Rotterdam Port with Lower Throughput in the First Half of 2020

The Corona pandemic is also leaving its mark on the Port of Rotterdam. In the first six months of this year, a total throughput of 218.9 million tons was achieved, which corresponds to a decline of 9.1 percent compared to the same period in 2019. The most significant decrease was in bulk goods.

(Rotterdam) In the first six months of 2020, the Port of Rotterdam achieved a throughput of 218.9 million tons. This is 9.1% less than in the first half of 2019, which was a record throughput at that time. Despite the disruptions caused by the COVID-19 pandemic to the economy, production, and logistics, the Port of Rotterdam remained 100% operational. The economic consequences of COVID-19 are the main reason for the decline in throughput volumes.

There was a significant decrease in the handling of coal, ores, and mineral oil products, a slight decline in container throughput, and an increase in the handling of biomass and LNG. Revenue increased by 0.7% to €360.4 million. The operating result decreased by 4.8% to €128.4 million.

The healthy financial situation of the port operation allows for sustained high investments (gross investments amounted to €136.4 million), among other things, in the Theemsweg route, the Container Exchange Route, and the Maasvlakte Plaza.

At the request of the central government, the port operation has compiled an overview of investment projects that can strengthen the sustainability of the Netherlands and accelerate the recovery of the economy (Starter).

Allard Castelein, CEO of the Port of Rotterdam: ‘The Dutch economy and the Port of Rotterdam depend on developments in global trade. The negative economic impacts of the COVID-19 pandemic are felt worldwide. Therefore, it should not be surprising that the throughput volume in the past six months was significantly lower than in the same period last year. It is also positive to note that the throughput volumes realized in the second quarter were less unfavorable than expected. It would not suit Rotterdam to simply remain inactive. Therefore, the port operation has created an overview of which public-private investment projects can be accelerated. This way, the authorities and the Port of Rotterdam can work together to make the economy more sustainable and give it a new impetus.’

Developments by Category of Goods Handling

Dry Bulk Goods

Compared to the first half of 2019. Dry bulk accounts for 14% of the throughput in the Port of Rotterdam. Volume declines were mainly seen in the handling of iron ore and scrap (-22%) and coal (-34%).

The steel mills that use the Port of Rotterdam for ore supply operated at a much lower production level than usual. Steel demand fell sharply from March due to production stoppages in the automotive industry and construction.

A low gas price means that more gas and less coal is used for power generation. Additionally, there was an increase in available wind energy due to weather conditions, resulting in a lower contribution to electricity production from coal-fired power plants.

Biomass increased significantly (+109%), which is attributed to the further growth of co-firing in power plants.

Liquid Bulk Goods

A total of 99.8 million tons of liquid bulk goods were handled. This was 10 million tons less than in the first half of 2019, corresponding to a decline of around 9%.

In Rotterdam, 46% of the throughput volume consists of liquid bulk goods. The handling of mineral oil products fell sharply (-22%). The decline in crude oil was only slight (-4%), while there was a slight increase in LNG handling (+2.6%). The handling of other liquid bulk goods remained at the same level as the previous year in the first half of the year.

Within the category of mineral oil products, heating oil was mainly affected by the decline. The crude oil handling decreased mainly due to a drop in demand. All major refineries therefore operated with a lower capacity utilization than usual.

The gas price has fallen even further due to the COVID-19 pandemic. Therefore, it has become attractive to use LNG (liquefied natural gas) from the North Sea and the Atlantic Ocean for electricity generation in Europe.

Containers and Breakbulk

In container handling, there was only a decline of 3.3% compared to 2019 (in TEU), which means 2.5 million tons less cargo. Shipping companies suspended up to 20% of all services in May and June. The decline in handling was also less severe, attributed to the increased call sizes and additional ships that called at Rotterdam. The amount of empty containers was significantly lower than in the same period last year. This is due to the decrease in imports from Asia, alongside an increase in exports.

The breakbulk segment recorded an 11% decline in the first half of the year. RoRo handling fell by 12%. The largest decline occurred at the beginning of the second quarter when the lockdown came into effect in most Western European countries. Towards the end of the quarter, the volume increased again.

Progress in the Energy Transition

In the past six months, significant steps have been taken in the gradual redesign of energy supply and measures to promote a circular economy in the port. Examples include:

Zero Emission Services (ZES) was established by Engie, ING, Wärtsilä, and the Port of Rotterdam to realize inland shipping with interchangeable battery containers.

For the Porthos project, the environmental impact assessment and all necessary permit applications were completed and submitted to the relevant authority in June. The investment decision is planned as soon as the permits are in place (second half of 2021).

Announcement of a site facility for electrolyzers (production of green hydrogen) on the Maasvlakte with Shell as the first customer, alongside the construction of a public hydrogen network in the port area by Gasunie and the port operation.

Advances in Digitalization

Our goal is to become the smartest port, thereby strengthening our competitive position. Good results have also been achieved in digitalization over the past six months. Examples include:

The further implementation of digital port infrastructure for smooth and secure ship processing and management of port infrastructure.

The international expansion of PortXchange is progressing well. In the last half-year, pilot projects were conducted with Shell in Houston and Maersk in Felixstowe and Algeciras.

Through a new route engine and the use of data directly provided by shippers and operators, Navigate has become more efficient, complete, and thus more reliable.

Nextlogic is Ready for Use

Port operation is financially healthy, with a sustained high level of investment. Revenue increased by 0.7% to €360.4 million during the reporting period. The increase is due to a rise in contract revenues, partly due to new lease agreements and partly due to the price indexing of existing contracts.

Operating expenses were 3.5% higher than in the first half of the previous year, mainly due to higher operating and other expenses due to some one-off effects. Personnel costs decreased by €1.8 million, which is also largely due to a one-off charge in favor of the senior citizens’ participation program in 2019. Depreciation increased by €3.6 million, mainly due to the extensive investment program of recent years.

The operating result before tax for the first half of 2020 was €128.4 million, a decrease of 4.8% compared to the first half of 2019. In the first half of 2020, a net result of €98.1 million was recorded.

Gross investments in the first half of 2020 amounted to €136.4 million. The Port of Rotterdam has consciously decided to continue investing in the port industrial complex during the COVID-19 period. The main investments for the first half of 2020 were the construction of the Theemsweg route, the construction of the Container Exchange Route, and the expansion of the Maasvlakte Plaza. The investment amount for 2020 is likely to be at the investment level of the previous year (2019: €338.3 million).

Kickstart for the Dutch Economy

Investments are good for the economy and can help it get back on its feet faster. Therefore, the Port of Rotterdam has examined which investment projects can be prioritized during this time. Projects that can accelerate economic recovery, comparable to a starter motor for a restart of the economy.

Starter acts like a knife with two blades: accelerating future-oriented investments in growth and profitability while simultaneously accelerating the energy transition and creating a more sustainable economy. Examples of Starter projects include the establishment of a hydrogen network, the introduction of shore power, and the construction of a heat exchange.

Outlook

There is great uncertainty about how long the recession will last and when recovery will begin again. The recovery of the global economy heavily depends on whether there will be a so-called second wave of virus infections. It also raises the question of whether the EU and the United Kingdom will succeed in agreeing on a trade deal in the coming months after Brexit. A cautious recovery of the economy is expected for the rest of the year. As a result, the volume in the port is not expected to decline further, but there will likely be no full recovery of the volume. Therefore, the total throughput volume for the entire year 2020 is expected to be significantly lower than in 2019.

Photo: © Port of Rotterdam / Danny Cornelissen

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