Over two thirds of Europe’s external trade based on value passes through its ports, and this figure is likely to grow as trade and container shipping growth is forecast to outstrip overall economic growth for the foreseeable future. According to the latest white paper from Colliers International, this growth will impact on current logistics hubs, resulting in the Eastern Mediterranean emerging as a new, key route in to Europe’s heartland.

Emerging vs. Traditional Ports

On the Mediterranean and Adriatic Sea large new port facilities allow container ships taking the Suez Canal route to deliver more directly to Central and Eastern Europe. However that said, Colliers points to the fact that almost 60% of all European container tonnage still passes through just four traditional Western European ports: Rotterdam, Antwerp, Bremerhaven and Hamburg, and many of the major European ports, such as Rotterdam, do have major expansion plans in place.  With the development of ever larger cargo ships, those ports with the facilities to handle them will be well placed to increase market share, as trans-continental sea routes become increasingly concentrated around these select ports.

A European port competitive towards the standards of the emerging sea routes of Asia is the London Gateway Port that is being developed by DP World and will be operational at the end of 2012. Again this is a deep-water port and will have container handling capacity of 3,5 million TEU.

Transcontinental Rail Routes Emerging but Infrastructure Placed a Limit on Capacity and Efficiency

One notable area for growth – or at least an area where the EU would like to encourage growth – is rail. From an environmental perspective it beats road freight hands down, and over long-distances it can prove extremely cost efficient. However, differing rail gauges in key links in the chain such as Russia pose a problem cost wise. And a lack of capacity and speed in much of Europe’s network also acts as a break, although investment in the infrastructure is on-going and there are many proposals regarding massive investment in this mode. Colliers expects rail freight to very gradually gain market share as infrastructure developments come online. Such an example is the Baku-Tsilisi-Kars line that will link the east of Turkey to Baku in Azerbaijan. The project is set to complete by the end of 2012 and will form a vital link in a China-Europe rail route going via Turkey. As part of the joint project, a special zone will be constructed in Georgia to allow trains to transfer easily from the wide gauge used in Georgia to the standard gauge used in Turkey and Europe.

European Air Freight under Pressure

Although air freight is still a key player in external trade, the major western airports are running out of capacity and with opposition mounting against expansion at the major commercial hubs such as Heathrow and Frankfurt, and the environmental cost of such activity, it is not an area likely to see dramatic growth. However it is estimated that regional hubs such as Leipzig/Halle will be the exception with an increase in growth.

 

As for Eastern Europe’s airports, given the lack of activity we may see some expansion here as the demand for and production of high value good starts to increase, as these countries move up the development path.