How Free Trade Zones Can Enhance Trade Development
Conference on “Global Connectivity With The
Mediterranean Basin, July 2nd & 3rd 2012, Treiste, Italy
Anand V SharmaMantrana Maritime Advisory Pvt Ltd, Mumbai, India
Contents
• Trieste Port Overview
• Free Trade Zones & Its Impact on Container Volume
• Jebel Ali – A Case Study
– Macro View
– Container Growth UAE
– Distribution of FTZ & Transshipment Traffic at Jebel Ali
– Commodities Growth at Jebel Ali FTZ
– Jebel Ali –Analysis of 2008 Statistics
– Jebel Ali – Mainline Vessel Calls Weekly
– Jebel Ali – Feeder Movement
• Prospects for Trieste
– EU-Mediterranean Container Distribution
– Features of Mediterranean Ports
– Strategic Advantage & Hinterland
– Italy Container Port Traffic
– Historic Port Traffic of Trieste
• Way Forward for Trieste
• About Mantrana
• End
2
Tertiary Hinterland
Secondary Hinterland
Primary Hinterland
3
Trieste Port Overview
www.mantrana.in
Population GDP (Const GDP (Current
mn 2000 US$ Bn) US$ Bn)Italy 60.3 1148.1 2061.0
Hungary 10.0 56.3 128.6
Austria 8.4 224.0 379.1
Poland 38.2 251.1 469.4
Slovakia 5.4 45.9 87.3
Croatia 4.4 28.0 60.9
Germany 81.8 2069.5 3280.5
Trieste
• Strategic Location
• Borders several land locked countries
• Minimum distance to the hinterland
• High Draft of 18 m
• Best suited for Low total logistics cost
• Cost competitive vis-a-vis to northrn ports
• Handles less than 400,000 TEU annually
Mediterranean Gateway
to EuropeWhat Should Trieste do to handle large
volumes of containers???
4
Free Trade Zones & Its Impact on Container Volume
www.mantrana.in
• Container Volumes at ports are driven by Transshipment, Hinterland & Free Trade Zones
� Not possible to design & Develop 100% transshipment port from day 1
� Transshipment is mostly induced as a follow-on effect of large container volume at ports
� Once initiated, gradually transshipment traffic becomes much larger
• Trieste due to its off route location, faces large deviation for mainline vessels for direct call
• Demography does not allow it to act as sole gateway port to Italy
• Free Trade Zone is an alternative way to increase volume
• Free Trade Zone coupled with Gateway to Central Europe
• Annual Traffic of 1 mn TEU attracts mainline vessel
• Trieste could achieve it only, if it has a larger synergy between Free Trade Zone and Port
Jebel Ali Free Trade Zone could be good example which is successful container port due to large Free Trade Zone
A Case Study of Jebel Ali
6
Jebel Ali – A Case Study (Macro View)
www.mantrana.in
Salalah
DammamShahid Rajaee
UAEJeddah
East
Ideally, a main line vessels due to its high
slot cost tends to move in a path of
minimum deviation. Other ports need to be
serviced using Feeder Vessels. However
large volume generated at the ports due to
domestic requirement or Free Trade Zones,
makes deviation to the remotest corner
commercially attractive
Large Volume Generated at Jebel Ali FTZ
renders deviation to normal course
commercially viable
7
Jebel Ali – A Case Study (Container Growth UAE)
www.mantrana.in
2
4
5
11
17
0
5
10
15
20
1991 1996 2001 2006 2011
Container Volume (mn TEU)
Jebel Ali
Khor Fakkan/Sharjah
Mina Zayed
Fujairah
Population GDP (Current GDP (Per Capita
mn US$ Bn) growth, %)
Saudi A. 27.4 434.7 3.8
UAE 7.5 297.6 1.4
Iran 74.0 419.1 5.8
Oman 2.8 57.8 3.9
• UAE with 7.5 mn population
handles 17 mn TEU
• Jebel Ali handles more than 75%
of the container traffic in Persian
Gulf
• Largest transshipment Port
• Traffic induced by Free Trade Zone
8
Distribution of FTZ & Transshipment Traffic at Jebel Ali
www.mantrana.in
4.2 8.7 11.8 11.6 13.0
0
20
40
60
80
100%
2002 2005 2008 2010 2011
inTrade VolumeAll values mn TEU
Transhipment + Empty
69.0%
24.1% 26.3% 25.3% 23.8%31.0%
75.9% 73.7% 74.7% 76.2%
Post 2008, Trade Traffic Seams to have Saturated. Still, due to large scale of operation total port
traffic continues to rise. Mostly driven by Transshipment.
9
Commodities Growth at Jebel Ali FTZ
www.mantrana.in
1.4
2.1
3.1 3.2
0.0
1.0
2.0
3.0
4.0
2002 2005 2008 2010
Container Volume (mn TEU)
Vegetables
Finished eatables
Chemicals, Plastics, etc
Wood Products
Textile
Machinery
Others
Jebel Ali created infrastructure suitable to store, trade and process to be consumed in the region.
This has led to large scale container inflow/Outflow from the port
10
Jebel Ali –Analysis of 2008 Statistics
www.mantrana.in
11.8 mn TEU
Trade Volume (30%)
Transshipment (45%)
Empty Unit (25%)
3.1 mn TEU
Imported For Domestic Consumption (12.6%)
Imported to process & export (3.6%)
Imported to store & Re-export (5.1%)
2.2 mn TEU
Traffic generated due to acting as agateway port to Middle East
Induced container handling due tolarge volume of container traffic
Imports (21.3%)
Export ( 3.6%)
Trading (5.1%)
Detailed Analysis of 2008 Statistics of FreeTradeZone Induced Port Traffic
Free Trade Zone has
induced close to 8 times
traffic in the Jebel Ali
Port (including
transshipment and
empty container)
11
Jebel Ali – Mainline Vessel Calls Weekly
www.mantrana.in
Northern Europe, 6
Mediterranean, 10
North America, 6
West Africa, 3
Red Sea, 16
East Africa, 4
South Africa, 4
South East Asia, 22
India, 26
Far East, 22Jebel Ali
• 48 Mainline Vessels (excluding feeder) call on Jebel Ali per week
• 25 continue on East-West border route, and 23 return to their region
12
Jebel Ali – Feeder Movement
www.mantrana.in
1%
37%
12%
20%
9%
8%7%5%
1%
Origin of Container Traffic to Jebel Ali
Australia
Africa
Europe
Far East
Indian Subcontinent
Mediterranean
Middle East
Americas
South East Asia
Feeder Movement Per Week at Jebel Ali14
10 109 9 9
6
4 4
21
• Jebel Ali - Gateway to Middle East, India and Africa
• 10-Yr CAGR of nearly 14% for container traffic
• More than 6,000 container vessels calls annually
• Middle East and Far East account for more
than 50% of traffic handled at Jebel Ali
• 80% of transshipment is for Middle East
• 75% movement is within Gulf
Source: DP World
Prospects for Trieste
14
EU-Mediterranean Container Distribution
www.mantrana.in
• More than 18 Mn TEU container
trade between Europe and Asia
annually
• 75% Share of Northern Ports &
25% Mediterranean ports
• Bulk opportunities arise from
Asian regions
• Transshipment facilitated growth
at ports like Gioia Tauro and
Algeciras
• Med ports lose out to northern-EU
ports in accessing high GDP
regions
Free Trade Zone enables
services to EU countries.
If Trieste could achieve
more than 1 mn TEU
traffic. It could attract
mainline vessels with idea
of Transshipment
15
Features of Mediterranean Ports
www.mantrana.in
Hub ports,
Transshipment rate of 87% & 90%
at Damietta & SCCT resp.
Largest
Transshipment
terminal in Med.
Handled 4.2 Mn TEU,
highest in Med
Transshipment hub for
NAPA ports
Excluding Transshipment traffic, Mediterranean Ports Share in EU total traffic reduces from 44% to 35%
Tertiary Hinterland
Secondary Hinterland
Primary Hinterland
16
Strategic Advantage & Hinterland
www.mantrana.in
• Ideal location of Trieste, enables it
to provide maximum sea travel and
minimum land travel for any
container destined for Austria,
Slovakia, South Germany, Poland,
etc
• Absence of Critical volume at the
port, discourages mainline vessels
to make direct call to Trieste.
• Transshipment at Tauro or Taranto,
feeder movement to Trieste
followed by last mile connectivity by
road or rail to Hinterland increases
total logistics cost making Northern
ports more commercially attractive
• Demography does not permit Trieste to act as Gateway port of Italy. However, it
certainly favors Central Europe
17
Italy Container Port Traffic
www.mantrana.in
1.6
3.3
6.6
9.0
0
2
4
6
8
10
1991 1996 2001 2006 2011
8.6Container Volume (mn TEU)
Gioia Tauro
Genoa
La Sepzia
Cagliari
Taranto
Leghorn
Naples
Venice
Trieste
• Gioia Tauro, largest transshipment terminal in Med. accounts for 24% of total Italian container traffic
• Trieste has a total share of 4% in Italy’s container traffic
• In order to attract, mainline vessel & transshipment traffic. Trieste would require to achieve critical
volume which could only happen by way of developing a Free Trade Zone.
18
Historic Port Traffic of Trieste
www.mantrana.in
0.0
0.1
0.2
0.3
0.4
1991 1996 2001 2006 2011
0.14
0.170.20
0.22
0.39
• Despite the deepest draft (18m), Trieste has only 4% share in Italy’s total container traffic
• Economic development in S. Germany, Czech Republic, Hungary, Balkans and Turkey
• More than 30% of container from these markets utilize intermodal services
• In the absence of Domestic Hinterland, Trieste would have to target Central & Eastern Europe
• Free Trade Zone and good inland connectivity would be key drivers of it
19
Way Forward for Trieste
www.mantrana.in
• Identify Trade Patterns of East Europe and Central Europe
• Develop Free Trade Zone with opportunity for Stake holder countries by way of Equity Stake
� Equity Stake to incentivize last mile connectivity by respective countries
• Develop large scale of operation
• Market to Shipping Lines Trieste
� Gateway to Central Europe
� Time Saving & Slot Cost Saving
• Provide bulk discount on THC for large volumes of container handled by Shipping lines annually
� Terminal Handling Charges (THC) constitutes a fraction of cost of product
� Discount on THC could be offset with the profit at Free Trade Zone
• Create an economy of Scale at Free Trade Zone for cost effective quality products
• Every Free Trade Zones is unique in its market focus, customer profile and Scale of Operation
� Trieste should work to identify its niche areas for Developing Free Trade Zone
20
About Mantrana
www.mantrana.in
• Dedicated Consultants for the Maritime Sector
• Undertakes economic advisory on the following maritime segments
√ Ports & Logistics
√ Shipbuilding
√ Shipping
√ Marine Tourism
• Following are key services provided by Mantrana Team
√ Market Study / Traffic Study
√ Project Feasibility Study
√ Business Plan
√ Bid Advisory
√ Due Diligence for investment
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