Why should shippers in southern Germany be focussing more intently on the Port of Rotterdam? What are the logistical and financial benefits and why does the rail connection to Rotterdam play a key role in shaping a successful intermodal logistics strategy? Here we interview: Ingrid Rossmeier, Southern German Representative for the Port of Rotterdam; Marilyne van Hoey Smith, Commercial Executive of European Gateway Services and Susana Jozinovic, Sales Manager at TXLogistik.
Port of Rotterdam: Ingrid Rossmeier, you have over 30 years of experience in the logistics business and have certainly experienced a lot as Director of Foreign Trade Processing at Quelle and then as Regional Director for Southern Germany at Transfracht. Since the beginning of 2014 you have been responsible for representing the southern German region for the Port of Rotterdam. What has been happening since then?
Ms Rossmeier: When I first started calling my many contacts in southern Germany I tended to get the reply that whilst the Port of Rotterdam was of course known for being one of the biggest ports in Europe, the idea of collaborating with the port was something they had never considered. Since shipping companies and freight forwarders don’t proactively offer transport via Rotterdam, most southern German shippers seemed to feel that Rotterdam was too far away and perhaps, being located abroad, too complicated. Why should we change our supply chain for you and then worry about whether you will set up the trains again, was what the shippers told us. We listened carefully and drew our own conclusions.
Ms van Hoey Smith: My experiences are similar. For many people Rotterdam is still too far away, so we have to get closer to our customers. Since the start of 2015, European Gateway Services (EGS) has had an office in Munich. I worked with ECT for 8 years previously and as a Dutch person I know the Port of Rotterdam very well so I can discuss the advantages of the rail network to and from Rotterdam with the Munich shippers personally and thus remove any obstacles. Many shippers are very loyal to their existing service partners and we respect that. Nonetheless, Rotterdam is a worthwhile alternative. We have strong arguments.
TXLogistik produces the trains for the rail connection from southern Germany to Rotterdam and operates the trains jointly with EGS. Susana Jozinovic, having worked for shipping companies like Hapag-Lloyd, CMA CGM and also Transfracht you have a very accurate understanding of the needs of the shippers. The Port of Rotterdam is actually closer than the northern German ports in terms of kilometres, but the majority of traffic still goes to them.
Ms Jozinovic: In southern Germany people feel an emotional connection to the national ports in Hamburg. We must not underestimate that. But shippers are beginning to notice that the Port of Hamburg is now bursting at the seams and can no longer grow at a fast rate. There is also the matter of deepening the River Elbe. If the Elbe has low water levels, large ships cannot take the load. This presents a huge risk for shippers. So we must offer attractive alternatives and make other ports and channels usable. This is where the Port of Rotterdam comes into play as well as TXLogistik as rail operator. There are already up to 15 services a day from Munich to Hamburg. Until now we have provided five rail services a week from Nuremberg and Munich to Rotterdam. Our aim is to extend this service based on demand, and in tandem with the growing trust of our customers.
Ms Rossmeier: Customers essentially want price parity. The transport to Rotterdam should not be more costly than to Hamburg. We are sensing however that customers are becoming more open to alternatives. This is due to the traffic situation at the northern German ports. But there is also increasingly the concern that the deepening and widening of the Weser and the Elbe rivers is not progressing quickly enough and large ships are travelling through the port less frequently. So it is important now to become familiar with the supply chain to Rotterdam and also to start using it.
Port of Rotterdam: Ms van Hoey Smith, customers would like more frequent trains but cannot guarantee to transport a pre-defined volume of cargo on a daily or weekly basis. It sounds a bit like a chicken and egg problem. How are you proposing to solve it?
Ms van Hoey Smith: To start with, we want to build up trust so we have made the strategic decision to further increase the frequency of our trains. We are seeing a growth rate of 20% and don’t want any ‘no’ sales. Shipping companies and freight forwarders can book directly with us, operators and road hauliers also reap benefits from the collaboration. We will put shippers in touch with shipping companies or freight forwards on request. EGS offers a service in the truest sense of the word.
Ms Jozinovic: TXLogistik offers tailor-made solutions. Our logical approach is reflected in the flexibility of our loading process. Where freight forwarders and shipping companies with specific volumes often face restrictions, we customise our service to meet their requirements. Not only do we handle 20- or 40-foot containers, but also short sea and intermodal containers. 23-, 30- and 45-foot containers and even other specialised containers travel with us too. Thus, we are innovative and position ourselves strongly against the competition from road hauliers.
Ms van Hoey Smith: Our main emphasis is really on deepsea containers. EGS maintains close connections with the Rotterdam terminals. We are a sister company of ECT in Rotterdam. Many shipping companies are involved in the terminals at the Port of Rotterdam. We regularly visit the European headquarters of the shipping companies and freight forwarders in northern Germany but it’s obvious that all the action is in southern Germany.
Port of Rotterdam: What percentage of container transport from southern Germany to Rotterdam is actually carried by rail?
Ms Rossmeier: We need to differentiate here between northern and southern Bavaria. From northern Bavaria a lorry driver would usually make it to Hamburg or Rotterdam in a day. In this area the ratio of rail versus road haulage is split 50:50. From Munich, Augsburg and eastern Bavaria about 75-80% of freight is transported by rail because a lorry driver would have to stay somewhere overnight or take a second driver with him. This becomes expensive and costs time. In general, customers expect their freight to be at the port within 24 hours. We mustn’t forget transport by inland waterway which is particularly appealing in Baden-Wuerttemberg and from Bavaria as far as Aschaffenburg.
Ms van Hoey Smith: It’s about getting the right mix. The Port of Rotterdam is giving us the clear message that we need to transport more by rail and inland waterway from the terminals to the German hinterland. The lorry share of the market cannot be more than 35%. The port supports us with various initiatives. EGS is therefore focussing on synchromodal container transport to the hinterland. Ultimately no one wants to be stuck in traffic and we want to maintain a clean environment at – and this is of course important – an acceptable price with a high-quality service.
Port of Rotterdam: We hear from some shippers in southern Germany that they are keeping a close eye on the development of the Betuwe route and fear time delays. How do you see that?
Ms Rossmeier: Last year the Port of Rotterdam handled 12.3 million TEUs. In the near future there will be new terminals with an additional capacity of around 5 million TEUs which will of course have to be handled as well. So, it is important to be aware that the Betuwe route is currently only operating at 60% capacity and the third track will be built ahead of the anticipated capacity.
Ms Jozinovic: I can reassure the shippers. I don’t think that the activity on the Betuwe route will lead to delays on the railways. We do, of course, take these construction sites into account on our timetables and there are sensible detours. I think it’s important to think long term about the benefits of the expansion. The railway will be strengthened further. In the future we will transport considerably more goods by rail as opposed to road because the advantages simply outweigh the disadvantages.
Port of Rotterdam: Are there businesses which will particularly benefit from the collaboration between the Port of Rotterdam, EGS and TXLogistik?
Ms Jozinovic: In southern Germany right now there are big car manufacturers and also lots of suppliers who have to shift their parts to plants worldwide. Among the suppliers in particular we are sensing a real openness to try out Rotterdam. They are also enthusiastic about the efficiency of these new approaches.
Ms van Hoey Smith: Durable consumer goods from the Far East in particular, such as textiles, continue to be imported in high volumes. Rotterdam is the first port of discharge for imports from the Far East and this is a huge advantage for the shippers as it offers a time saving of at least two days over Hamburg.
Ms Rossmeier: It takes the 20,000 TEU ships a maximum of 2 hours to dock at each overseas terminal at the Maasvlakte I and II. A ship of that size has to be semi unloaded and lose half of its weight in order to make the next high tide at the Port of Hamburg. This means that the large ships always have to have been at Rotterdam, Antwerp or Bremerhaven first before they can call at Hamburg. It is the same on the way back. The half-loaded ship in Hamburg has to call at another port, a process known as ‘second call’. And this is where shippers, again, lose a good two days.
Port of Rotterdam: Raw materials are increasingly imported, then assembled or refined in Eastern Europe before being exported onwards. How important is the issue of ‘near and back sourcing’ now for the shippers?
Ms van Hoey Smith: In Eastern Europe it is becoming more and more important. In the past, goods were almost always exported and imported via the northern ports. For the shippers and shipping companies in Eastern Europe, the idea of Rotterdam as another alternative is new. The improvement in liquidity through fiscal duty is an important matter here.
Port of Rotterdam: Can you briefly explain the mechanics of fiscal duty, Ingrid Rossmeier?
Ms Rossmeier: In short, the procedure is as follows: A tax representative in the country where import sales tax is owed fills out the tax return on behalf of the foreign company. In the same tax return this import tax is then taken again. In this way, the final total remains unchanged. In a normal tax return however, the import tax has to be paid directly. It can only be reimbursed retrospectively on application to the tax office. Making use of this provision can offer substantial liquidity and financial gain to the foreign company.
Port of Rotterdam: Fiscal duty is one of the many advantages of working together with the Port of Rotterdam. A final question: How do you envisage the connection between southern Germany and the Port of Rotterdam in five years’ time?
Ms Jozinovic: TXLogistik runs a comprehensive network of block trains out of the northern ports to Germany’s most important economic centres. The system is currently the leader in offering quality and quantity. To maintain this position in the future we are completely focussed on expanding and optimising the rail network. Using the same model, we are also seeking to further develop the western ports, thus offering our customers more flexibility to transport the increasing supply of goods quickly and efficiently to their European destinations. The aim is to offer a uniformly sophisticated rail system from the relevant entry and exit ports in Europe. It is here that the connection between the southern German regions and Rotterdam will play a key role over the next five years and beyond.
Ms Van Hoey Smith: EGS offers a European network from every deepsea port in Rotterdam and Antwerp. ‘Extended Gate’ is our term for all our inland terminals or those with which we work. We will most certainly further extend our network in southern Germany. I am sure that in five years’ time Rotterdam will not only be an alternative for southern Germany; it will be the best option. We are working hard to prove this.
Ms Rossmeier: With an improved hinterland product and increased trust in the stability of our service, our share will continue to grow.