. Finally, "incidental" demand growth can be triggered by regional variations in import and export activity (for example related to exchange rate swings) causing imbalances in directional containerised trade flows.

According to Dynamar (2007) the total number of full containers shipped on worldwide trade routes reached an estimated 110.2 million teu in 2006. This is nearly twice as high as the 60.5 million teu in 2000, corresponding to an average annual growth rate of 10.5%. For 2007 a further double-digit increase to 121.5 million teu is forecasted. Similarly, UNESCAP (2005) forecasts a figure of 177.6 million teu for 2015 (excluding transhipment). More specifically, container volumes shipped on worldwide trade routes are expected to develop as follows (see also Global Insight et al., 2005):

• Volumes on the east-west trades (i.e. Transpacific, Transatlantic and Asia/Europe) are expected to increase from 34 million teu in 2002 to 70 million teu in 2015, representing an average annual growth rate of nearly 6%;
• Volumes on the north-south trades (linking the major production and consumption centres of Asia, North America and Europe with developing countries in the Southern Hemisphere) are expected to show a similar average growth rate, increasing from about 17 million teu in 2002 to about 36 million teu in 2015;
• Intra-regional trades, however, are expected to show significantly higher growth during the same period. Mainly as a result of booming intra-Asian trades, they are expected to surge from 28 million teu in 2002 to no less than 72 million teu in 2015, corresponding to an average annual growth rate of 7.5%.

Table 6 gives an overview of the estimated 2006 and forecast 2007-2008 full container trade on the three arterial East-West trades. As this table indicates, both the Far East-Europe and Transpacific trade have enjoyed healthy 8-9% growth in 2006, and this is expected to continue throughout 2007-2008 as well. Compared to these two trade routes, the Transatlantic market is significantly smaller (albeit still very important) and also has much lower annual growth rates.

Apart from the arterial East-West trades, the container trade between Europe and Latin America (including Central America, the Caribbean and South America) also involves significant volumes. According to Global Insight, volumes on this trade route increased from about 2.85 million teu in 2004 to 3.30 million teu in 2006, representing an increase of nearly 16% in two years time. Just like the Far East-Europe and Transpacific trade, the trade between Europe and Latin America is characterized by a major imbalance: the northbound volumes (2.32 million teu) were more than double the southbound volumes (0.98 million teu) in 2006². In addition, the Europe-Africa trade is estimated at 2.98 million teu in 2006 (some 17% higher than in 2004), of which 1.71 million teu southbound and 1.27 million teu northbound. Similarly, trade between Europe and the Middle East increased from 2.30 million teu in 2004 to 2.65 million teu in 2006 (+15%), of which 1.83 million teu eastbound and 0.82 million teu westbound. Hence, contrary to the Far East-Europe trade, the eastbound leg is the dominant leg on the trade between Europe and the Middle East.

Finally, the intra-European containerized trade (including shortsea and feedering) is estimated at some 7.72 million teu in 2006, some 19% higher than in 2004. Volumes between North Europe and the Mediterranean reached 2.44 million teu in 2006, of which 1.33 million teu southbound and 1.12 million teu northbound (Dynamar, 2007).

In view of the above, it is hardly surprising that container traffic has been the driving force behind the growth in cargo handling in many seaports around the world. Drewry Shipping Consultants (2006) estimates that the total throughput handled by the world’s container ports (not to be confounded with the trade route volumes mentioned above) increased from about 236 million teu in 2000 to an estimated 399 million teu in 2005 (including empties and transhipment), representing an average annual growth rate of 11%. As Table 7 indicates, transhipment traffic has clearly been the driving force behind growth in container handling in the last decade. As far as the near future is concerned, worldwide container handling is expected to increase further to 627.7 million teu in 2010 (nearly 60% above the 2005 level), of which 356.7 million teu port-to-port full containers, 91.2 million teu port-to-port empty containers and 179.8 million teu transhipment.

Table 8 provides an overview of container traffic handled in selected geographical areas in Europe. The total sample consists of 132 individual seaports³ which together handled 73.73 million teu in 2005 (transhipment included). At an estimated average weight of 11 tons per teu, this boils down to some 800 million tons. The figure of 73.73 million teu represents about 18% of the estimated world container port traffic of 399.2 million teu for 2005, as mentioned above. Table 8 is divided into two parts. The first part covers Northern Range ports (including Northern Europe and Scandinavia/Baltic) while the second part focuses on Southern Range ports (covering the Western Mediterranean, Iberian Peninsular and Eastern Mediterranean/Black Sea).

About 56% of the total European container traffic was handled by ports in Northern Europe (37 ports in total), registering a combined throughput of 41.70 million teu in 2005. Rotterdam, Hamburg and Antwerp handled a staggering 23.86 million teu in 2005 or 32% of the European total and nearly 60% of the Northern European container throughput. In 2006 their combined throughput increased further to 25.57 million teu (+7.2%). The main volume drivers were intra-European flows and Chinese traffic, mainly in Rotterdam and Hamburg. Chinese cargo (including Hong Kong) in Hamburg far exceeded 2 million TEU in 2005 with Rotterdam also approaching the 2 million TEU mark. Hamburg continues to develop its hub role for the Baltic and Central and Eastern Europe, while Rotterdam and Antwerp strongly capitalize on strong cargo generating centres in the extending ‘blue banana’ of Western Europe combined with a high density of European distribution centres in the Benelux, Northern France and parts of Germany.

Besides these three mainports, Northern Europe also counted five other "teu millionaires" (of which two in the UK). The 29 remaining (small and mid-sized) ports handled a combined throughput of 6.3 million teu in 2005. Most of them handled less than half a million teu.

Although the Scandinavia/Baltic region includes no less than 45 container ports, volumes handled are far less than in Northern Europe. The total throughput in 2005 reached 6.44 million teu, more than half of which was handled by the top-5 ports St-Petersburg, Aarhus, Gothenburg, Helsinki and Gdynia. However, expressed in percentage terms, many ports in the Scandinavia/Baltic region have grown considerably faster than their big counterparts in Northern Europe in recent years. A prime example is St-Petersburg, which handled only 0.58 million teu in 2002 (i.e. about half its throughput of 2005). A similar picture applies to Aarhus (0.40 million teu in 2002), Gdynia (0.25 million teu) and Klaipeda (0.07 million teu).

Hence, the total Northern Range (82 ports) accounted for 48.14 million teu in 2005, i.e. about 65% of the total port sample included in Table 8.

The second biggest container port region in Europe is the West-Mediterranean (27 ports) which, consisting predominantly of Spanish and Italian ports, accounted for 19.32 million teu in 2005. Three Spanish, three Italian and one Maltese port handled in excess of 1 million teu, with Marseilles (Southern France) following closely behind. The 19 remaining (small and mid-sized) ports together handled about 3.6 million teu. Most of them handled less than half a million teu.

Next, the 15 ports in the East-Mediterranean/Black Sea region (excluding ports in Egypt, Israel, Turkey or Lebanon) handled a combined throughput of 4.62 million teu in 2005. Only Piraeus handled in excess of 1 million teu. Finally, the 8 ports on the Atlantic Coast of the Iberian Peninsular accounted for only 1.66 million teu in 2005. The biggest of them (Lisbon and Bilbao) handled about half a million teu each.

Hence, the total Southern Range (50 ports) accounted for 25.59 million teu in 2005, i.e. about 35% of the total port sample included in Table 8.

The West-Mediterranean has witnessed a remarkable development since the mid 1990s. From that moment on, transhipment hubs emerged in the region (e.g. Algeciras, Gioia Tauro, Marsaxlokk, Taranto, Cagliari) which gave impetus to shipping lines to reconfigure their service networks and to have more services calling in Mediterranean ports. Although most transhipment hubs still record healthy growth, growing Mediterranean volumes have generated a mounting interest of shipping lines to have direct calls in mainland Med ports, supported by dedicated Asia/China-Med liner services. An example is the successful development of the Spanish ports of Valencia and Barcelona. This development has made some transhipment hubs to reorient their focus towards feeder flows to the East Mediterranean.

At the time of writing (March 2007), final traffic figures for 2006 were not yet available for all seaports listed in Table 8. Those seaports for which this was the case are included in Table 9. This table again includes only those seaports handling more than 3000 teu on an annual basis. This resulted in a (provisional) sample of 56 different ports, handling a combined throughput of 66.12 million teu. This represents an increase of 8.6% compared to the year before. However, as Table 9 indicates, growth rates varied considerably between ports and geographical regions.

The Northern European seaports included in Table 9 handled a combined throughput of 39.38 million teu in 2006. Compared to the 36.05 million teu of the year before, this represents a healthy 9.3% increase. The biggest percentage increases were registered by Amsterdam, Bremen/Bremerhaven and Zeebrugge. The ports of Felixstowe, Hamburg, Southampton and Antwerp also performed well, while Rotterdam scored below average. Finally, volumes at Le Havre, Dunkirk, Bristol, Ipswich and Hull were quasi-stagnant.

Secondly, the Western Mediterranean seaports included in Table 9 saw their combined traffic increase by a mere 4.3% to 17.74 million teu in 2006. Star performers with double-digit increases in traffic levels included Malaga, Vado Ligure, Barcelona and La Spezia. The ports of Marsaxlokk, Cagliari and to a lesser extent Marseilles, Genoa and Algeciras also performed well, while Gioia Tauro and Valetta saw a significant drop in volumes. Traffic at Palma de Mallorca remained quasi-stagnant.

Thirdly, ports in the Eastern Mediterranean/Black Sea region handled a combined throughput of 3.55 million teu. This is a healthy 12.9% increase compared to the year before. Constantza enjoyed a whopping 40% increase and breached the 1 million teu barrier. Rijeka and Heraklion also registered double digit growth of 25.9% and 18.1%, respectively. Trieste and Limassol each notched a nice 11% increase in volumes, while traffic at Thessaloniki increased by a mere 3% and volumes Piraeus remained quasi-stagnant.

Finally, the Scandinavian/Baltic seaports included in Table 9 notched a nice 15.1% increase to 4.97 million teu in 2006. This nice result is largely due to St-Petersburg’s 30% increase to nearly 1.5 million teu. The port of Ventspils registered a massive 1686% increase, albeit from a very low cargo base in 2005. Liepaja, Oulu, Rauma, Helsingborg, Kotka and Turku each witnessed a growth rate of (well-)above 20%. Most other Scandinavian/Baltic ports also performed well, with the exception of Helsinki, Pori, Kemi and Raahe which each saw a (significant) drop in volumes.

An overview of the Top-15 European container ports for selected years is given in Table 10. As this table indicates, Rotterdam, Hamburg and Antwerp have assumed the top-3 positions in Europe since 995, while Felixstowe dropped from fourth position in 2000 to sixth position in 2006. Expressed in percentage terms, by far the biggest growth between 1995 and 2006 was enjoyed by the port of Gioia Tauro. In 1995 this port handled a mere 16,000 teu as port operations just started up. Other ports with substantial increases in volumes include the Spanish ports of Valencia, Algeciras and Barcelona as well as Zeebrugge, Hamburg, Antwerp and Bremerhaven. On the other hand, ports with belowaverage growth over the period considered include Rotterdam, Felixstowe, Le Havre and La Spezia.

Table 11 lists some of the strongest growers in Europe in 2006, both in percentage terms and absolute volume terms. In relative terms, Amsterdam was the star performer with a nearly five-fold increase in 2006. The Dutch port started to see the full impact of the Grand Alliance loops calling at the Ceres Paragon Terminal (owned by NYK). Similarly, the PSA-operated container terminal in the port of Sines (Portugal), which opened in May 2004, got a significant traffic boost through MSC. Constanza is rapidly becoming a major gateway to Eastern Europe and Black Sea states, while volumes in Gdynia and Tallinn are also witnessing high growth rates. The Finnish ports of Kotka and Rauma saw a sharp increase in 2006, but total container throughput in the Finnish ports saw a more moderate increase of 7.7%, mainly due to a 9.4% traffic decline in Helsinki (figures Finnish Ports Association). In Northern Europe, Zeebrugge witnessed healthy growth, although the new APM Terminals facility (opened in the Summer of 2006) will only have its full effect on traffic volumes in 2007. Finally, Bremerhaven marked one of the highest growth rates both in teu and percentage terms, mainly as a result of Maersk Line shifting cargo to Bremerhaven and increased traffic from MSC. In absolute volume terms, the ports of Hamburg and Bremerhaven added a remarkable 1.5 million teu in 2006, significantly more than the combined 930,000 teu throughput increase of their large Benelux competitors.

Northern ports, in particular Hamburg, are benefiting the most from the last round of EU enlargement, whereas new development opportunities are arising for secondary port systems in the Baltic Sea and the Black Sea. An increasing number of ports gain direct hinterland access to the ‘blue banana’ area. On the one hand, this development has broadened container port competition and altered spatial hierarchy, in the sense that the load centres in the Hamburg-Le Havre range are increasingly facing competition from container ports in other European port ranges (Baltic and Med), primarily for serving hinterland regions in the periphery of the core of the EU. On the other hand, the rise of economic centres in Eastern and Central Europe creates opportunities for the Hamburg-Le Havre range to develop shortsea shipping services and water- and land-based hub-feeder networks to these areas.

Finally, as far as the hinterland traffic of containers is concerned, road transport is still by far the dominant transport mode in most of Europe’s seaports. In this respect, Table 12 provides an overview of the modal split for a selection of 10 large seaports in Northern Europe. In all ports except for Amsterdam, Dunkirk and Bremerhaven road transport has a market share of at least 50% (and even 80% in the large UK ports). Rail transport has a (very) important market share in Bremerhaven, Dunkirk, Zeebrugge, Hamburg and Felixstowe, while barge transport enjoys a strong position in Rotterdam, Antwerp and Amsterdam (although the latter port has a much smaller cargo base than its three Benelux counterparts).

While most ports have achieved a considerable modal shift in hinterland container transport, rail and inland navigation still have not reached their maximum potential. Modal shift policies are implemented throughout Europe and these policies are starting to pay off on some multimodal inland corridors. Antwerp and Rotterdam have always had a strong position in container transport by barge in Europe. In the last ten years, their barge volumes have seen strong growth by the development of numerous inland terminals in the Benelux and Northern France, sustained growth in the Rhine basin and massive container exchanges between the two mainports. However, container transport by barge is also becoming more important in other navigation areas (e.g. Seine axis, Elbe, Rhône) and this has led to significant growth in barge transport in ports such as Hamburg, Le Havre and Marseilles.

Container transport by rail has seen a spectacular development in German ports (in particular Hamburg), while other both small and large ports are implementing strategies (backed up by infrastructure and rail liberalisation) to significantly increase the market share of rail in the modal split in the medium term. The organizational focus on rail implied the spatial development of extensive hinterland corridors, at first instance with a North-South orientation, but the last ten years also with a West-East orientation.

Hinterland connections of smaller seaports and new load centres in a start-up phase remain rather precarious. Smaller ports and new terminals often find themselves confronted with a vicious circle in the organization of hinterland transportation. The small-scale container volumes do not allow to install frequent block and shuttle trains to the more distant hinterlands. Because of the inability to serve a substantial hinterland, the major shipping lines do not include these ports in their liner services.

In many respects, the period 2005-2006 has been truly eventful for the container industry. Above all, it will undoubtedly be remembered as the era of major consolidation. Indeed, substantial take-over activity took place both on the shipping lines’ side (where mergers have created a handful of gigantic companies controlling several hundred ships, and where a handful of European shortsea operators turned out to be in a very acquisitive mood) as on the side of the container terminal operators. This is illustrated with some key facts and figures in the sections below.

As far as the shipping lines are concerned, AP Moller-Maersk started the wave of consolidation with a successful 2.3 billion euro takeover bid for P&O Nedlloyd in August 2005, adding nearly half a million teu slots to its fleet. A couple of months later, TUI AG (Hapag-Lloyd’s parent company) responded with a USD 2.1 billion purchase of CP Ships, while French line CMA CGM acquired the shipping interests of compatriot industrial group Bolloré (including Delmas, OTAL, Setramar and Sudcargos) for a reported USD 600 million. Finally, Hamburg-Süd took full control of Ybarra y Compania Sudamericana S.A. of Barcelona in early 2006, by acquiring the 50% stake previously held by CMA CGM. This was followed by an announcement in March 2006 that Hamburg-Süd had reached agreement with Fesco Ocean Management Limited (FOML), a subsidiary of the Far Eastern Shipping Company (FESCO), to acquire the assets of FOML and its affiliates that relate to FOML’s cross trades between Australia/New Zealand and Asia as well as North America. The deal was finalized in early July 2006. These two acquisitions follow the 15 or so takeovers by Hamburg-Süd during 1990-2005.

As Table 13 indicates, the acquisition of P&O Nedlloyd enabled Maersk to substantially increase its market share (based on the number of teu slots deployed) from about 12.4% at the beginning of 2005 to more than 18% at the beginning of 2006. Its cellular fleet capacity of nearly 1.7 million teu was more than double the fleet size of runner-up MSC and more than three times the fleet size of CMA CGM. Between them, these three carriers controlled about 20% of the cellular ships in service and more than 30% of the cellular teu-capacity at the beginning of 2006. Similarly, the take-over of CP Ships more than doubled the size of the Hapag-Lloyd cellular fleet and catapulted the German shipping line from 17^th to 5 ^th position in the global league table. Finally, given the relatively small size of the Delmas/OTAL cellular fleet at the time of the acquisition by CMA CGM, the impact on the latter’s market share was rather limited⁴.

Table 13 also shows that during 2006 and the first couple of months of 2007 the cellular fleet of Maersk Line has grown considerably slower than that of its nearest rivals. Between January 2006 and mid-March 2007 Maersk Line added less than 100,000 teu slots to its cellular fleet, representing an increase of just 5.6%. This is significantly less than the fleet increases of MSC (+297,000 teu or +37.8%) and CMA CGM (+238.000 teu or +46.9%). In fact, with the exception of Hanjin/Senator (+4.9%), APL (+3.5%), Wan Hai Lines (+1.8%) and RCL (-4.4%), Maersk Line witnessed the lowest percentage increase of the entire top-25 during the period considered. As a result, its market share decreased to 16.4% in Mid-March 2007.

The consolidation trend on the shipping line’s side continued in 2007, albeit on a much smaller scale than the two years before. At the end of February 2007 it was announced that CMA CGM had made its (much-anticipated) offer for Taiwanese owner Cheng Lie Navigation Co (CNC Line) for a reported USD 159 million. At the beginning of March the French line had already secured agreement for over 80% of the shares. The acquisition was primarily aimed at giving CMA CGM a stronghold in the fast-growing intra-Asia feeder and shortsea trades⁵. At the beginning of March 2007, the CNC Line fleet counted 9 ships (of which 2 owned and 7 chartered) for a total capacity of some 11,000 teu slots.

Some industry observers argue that we could be on the verge of further consolidation in the liner shipping industry in the years to come. For example, an in-depth assessment of AP Moller-Maersk’s prospects by Dansk Equities during 2006 stated that the Danish company could well be targeting a 25% market share in container shipping by 2010, through a massive USD 15 billion fleet expansion programme⁶. It suggests this ambition could embrace the takeover of another major rival. However, as the integration costs related to the takeover of P&O Nedlloyd turned out to be higher than expected (forcing Maersk to significantly lower its profit expectations for 2006⁷), one could question whether the Danish carrier is ready for a next big move in the short term. Moreover, a single carrier with a market share of 25% would be unlikely to escape the scrutiny of regulatory bodies such as the European Commission. Last but not least, it also remains to be seen what the reaction of customers would be when being faced with such a dominant market player.

Table 13 also reveals that, following the consolidation activity in 2005 and massive organic growth during 2006, the top-5 container shipping lines (four of which are European) controlled 43% of the total teu-capacity deployed on worldwide trade routes at mid-March 2007. This obviously gives them enormous bargaining power vis-à-vis terminal operators and port authorities.

As a matter of fact, in an effort better to control costs and operational performance and as a measure to remedy against the effects of everdecreasing schedule integrity (cf. infra), container shipping lines have been very active in securing (semi-)dedicated terminal capacity in strategic locations in recent years. As Table 14 indicates, this trend towards more carrier involvement in terminals has not escaped the European port scene, quite to the contrary. Nowadays a substantial number of container terminals in North and South Europe feature a shipping line among their shareholders (in most cases as a minority shareholder). In particular MSC and CMA CGM, the world’s second and third biggest container shipping lines, are very active in this field, with involvements in 15 and 10 container terminals, respectively. This is a significantly bigger portfolio than the one of Maersk Line, which has a stake in only 1 terminal in Europe. However, it has to be noted that Maersk Line’s parent company, AP Moller-Maersk, operates a large number of container terminals in Europe (and abroad) through its subsidiary APM Terminals. Although this Netherlands-headquartered company advertises itself as "an independent company within the A.P. Moller-Maersk Group, with an independent board and operating common user terminals for all container ship lines in Europe", it currently still mainly handles traffic of sister company Maersk Line. In fact, it does so in an ever-increasing number of European ports: APM Terminals is currently involved in the management of container terminals in the ports of Aarhus, Bremerhaven, Rotterdam, Zeebrugge, Dunkirk, Gioia Tauro, Algeciras and Constantza. It has also been awarded a new terminal in Le Havre’s Port 2000 complex (to be opened in early 2008), as well as a new terminal on the future Maasvlakte-2 in Rotterdam and in the future JadeWeserPort in Wilhelmshaven (the latter one in 30/70 joint-venture with Eurogate).

As Table 15 indicates, the top-20 container shipping lines carried an estimated 87.77 million full teu during 2006, some 8% more than the year before. This represents about 80% of the estimated world total of 110.20 million full teu that year. In view of the above, it comes as no surprise that Maersk Line, MSC and CMA CGM took the number 1, 2 and 3 spots, respectively, with combined carryings of nearly 30 million full teu in 2006. It is, however, surprising to see that Maersk Line actually carried slightly less containers than in 2005 while MSC and CMA CGM both registered a massive 16-17% increase in carryings. In fact, their percentage increase in 2006 was only exceeded by China Shipping Container Lines’, which saw volumes jump nearly 20%. This enabled them to leapfrog Evergreen, which only enjoyed a modest 7% growth in volumes carried. The same situation applies to COSCO and Hapag-Lloyd, although the difference in carryings between these two shipping lines is very small. Between them, the top-7 shipping lines carried more than 50 million teu in 2006, i.e. some 45% of the world total. This once again illustrates the dominance of the top liner shipping companies.

Apart from the deepsea segment, the period 2005-2006 has also been a very remarkable one for the intra-European (shortsea) container trades, as indicated in the overview below. In fact, 2006 witnessed an acceleration of the consolidation momentum which took off in 2005, with two Icelandic (Eimskip and Samskip) and one Belgian company (Delphis) leading the game for door-to-door container services. In addition, Grimaldi Lines became a leader on the pan-European trade running from the upper Baltic to the Eastern Mediterranean with its successful bid on Finnlines. Finally, North Sea RoRo-operators DFDS Tor Line and Cobelfret were also in an acquisitive mood, while AP Moller-Maersk offloaded its intra-Europe door-to-door container businesses Portlink and Norfolkline Containers. Table 16 provides an overview of the five largest intra-European container operators as at early March 2007.