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Maritime Economics Report: Tender for Container Terminal Altenwerder

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  • 1. 10/25/2010 EUROGATE TENDER FOR CONTAINER TERMINAL ALTENWERDER Tender- CTA, Port of Hamburg | EUROGATE GmbH & Co. KgaA, KG
  • 2. Tender- CTA, Port of Hamburg 2
  • 3. Tender- CTA, Port of Hamburg CONTENTS 1. PREFACE ................................................................................................. 6 2. SUMMARY OF BID OFFER ....................................................................... 7 3. UNDERSTANDING CONTAINER TERMINAL ALTENWERDER (CTA) ........ 8 4. COMPANY INTRODUCTION- EUROGATE GMBH & CO. KGAA ............... 12 A. ....................................................................................................... COMPANY PROFILE ........................................................................................................... 12 B. ............................................................................. ORGANISATIONAL STRUCTURE ........................................................................................................... 13 C. ....................................................... AWARDS AND ACCOLADES OF EUROGATE ........................................................................................................... 17 D. ................... TERMINAL ALTENWERDER NEW DEVELOPMENT (CTA-ND) DEPARTMENT .................................................................................... 18 5. ABOUT CTA-ND ..................................................................................... 19 A. ............................................................................................ CTA-ND VISION/MISSION ........................................................................................................... 19 B. .......................................................................................................... BIDDERS PROFILE ........................................................................................................... 20 C. ............................................................................... ROLES AND RESPONSIBILITIES ........................................................................................................... 23 D. ............................................................................................. MARKETING STRATEGY ........................................................................................................... 24 E. ....................................................................................... PARTNERS AND SUPPLIERS ........................................................................................................... 25 6. OPERATIONS ......................................................................................... 30 3
  • 4. Tender- CTA, Port of Hamburg A. ......................................................................................................................... OVERVIEW ........................................................................................................... 30 B. ............................................................................................................................ SERVICES ........................................................................................................... 33 C. ............................................................................................................................ CHARGES ........................................................................................................... 34 D. .................................................................................................................. TECHNOLOGY ........................................................................................................... 34 E. .................................................................................................................... HINTERLAND ........................................................................................................... 38 F. .................................................................................................................................. SAFETY ........................................................................................................... 42 G. ........................................................................................................................... SECURITY ........................................................................................................... 44 7. FINANCIAL PLANS FOR CTA-ND ............................................................. 45 A. ................................................ PAST EUROGATE FINANCIAL PERFORMANCE ........................................................................................................... 45 B. .................................................................. OBTAINING FINANCING FOR CTA-ND ........................................................................................................... 46 C. ....................................... PROJECTED CONTAINER THROUGHPUT FOR CTA ........................................................................................................... 48 D. ............................................................................................................................ CHARGES ........................................................................................................... 51 E. ................................................................................................. REVENUE STRUCTURE ........................................................................................................... 56 F. ........................................................................................................... COST STRUCTURE ........................................................................................................... 58 4
  • 5. Tender- CTA, Port of Hamburg G. .......................................................... FINANCIAL SUSTAINABILITY OF CTA-ND ........................................................................................................... 60 H. ......................................................... FINANCIAL FEASIBILITY OF THE CTA-ND ........................................................................................................... 62 8. RISKS POSITIONS OF EUROGATE .......................................................... 63 9. BID OFFER ............................................................................................. 64 10. FUTURE DEVELOPMENTS OF CTA ........................................................ 66 11. CONCLUSION ........................................................................................ 69 5
  • 6. Tender- CTA, Port of Hamburg 1. Preface EUROGATE GmbH & Co. KgaA, KG is Europe's largest container terminal and logistics group. Together with Contship Italia, we operate marine terminals at the North Sea, the Mediterranean and the Atlantic, with excellent connections to the European hinterland. Along with container handling, we provide all services related to the "Box", from cargo-modal services of Container Depot and Container maintenance and repair. The financial crisis of 2008 caused a sharp downturn in the economy which similarly affected the maritime industry. World demand fell, which led to a significant decrease in international cargo traffic last year. The EUROGATE Container Port Terminal in Hamburg (CTH) experienced a fall of 20.5 percent in container handling in 2009 as compared to 20081, but as the world recovers from the crisis, the Port of Hamburg has reported positive trends of 4.3 percent increase (3.7 million TEUs) of container handling in the first six months of 20102. Strong growth is also predicted for the Port of Hamburg by world economist Claudia Roller. Total cargo handling is expected to grow by 8 percent and container handling is expected is expected to grow by 9 percent (Port of Hamburg). An encouraging sign can be seen from the recent shifting of feeder line services from Rotterdam into Hamburg by shipping companies Team Lines and APL. Though this deal was achieved by our competitor terminal operators HHLA, EUROGATE has similar plans to emulate the success of our rivals. In light of the strong future forecast of container shipping growth in the Port of Hamburg, The EUROGATE Company have been looking into opportunities to expand in the Port of Hamburg (HPA). With the experience of operating ten terminal sites under our belt, EUROGATE is looking forward to the possibility of operating Container Terminal Altenwerder (CTA), to gain a strong foothold in the second largest port in Europe. Yours Sincerely Glen Keith Chan Glen Keith Chan Director, CTA-New Developments, EUROGATE GmbH & Co. KgaA, KG 1 EUROKAI Annual Report 2009, (Abbreviated version in English) Page 9 of 32 2 Remarkable Growth for the Port of Hamburg in the First Half-Year 2010, http://www.hafenhamburg.de/en/news/remarkable-growth-port-hamburg-first-half-year-2010, Port of Hamburg 6
  • 7. Tender- CTA, Port of Hamburg 2. Summary of Bid Offer We present a bid offer of € 100 million, to be paid out in 3 periods. 2011 2021 2031 •Official takeover of CTA •€ 40 million will be paid upfront •€ 30 million will be paid in the second period •The remaining € 30 million will be paid out Summary of Developmental Plan 2011 2025 •Official takeover of CTA •Reinvestment of profits for CTA's expansion plans •Commencement of CTA's 5th berth 2030 7
  • 8. Tender- CTA, Port of Hamburg 3. Understanding Container Terminal Altenwerder (CTA) Figure 3.1 Under its previous management Hamburger Hafen Und Logistik Aktiengesellschaft (HHLA), CTA was established as the state-of-the-art container terminal using the most modern technology. In 2002, when CTA first started its operations, Hamburg was considered the fastest-growing container port in the North Range and in the ensuing years, CTA, with its performance potential in handling mega-containerships and its capacity growth, ensured that this remained so. The technology that HHLA Container Terminal Alterwerder previously used allowed it to be efficient and at the leading edge of logistics technology compared to its peers, a concentration of all that terminal technology has to offer. Such technology includes innovative two-trolley container gantry cranes, an unmanned transport system with Automated Guided Vehicles (AGVs), compact storage blocks with automatic stacking cranes and an almost entirely automated controls system. Together with the conveniently located adjacent goods traffic centre and on-dock rail terminals, with direct links to the autobahn and rail networks, CTA offers a comprehensive logistics system for the speedy unloading and reloading of cargoes. 8
  • 9. Tender- CTA, Port of Hamburg Figure 3.2 According to the website of HPA, Hamburg took over Antwerp as the second largest port in Europe in 2008, and has shown continuous growth in the volume of TEUs handled. This positions HPA as a port with great potential, particularly with its new agreement with Unifeeder to serve as a feeder hub to serve the Baltic Region in Europe. Traditional advantages of the location of Port of Hamburg lie in the following: o Enviable Geo-economic Advantage From its fringe position at the frontier of two economic blocks, Hamburg has shifted into the centre of the developing market of the whole of Central Eastern Europe. Hamburg has thus regained its original importance as middleman between the East and West. The city’s good relations with China also facilitate optimal links between the markets of Eastern Europe and Far East via Hamburg. Not only does the location have the advantage of speeding up waterborne traffic for the Baltic States which can pass through the Kiel Canal, it also has a dense network of rail links reaching far into the heart of Central Europe. o High Level of Locally Generated Cargo and Port-dependent Traffic Large quantities of goods which are produced, manufactured or consumed in the metropolitan region are transshipped through Hamburg. This can be seen from the following points: Almost 45 percent of goods handled are sourced from, or destined for the metropolitan region or have close and long-standing links to the port through logistics chains. 9
  • 10. Tender- CTA, Port of Hamburg Incoming sea traffic: 56 percent of cargo meant for the metropolitan region is logistically committed to Hamburg versus the outgoing sea traffic of 27.4 percent. The close links of port handling with the industry and commerce in the metropolitan region and beyond guarantees that port facilities are constantly in use and binds port customers to the location for the long term. o Efficient hinterland links via all carriers Being blessed with efficient land and water links in and out of the hinterland, the Port of Hamburg also offers general transport infrastructure enhanced by specific transport services offered by the port industry. Being Europe’s largest hub for rail borne container transport, the frequency of departures and network of feederships has been intensified in recent years. Hamburg’s efficient and reliable distribution services in the Baltic Sea transshipment in particular have given it the edge over competing ports in the North Range. Figure 3.3 From the above picture, we can see the primary hinterland links with the Port of Hamburg, comparing it with the picture below; we see the outreach that EUROGATE has with the railway services and inland as well as sea terminals that we operate. 10
  • 11. Tender- CTA, Port of Hamburg Figure 3.4 11
  • 12. Tender- CTA, Port of Hamburg 4. Company Introduction- EUROGATE GmbH & Co. KgaA a. Company Profile EUROGATE GmbH & Co. KgaA, KG was founded in September 1999, by merging the container business of both company in the joint venture of two German companies, EUROKAI and BLG Logistics Group. Each company has a 50 percent stake in EUROGATE. The company is based in Bremen, Germany. Since its inception, EUROGATE has developed ten terminal sites, and has handled a turnover of 12.5 million TEUs to become Europe’s largest terminal operator. Together with Contship Italia, of which EUROGATE has a 33.4 percent stake in, we operate marine terminals in the North Sea, the Mediterranean and the Atlantic, with excellent connections to the European hinterland. Figure 4.1 The main business that EUROGATE conducts is container handling on the continent of Europe. Secondary services are also available in the form of cargo modal handling services such as goods distribution and storage, intermodal services- carriage of sea containers to and from terminals- plus repair, storage of containers, their sale and purchase, technical services and IT services. High quality standards are expected from each of the EUROGATE Group companies. We distinguish ourselves by our high productivity rates and best coordinated work processes. The modern terminal technology we use is maintained by continuous investment. Not only relying on technology, we also rely on our employees to achieve high productivity rates. In the fiscal year 2009, EUROGATE reported a net income of USD 68.55 million and an employment of 4000 employees3. We are constantly looking into opportunities to enter strategic alliances and maintain longterm partnerships with other companies. In Bremerhaven, we are involved in two joint ventures. NTB North Sea Terminal is a joint venture with the world's largest shipping company Maersk Line, MSC GATE contrast, a joint venture with the second-largest shipping company, MSC Mediterranean Shipping Company. We have also gone into a joint venture with HHLA to form a new feedership company Feeder Logistik Zentrale (FLZ) to further strengthen Port of Hamburg’s competitiveness4. With the vacancy of Container Terminal Altenwerder (CTA), EUROGATE views it as an excellent opportunity for expansion in the Port of Hamburg, increasing our stake in the port and operating our eleventh terminal in Europe. We believe that by operating both CTH and CTA in HPA, we will be generating positive results by capturing a larger share of the market and strengthening our foothold there. 3 4 EUROGATE Fiscal Year 2009 statements, Thomson One Banker http://www.hafen-hamburg.de/en/news/hhla-and-eurogate-strengthen-hamburg-feeder-hub 12
  • 13. Tender- CTA, Port of Hamburg b. Organisational Structure The EUROGATE Management Group consists of four key members. The table below represents a summary of their responsibilities in the management group. The key management team oversees the general running of the EUROGATE Company, and directors of various departments report to the Management Team. A short profile of the mangement team is provided below. Thomas Eckelmann Thomas Eckelmann (born 1951) was deliberately educated with a view to taking over commercial management of Eurokai Group, founded by his father. Both before and during his time at university, where he studied industrial economics – beginning in Zurich in 1974 and taking his degree in Hamburg in 1979 – he gained practical experience in finance (Hamburgische Landesbank), in the international forwarding business (Jacky Maeder, Zurich) and in shipping (Brown Jenkins, London). Thomas Eckelmann entered the Sales Department of Eurokai KGaA in 1980. Two years later he was appointed to the company's Group Management Board, and on 3 August 1986 he became its Chairman. Since then he has worked intensively to build up container-handling business in Hamburg and abroad (Italy and Portugal) and to develop the areas of intermodal transport and distribution / counter-logistics. Since EUROGATE was founded in 1999, Thomas Eckelmann has been Joint Chairman of the EUROGATE Group Management Board along with Emanuel Schiffer. 13
  • 14. Tender- CTA, Port of Hamburg Emanuel Schiffer Emanuel Schiffer (born 1951) began his career as an assistant engineer at Hapag Lloyd, subsequently expanding his technical knowledge at the Wallenius Shipping Line, after which he took a degree at Bremerhaven Polytechnic. He practiced his engineering qualifications at sea, before starting a foundation course in economics in Bielefeld. In 1978 Emanuel Schiffer joined Bremer Lagerhaus Gesellschaft (BLG) as a trainee manager in the Technology Department. From 1981 he was in charge of planning and profitability for operations in Bremerhaven; five years later he changed to the Planning and Scheduling Department. In 1994 he took over as head of container business, and a year later he was appointed to the BLG Management Board. With the foundation of EUROGATE in 1999, in addition to his membership of the BLG Management Board, Emanuel Schiffer was appointed Joint Chairman of the EUROGATE Group Management Board together with Thomas Eckelmann 14
  • 15. Tender- CTA, Port of Hamburg Andreas Bergemann Andreas Bergemann was an active trade union member in various different functions for 18 years. He started out as Regional District Youth Secretary with the ötv union (later ver.di), where he subsequently held the position of Trade Union Secretary in the Transport sector from 1995 to 2006 and from 2001 focusing on the Port of Lübeck. At the beginning of 2007, Andreas Bergemann was appointed Head of ver.di’s Ports division. In the same year he was elected President of European Dockworkers in the ETF (European Transport Workers’ Federation). Marcel Egger Marcel Egger joined the EUROKAI/EUROGATE Group in January 1991. Prior to that he was at BfG Bank in Hamburg, where he was responsible for accounting, audits and corporate business. Marcel Egger is a qualified banker and graduated as a certified banking specialist from the Banking Academy in Frankfurt am Main. For the past 18 years, he has managed finances as finance director in the EUROKAI and, since 1999, also in the EUROGATE Group. Since 01.07.2009 he has been the Group director for finances, controlling and administration. 15
  • 16. Tender- CTA, Port of Hamburg The hierarchal ownership structure of EUROGATE can be seen from the table below. It must be noted that while EUROGATE is a joint venture between EUROKAI and BLG Logistics Group, EUROGATE owns a number of container terminals and intermodal logistics company to provide a holistic service to shipping companies looking to transport their goods to the European hinterland. Figure 4.2 16
  • 17. Tender- CTA, Port of Hamburg c. Awards and Accolades of EUROGATE In our constant efforts to stay relevant and competitive, EUROGTE has been awarded the following awards in recognition of our efforts. Quality Awards Majority of the EUROGATE branches have been awarded the ISO9002, which was the standard for quality systems- the model for quality assurance in production, installation and servicing. 2000: Lloyd’s Loading List International Haulier of the Year 2006: No. 73 in UK’s Hot 100 fastest growing companies 2008: The prestigious IFW Award’s Freight Forwarder of the Year 5was awarded to EUROGATE in recognition of its effort in expanding across Europe, to develop in areas requiring a specialist focus, turning problems into opportunities and showing strong growth over the years. 2009: Second-runner up for Lloyd’s List awards, Best Container Terminal Operator of the Year from 2006-2009 2010: Container Terminal Hamburg stood out for its superb performance and was awarded the Container Terminal Quality Indicator (CTQI) standard for the second time running. The CTQI standard has been developed since 2007, the prime movers being the Global Institute of Logistics and Germanischer Lloyd. This internationally valid quality seal requires optimal operational processes and unified methods for the evaluation of performance. Membership and Accreditations We have been a registered member with the British International Freight Association, the International Federation of Freight Forwarders Associations and the Freight Transport Association since 1990. We are also an active member of a number of trade associations and business organisations including: - Chambers of Commerce (national and international) Local freight forwarders associations across Europe and across the FSU 5 http://uk.eurogate.co.uk/news/18/19th+June+2008...+Eurogate++FREIGHT+FORWARDER+OF+THE+YEAR+-+2008 17
  • 18. Tender- CTA, Port of Hamburg d. Terminal Altenwerder New Development (CTA-ND) Department A new department has been set up for the purpose of bidding and operations of Container Terminal Altenwerder (CTA), the CTA-New Development (CTA-ND) Department. This department will fall under the ownership of EUROGATE as well as two other venture capital firms that will be providing funds to the department. The responsibilities of CTA-ND can be divided into two stages: - Bidding Operations of Port Bidding Having conducted a feasibility study of the Port of Hamburg, the CTA-ND Department have successfully convinced the Board of Directors of the immense potential and returns that operating an additional terminal in HPA would bring. The heads of departments for CTA-ND will have to draft out the proposal and bid to present to the authorities at HPA. The timeline for this stage of the project started from early September 2010 and will end at late October 2010. The details that will be covered in the bid offer will include nonexhaustively: - Proposed strategic direction of CTA Projected finances estimates and backers Changes to infrastructure of CTA (if any) Proposed operations of terminal Proposed partners (operations, marketing, finance) During this period, the department will also have to work out agreements with various partners and enter into an understanding of the commitments that are entailed from their end should the bid of CTA be successful. Operations Should EUROGATE be successful in the tender, the next stage would proceed into operations of the port. The expected operations of CTA, taking into account of renovations and test runs, will commence in May 2011, and will last for 30 years, which is the length of the lease offered. More details regarding the operations of the container terminal will be discussed later on in the proposal. 18
  • 19. Tender- CTA, Port of Hamburg 5. About CTA-ND a. CTA-ND Vision/Mission Vision To be a leading world-class container terminal, internationally recognized for its efficiency, reliability and strategic alliances. Mission o For our Customers We aim to prevent and reduce unnecessary waiting time for ships to load and unload cargoes by innovating and optimizing our operations. o For our Partners and Suppliers We aim to establish a trustworthy relationship with our partners by delivering what we promise and always being fair and just in our business undertakings. o For our Employees We aim to be fair employers, by respecting, nurturing and supporting one another. 19
  • 20. Tender- CTA, Port of Hamburg b. Bidders Profile The selection of key employees to spearhead the running of CTA-ND has been made based on their past experiences in developing new terminals, as well as visions for the future. There will be three key persons spearheading the first stage of CTA-ND for the operations of CTA: Biography: Glen Keith Chan (Mr.) Number of years in EUROGATE: 10 Age: 40 Joined since: 2000 Position: Director Profile: Mr. Chan, who hails from Singapore, joined EUROGATE in 2000, one year after the inception of the company. Prior to EUROGATE, Mr. Chan was the Vice-Director of Operations at the Port of Singapore Authority (PSA) for 7 years. During that period, he was involved in several projects that included developing the then-new Eastern Sea Laem Chabang Terminal Co Ltd in Bangkok, Thailand. Mr. Chan was hired by EUROGATE in 2000; one year after the company was established to lend his expertise in running and developing new container terminals. Most notably, Mr. Chan was one of the pioneers in developing the logistics process flow in the Container Terminal of Hamburg. With Mr. Chan spearheading CTA-ND in the bid for CTA, the past experiences he will bring to the department will be greatly valuable in running the terminal. Areas of Responsibility Executive Board Coordination Operations Process Flow Purchasing, Supplies & Materials Intermodal & Logistics segment 20
  • 21. Tender- CTA, Port of Hamburg Biography: Vedrana Plestic (Ms.) Number of years in EUROGATE: 7 Age: 32 Joined since: 2003 Position: Vice-Director (Finance) Profile: Ms. Plestic graduated with highest honors from the Faculty of Maritime Sciences, Kobe University, Japan, and Graduate School of Maritime Sciences1. Upon graduation, she was immediately placed in the prestigious accelerated Management Associate program with EUROGATE, where she spent the past 7 years attached to three EUROGATE terminals located at Wilhelmshaven, Bremerhaven and Hamburg. Ms. Plestic was selected to be part of the pioneer team in CTA-ND due to her expertise in finance controlling. During the economic crisis of 2008, it was Ms. Plestic’s budget measures that ensure that EUROGATE reported a profit in the last fiscal year. Such accurate and precise budget control will be crucial in ensuring the smooth operations of CTA-ND, especially in the infant years of terminal operation. Areas of Responsibility: Finance (Controlling) Health, Safety and Security Environmental sustainability 21
  • 22. Tender- CTA, Port of Hamburg Biography: Eling Tan (Ms.) Number of years in EUROGATE: 2 Age: 34 Joined since: 2008 Position: Vice-Director (Corporate Communications) Profile: The amount of time that Ms. Tan has in EUROGATE is significantly shorter than her colleagues, but her additional to CTA-ND is not any lesser. Prior to that, Ms. Tan was with APL, a global shipping company providing transportation services to companies for 9 years. She has worked in APL offices in more than 6 countries worldwide, and helped APL to gain more than S$100 million in sales. The expertise Ms. Tan has in communications and partner relations will be valuable to the department as CTA markets itself to potential shipping companies. Areas of Responsibility: Corporate Communications Partner Relations Internal Audit Legal & Insurance 22
  • 23. Tender- CTA, Port of Hamburg c. Roles and Responsibilities A clearer representation of the different roles and responsibilities of the CTA-ND Department can be viewed in the table below. Internal Organizational Structure of CTA-ND EUROGATE CTA-New Development Director (Mr. Chan) Vice-Director (Ms. Plestic) Vice-Director (Ms. Tan) Executive Board Coordination Finance (Controlling) Corporate Communications Operations Process Flow Health, Safety & Security Partner Relations Purchasing, Supplies & Material Environmental Sustainability Internal Audit Intermodal & Logistics Management Legal & Insurance 23
  • 24. Tender- CTA, Port of Hamburg d. Marketing Strategy CTA-ND has identified several key markets in Europe and the rest of the world. One such key market is the Baltic Sea Region, and Poland, in Eastern Europe. When looking at the forecasted demand of east Europe, Poland has been showing a GDP growth even when OECD statistics in total have been negative. We believe it to be a market in strong development and with a strong growing demand, especially along with its entrance in the European Union. It is therefore a market we will highly try to specialize and market ourselves in. Poland also has a small port, which means it is unable to generate high economies of scale due to its limited capacity. This gives us an advantage because exports handled at our terminal and re-shipped to Poland will be cheaper than directly docking at Poland’s port. The ideal location of our terminal will therefore make sure that we can provide a better alternative for transport than the other ports. 2008 2009 2010 2011 Estonia -5.1 -13.9 0.9 3.8 Latvia Lithuania Poland -4.2 2.9 5.1 1 -18 -14.7 1.7 -3.5 -0.6 2.7 3.3 3.2 3.3 Another market segment we will be focusing on is the Baltic Sea region. As stated earlier we have the advantage of geographic location so that we will be able to use the sea for transportation, along with our strong relationship with, in this case, mainly Lübeck. Looking at Estonia, Lathvia and Lithuania, they are forecasted to have a GDP growth similar to the one of Poland, close to 4% by 2014 meaning that the demand will grow and therefore the dependence towards the shipping service that our terminal then can provide. Here, as well as for Poland, we can see the great advantage of our geographical location and knowledge of the area. Services and quality for all clients will be provided and guaranteed as well, regardless of the country of destination or origin. There will be no preferential treatment towards any country. To sum up, marketing will be directed to the key markets of on the Baltic Sea region and Poland mainly, to make sure that we capture the growing demand of the regions before anyone else does. 24
  • 25. Tender- CTA, Port of Hamburg e. Partners and Suppliers While EUROGATE provides logistics and operational support in running container terminals, CTA-ND requires financial backers and reliable supplies partners in order to be fully operational. Our partners come from a myriad of industry background, and are highly credited experienced companies. A brief description of our partners can be seen below: - Venture Capitalist(s) Given the slowdown in the economy during the financial crisis in 2008, EUROGATE and CTA-ND have decided to obtain 60 percent of our funding from two venture capital firms, leaving EUROGATE with the majority share at 40 percent. This unconventional method, while not the usual operating method of EUROGATE, is deem as a cautious move on the company’s end to safeguard itself against the potential risks of yet another slowdown in the next 30 years. The two venture capital firms that CTA-ND have chosen to work with are chosen due to their o Bessemer Venture Partners (BVP)6 In 1872, Henry Phipps, Jr. and Andrew Carnegie co-founded Carnegie Steel, an innovative steel producer that commercialized an industrial process licensed from Lord Henry Bessemer. When they sold their startup 29 years later, Henry formed a family office to re-invest his proceeds into other entrepreneurial ventures like his own. He adopted the Bessemer name to honor the inventor behind his start-up’s success. A century later, Bessemer Venture Partners (BVP) continues the longestrunning record of success in the venture capital industry. Over the course of its history, investors at the firm formed or funded over 100 startups that grew into independent public companies. They provided seed funding for early industrial companies like WR Grace, Ingersoll Rand and International Paper, retail innovators like Staples, The Sports Authority and Blue Nile, new drug developers like Isis and Perspective Bio systems, service pioneers like Gartner Group, Bright Horizons and Celtel, and high-tech innovators like Ciena, Parametric, VMX, DSP Group (now Intel), Versant (now Symantec), Maxim, Flarion (now Qualcomm) and Skype. 6 http://www.bvp.com/About/History/default.aspx 25
  • 26. Tender- CTA, Port of Hamburg Today, BVP has offices in New York, Silicon Valley, Boston, Mumbai and Herzliya and manages more than $2 billion of venture capital invested in more than 130 companies located around the world. Some of our portfolio companies, like Ungermann Bass and Verisign, were started in our offices. With our roadmap approach to investing, BVP seeks out entrepreneurial opportunities across industries and geographies. Our partnership with BVP stems from a common understanding of the immense potential that CTA possess in becoming a leading port together with EUROGATE’s existing Hamburg Container Terminal. o MTI Partners Ltd.7 MTI has been investing since 1983, helping entrepreneurs realize their visions and stakeholders create value. MTI’s hands-on approach ensures that it is a leader in the field of technology venture capital. Our team, consisting of proven business builders and experienced leaders in the technology sector, are all technically qualified, making sure that we all have the knowledge and skill set to help realize latent potential. MTI takes a highly proactive stance towards its portfolio, guiding and assisting companies through all of the challenges that every rapidly growing business faces, at every stage. Headquartered in the UK, and with a US office in Boston, the portfolio of investments includes global companies in the Materials Technology, ITEC and Medical Technology sectors. MTI can invest at any stage of a company’s growth cycle, and across all geographies. Its typical investment over the life of a portfolio company is £5m/$10m, an amount that is multiplied by our ability to lead a syndicate. After learning about EUROGATE’s interest in operating our second container terminal in Hamburg, MTI Partners have agreed to provide us with the funds needed to operate the terminal in exchange for repayment with interest at the end of a certain period. 7 http://www.mtifirms.com/ourbusiness.aspx 26
  • 27. Tender- CTA, Port of Hamburg - Suppliers o Gottwald Port Technology8 1. Cranes, 2. AGVs, 3. Automatic Stacking Cranes 4. Software Gottwald Port Technology, based in Düsseldorf, Germany, is a subsidiary of Demag Cranes AG. Founded more than 100 years ago, the company manufactures state-of-the-art equipment for efficient cargo-handling in ports and terminals under the "Gottwald" brand name. Thanks to their electrical drive concepts, these products, supplied by Gottwald to more than 90 countries worldwide, meet the steadily growing requirements of economical and environmentally compatible operation. As the inventor of the Mobile Harbor Crane and world market leader in this field, Gottwald Port Technology manufactures Mobile Harbor Cranes with lifting capacities of up to 200 tonnes and radii of up to 56 metres for all kinds of applications and for all sizes of ships in all types of terminals. Gottwald Mobile Harbor Crane technology – proven more than 1,000 times over worldwide – also extends to rail-mounted portal cranes and floating cranes. In the automation of port logistics, Gottwald Port Technology is also a pacesetter with its fully and semi-automated transport and stacking crane systems for container handling in maritime and river ports and in intermodal terminals. As a supplier of integrated systems and supplier of turnkey solutions, Gottwald also develops its own software and plans or optimises individual terminals and entire ports. The broad range of services available rounds off the company's range which is tuned to meet the exact requirements of its customers – in line with Gottwald's slogan "You Name it, We Crane it". 8 http://www.gottwald.com/gottwald/site/gottwald/en/about/Profile.html 27
  • 28. Tender- CTA, Port of Hamburg o Trucking: CONTAINER- TRANSPORT-DIENST (CTD)9 Innovation and flexibility are key words that connect to Container TransportDienst GmbH (CTD). Since 1974, CTD has been providing fast and efficient flow of goods in between the terminals and freight stattions in the port of Hamburg. In times of the global supply chain, the entire hinterland of Europe can be reached wtih the German seaports. CTD tailors solutions for clients who are themselves involved in tightly organized supply chains. In addition to flexible services, CTD relies on innovative techology and computer-supported planning accelerated transport services. Due to our 30 year expericne of operating in the Hamburg harbor, you will find that us the right person for cmopetent handling of your shipments. The close contact we have with the relavent authorities in the port ensures transportation without any loss of time. o Feeder Service: Feeder Logistik Zentrale10 FLZ was founded in 2009 as an independent company in a joint venture between the two port operators in HPA, HHLA and EUROGATE, with the latter company owning 33 percent in stake. FLZ recently signed a contract with Unifeeder, a feedership company with connections to the Baltic region to Baltic States and also countries such as Denmark, Finland and Russia. FLZ will offer an efficient ship planning and data platform for feedership clearance, a neutral coordination point and service facility for optimization of feeder clearance. This will result in a faster turnaround of feederships, cost reductions for shipowners and ultimately boost the competitiveness of the Port of Hamburg. As EUROGATE owns a 33 percent stake in FLZ, CTA will work with FLZ to offer feedership services to large ships, enabling the ships unable to venture 9 http://www.ctd.de/index.php/unternehmen.html 10 Hamburger Feeder Logistik Zentrale GMBH, Press Conference Release, 7 Jan 2010 28
  • 29. Tender- CTA, Port of Hamburg into the narrow waterways of the Baltic to deliver the cargoes to the European Hinterland. o Railway: TFG Transfracht11 Since 1969, TFG Transfracht has transported containers for shipowners and freight forwarders from German seaports direct to final consignees in Germany, Austria and Switzerland, and from first shippers to German seaports. TFG Transfracht connects three countries (Germany, Austria and Switzerland) and two seaports (Bremerhaven and Hamburg) with the AlbatrosExpress rail network. With more than 11,000 connections a year and 20 terminals, the AlbatrosExpress network is the most extensive rail network in European seaport-hinterland transport. TFG Transfracht sets high quality standards when transporting containers. These product and service standards can only be met with a staff of committed employees, a reliable system of quality management and competent partners. As a subsidiary of HHLA Intermodal GmbH and DB Mobility Logistics AG, TFG Transfracht has yearlong practicse and plenty of expertise to enable it to meet the stringent requirements of combined traffic. With turnover amounting to around 211 million Euros, a transport volume of 795,000 TEUs and a staff of 173 dedicated employees, TFG Transfracht is now the market leader for seaport hinterland traffic with German seaports, offering its customers the most extensive rail network in Europe. 11 TFG Transfracht , Business Profile http://www.transfracht.com/start/index.php?page=unternehmensprofil 29
  • 30. Tender- CTA, Port of Hamburg 6. Operations a. Overview CTA-ND understands that our future clients have high expectations for the efficiency and effectiveness of our terminal. Their demand for high standards is justifiable considering the fact that the operating costs of a typical post Panamax vessel can amount to US$10,000/day for insurance, wages and maintenance. Furthermore, the estimated depreciation cost of a similar vessel, assuming it has a 25 years life span, can also amount to US$10,000/day12. Therefore, we aim to provide services which enable them to reduce their makespan so that they can optimize the use of their ship. On our side, CTA will be able to increase its handling capacity as waiting times are reduced for vessels which require our services. CTA will operate 24 hours a day, 7 days a week. It will adhere to world-class standards in terms of service, safety and security. Due to the nature of port operation using AGVs (Automated Guided Vehicles), we are less susceptible to disruptions (labour strikes) and increased operational costs (employment wage increase). CTA’s operating model is demonstrated by the pictures and descriptions below. Figure 6.1 Figure 6.2 30
  • 31. Tender- CTA, Port of Hamburg Process of unloading containers from vessels for delivery via truck / rail 1. 2. 3. 4. Containers are unloaded from the ships and placed on AGVs AGVs transport containers to area of container storage Upon arrival, ASCs lift the containers and stacks them in rows Containers will either be lifted from storage and placed on i. Trucks for delivery or ii. AGVs for transport to railway 5. RMGs will lift containers from the AGVs and place them on waiting train cars. The above process is reversed for the loading of containers onto vessels arriving from truck / rail. Figure 6.3 Process of loading feeder ships / barges for inland waterway services 1. Containers are removed from storage by ASCs and place onto AGVs for transport 2. AGVs transport containers towards quay 3. Quay cranes lift containers on AGVs and place them onto feeder ships / barges *note if feeder ships / barges are available for immediate transport, AGVs will transport the containers straight to the feeder ships upon unloading from main vessels. The above process is reversed for the unloading of containers from feeder ships / barges. *note if main vessels are available for immediate transport, AGVs will transport the containers straight to the main vessels upon unloading from feeder ships / barges. 31
  • 32. Tender- CTA, Port of Hamburg In a bid to realise the goal of having a sustainable port, as well as to reduce pollution, CTA will be promoting feeder-services via our inland-waterways. According to reports13, the use of vessels for container transport has shown to be better in terms of energy consumption, pollution, and noise and traffic safety as compared to freight trucks or railway. Figure 6.4 13 http://marinelink.com/news/article/new-berlin-hamburg-water-transport-routes/331486.aspx 32
  • 33. Tender- CTA, Port of Hamburg b. Services CTA offers our clients impeccable services in terms of speed, quality and efficiency. We offer a wide range of services to cater to the needs of ship-owners and shippers. The types of services we offered can be categorized into the following: 1) Delivery 2) Handling 3) Storage 4) Inland waterway feeder services 5) Bunker 6) Miscellaneous / Special services The following gives a brief summary into the 3 main services CTA provides. o Delivery Due to CTA’s ideal location, it offers a variety of delivery modes. There are more than 50 trucking companies offering their services as well as a reliable railway network. With this tremendous network, cargos can be delivered to their destinations swiftly. Taking this from another perspective, cargos planning to be shipped out of Hamburg can arrive on time and loaded onto ships promptly. o Handling / Storage The combination of automation and advanced software allows for handling and storage of containers to be quick and reliable. With an advance computer system, tracking of containers in storage is hassle-free. This is crucial especially for reefer containers which require extra attention due to the nature of their contents. o Inland waterway feeder services This is an added service offered to shippers at CTA. Containers can be loaded from our terminal onto feeder ships located at the quay. The transport of containers using our inland waterway feeder services can reach destinations as far as Berlin via the Elbe-Spree inland waterway14. At present, there are a few inland river networks to choose from. They include the Spree River, the Havelkanal, the Elbe-Havel-Kanal, the Mittellandkanal, the ElbeSeitenkanal, Middle Elbe and Dömitz. With HPA and other port authorities promoting the use of such services, we can expect to see more river networks emerging. 14 http://marinelink.com/news/article/new-berlin-hamburg-water-transport-routes/331486.aspx 33
  • 34. Tender- CTA, Port of Hamburg c. Charges The charges for services offered by CTA will be almost similar to our existing container terminal in Hamburg, CTH. We hope to offer competitive prices which are fair and affordable for both shipowners and shippers. CTA-ND’s price structure for services in comparison to CTH (EUROGATE) can be found in the financial section of our report. d. Technology o Cargo Handling Technology The existing technology that HHLA Container Terminal Alterwerder uses allows it to be efficient and at the leading edge of logistics technology compared to its peers, a concentration of all that terminal technology has to offer. Such technology includes innovative two-trolley container gantry cranes, an unmanned transport system with Automated Guided Vehicles (AGVs), compact storage blocks with automatic stacking cranes and an almost entirely automated controls system. Together with the conveniently located adjacent goods traffic centre and on-dock rail terminals, with direct links to the autobahn and rail networks, CTA offers a comprehensive logistics system for the speedy unloading and reloading of cargoes. 16 Fourth Generation Super-Post Panamax Quay cranes will serve quayside operations. These cranes are 38 metres in height with an overhang of 50 metres, or 22 rows of containers. They have the ability of serving Post Panamax sized ships. Figure 6.5 CTA will handle ISO containers with the use of 65 AGVs operating at an average speed of 14km/h. These AGVs have the ability to handle up to one 45 foot container per trip. 34
  • 35. Tender- CTA, Port of Hamburg Alternatively, it can also be used to transport containers in other combinations such as one 30 foot container or two 20 foot containers as shown in the figure below. Figure 6.6 There will be the usage of Automatic Stacking Cranes (ASC) for port organisation. CTA’s 22 rows of stacked container storage will be served by 44 ASCs. The ability of these cranes to function in nearly all weather conditions enables CTA to have less disruption to its operations. The figure below shows an example of an ASC in operation. Figure 6.7 35
  • 36. Tender- CTA, Port of Hamburg 3 Rail-Mounted Gantry (RMG) cranes will serve as railway gantry cranes. The cranes will be placed across the railway tracks to serve railway loading / unloading operations. These cranes have lifting capacities of up to 50.8 tons. Their lifting heights can reach up to 18 metres with a span of 50 metres. This allows the cranes to serve up to 4 railway tracks. Their outreach is up to a maximum of 12 metres each side. The trolley transverse speeds and gantry travel speeds are 150m / min and 240m / min respectively. Figure 6.8 CTA will adopt the use of Management and Navigation software by Gottwald Port Technology to enhance the terminal operations. Successful integration of our automation equipment (AGVs & ASCs) is vital to the success of our terminal. Both the AGVs and ASCs have to work together in order optimise productive in port operations. Since the main bulk of the work is done by our AGVs, we aim to achieve efficient use of them. 36
  • 37. Tender- CTA, Port of Hamburg o Efficient use of AGVs AGVs have a maximum forward speed of 21 km/h and turning speeds of 10 km/h. Furthermore, it has the ability of crab steering. Its 357 horsepower diesel engine can carry 2 x 30 tons and operate at average speeds of 14 km/h. A robot refuelling vehicle allows automatic refuelling. CTA will have a linear layout (shown in Figure 6.7) housing 16 quay cranes along its 1.4km quay. The 1.0 km2 terminal will be serviced by 65 AGVs at any one point in time. Figure 6.9 CTA-ND plans to maximise the use of our AGVs during port operations. In order to do so, we have conceived an AGV deployment strategy. Our goal is to dispatch AGVs so that containers can be loaded/unloaded/stored within the shortest time possible. Consequently, we found the need for AGVs to work in tandem with the speed and operations of our quay cranes to produce an optimal throughput. The problem of AGV congestion may occur when we deploy too many for port operations. That would result in lower average speeds for AGVs navigating through the terminal. Moreover, there will be increased waiting times for AGVs if they arrive early at the quay cranes. That results in inefficiency. We have chosen to adopt the Minimum Cost Flow (MCF) algorithm to solve this problem. According to studies done on similar port layouts and settings, this algorithm produces the highest throughput and lowest times needed for an AGV to queue for a job. According to the study, having 60 AGVs operating under the MCF algorithm produces an average output of 72.660 containers processed per hour. This allows the average makespan of a ship to be reduced to 5.910 hours. 7. 37
  • 38. Tender- CTA, Port of Hamburg e. Hinterland The Port of Hamburg is the major international hub for container transport by sea and land, with an optimal hinterland link to Central and Easter Europe, Scandinavia and the Baltic region. Figure 6.10 Port of Hamburg is located such that it is able to act as a distribution point for large ships (Panamax-size) to dock at their container ports, unload and reload smaller portions of their cargoes into smaller ships and then shipped to ports further inland of Europe. This is called Feeder Services. All container terminals in the Port of Hamburg offers container feeder services, most recently in Sept 2010 it was reported that the Port of Hamburg had managed to lure several container feeder services away from Rotterdam15, the largest port in Europe, operated by Team Lines, a leading European feeder operator, and ocean carrier APL The feeder vessels includes deploying four ships each with a capacity of 1,400 20-foot equivalent units, on routes between Hamburg, Bremerhaven, and ports in Finland, Russia and Poland. Feeder Connectivity We believe that one main advantage that our terminal has, is the great geographic location providing a lot faster service to destinations north of Hamburg such as Scandinavia and the Baltic sea region. The location is giving the terminal the advantage of using the Baltic Sea as a way of connectivity to the northern part of Europe and providing the customers with a lot faster delivery service than other terminals are able to. There is as well a great advantage in the fact that customers can avoid the main traffic on the roads of Europe when wanting to transport cargo further north. Therefore this is something we wish to develop even further, making sure that we use our advantage in the most efficient way 38
  • 39. Tender- CTA, Port of Hamburg possible. In 2008 it was estimated that the feeder service had around 140 departures weekely and 2,6 million TEU of cargo was transported only to the northern locations of Europe. Today we believe that this service is enough to meet the demand needed but we expect growth within the near future, as soon as the economy is in for recovery, which means that we already now want to look at the possibilities of adding extra feeder service. Ensuring that we have the capacity needed to match demand as soon as possible. Figure 6.11 The decision by APL and Team Lines to focus feeder operations in Hamburg underlines the port's position as the leading feeder hub in northern Europe for the Baltic region. Statistics from HHLA shows that Hamburg has around 60 feeder services, up from 45 a year ago, and handles up to 160 feeder vessels every week. Rail Connectivity The Port of Hamburg also serves its European hinterland with a variety of rail links, amounting to 70 percent of long distance traffic being moved by rail- a figure unique in Europe. One such rail service includes Hamburg Port Railway, which was built by the government in 2009, around 220 trains with over 4300 railcars run on its railway tracks every day. 39
  • 40. Tender- CTA, Port of Hamburg The fact that CTA already is served with a rail station, making it a lot easier to transport the container from the ship to the railways, will contribute to the maintenance of our efficiency goal and not only make our terminal very attractive but also give us a great advantage over our competitors. We will be striving towards finding the right capacity and utilization needed for the rail station, making sure that the demand of transportation is satisfied. Not only will this maximize our profit, since capital will be efficiently used, but the more efficient flow time will also benefit our customers by making sure that their goods are delivered on time. The rail network transportation service will be offered to all customers wishing to transport their goods throughout Europe although the main focus will be aimed toward the countries east, south and west of Germany. Figure 6.12 Road Connectivity While the rail network connectivity will be focused towards destinations that are either further away or towards customers in need of very efficient delivery, the truck connectivity will have its focus on cargo transportation involving shorter routes. This system does not work as efficient when it comes to destinations further away, hence we will then provide with rail connectivity, so when looking at the speed, cost and flexibility the truck service will be offered to customers wishing to use the autobahn for transportation mainly within direct locations in Germany or to locations where then another mean of transportation is used for further delivery. We see that the customers using this service will mainly be 40
  • 41. Tender- CTA, Port of Hamburg associated to further production or warehouse locations in a region close to the terminal. We will of course have service provided even for customers wishing to use road connectivity to a destination further away although to ensure the most efficient and cost beneficial way rail transportation will be offered first. Figure 6.13 41
  • 42. Tender- CTA, Port of Hamburg f. Safety The safety standards of CTA can be classified into 2 categories; Safety of port terminal operations and Safety of ship navigation. o Safety of port terminal operations With the use of AGVs within the terminal, accidents involving humans transporting cargo via forklift or truck is greatly reduced. Strict rules will be enforced to prohibit vehicles or humans to enter the area where the AGVs are roaming freely. We have also noted that while AGV use can reduce human accidents, there is still a risk of accidents involving the AGVs. Hence, we have adopted the method of zoning to prevent the occurrence of accidents among the AGVs. This method involves the network of junctions and lanes within CTA to be partitioned into many zones with a rule to restrict vehicle movement. This programming rule works in such a way that an AGV which wishes to move into a particular zone has to ensure that the zone is free of other AGVs. In other words, only 1 AGV can occupy a particular zone at any time. CTA-ND pledges to uphold high safety standards. We have decided to enlarge the zones beyond the minimum safety requirement standards, even though it results in slight dips in efficiency levels. The enlargement of the safety zones will mean that the proximity of AGVs will be further apart, hence, reducing throughput. This shows our high level of commitment to promote and maintain the operational safety of CTA. o Safety of ship navigation The narrowest part of the channel near CTA is only slightly more than 300m. That distance is roughly the length of 1 Panamax or 9 Panamax ships placed side by side. Hence, there is a safety issue as a narrow channel causes ships to travel dangerously close to each other. Currently, shipping traffic within the port is being controlled by VTS (Vessel Traffic Services) which is located at Seemannshöf. Radars located along River Elbe are used to monitor shipping traffic. This allows the VTS to register and monitor ships entering the port. A sample of reporting procedures required for vessels is shown in Figure 6.9. 42
  • 43. Tender- CTA, Port of Hamburg Figure 6.1416 This information obtained from vessels reporting is crucial to minimise mistakes which may endanger lives as well as cost money. The VTS can now decide the time and the place which a vessel has to dock and whether the vessel docks port or starboard side. Communication with the VTS is possible due to transponders which are installed on vessels. Transponder signals transmitted by vessels are also detected by the AIS (Automatic Identification System). The AIS identifies the vessels and stores the information in the system. This can aid the traffic routing/control system which helps vessels navigate within the port. Moreover, a Vessel Traffic Emergency Centre has been set up in 2008 to enhance safety and provide better response to emergencies. Piloting services provided by Hamburg Elbe Pilot and Hamburg Harbour Pilot are available upon request. Furthermore, bigger container ships may use CTA in the future. As such, we aim to continue working closely with HPA to support their efforts in creating a safe environment for shipping traffic. As we recognise that shipping traffic management and safety is crucial to the reliability of Hamburg ports, we plan to contribute € 500,000 yearly to HPA for maintenance and improvement of navigational equipment (VTS radar beacons, buoys & beacons etc.) and to support the training of pilots who operate within Hamburg port. 16 http://www.worldvtsguide.org/MenuPages/GermanyMenu/Hamburg.html 43
  • 44. Tender- CTA, Port of Hamburg g. Security The International Ship and Port Facility Security (ISPS) code came into place to address the maritime security issue. The code was adopted by the International Maritime Organization (IMO) in December 2002; it was then adopted by the European Union and came into force in 1st July 2004. The ISPS Code demands the internationally standardized installation of preventive measures to obviate terrorist attacks on ocean-going vessels and port facilities. For the operators of port facilities, implementation of the code means that in addition to strict access control, numerous other measure for averting danger have to be complied with. In the Port of Hamburg’s area, the German Port Security Act gives the aforementioned provisions a more concrete, specific form and implements them locally. The act contains farreaching regulations so that the more stringent demands on security in the Port are satisfied. Abiding by the ISPS code, the projected security investment and operational costs for the port terminal for the 30 years under CTA will have strict security measures put into place to protect its premises. Such measures include: 1) 100% scans / checks on all vehicles / personnel entering & leaving CTA 2) 24 hour monitoring by the use of security camera and guards 3) Mandatory checks on dangerous cargoes 4) Conducting random checks on normal cargo at receiving / delivery points Security is as strong as its weakest link. CTA-ND recognizes that security is a joint effort by all parties which are linked to CTA. Hence, we want to improve security beyond our premises. To do so, we shall pledge a total of € 500,000 yearly to subsidize all efforts taken towards enhancing overall regional safety. 44
  • 45. Tender- CTA, Port of Hamburg 7. Financial Plans for CTA-ND a. Past EUROGATE Financial Performance17 We present a selection of the past financial statements, as well as selected analysis of these financial ratios to provide an overview of EUROGATE’s financial standing for the past 5 years. 2009 (USD 2008 (USD Mil) Mil) Net Sales or Revenues Total Expenses Profit Before Tax Net Income Total Assets Profit Margin (%) Return on Assets (%) Return on Equity (%) 2007 (USD 2006 (USD 2005 (USD Mil) Mil) Mil) 848.51 27.15 993.86 14.64 964.25 - 738.45 12.30 616.65 -22.90 68.88 68.55 1,451.91 178.49 161.91 1,373.55 - 111.63 92.24 833.88 126.37 119.17 672.05 8.1 18.0 - 15.1 20.5 4.7 13.0 - 13.4 18.8 18.5 56.9 - 48.7 66.2 Data for the year 2007 is missing due to incomplete data at the point of time of obtaining. However, if we should look at the overall trend of the financial performance of EUROGATE, we can see that the company has been maintaining a modest profit even at the height of the financial crisis in 2008, reporting a profit margin of 8.1 percent in 2009, and a healthy profit margin of 18 percent in 2008. What is notable here are the figures for Return on Asset (ROA) - ROA measures how profitable a company is relative to its total asset. EUROGATE has a ROA figure of 18 percent in 2008; this means that for the company made USD$ 178 million in net income before taxes for the total asset worth of USD$1373.55 million, signifying that the company is able to convert its assets into net income effectively. Looking at the Return on Equity (ROE) - a measure on how much profit a company makes with the money shareholders invested, we see that EUROGATE’s ROE falls between the ranges of 48.7 percent to 66.2 percent in its healthy years. This means that for 2008, 56.9 percent of the net income was generated using the money that shareholders invested in, also signifying that the company is using the money invested by shareholders effectively. 17 Summary of EUROGATE Financial Statements- Thomson One Banker 45
  • 46. Tender- CTA, Port of Hamburg b. Obtaining Financing for CTA-ND CTA-ND has adopted an unconventional funding method to obtain the required finances needed to operate CTA. We will be obtaining 70 percent of the funds needed from our company EUROGATE, and obtaining the other 30 percent from two venture capital firms, Bessemer Venture Partners (BVP) and MTI Partners Ltd. These two firms will provide an equal 30 percent of funds needed, and these two firms have been chosen due to their interest in the container shipping industry, as well as their confidence that their investment in EUROGATE will obtain a satisfactory payout. EUROGATE will be providing 70 percent of the funds needed, which is 210 million €. The other two venture capital firms will be providing 45 million € each. The loan amortization table is provided below. The repayment structure has been worked out such that they will be paid only from the sixth year, with an interest rate of 15 percent, which is higher than the market interest rate in the EU, over 20 years. Loan Term (years) Principal Loan Annual interest rate Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 Beginning Principal Loan (Millions of Euro) 45 € 45 € 45 € 45 € 45 € 45 € 45 € 44 € 43 € 42 € 40 € 39 € 37 € 35 € Yearly Payment 0€ 0€ 0€ 0€ 0€ 0€ 8€ 8€ 8€ 8€ 8€ 8€ 8€ 8€ 20 45,000,000 € 15% Interest Payment 0€ 0€ 0€ 0€ 0€ 0€ 7€ 7€ 6€ 6€ 6€ 6€ 6€ 5€ Principal Payment (Millions of Euro) 0€ 0€ 0€ 0€ 0€ 0€ 1€ 1€ 1€ 1€ 2€ 2€ 2€ 3€ Ending Principal Loan(Millions of Euro) 150 € 150 € 150 € 150 € 150 € 45 € 44 € 43 € 42 € 40 € 39 € 37 € 35 € 32 € 46
  • 47. Tender- CTA, Port of Hamburg 32 € 29 € 26 € 22 € 18 € 13 € 7€ 8€ 8€ 8€ 8€ 8€ 8€ 8€ 5€ 4€ 4€ 3€ 3€ 2€ 1€ 3€ 3€ 4€ 4€ 5€ 6€ 7€ Total: 14 15 16 17 18 19 20 115 € 70 € 29 € 26 € 22 € 18 € 13 € 7€ 0€ 45 € The total funds available to CTA-ND for the development and operations of the container terminal will thus be in this manner: 1. EUROGATE: 70 percent; 210 million Euros 2. Bessemer Venture Partners (BVP); 15 percent, 45 million Euros 3. MTI Partners Ltd; 15 percent; 45 million Euros Company Stake of Container Terminal Altenwerder 15 EUROGATE 15 BVP 70 MTI Partners 47
  • 48. Tender- CTA, Port of Hamburg c. Projected Container Throughput for CTA According to the Port Development Plan of the Port of Hamburg, the expected prognoses for the Port of Hamburg can be seen in the figure below. Figure 7.1 From the projections given in the Port Development Plan, it is projected that the volume of TEUs will increase yearly by 8 percent (from 2010 to 2015). It might be safe to adopt this estimate given the delicate economic recovery as a result of the 2008 Financial Crisis. However, in the RFP sent out by the Port Authorities, it was estimated that container turnover for the year 2025 will reach 27.8 million tons (an increase in cargo turnover of 9 percent year on year until 2025), of which by proportion that will go to CTA will reach 9.27 million TEUs. Given that the estimates by the Port Authorities in the RFP are more recent than the Port Development Plan’s (which was published in 2007), CTA-ND has decided to adopt the growth estimate given by the Port Authorities. The table below represents the volume of TEUs that the Port of Hamburg is expected to handle for the next 30 years, including the estimate for CTA as well- which is 33 percent using the figures given in the RFP- that CTA’s maximum capacity is 33 percent of the port’s maximum capacity, so by proportion CTA’s volume of TEUs handled would be 33 percent of the total. The figures from 2005 to 2009 were obtained from the website at Port of Hamburg. We did the projection of container throughput using a constant growth rate of 9 percent. 48
  • 49. Tender- CTA, Port of Hamburg The predictions were made from the most recent year of data available- which was 2009. We feel that although 2009 was a recessionary year, it provides a good starting point as the economy recovers from its shock. Vol. of TEUs Projected container throughput over 30 Years TEU Total TEU-CTA Years Figure 7.2 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 TEU Total 8.09 8.86 9.89 9.74 7.01 7.64 8.33 9.08 9.89 10.78 11.75 12.81 13.96 15.22 16.59 18.08 19.71 21.48 23.42 TEU-CTA 2.67 2.92 3.26 3.21 2.31 2.52 2.75 2.99 3.26 3.56 3.88 4.23 4.61 5.02 5.47 5.97 6.50 7.09 7.73 CTAWeighttons 27.41 29.54 31.63 31.37 23.49 25.60 27.90 30.42 33.15 36.14 39.39 42.93 46.80 51.01 55.60 60.60 66.06 72.00 78.48 % Change NA 9.57 11.60 -1.54 -28.03 NA 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 49
  • 50. Tender- CTA, Port of Hamburg 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 25.53 27.82 30.33 33.06 36.03 39.27 42.81 46.66 50.86 55.44 60.43 65.87 71.79 78.26 85.30 92.98 101.34 8.42 9.18 10.01 10.91 11.89 12.96 14.13 15.40 16.78 18.29 19.94 21.74 23.69 25.82 28.15 30.68 33.44 85.55 93.25 101.64 110.79 120.76 131.63 143.47 156.39 170.46 185.80 202.52 220.75 240.62 262.27 285.88 311.61 339.65 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 However, as this is a standardized straight-line projection, the model fails to take into consideration certain risk factors that affect the future volume of TEUs handled by CTA. Such factors include non-exhaustively: 1. Economic Recession causing slowdown in global shipping and demand of imports. 2. Inability of port to handle ever-increasing volume of TEUs due to limited terminal capacity Further explanations of the risks facing CTA and EUROGATE will be elaborated on later in the report. 50
  • 51. Tender- CTA, Port of Hamburg d. Charges A detailed list of charges that CTA-ND charge can be seen at the table below. We have provided a comparison to the charges that our counterpart at EUROGATE CTH charge, so as to give an overview of the fairness of our charges. Type of Services / Charges Berthing charges Vessels berthed at handling facilities will be charge berthing charges based on the vessels’ gross tonnage index. The duration of the berthed vessel shall be calculated at the time of docking until the time of casting off. The charges listed below have to be multiplied by the vessels’ gross tonnage index. i) For the first 24 hours of lay days or part thereof ii) For every additional 12 hours or part thereafter Vessels without proper Tonnage Measurements will be charged as follows: i) Per running vessel metre Surcharge for delays A surcharge will be imposed upon vessels which incur arrival and casting off delays which are not the fault of the terminal. This surcharge is necessary to maintain a smooth flow of traffic for the terminal The charges listed below have to be multiplied by the vessels’ gross tonnage index. i) For the first 24 hours of delay or part thereof ii) For every additional 12 hours Prices of Port Terminal Container Container Terminal Terminal Altenwerder Hamburg (CTA) (CTH) € 0.48 € 0.48 € 0.24 € 0.24 € 10.00 / 24 hours € 10.00 / 24 hours € 1.00 € 0.50 51
  • 52. Tender- CTA, Port of Hamburg or part thereafter Vessels without proper Tonnage Measurements will be charged as follows: i) Per running vessel metre € 20.00 / 24 hours - € 6.30 / ton € 6.50 / ton € 3.60 / ton € 3.75 / ton € 220 / container € 224 / container € 27.50 / container € 13.50 / container € 27.50 / container € 13.50 / container by arrangement by arrangement by arrangement by arrangement € 69 / container € 69 / container Weight Dues Charges are applied to goods which are loaded / discharged via CTA’s quay i) Vessels engaged in shipping (incoming / outgoing traffic) ii) Vessels engaged in shipping within Europe via inland waterways (incoming / outgoing traffic) Handling charge i) Loading / discharging container to / from main, feeder vessel ii) Lashing / Unlashing / Securing Containers on vessels: Lashing / unlashing, using system lashings on board vessels Setting / removing twistlocks on board Lashing / unlashing with / of chains or wire Lashing / unlashing of general / heavy cargoes Setting / removing bridge fittings per employee and hour or part thereof iii) Restowing charge - ISO-container (full / empty) - Non-ISO container (full / empty) € 280 / container € 560 / container Delivery charge i) Loading / Unloading to or from rail/truck, per trip ii) Loading / Unloading to or from feeder vessel, per trip € 95 / per container € 50 / per container € 272 / container € 545 / container € 90 / per container 52
  • 53. Tender- CTA, Port of Hamburg Storage charge Free storage periods for full containers per day: Import: 3 calendar days after last day of the cargo discharge from vessel Export: 5 calendar days after day of delivery Transhipment: 6 calendar days Hazardous cargoes: 1 calendar day after cargo has been received No free storage for empty containers and transit containers. Per full container (20’) Per full container (40’) Per full container (more than 40’) Non- ISO full Containers Per empty container (20’) Per empty container (40’) Per empty container (more than 40’) Non- ISO empty Containers € 30 / day € 60 / day € 85 / day double rate € 15 / day € 30 / day € 42.50 / day double rate € 29 / day € 58 / day € 87 / day double rate € 14.50 / day € 29 / day € 43.50 / day double rate €110 / container €4.50 / container € 42 / per change €109.50 / container €4.50 / container € 41.50 / per change € 90 / container € 90 / container € 70 / container € 90 / container € 13 € 105 / € 13.50 € 140 / container Refrigeration & temperature maintenance: First 24 hours or part thereof For each subsequent hour or part thereof - Changing temperature cards Movement charge i) Per container movement from / to rail cars / trucks ii) Per container movement within CTA Security charge i) ii) Per container (full / empty) Per movement of container 53
  • 54. Tender- CTA, Port of Hamburg for inspection (empty / full) Inland waterway feeder services Bunker Services container Refer to operators for charges - Refer to bunker supplier for bunker prices Miscellaneous / Special services charges i) Charges for certificates ii) Gassing / de-gassing iii) Status change Change to ship, weight, port of discharge Change to stock data iv) Interchange provision v) Sealing / resealing of containers At the gate Within terminal vi) Labelling / neutralising Labelling and neutralising of containers will be undertaken in conformity with regulations only following explicit written order Within terminal (including a maximum of 4 labels, staff and security vehicle, excluding container movement) - Additional labels vii) Visual documentation Provision of photographs and electronic dispatch, including security vehicle, excluding container movement viii) Guarding containers in hazardous-goods area (per day) ix) Masking minor damage € 41.50 / container € 40 / container € 220 / container € 221 / container € 90 / container € 90 / container € 40 / container € 90 / container € 90 / container € 42 / container € 45 / container € 90 / container € 45 / container € 90 / container € 90 / container € 6.00 / container € 90 / container € 6.00 / container € 90 / container € 90 / container € 125 / container € 125 / container € 63 / container € 63 / container 54
  • 55. Tender- CTA, Port of Hamburg x) Exterior cleaning of container, excluding container movement xi) Locking containers Harbour fund charge on top of total charges € 63 / container € 63 / container € 105 / container € 105 / container 1% 1.5% These charges are modelled after CTH, so as not to be in direct competition with our counterpart. Some of the charges are referred to the suppliers which we work with, and the revenue is such that we will seek a part of the revenue they earn from them. 55
  • 56. Tender- CTA, Port of Hamburg e. Revenue Structure The table below represents the sizes of the different container ships that will dock at CTA. To standardize the projection of our finances for the next 30 years, we will adopt an assumption that only Emma Mærsk container ships will dock at CTA. This will help us generate a model that provides an estimate of the revenue that will be generated. 1 2 3 Class Panamax (MOL Encore) Emma Mærsk CMA CGM CHRISTOPHE COLOMB Capacity (TEUs) Draft (m) Tonnage (GT) 5000 15000 12.04 15.5 53100 170974 13800 15.5 153022 The example that we will adopt to calculate the revenue is the one below: Example: An "Emma Mærsk" from docks at CTA to unload one-third of its 15000 TEUs to be transported via railway, trucking and feeder services, spilt equally (i.e. 1667 TEUs for each mode of transport) It also loads back 5000 TEUs to be redistributed via its route. The ship docks at the port for one week. There are no unexpected delays. Calculating from the table of charges for CTA, the revenue that CTA can earn from one Emma Mærsk is 2,871,162 €, or 2.87 million Euros. The detailed calculations for the expected revenue can be seen from the table below. Revenue Berthing Charges Weight Dues Handling Charges Delivery Charges Storage charges Movement Charges Amount 574,473 € 359,050 € 1,237,500 € 400,080 € (No additional charges) 300,060 € Total 2,871,162 € 56
  • 57. Tender- CTA, Port of Hamburg Given that a container terminal is considered to be running at full capacity when the utilization level is at 70 percent, and that CTA has yet to be running at full capacity currently, we have multiplied the number of Emma Mærsks expected to dock at CTA with the revenue that can be earned from the example above at a utilization rate of 60%. Note the very cautious and modest estimates that we are using here, to prove that even operating at very pessimistic expectations a profit level will be reported. TEUYears/Millions CTA 2010 2.52 2011 2.75 2012 2.99 2013 3.26 2014 3.56 2015 3.88 2016 4.23 2017 4.61 2018 5.02 2019 5.47 2020 5.97 2021 6.50 2022 7.09 2023 7.73 2024 8.42 2025 9.18 2026 10.01 2027 10.91 2028 11.89 2029 12.96 2030 14.13 2031 15.40 2032 16.78 2033 18.29 2034 19.94 2035 21.74 2036 23.69 2037 25.82 2038 28.15 2039 30.68 2040 33.44 CTAWeighttons 25.60 27.90 30.42 33.15 36.14 39.39 42.93 46.80 51.01 55.60 60.60 66.06 72.00 78.48 85.55 93.25 101.64 110.79 120.76 131.63 143.47 156.39 170.46 185.80 202.52 220.75 240.62 262.27 285.88 311.61 339.65 Number of Emma % Maersk(s) Change by GT NA 101 9 110 9 120 9 131 9 142 9 155 9 169 9 184 9 201 9 219 9 239 9 260 9 284 9 309 9 337 9 367 9 400 9 436 9 476 9 518 9 565 9 616 9 671 9 732 9 798 9 869 9 948 9 1033 9 1126 9 1227 9 1338 Projected Revenue (Millions of Euros) 289.37 315.42 343.80 374.75 408.47 445.24 485.31 528.99 576.59 628.49 685.05 746.71 813.91 887.16 967.01 1054.04 1148.90 1252.30 1365.01 1487.86 1621.77 1767.72 1926.82 2100.23 2289.25 2495.29 2719.86 2964.65 3231.47 3522.30 3839.31 57
  • 58. Tender- CTA, Port of Hamburg f. Cost Structure The following are the projected costs before operations of the terminal can be commenced; they include fixed and variable costs, over a period of 30 years. Fixed costs for operating CTA (2011) Class Technical Equipment and Machinery: Automated Guided Vehicles (AGV) Quay Cranes Rail Mounted Gantry (RMG) Automatic Stacking Crane (ASC) Operating System Cost Total (Millions in (Millions in Quantity Euro) Euro) 75 16 3 44 0.2 4.3 5 2.5 10 15 68.8 15 110 10 Administrative & Office Equipment: Marketing Office Supplies & Renovation Legal and Insurance Personnel Training 5 2 5 2 5 2 5 2 Infrastructure: Sanity Check of existing structures Safety Check & Regulations 5 5 5 5 40 40 5 5 Bid offer Miscellaneous: Other Expenses Total 287.8 58
  • 59. Tender- CTA, Port of Hamburg Detailed Breakdown of Operating Revenue and Costs for 2011 Operating Revenue Handling Fees Transport Fees Fees for Additional Services Storage Repair Maintenance Consulting Fees Building Rental Total: 97.80 € 88.26 € 20.41 € 30.10 € 25.80 € 11.00 € 16.00 € 289.37 € Operating Expenses Fuel and Energy Depreciation/Amortization Personnel Expenses Upgrading Cost 67.00 € 32.00 € 30.00 € 22.00 € Maintenance and Repair External Services Financing Costs (Repayment) 16.00 € 9.00 € 30.00 € Total 206.00 € Earnings Earnings before taxes Income tax 83.37 € 12.51 € Total Earnings After Tax: 70.86 € 59
  • 60. Tender- CTA, Port of Hamburg g. Financial Sustainability of CTA-ND We present the financial sustainability of CTA for the next 30 years. This is based on the assumption of 9 percent constant growth in the first 15 years, which then drops to a growth rate of 5 percent after 2025. Note that the loan repayment amount to our venture partners has been included in our operating expenses amount. Financial Projections of CTA 4000.00 3000.00 2500.00 2000.00 Operating Revenue 1500.00 Operating Expenses 1000.00 Earnings Before Taxes 500.00 Earnings After Taxes 2038 2036 2034 2032 2030 2028 2026 2024 2022 2020 2018 2016 2014 2012 0.00 2010 Millions of Euros 3500.00 Years Projected Financial Sustainability of CTA 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Operating Revenue 289.37 315.41 343.80 374.74 408.47 445.23 485.30 528.98 576.59 628.48 685.04 Operating Expenses 206.00 224.54 244.75 266.78 290.79 316.96 345.48 376.58 410.47 447.41 487.68 Earnings Before Taxes 83.37 90.87 99.05 107.97 117.68 128.28 139.82 152.40 166.12 181.07 197.37 Earnings After Taxes 70.86 77.24 84.19 91.77 100.03 109.03 118.85 129.54 141.20 153.91 167.76 % Change 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 60
  • 61. Tender- CTA, Port of Hamburg 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 746.70 813.90 887.15 967.00 1054.03 1148.89 1252.29 1364.99 1487.84 1621.75 1767.71 1926.80 2100.21 2289.23 2495.26 2719.83 2964.62 3231.44 3522.26 3839.27 531.57 579.41 631.56 688.40 750.35 817.88 891.49 971.73 1059.18 1154.51 1258.41 1371.67 1495.12 1629.68 1776.35 1936.23 2110.49 2300.43 2507.47 2733.14 215.13 234.49 255.60 278.60 303.67 331.00 360.79 393.27 428.66 467.24 509.29 555.13 605.09 659.55 718.91 783.61 854.13 931.00 1014.79 1106.13 182.86 199.32 217.26 236.81 258.12 281.35 306.68 334.28 364.36 397.15 432.90 471.86 514.33 560.61 611.07 666.07 726.01 791.35 862.58 940.21 Total 39443.31 28079.35 11363.96 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9% 9659.37 Comparing the projected operating profits of CTA-ND with what the port authorities projected, we have managed to forecast a higher level of profit. This is partly in due to the predicted higher container throughput as well as a cost-efficient operation workflow. Part of the profits will lend to the liquidity profile of the company, while a certain proportion will go into our philanthropic program. 61
  • 62. Tender- CTA, Port of Hamburg h. Financial Feasibility of the CTA-ND Breakeven Analysis: There will be two bouts of investment injection into CTA, the first one being the period when we first take over CTA for operations. The investment amount for the first period will go towards ensuring the safety and workability of the structures and machinery, as well as towards training personnel to minimise work interruptions and delays. The breakeven period for this first investment will be in 2014. The second investment injection will be in 2025, where we have made plans for 178 million Euros for a further development of 0.5 kilometres of the port. More details are available at the Expansion segment of the report. This 178 million Euros investment amount will stem from the retained profits of the port operations, and the breakeven year is expected to be reached within 2 years, by 2027. Net Present Value (NPV): The Net Present Value (NPV) calculates the profitability of the project by calculating the difference between the present value of the investment return and cost. Assuming a discount rate of 20 percent, the NPV for our project is 256.85 million Euros; this signifies that EUROGATE will stand to make 256.85 million Euros from the entire project, which is a very significant amount. Internal Rate of Return (IRR): From our initial injection of 300 million Euros, our IRR is 33 percent. This means that for any discount value below 33 percent, we will be able to at least break even from our initial investment. Given the market discount rate 20 percent, the project will not only break even, but also be profitable to the company. 62
  • 63. Tender- CTA, Port of Hamburg 8. Risks Positions of EUROGATE Strategic Risks, Market Risks and Operational Risks As a company with many port terminals and logistics company under its ownership, EUROGATE is exposed to the individual risks of its subsidiaries. Hence, there is a need to identify and categorize these risks such that any revenue and cost projection takes into account the risks inherent. In particular, the current risks facing EUROGATE in Hamburg is the growing size of container ships passing through River Elbe. Hence, the dredging of river Elbe’s shipping channel to allow for a salt-water draught of 13.50m throughput and 14.50m depending on the tides is of crucial significance. The deepening of the waterway is a vital prerequisite for maintaining and extending its position as a key hub for international container traffic in future. Delays in carrying out the work mean that shipping companies will increasingly look to other handling sites with greater ease of nautical access when planning their scheduled services, which over time would mean that developments in freight traffic might bypass the Port of Hamburg. The modernization and expansion of the regional road and rail infrastructure are required also to maintain the Port of Hamburg’s competitiveness, as well as to optimize the processes for the inbound and outbound of goods in the hinterland. Market Risks Although market indicators currently point towards a gradual recovery of the global economy, therein still remain a great deal of uncertainty towards the forecasts. Because of this uncertainty, EUROGATE may not achieve the projected figures for container throughput for the next 30 years. However, CTA and EUROGATE have diversified and mitigated the risks by optimizing our process flow such that container ships will face minimal delays and the most cost-efficient method handling of their containers. This is in line with the new priorities that shipping clients face- in the light of the downturn in international transport volumes and low transport and charters rate, these clients are more increasingly concerned regarding cost. So with CTA’s competitive market rates and efficient handling of cargoes, the risks of low demand will be mitigated. Liquidity Risk EUROGATE CTA-ND is exposed to the risk of its business clients defaulting on their payments. If such defaults do occur, CTA-ND will have difficulty meeting the payments to its suppliers. However, aside from that concern, there are currently no significant threats to EUROGATE’s liquidity standing. 63
  • 64. Tender- CTA, Port of Hamburg 9. Bid Offer After consideration of the operating revenue and expenses of CTA over the period of 30 years, EUROGATE is prepared to offer a suitable bid offer of € 100 million. We foresee that CTA has great potential for growth in the future and strives to bring out CTA’s full potential for growth, to serve the regions of Hamburg and beyond. The bid amount will be paid out in the following manner: 40 percent (40 million Euros) will be paid up front in 2011. The remaining 60 percent will be paid out in two periods of 10 years each. (I.e. 30 million Euros in 2021, 30 million Euros in 2031) CTA will be a sustainable terminal operating in tandem with the future plans of Hamburg Port Authority (HPA). One of the goals of a HPA is for the ports of Hamburg to be a Universal Port. With close collaboration, we foresee that CTA will be transformed into a world-class container shipping hub, attracting international shipping traffic into the region. CTA-ND will also be promoting the use of inland-waterway feeder services as one of its efforts towards sustainability. CTA-ND strongly believes in safety and security. We believe that it is a duty to provide both of it to our clients as well as the region of Hamburg. This gives everyone a peace of mind and generates confidence in the safety and security of the region. Hence, we will strongly support all efforts which enhance and promote them. In order to aid such efforts, we will pledge € 500,000 yearly to both areas. 64
  • 65. Tender- CTA, Port of Hamburg We have provided a brief summary of our development plans below: 2011 Official takeover of CTA 2016 Breakeven for CTA investment 2025 Reinvestment of profits for CTA’s expansion plans 2028 Breakeven for investment in CTA’s expansion plans 2030 Operation of expanded CTA terminal (5th berth) Further details can be found in our report. 65
  • 66. Tender- CTA, Port of Hamburg 10. Future Developments of CTA CTA operations will experience many changes in the next 30 years due to the ever-changing landscape of the maritime industry as well as global events. We acknowledge that CTA will face 3 main problems in the coming 30 years. We will encounter: 1) Increase in world demand for container handling services 2) Increasing competition from other terminals outside Hamburg 3) Stringent calls for environmental conservation As such, we have made plans to deal with these upcoming challenges. 1. Increase in world demand for container handling services We foresee that CTA will experience growth in container traffic in the future. We also foresee that the size of ships will gradually grow over time. We predict this by observing past trends as seen in Figure 5.1. Figure 10.1 The size of containers used is also predicted to change. At present, majority of the containers used are ISO 40 foot sized containers. However, there is a trend to use bigger containers such as ISO 48 foot or 53 foot sized containers. The reason behind the change may be due to greater economies of scale which shippers can exploit by using bigger sized containers. This is especially true for international ocean-going ships. 66
  • 67. Tender- CTA, Port of Hamburg Therefore, we plan to upgrade the capabilities of our equipment in order to cater to our clients. Our current AGVs can handle up to 45 foot container sizes. With the advancement of technology, we will upgrade our AGVs to handle larger container sizes. This will create more flexibility to our business model as well as allowing us to cater towards a larger pool of customers. We also recognise the need for our terminal to increase throughput through the possession of better technology and by improving operating efficiency. One of the solutions will be for us to upgrade our quay cranes to handle customers with larger ships. Figure 10.2 Gantry Crane evolution (Source: John Elliot, TOC 2005) We believe that technology will advance as the years go by. Unfortunately, we foresee that there are limits to the level of efficiency we can attain through technological upgrade. CTA’s present land area of 1.0km2 will pose a limit to the amount of storage space we have as well as the number of cranes and AGVs we can house. Moreover, the number of berths also restricts the volume of container traffic we can receive. We have come up with an expansion plan to cater to the potential demand in future years. We intend to carry out this expansion plan in the year 2025. The year 2025 was chosen because we foresee that we will encounter a plateau in our efficiency levels in year 2030 given CTA’s current land area. The buffer of 5 years will enable CTA to meet the demands for services when it is required in 2030. This ensures continuous growth of CTA without disruption. This expansion plan is done by extending CTA’s boundaries southwards towards the currently semi-vacant land. This will expand CTA’s land area by 0.5 km2. Furthermore, there 67
  • 68. Tender- CTA, Port of Hamburg is also potential for 1 extra berth to ease congestion at CTA. That will bring the total number of berths for CTA to 5. 2. Increasing competition from other terminals outside Hamburg In the future, newly constructed container terminals in the regions close by may be a threat to business. Established container terminals such as those in Rotterdam and Antwerp pose a similar threat. We believe HPA’s campaign of promoting the ports of Hamburg as one universal port will be successful. The port of Hamburg can be seen as an ideal one-stop destination for our clients worldwide to choose. On the part of CTA, we aim to assist HPA’s marketing plans 18 by providing low prices for our services. As a whole, Hamburg ports will draw in shipping traffic. This way, it will also result in benefits for CTA. More details can be seen in the marketing section of our report. 3. Stringent calls for environmental conservation Globally, many groups are calling for environmental controls due to increased awareness. We are aware that HPA is pushing for sustainable ports which can minimise the harm to the environment and promote environmentally friendly methods. CTA-ND hopes to help HPA achieve these goals by promoting the use of inland waterway services. This form of container transport is proven to consume less energy as compared to trucking services. We strive to be responsible operators of CTA who care for the environment. We will ensure that our equipment conforms to environmental standards as well as utilizing them in an environmental friendly manner. This includes lowering energy consumption and reducing pollution. Currently, a zero-emission battery-driven version of the AGV is under development. CTA will adopt it when it is available so as to be aligned to our goal of having a sustainable port. Moreover, we will plan to exceed the requirements of EU’s environmental control laws by placing in additional measures to cut down energy usage of the terminal. Other initivates which we will implement include the encouragement of our partner trucking companies to adopt the use of Euro 6 engines which are expected to be available in 2013. Thus, CTA does not concentrate sustainability efforts within our port alone. We extend our concern for the environment to our hinterland as well. 18 http://webcache.googleusercontent.com/search?q=cache:3h6HHYHqa5UJ:www.hafenhamburg.de/en/news/hamburg%E2%80%99s-port-lowers-fees-port-alliance-initiates-growthstrategy+how+much+does+pilotage+cost+in+hamburg&cd=3&hl=en&ct=clnk 68
  • 69. Tender- CTA, Port of Hamburg 11. Conclusion In conclusion, we believe that EUROGATE’s bid offer of € 100 million will make a significant different to the developmental plans of Port of Hamburg. Leading industry sources have indicated immense growth potential for HPA, coupled that with the vast experience that EUROGATE has in operating container terminals around the world, we believe that EUROGATE will be the best choice for HPA. The multiple awards that EUROGATE has won over the years have shown that we are the company to bring HPA into the global arena with the potential to overtake Rotterdam as the largest port in Europe. We look forward to a wonderful working relationship with HPA. -The End- 69

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