Port of Rotterdam fully operational 1H20

Highlights of 1H20

• Total throughput 218.9 million t (-9.1%).
• Significant reduction in throughput of coal, ores and mineral oil products, small reduction in container throughput, increase in throughput of biomass and LNG.
• Revenue increased 0.7% to €360.4 million.
• Result on ordinary activities fell 4.8% to €128.4 million.
• The Port Authority's healthy financial position makes it possible to continue to invest at a high level (gross investments amounted to €136.4 million), for example in the Theemsweg Route, Container Exchange Route and Maasvlakte Plaza.
• Partly at the request of the central government, the Port Authority has reviewed investment projects that can both make the Netherlands more sustainable and accelerate the recovery of the economy (Starter Motor).

Allard Castelein, CEO of the Port of Rotterdam Authority, commented: “The Dutch economy and the Port of Rotterdam are dependent on developments in world trade. The negative economic impact of the COVID-19 pandemic is being felt worldwide. It should therefore come as no surprise that throughput volumes in the past 6 months were considerably lower than in the same period last year. On the positive side, the throughput volumes in the second quarter turned out to be better than initially expected. Nevertheless, it is not in Rotterdam's nature to sit back and watch. That is why the Port Authority has conducted a review to determine which public-private investment projects can be accelerated. In that way, the government and the port of Rotterdam can team up to further the sustainability of the economy, while giving it a kick-start at the same time.”

Dry bulk cargo throughput

The throughput of dry bulk amounted to 30.8 million t, 19% less than in 1H19. Dry bulk accounts for 14% of throughput in the Port of Rotterdam. Falling volumes were seen primarily in the throughput of iron ore and scrap (-22%) and coal (-34%).

The steel factories that use the Port of Rotterdam for the supply of ore are producing much less than usual. Demand for steel fell sharply from March onwards as a result of production stoppages in the automotive industry and construction.

A low gas price meant that more gas and less coal was used for power production. In addition, favourable weather conditions meant that there was an increase in the available wind energy, reducing the need to switch to coal-fired power stations.

There was a sharp increase in biomass (+109%) due to the continued rise in co-firing in power stations.

Eenergy transition progress

In the past 6 months, meaningful steps have once again been taken in the phased transformation of energy supplies and the encouragement of circular activity in the port. For example:

• Zero Emission Services (ZES) was established by Engie, ING, Wärtsilä and the Port of Rotterdam Authority to operate inland shipping with exchangeable battery containers.
• The environmental impact assessment and all the necessary permit applications for the Porthos project were completed and submitted to the competent authority in June. The investment decision is expected to be made as soon as the permits are received (2H21).
• The announcement of the construction of a site for electrolysers (for the production of green hydrogen) on the Maasvlakte with Shell as the first customer, at the same time as the construction of a public hydrogen network in the port area by Gasunie and the Port of Rotterdam Authority.

Ddigital transition progress

The ambition is to be the smartest port and, in that way, to strengthen its competitive position. Good results have also been achieved in the area of the digital transition during the past 6 months. For example:

• The further implementation of the digital port infrastructure for smooth and safe shipping handling and the management of the port infrastructure.
• The international expansion of PortXchange is going well. In the past 6 months, pilot projects were implemented with Shell in Houston and Maersk in Felixstowe and Algeciras.
• With the addition of a new route engine and the use of data that come directly from carriers and operators, Navigate is now more efficient and complete, and therefore more reliable.
• Nextlogic is operational.

The Port Authority’s financial situation

Revenue increased by 0.7% in the period under review to €360.4 million. The increase was primarily attributable to an increase in contract income, in part from new rental contracts and in part from the price indexation of existing contracts.

Operating expenses were 3.5% higher than in 1H19, mainly because of higher exploitation and other expenses due to some one-off effects. Labour costs fell by €1.8 million and this was also largely due to a one-off charge for the participation scheme for older employees in 2019. Depreciation and amortisation increased by €3.6 million, mainly because of the substantial investment programme of recent years.

The result on ordinary activities before tax for the 1H20 was €128.4 million, a decline of 4.8% by comparison with 1H19. A result after tax of €98.1 million was booked in 1H20.

Gross investments in 1H20 amounted to €136.4 million. The Port of Rotterdam Authority has deliberately chosen to continue investing in the Port Industrial Complex during the COVID-19 period. The most important investments for 1H20 were the construction of the Theemsweg Route, the construction of the Container Exchange Route and the extension of Maasvlakte Plaza. The level of investment for the whole of 2020 is expected to be in line with the €338.3 million invested in 2019.

Starter motor

Investments are good for the economy and they can help it to recover faster.

That is why the Port of Rotterdam Authority has reviewed the investment projects to see which of them can be brought forward. These are the projects that can accelerate economic recovery, working like a sort of starter motor to get the economy going again.

The Starter motor cuts two ways: it accelerates forward-looking investments in growth and earning capacity while also accelerating the energy transition and efforts to make the economy more sustainable. Examples of Starter motor projects are the construction of a hydrogen network, the roll-out of shore power and the construction of a heat roundabout.

Outlook

There is considerable uncertainty about how long the recession will last and when recovery will begin. The recovery of the world economy depends very much on whether there will be a second wave of virus infections. And another factor is whether the EU and the UK will manage to conclude a post-Brexit trade agreement in the coming months. A cautious recovery of the economy is expected in the rest of the year. As a result, volumes in the port will not decline further but there will probably be no full recovery of volumes. The total throughput volume for the whole of 2020 is therefore currently expected to be significantly lower than in 2019.

Read the article online at: https://www.drybulkmagazine.com/shipping/23072020/port-of-rotterdam-fully-operational-1h20/