Cádiz port authority (APBC) borrowed heavily to fund its new container terminal, but, as yet, nobody has bid to operate it, despite three tenders having been issued, the last in June 2016. Industry experts say that the 60,000 m2 terminal, built on an extension of the Levante Dyke, is in the wrong place, is not deep enough and lacks a railway connection.

The existing port is located at the very end of a long peninsula and is effectively hemmed in by the city. Lacking available land nearby, APBC was forced to undertake expensive  reclamation work in the bay, linking the new operating area to the mainland and existing port with a new road bridge.

Juan Carlos Pery, a former head of Dragados, and a nativo de Cádiz, has long argued that the terminal should have been built at Cabezuela (on the ‘mainland’ at El Trocadero), where it  would have been easier to provide a rail connection, and where draught would have been deeper. Furthermore, trucks would not have had to move through the city centre in order to access facilities there.

However, Cabezuela comes under a different municipal authority, perhaps explaining why Cádiz’s politicians were so insistent on pressing ahead with the more expensive reclamation  option, rather than opting for a more logical location.

No way out

Financially, failure is not an option for the new terminal. Finding a concessionaire would release EU ERDF funding of €60M, while a further €60M from the European Investment Bank  (EIB) is dependent on EC Regional Policy Commissioner Corina Creţu signing off the project. Without this, APBC would be left with an enormous hole in its finances.

It has awarded Consultrans a €60,496 contract to undertake studies to identify an alignment for the missing railway connection. These should be completed by the end of the year, with  APBC arguing that the rail link “is fundamental to make the container terminal competitive”. It has also indicated that it is open to awarding a 50-year concession, instead of the  current 35-year concession plan.

Concerns remain that nobody of any note will bid, given that the incumbent container handler, Concasa, is struggling to retain existing traffic. The operator has sought permission from APBC to shrink its existing area on Reina Sofía quay from 34,000 m2 to 25,000 m2 , following the loss of major client OPDR to Seville (where the line now operates the container  terminal jointly with Boluda under a 30-year concession). In return, it has acquired a concession extension through to 2023.

The loss of OPDR in 2015 and Concasa’s inability to attract new clients resulted in a 10,000 TEU reduction in traffic, leaving just a single weekly call from MSC. For the rest of the week,  the terminal is effectively empty. In 2007, Cádiz registered a throughput of 147,000 TEU, dropping to 85,000 TEU in 2014 and just 74,321 TEU last year.

Signs of interest?

When the last of the three tenders was declared void last year, there was some speculation that the port authority could make a direct award, without going through a tender. However,  EU rules do not permit such awards to take place based on improved terms and conditions. Even so, according to APBC president José Luis Blanco, two terminal operators are showing  interest.

He declined to name names, but sources say the authority is hoping Yilport Holdings will step in. The Turkish operator owns another Concasa terminal, in Huelva, where it is in  partnership with Sandra Domécq. Her sister, Diana Domécq, owns Concasa Cádiz. It was thought that Yilport, which holds a 25% stake in CMA CGM, was interested in bringing both  terminals under its ownership umbrella.

However, the situation in Algeciras has complicated matters. Before (the now liquidated) Hanjin sold its majority stake in TTIA to Korean banks to reduce its debts, it had turned down  an option from Algeciras Bay Port Authority (APBA) to extend the terminal on Isla Verde. APBA decided to offer the available land on the extension of Isla Verde Quay as a third  concession (after APMT and TTIA).

This could be more attractive to Yilport than a more limited facility in Cádiz. The difficulty, however, is that Algeciras has no gateway role, and Yilport would be entering a crowded and  low margin transhipment market. In fact, even though it is offering a 50-year concession, APBA has again had to extend the deadline for bids for the projected ‘third terminal’ until 31  May.

Playing to strengths

APBC has been getting more and more flak from local media about the viability of the new terminal, but has fought back by arguing that Cádiz is the natural gateway for the Canary  Islands. In 2016, out of a total volume of 3.66 Mt of general cargo handled, 0.79 Mt corresponded to traffic to and from the archipelago. This is mostly carried as rolling cargo although  lo-lo container traffic amounted to 44,519 TEU. APBC’s commercial manager Kate Bonner believes that the port can continue boosting its market share due to economic recovery in the  Canaries.

“We offer the fastest transit times and three weekly sailings. We not only offer high quality service, but also very competitive pricing,” she said, adding that Cádiz is particularly  attractive for perishables, high value cargo and also JIT cargo in both directions. Most of the Islands’ banana shipments to the mainland are landed at Cádiz, helping to provide balanced trade.

“In 30 hours, a consignment from Cádiz can be in the Canary Islands. Other ports are restricted to transit times of 52-56 hours. That difference clearly favours us,” said Ms Bonner. In  the southern Spanish province of Andalucía, only Huelva and Seville offer realistic competition on timings, although both are further distant.

“Sailings from Cádiz make it possible to take maximum advantage of our proximity, given that a vessel leaving on Saturday allows products to be at market on Monday,” she says.

To make the terminal more attractive, Bernardino Copano, president of Cádiz’s promotion body Gades-Port, has suggested it should be developed as a “multimodal platform” and  provide bunkering facilities.

Structural issues

Spain is still trying to recover from the 2008-09 financial crisis and is hampered by being in the ‘euro straitjacket’, while on top of that the ports industry is confronted by structural  problems. As reported by WorldCargo News Online in March, following a vote in parliament, the country is effectively flouting European law over the SAGEP (stevedoring company)  system, but internally the situation is even more complicated, and the Development Ministry (MdF) has rejected a “heads of agreement” struck between Anesco (the national association of SAGEPs) and the port unions.

As part of this deal, stevedores have committed to increase productivity by 10-15%, but they want to see salaries reduced by no more than 10%, while Anesco is seeking reductions in  the region of 30%. Both sides are open to continuing negotiations on this point to ensure that the reform of stevedoring practices ordered by the European Court of Justice can be  implemented, despite the setback for the government in parliament.

However, the main sticking point for the MdF is writing guarantees into any subsequent legislation governing stevedores’ rights under any new employment structure.

MdF is also opposed to Puertos del Estado having to pay for any differences in labour costs that occur because of the subrogation process.

The employers believe that the Anesco agreement addresses most of the significant points covering organisation and productivity, as well as alluding to guarantees in the continuity of employment for existing workers.

However, in recent weeks, the government has made it plain that guarantees over the subrogation of workers cannot be included in the legislation that will replace the 2010 Ports Law.  On early retirement, both Anesco and unions have spoken about voluntary redundancy for workers older than 50 and mandatory lay-offs for those over 55.

Antolín Goya, head of the main dockers’ union, Coordinadora de Trabajadores del Mar, said that the sector still had much to do “to show the government that stevedoring reform can  fulfil [the changes] that Europe wants, but in a different way”.

One reason the reform process has stalled is that two leading port employers, Noatum and APM Terminals/Maersk España have different agendas. The Maersk position is that the talks  have included elements that are “irrelevant” or focus on relatively trivial matters. It does not place the same weight on wage cuts as Noatum, and does believe that there is an excess of workers at its operation in Algeciras.

The cost of doing business at Algeciras is currently deemed acceptable, since it is broadly in line with those of other regional transhipment hubs. This is borne out by the fact that, in  theory, Maersk could transfer many operations to Tanger-Med.

Its position is clearly appreciated by the port unions, which have continued to work relatively normally at facilities managed by APM Terminals in Spain (i.e. Algeciras and the former  Grup TCB terminals in Valencia and Barcelona), whereas Noatum’s ‘flagship’ operation in Valencia has been plagued by go-slows ever since the renegotiation of stevedoring legislation  came to the fore.

Maersk’s position is so at odds with that of other employers that it has been accused of “interference” in the negotiating process. Noatum’s position is more complicated than Maersk’s.  As a common user service provider, it has to offer the most competitive prices in order to retain traffic, so wants major salary cuts and significant increases in productivity. Indeed, its  position in Valencia leaves it dangerously exposed, since both its leading clients, Maersk and MSC, have their own operations in the port.

For the defence

In Portugal the presidents of the Lisbon, Setúbal and Barreiro municipalities have come out in defence of the Lisbon Barreiro port project. Even though Setúbal Port Community (CPS) has again expressed its opposition to the project, Fernando Medina (Lisbon), Carlos Humberto (Barreiro) and Maria das Dores Meira (Setúbal) have adopted a united position,  defending both the new terminal and the deepening of the access channel at the port of Setúbal. They maintain that there is a sound business case for creating more capacity on the  south bank of the Tagus.

For Setúbal, a deeper access channel is an obvious requirement for attracting bigger vessels to the port, and this is in line with government policy. Ms Meira said it is “essential to  have port capacities that can meet the challenge of the development and growth in national production”. The three municipal bosses see the Tagus and Sado estuaries as constituting a  multimodal regional and national port platform.

Making concessions

Three years ago, the Portuguese government set out to renegotiate existing port concessions to ensure that much-needed investment would be made to meet the expected longer-term  increase in traffic. The process has not been entirely smooth, and was resumed last August after a 12-month break.

Talks with Yilport, which acquired Tertir in September 2015, resulted in the government announcing in March that it had reached an agreement with Terminal de Contentores de Leixões (TCL), under which the Yilport affiliate would invest €43.4M to boost capacity at south terminal in return for a further five years added to its concession. The TCL concession,  which began in 2000, will thus now expire in 2030 rather than in 2025.

“This is a further step taken towards implementation of the government’s strategy to increase port competitiveness, which requires a tripling of container handling capacity,” said Ana  Paula Vitorino, minister of the sea.

The additional investment in TCL should be finalised within a period of no more than 42 months. The works encompasses the extension of the embankment (€15.9M) and equipment acquisition (€27.5M), to boost annual capacity from 490,000 TEU to 620,000 TEU. Last year, TCL reported a throughput across both north and south terminals of 660,000  TEU, up 5.5%.

As part of the agreement, TCL has agreed to offer average discounts on commercial rates of 20% compared to the maximum possible tariffs to ensure it remains competitive. TCL will  also assume all responsibility and investment risk associated with future civil works.

At the time of writing, TCL is ‘peaking’ at almost 3,000 TEU/ day over the quay, and is regularly dealing with over 20 ship calls/ week.

Since February, Leixões has had a weekly ro-ro link with Zeebrugge through CLdN RoRo. In another shipping development, Arkon Shipping has set up a new Portuguese-flag line Tejo shipping, offering shortsea dry bulk/general cargo services linking the Iberian Peninsula with North Africa and Northern Europe (Amsterdam). Two “mini-bulkers” are deployed in the  service, TEJO ALGÉS (ex-PARMA) and TEJO BELÉM (ex-CHAVES). In March, OPDR started a new shortsea service called POSS linking Seville and Setúbal with Tilbury and Rotterdam.  The line has reported that the transit time from Seville to Tilbury is just four days.  

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This complete item is approximately 2000 words in length, and appeared in the April 2017 issue of WorldCargo News, on page 17. To access this issue download the PDF here.