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.

Not only the liner shipping industry, but also the container terminal operating industry has witnessed an increased amount of consolidation during 2005-2006. A front-runner in this respect was DP World, through the acquisition of the terminal portfolios of CSX World Terminals (2005) and P&O Ports (2006) for a total amount of more than 8 billion US Dollars. These two acquisitions have given DP World a significant presence on the container handling scene in China, Hong Kong, South (East) Asia, Australia, the Americas and Europe. In fact, DP World now has a very balanced terminal portfolio covering most of the world's trading regions, which should protect it against the risk of a downturn in any one particular region (Drewry Shipping Consultants, 2006).

Apart from DP World's acquisitions, another major deal was PSA's acquisition of a 20% stake in Hutchison Port Holding's global terminal portfolio for a reported USD 4.93 billion, following its earlier purchase of strategic shareholdings in a number of other Hong Kong operations (HIT, Cosco-HIT, Container Terminal 3 and Container Terminal 8) in 2005. In addition, quite a number of terminal operators took shareholdings or increased their existing stakes in individual terminal businesses during 2005 and 2006. It is beyond the scope of this Report to list all these transactions in detail. For an overview, the reader is referred to Drewry Shipping Consultants (2006).

Hence, whereas a few years ago the container handling sector was still rather fragmented and characterized by about 10 big players, the picture looks drastically different today. Table 17 provides an overview of the top-10 global terminal operators for the years 2001 and 2005 (the latest year for which detailed statistics are available). Whereas the volume handled by the top-10 players amounted to 103 million teu in 2001, for a market share of 42%, these figures had risen to about 220 million teu and 55%, respectively, in 2005.

As Table 17 indicates, a significant throughput gap existed between the top-3 players and the rest of the league in 2005. As stated before, this situation was compounded by the take-over of P&O Ports by DP World in early 2006, such that the container handling industry is nowadays dominated by four worldwide operating companies with an enormous lead over their rivals in terms of throughput and market share. When the P&O Ports portfolio is added to DP World's, the combined throughput of the top-4 operators amounted to nearly 170 million teu in 2005, representing some 42% of total worldwide container handling. To put this in perspective, in 2001 the market share of the top-4 operators was still below 30%. Hence, as far as the concentration of market power is concerned, the current situation in the terminal operating sector⁸ is somewhat comparable to that of the liner shipping industry, where the four largest shipping lines also control some 40% of the market (expressed in the number of teu slots deployed). The current European portfolio of leading container terminal operators is presented in Figure 1. The financial involvement varies between full ownership to minority shareholdings.

Given the fact that there are no really "big" companies left to acquire nowadays, it can be expected that the top-4 players will maintain their lead over the other operators for quite a number of years to come. As a matter of fact, some industry observers even predict that, spurred by the shortage of port capacity to handle the ever-growing volumes of container traffic (making existing terminals very attractive for investors), as well as high profitability levels enjoyed by terminal operators⁹, M&A activity in the container handling sector is likely to continue in the years to come, albeit on a smaller scale than witnessed recently. In this respect, one should not forget that building or extending container terminal capacity nowadays requires huge capital investments, which only very few players can afford. Moreover, while their business had thus far grown mainly organically, APM Terminals announced in mid-2006 that they were also looking at the acquisition of existing facilities, in order to reduce dependency on Maersk Line and strengthen their common-user business. It is believed that Maersk Line traffic nowadays accounts for about 65% of APMT business worldwide, down from 90% some five years ago.

However, in early 2007 the prospect of further consolidation among the major players was somewhat put on hold by the decision of the City of Hamburg concerning the sale of a stake in local terminal operator HHLA. At the end of 2006 the City of Hamburg requested Expressions of Interest for a stake of up to 49.9% in HHLA, mainly aimed at funding the '1.2 billion investment programme (amongst other things to increase box handling capacity to over 12 million teu in 2015). At the beginning of 2007 six companies were shortlisted by the Hamburg Municipality, one of which was DP World. However, in a surprise move, the Hamburg Senate announced in early March 2007 that the shortlist was reduced to two bidders, namely Hochtief and Macquarie. This, in turn, was followed by rallying protests from HHLA staff fearing a negative impact on working conditions when a 49.9% stake would be sold to either of the two companies. As a result, the Hamburg Senate decided to stop the bidding process for HHLA altogether and agreed to a part-floatation of the terminal operator for 30% of the shares.

In fact, the interest being shown by players such as Macquarie for investments in port operations is something that has only been witnessed in recent months. Indeed, as mentioned by Dynamar (2007:21), "when it comes to takeovers of ports, terminals or terminal operators, more and more financial suitors (banks, hedge funds, private equity groups, investors) are directly taking part in the bidding, a completely new development also seen in other lines of business". Examples of recent deals involving such players are listed in Table 18. The total value of the 10 deals listed exceeds USD 13 billion.

As a result of strong growth on the arterial container trade routes in recent years, and in order to anticipate on future volume increases, many shipping lines have embarked upon ambitious expansion plans to upgrade the capacity of their ship fleets. According to AXSAlphaliner (2007), 2622 cellular containerships were deployed on worldwide trade routes at the beginning of 2000, providing a total slot capacity of about 4.51 million teu (see Table 19). By the beginning of 2007 these figures had increased to 3950 ships and 9.58 million teu, respectively. Hence, the total capacity provided by cellular containerships more than doubled in just seven years time, representing an average annual increase of 11.3%. Moreover, based on shipping lines' orderbooks as at 01/03/2007, the number of cellular containerships deployed on worldwide trade routes is expected to further increase to about 5200 units by 01/01/2010, providing a total slot capacity of 14.07 million teu. This equals a massive increase of nearly 50% in just three years time, or 13.5% per year. To put this in perspective, the capacity increase of 4.50 million teu during 2007-2009 means that a stunning 125,000 teu slots will be added to the worldwide cellular fleet every month.

Given the relentless search for cost savings at sea (cf. economies of scale), it is hardly surprising to see that many shipping lines' expansion plans are heavily focused towards large post-panamax (i.e. 5000+ teu) containerships. Whereas 78 of such ships provided a total slot capacity of just 464,000 teu at the beginning of 2000, these numbers already amounted to 504 units and 3.3 million teu, respectively, at the beginning of 2007 and are expected to further increase to 820 units and nearly 5.7 million teu by the beginning of 2010. This equals a more than 12-fold increase of the teu-capacity in a time span of ten years, or an average increase of nearly 30% per year. Whereas 5000+ teu ships provided just 10% of the total cellular fleet capacity at the beginning of 2000, their share will have increased to 40% at the beginning of 2010.

The massive influx of new tonnage in the coming years, and the cascading-down effect triggered by the introduction of large post-panamax ships on the arterial trade routes, will obviously invoke a significant increase in average vessel sizes on the main trade routes. For example, Ocean Shipping Consultants (2006) expects the size of a typical container vessel deployed on the Far East - Europe trade to increase from 4500-5500 teu in 2000 to 8000-9000 teu in 2010 (i.e. +70%) and no less than 10,500 teu in 2015 (i.e. +110%). The increases in average vessel sizes for the other deepsea trades and the feeder trades are somewhat lower, albeit still remarkable¹⁰ (see Table 20).

Whereas shipping lines, through massive expansion plans for their ship fleets, have clearly prepared themselves to handle the expected increase in container volumes in the short term, the development of additional container handling capacity to meet this demand has clearly lagged behind in some parts of the world. Specifically with respect to North Europe, Drewry Shipping Consultants (2005) found significant delays in many expansion projects related to container handling. In France, for example, the originally proposed date for the opening of the "Le Havre Port 2000" complex was delayed for three years (from 2003 until 2006). Analogously, operations at the Deurganckdok in the port of Antwerp (Belgium) only started in late 2005, while this date was originally intended to be 2001. A similar four-year delay is experienced by the Euromax terminal in the port of Rotterdam (from 2004 to 2008) and the JadeWeserPort in Wilhelmshaven (from 2006 to 2010), while yet even bigger delays are being faced by the Westerschelde Container Terminal in Flushing (at least five years delay, if the terminal will be built at all) and the Maasvlakte II project in Rotterdam (start date of operations postponed from 2002 to 2013 at the earliest). In the UK, Hutchison Port Holdings' 'Felixstowe South Reconfiguration' obtained government approval in early 2006 and is expected to be taken into operation in 2008, i.e. two years behind schedule. Hutchison was also recently given the formal go-ahead for the development of a new container terminal at Bathside Bay in the port of Harwich. Construction work on the first phase of the project is expected to start in 2009 at the earliest, implying a significant delay to the proposed start date of operations of 2004. Finally, DP World's plans for the London Gateway terminal (originally scheduled to open in 2006) were still awaiting final approval in early 2007, while Associated British Ports' plans to develop a new container terminal at Dibden Bay in Southampton (scheduled to open in 2000) have even been cancelled altogether.

The delays or cancellations of the above-mentioned projects have a number of different causes, ranging from internal politics within the port, environmental objections, legal technicalities and objections, investigations by the European Commission into market share implications, to political wrangling over funding, court cases, or to public enquiries and subsequent government considerations of their findings. Overall, the estimated total cost of the approval processes of the different terminal projects listed above is well in excess of half a billion euro. If all these proposed projects had been realised in accordance with the original time schedule, an extra capacity of no less than 11.4 million teu would have been available in North European ports in 2005. To put this in perspective, this is nearly one third of the total capacity offered by these ports in 2004 (34.8 million teu).

In view of the above, it should come as no surprise that terminal operators active in major European container ports have been witnessing increasing utilization levels of their facilities in recent years. According to estimates by Ocean Shipping Consultants (2006), 'North Continent East' (=German) and 'North Continent West' (=Benelux and Northern French) container ports experienced utilization levels of +90% and +80% respectively in 2004, obviously resulting in severe congestion problems during peak periods¹¹. This is confirmed by HVB Group/Drewry Shipping Consultants (2005), who state that "arguably, 2004 was the worst year on record for congestion at the world's container ports" and who indicated in particular the major Benelux ports and some UK ports as European 'congestion hotspots' during 2004. Appleton (2005) argues that, as 90% utilization levels are exceeded, carriers experience a significant loss in terminal flexibility. In this respect it is important to note that, without the planning delays of the above-mentioned projects, average utilization levels at European deepsea terminals in 2004 would have hovered around 68%, significantly lower than the 86.6% experienced in reality.

Although many new container terminal projects in European seaports have faced significant delays, stevedores have not been sitting on their laurels. Indeed, in recent months and years substantial investments have been made to increase the capacity of existing container terminals. According to Cargo Systems Magazine, 69 ship-to-shore (STS) gantry cranes were delivered to European container terminals in 2006, i.e. nearly one fifth of all STS gantry crane deliveries that year (Table 21). Moreover, the orderbook for delivery at European terminals during 2007-2008 counted 91 units at the end of 2006, from a total of 368 units worldwide.

As Table 21 indicates, terminal operators around the world are clearly anticipating the arrival of massive 10,000+ teu containerships in great numbers in the not too distant future. Of the 363 STS gantry cranes delivered to worldwide terminals in 2006, no less than 231 (64%) had an outreach of at least 60m, enabling them to handle ships of 20-22 containers wide. A similar picture applies to the STS gantry crane orderbook. Many of the cranes listed in Table 21 have a lift capacity of 60 tons or more (with a few cranes even breaking through the 100 ton lifting capacity barrier) and are equipped with twin-lift (2 teu) or tandem-lift (4 teu) spreaders.

Table 21 also illustrates the overwhelming dominance of Chinese manufacturer ZPMC, accounting for 67% of STS gantry crane deliveries in 2006 and 60% of the orderbook. Their 244 deliveries in 2006, the lion's share of which was destined for the Chinese market, is equivalent to one crane leaving the factory gates every 1.5 days. Finally, as far as the geographic spread is concerned, the single biggest market for STS gantry crane deliveries is China, followed by Europe and Other Asia. Between them, these three regions accounted for some 73% of worldwide STS gantry crane deliveries in 2006 and 71% of the orderbook. While North American terminals only received 15 new STS gantry cranes in 2006, their combined orderbook for delivery in 2007-2008 stands at 43 units.

As argued by IBM Business Consulting Services (2005), container shipping lines are facing several challenges in today's highly competitive environment, one of which is an increasing demand by customers for greater reliability of container shipments at lower total costs. This is acknowledged by Psaraftis (2004), former CEO of the Piraeus Port Authority, stating that "the name of the game of all major container lines is their ability to meet their schedules, as they incur enormous costs, both real and intangible, in case they do not". However, an in-depth schedule reliability survey performed by leading maritime analyst Drewry Shipping Consultants (2006) and based on the monitoring of no less than 5410 vessel arrivals on 23 different east/west and north/south trade routes between April and September 2006 (i.e. about 200 vessel calls per week) revealed that more than 40% of vessels deployed on worldwide liner services arrived one or more days behind schedule. To be more precise, the percentage of on-time vessel calls was about 52%, with 21% of vessels arriving one day late, 8% arriving two days behind schedule and no less than 14% of vessels calling their port of arrival three or more days late (the remaining 4% actually arrived two or three days before their scheduled ETA). These observations are obviously in stark contrast with claims of shipping lines that most of their containerships operate on fixed-day weekly schedules.

Although the Drewry survey found low reliability levels overall across the industry, strong variations were observed between the schedules of different liner carriers. Of the 65 international shipping lines whose vessel schedule reliability was monitored, 15 enjoyed on-time arrivals of 60% or more, while 12 carriers scored between 50% and 60%. No less than 38 carriers had on-time arrivals of less than 50% (of which 21 carriers even scored below 40%). Individual schedule reliability percentages ranged between 4% for the least reliable shipping lines and above 90% for the best performing carriers over the period of the survey. Of the main east/west carriers, Hatsu Marine, Italia Marittima (both belonging to the Evergreen Group), Safmarine and Maersk Line enjoyed high schedule reliability levels, whereas K-Line, China Shipping Container Lines and Mediterranean Shipping Company were some of the carriers with below-average schedule integrity. For the worst performing carriers, average deviation from the ETA easily amounted to 3 days or more.

Unsurprisingly, the survey also revealed significant differences between reliability levels on the different liner trade routes. Routes with on-time arrivals of 70% or more included North America/Indian Subcontinent/Mideast/Red Sea and North America/Hawaii/Guam/mid-Pacific. On the other hand, the Asia/East Coast South America, Asia/West Coast South America, Europe/Med/Australia/New-Zealand/South Pacific, Europe/Med/West Coast South America, North America/Caribbean/Central America and North America/East Coast South America trades each experienced reliability levels of (well-)below 40%. On some trade routes transit time delays of 3 days or more were found to be the rule rather than the exception¹².

Low reliability of liner schedules can be explained by a number of factors. Common reasons for vessel delays include bad weather at sea, congestion or labour strikes at the different ports of call, as well as knock-on effects of delays suffered at previous ports. More serious delays, leading to significant time-losses for the cargoes involved or even the loss of the cargo altogether, can be caused by fire incidents (cf. the serious fire incident onboard the HYUNDAI FORTUNE in the Gulf of Aden in late March 2006), ship collisions or ship groundings (cf. the incident with the MSC NAPOLI off the English Coast in early 2007).

Obviously, another major factor hampering liner schedule integrity is the growing mismatch between the demand for container shipping services and the supply of terminal capacity, as outlined above. It is obvious that decreasing schedule integrity can have profound implications for players throughout the entire supply chain (for an excellent overview, see HVB/Drewry Shipping Consultants, 2005):

In order to make up for time lost in port and restore schedule integrity, shipping lines can follow a number of strategies (see also Notteboom, 2006). Firstly, they might have their ships sail at full service speed when steaming from one port to the next. However, such a practice can be extremely costly. Figure 2 depicts the relation between service speed and fuel consumption for four types of container vessels and eight different service speeds. This figure indicates that an increase in service speed with just a couple of knots already results in a dramatic increase of fuel consumption. For example, increasing service speed from 22 to 24 knots for an 8000 teu container vessel increases its fuel consumption by as much as 45 tons per day. With current bunker prices¹³ of about USD 270 per ton, this translates into a daily cost increase of USD 12,150 for each of the vessels deployed. For a 10,000 teu ship, which will most probably become the workhorse on the Far East-Europe trade route by 2010, the daily cost increase per vessel would even amount to USD 16,200.

Table 22 gives an indication of the daily fuel costs at sea (at mid-2006 bunker prices) for three types of container ships and seven different service speeds, as estimated by leading containership classification society Germanischer Lloyd.

As a matter of fact, bunker prices have nowadays reached such a level that, at least for certain trade routes, it might be justified to add an extra vessel to an existing loop in order to slow down the sailing speed of all vessels plying it, while still maintaining the service frequency (usually weekly). Indeed, if the addition of an extra 8000 teu vessel to an existing loop would reduce the required service speed for all vessels plying it from 22 to 20 knots, this would result in fuel savings of some 45 tons per day for each of the vessels deployed. At a USD 280 per ton bunker price, this translates into a daily saving of some USD 12,800 per vessel. In this respect, it comes as no surprise that both the Grand Alliance and CMA CGM each decided to add a ninth vessel to one of their respective Far East-Europe loops during the Summer of 2006. The resulting fuel cost savings generated by each of the existing eight vessels more than compensated for the cost of hiring and operating the ninth vessel.

Secondly, rising port congestion levels might incite shipping lines to reshuffle the order of ports of call on a certain loop (possibly resulting in peak volumes in the 'new' first port of call) or, in extreme cases, leave them with no other option than to omit certain port calls altogether to get vessels back on schedule (cf. the diversions of container ships from Rotterdam to Antwerp and Amsterdam following IT-problems at the ECT Delta terminal on the Maasvlakte in May 2006). As discussed by Notteboom (2006), yet another option to keep deteriorating schedule reliability under control is the so-called "cut and run" principle, implying that crane operations on a vessel are abruptly stopped even if there are still some containers on the stack waiting to be loaded.

Thirdly, liner carriers could relax buffer time in their service schedules for contingencies such as bad weather and port delays. But increasing buffer time comes at a high cost, even an additional vessel on a loop.

Finally, as noted by Dynamar (2005), the prospect of ever-decreasing schedule reliability constitutes an important reason why shipping lines increasingly seek control of container terminals in strategic locations. Indeed, by investing in (semi-)dedicated facilities, shipping lines can reduce waiting times (cf. berthing on arrival) and are guaranteed of high vessel productivity. Moreover, terminal agreements typically lead to lower handling rates, enabling shipping lines to operate below the normal THC levels. As discussed previously, the trend towards more carrier involvement in terminals has not escaped the European port scene, quite to the contrary (see Table 14 above).