Elbe dredging serves notice to Hamburg rivals

Elbe dredging serves notice to Hamburg rivals

Dredger Scheldt River begins the Elbe deepening project that will dig the way for fully-loaded mega-ships to access the Port of Hamburg without draft restrictions. Photo credit: HHM/Dietmar Hasenpusch.

The deepening of Hamburg port’s Elbe River access fairway has begun, a long-awaited process that will enable the passage of fully loaded mega-ships and in time allow the port to recover volume lost to other North Europe hubs.

Hamburg has lagged its two rivals of Rotterdam and Antwerp over the past few years. While Europe’s two busiest container hubs made record increases in volume in 2018, Hamburg went the other way.

Rotterdam grew its volume by 5.7 percent in 2018 to a record 14.5 million TEU, while Antwerp increased its throughput by 6.2 percent to 11.1 million TEU. Hamburg, on the other hand, reported a 1.1 percent decline in volume in 2018 with the 8.7 million TEU the lowest throughput at the port since 2010.

But as much as it was a priority to deepen the Elbe, it has taken 13 years of political and legal wrangling to get the dredgers busy on a project that Jefferies has valued at $460 million to $570 million, and it will take at least two years before it is completed.

However, a key part of the project may be finished by the end of this year. A ship “passing box” on the river downstream from Hamburg will make the Elbe navigable for mega-ships in both directions without the existing restrictions.

“We have waited a long time for today and are now hoping for rapid implementation,” said Ingo Egloff, joint CEO of Port of Hamburg marketing.

The deeper fairway will add one extra meter of draft, allowing container ships to carry about 1,800 more TEU per call, irrespective of the tide. Loaded oceangoing vessels will be able to leave Hamburg with a draft of 13.50 meters (44 feet), and during high tide with a draft of 14.50 meters.

Running from empties

Hamburg’s volume shortcomings have largely been in the decline of empties, which is directly linked to the depth restrictions on the access river. The inability of mega-ships to call and leave Hamburg optimally loaded because of draft restrictions and limited tidal windows forces carriers to prioritize the transport of full containers on their giant vessels, with empties being routed via other hubs in northern Europe. Among Europe’s major ports, Hamburg’s container throughput features the lowest proportion of empty boxes, at about 14 percent, and the highest for loaded containers, at 86 percent.

Easing Hamburg’s volume pain has been the January relocation of the trans-Atlantic operations of THE Alliance (Hapag-Lloyd, Yang Ming, and Ocean Network Express) from Bremerhaven to Hamburg, a move that Alphaliner has estimated will be worth about 500,000 TEU in annual volume. The four weekly services involved will be AL1, AL2, AL3, and AL4, which connect northern Europe with the US East Coast and US Gulf.

But there are enormous gains to be made once the dredging is completed, and not only in volume terms. Jefferies has estimated that the earnings before interest and taxes of Hamburger Hafen und Logistik (HHLA), which controls 78 percent of the containers handled at Hamburg, is targeted to nearly double to $342 million by 2025. The bank said gains would be driven by improved efficiency following investments in equipment and the dredging of the Elbe, which would lead to a better peak-load volume distribution.

Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler.