Fighting Recession with a diversified Portfolio: the presentation shows that diversified ports are watering the economic recession better than ports focused on single cargo.

1. Port Finance
Amsterdam
Fighting Recession with a
Diversified Portfolio
Richard Szuflak
www.euroports.com

2. Introduction
 The purpose of this paper is to assess the impact of the current
economic recession on volumes at European ports;
 We will look at different ports and trades and try to see if some have
been impacted more than others;
 And we will try to discuss a conclusion – if there is one…
 Three small points before starting:
• This is not a scientific work. This presentation aims at providing trends
rather than detailed analysis;
• Finding meaningful and coherent statistics is sometimes a challenge;
• Obviously transhipment hubs and gateway ports do not treat the same kind
of volumes however in this work we compare ports between themselves
irrespective of their main businesses, traffic line or dependence on key
industries.
2

3. Purpose of the paper
 The economic recession affects all businesses;
 Port operations, like any other segments of the economy, have been
hurt;
 In today’s presentation, we will try to see how ports have been affected;
 Are the effects been different for different ports?
 Is there a resilient model?
3

4. The Basics
 GDP growth always has been a proxy for seaborne traffic
and port handling;
 Everyone here has seen this graph showing that world
seaborne trade is growing faster than world GDP;
Seaborne Trade Grow
Faster than GDP
4

5. GDP is going down
 When GDP is down, what effect this has on port traffic?
Source: IMF April 2009 Source: Eurostat 15 may 2009 (Euro Area and EU)
5

6. Economic Production is going down too
Source: Eurostat 13 May 2009
6

7. Total Traffic in some of the largest European ports
 All ports claimed to have had a strong first half of 2008;
 Followed by a slower second half – ie after the summer and increasingly
towards the year end;
 However most ports have recorded a positive growth in 2008;
 That was on top of an average growth of 5% in 2007 for those ports;
Volume in mtons All cargo Containers RORO
Ports 2007 2008 % H2/H1 2008 H2/H1 2008 H2/H1 2008
Rotterdam 407 421 +3.5% -2.5% -1.4% -4.9%
Antwerp 183 189 +3.5% -3.2% -4.6% -8.9%
Hamburg 140 140 -0.0% -2.3% -2.3% n/a
Marseilles 96 96 -0.0%
Amsterdam 88 95 +7.9%
Le Havre 79 80 +1.6% H2 2008 witnessed
Algeciras 75 70 -6.6%
the start of a slow
Bremen 69 75 +7.9%
down. Container
Top 8 1 137 1 166 +2.6% and RORO trades
Ranking based on Total Traffic at each port were hit the most.
7

8. In Q1 09 the trend accelerated somewhat
-1% -10% -7% -10% +7%
100 95.0 94.0
90
80
70
60
50 41.8
37.3
40 29.4 27.3
30 23.4 20.9
18.0 19.3
20
10
0
R otterdam Antwerp Hamburg Mars eilles Ams terdam
Q 1 08 Q 1 09
In million tons
8

9. We turn our attention on Container Trade
 Top 10 container ports in Europe is shown below;
 The 2007 growth for those 10 ports was +13%
 2008 still posted a gain;
 But that was a strong deceleration against 2007; -18% -16%
3,000
2,738
2,590
Volume in mteus
2,500 2,250
PORT 2007 2008 % 1,955 2,030
2,000
Rotterdam 10.8 10.8 -0.2% 1,700
Hamburg 9.9 9.7 -1.9% 1,500
Antwerp 8.2 8.7 +6.0%
1,000
Bremen 4.9 5.5 +12.0%
Gioia Tauro 3.4 3.4 +1.5% 500
Algeciras 3.4 3.4 -0.3% 0
Felixtowe 3.3 3.2 -3.0% R otterdam Antwerp
Valencia 3.0 3.6 +18.3% Q 1 07 Q 1 08 Q 1 09
Le Havre 2.6 2.5 -5.4%
Barcelona 2.6 3.6 +36.4%
Q1 09 vs Q1 08 showed tremendous
Top 10 52.1 54.3 +4.2% slowdown at the top two ports.
9

10. This is a Global Trend
8 7.21 6.97
7 6.27
6.02
6 5.62
5 4.6
4
2.77 2.56
3 2.3
2.07 2.08 2.13 1.93
1.74
2 1.53
1
0
S ing apore Hong -K ong Antwerp R otterdam L os Ang eles
Q 4 07 Q 4 08 Q 1 09
In million TEU
10

11. Further Comments
 Not all ports are equals:
 some have posted gains in Q1 09 like Valencia (+6.5%)
 some have limited the downturn like Genoa (-3.7%)
 Some have been awfully affected like Barcelona (-28%)
 To navigate through the storm, many ports have decided to freeze port
charges and dues
 In some cases, those charges will even be reduced;
 For Q1 2009, a decrease of 15 to 20% of container trade seems more or
less the average.
11

12. What About Dry Bulk Trade in Europe?
 Some of the largest bulk ports in Europe is shown
below;
 The 2007 growth for the top 10 ports was +13%
 However 2008 saw (again) a strong decline;
 Q1 2009 vs Q1 2008 for the top two ports resulted in a
dramatic decrease! -23% -40%
Volume in mtons
25,000
PORT 2007 2008 %
Rotterdam 90.6 94.9 +4.7% 20,000
19,845
Amsterdam 51.2 50.8 -0.8%
15,249
Hamburg 30.0 26.8 -10.5% 15,000
Dunkirk 27.6 26.8 -2.7%
Antwerp 24.5 27.3 +11.6% 10,000
6,630
Taranto 22.0 21.8 -1.0%
5,000 3,950
Gijon 18.3 16.9 -7.8%
Ghent 17.1 18.0 +5.3%
0
R otterdam Antwerp
Top 8 281.2 283.3 +0.7% Q 1 08 Q 1 09
Constanza and Immingham are missing in this list
12

13. Further Comments
 Main bulk ports traditionally serve power stations and steel mills;
 A smaller fraction goes into the agriculture industries (agribulk, grain,
fertilisers);
 A combination of huge decrease in European steel production, halt of
construction industry as well as less coal imports have hit bulk trade very
hard;
 This is of course linked with electricity consumption, automotive and
constructions industries;
 Q1 2009 shows a decrease of 20 to 30% on average;
 In theory, bulk trade should indicate the restart of the economy.
 Baltic Freight Index is seen more and more by analysts as a proxy to
estimate the state of the world economy.
13

14. Heavy Bulk impacted more than containers because of
steel production sharp decrease
 Container trade experienced a decrease, on average, by 15-20% for
a number of ports in Europe;
 Bulk trades have been impacted too, but we have two categories
here:
• Ports with a strong reliance on imports for steel plants have been
very affected:
– Marseilles: -51% and Dunkirk: -33% but -67% for ores
– Taranto: -52%
– All Spanish ports: -30%
- Ports with a larger hinterland or larger product-mix
– Amsterdam: -7%
– Rotterdam: -23% (but -55% for ores and + 23% coal)
 If ports with a better cargo mix are doing better, is it then possible to
look if ‘generalist’ ports have done better than others?

15. How ‘Generalist Ports’ have traded?
 We will now turn our attention to generalist ports: what are generalist
ports?
 Generalist ports have a ‘balanced’ flow of traffics between dry bulk, liquid
bulk, general cargo and containers and with no strong dominant cargo
line;
 The method is a bit ‘empiric’ – so forgive me for my choice - but the idea
is to select ports having a relatively balanced flow between different
cargo – and no steel plant around…
 We have selected 4 ‘candidates’: Proportion of traffics in % (2008)
PORT Bulk Liquid Containers
and GC
Zeeland ports 39% 36% 26%
Valencia 18% 6% 76%
Rouen 47% 40% 13%
Rostock 17% 22% 61%
15

16. This small sample shows inconsistent results but yet the
fall in traffic seems less significant than other ports
Volume in mtons
PORT 2007 2008 %
Zeeland ports 33.4 33.6 +0.6%
Valencia 53.3 58.7 +10.1%
Rouen 22.2 22.7 +2.3%
Rostock 26.5 27.3 +3.0%
Top 10 135.4 142.3 +5.1%
Performance Q1 09 vs Q1 08
-12% -16% -3% +12%*
Rostock Zeeland Valencia Rouen
+4% excepted grain exports
16

17. To Sum-up
2008 vs 2007 Q1 09 vs Q1 08
(average)
 Sample of Top 8 European ports (all cargo): +2.6% +5% to -15%
 Sample of Top 8 Container ports: +4.2% - 15% to -20%
 Sample of Top 8 Dry Bulk ports: +0.7% -20% to -40%
 Sample of 4 generalist ports: +5.1% +10% to -15%
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18. Is there a winning model?
 Ports are very diverse and it is hard to see anything else than common
sense;
 Container trade is down and seems to go down 3X faster than GDP;
 Bulk trade (specifically heavy bulk like coal and iron ore) has been
hammered by the production shutdowns in steel plants;
 Bulk ports with a more diverse cargo exposure or servicing a large
hinterland are holding better than ports solely exposed to the steel
industry;
 Although our sample is very small, generalist ports seems to hold a bit
better – but this should be tested on a greater sample.
 Basically, this is a validation of the old saying: don’t put all your eggs in
the same basket!
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19. History Shows…that there is hope!
 During past recessionary
periods growth reduced for
periods of 1-2 years;
Strong
 In the recessions of the early
Rebound
1980s and early 2000, world
maritime growth was
reduced/flat or negative;
 However this recession seems
considerably worse.
 Following a recession a strong
rebound in growth experienced
re-capturing the long-term trend
once the recessionary period 2009?
was over; 2010?
2011?
 It has to be seen if it will be the
case again;
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20. A few words on Euroports
www.euroports.com

21. EUROPORTS is a diversified port operator with
capabilities across all cargo segments.
Industrial
Operations Heavy Bulk
12% 21%
Bulk Liquids
6%
Containers
9%
Minor Bulk
26%
General Cargo &
Roro
26%
21

22. EUROPORTS is Built Along 3 Main Freight Corridors
Rauma
Varna
22

23. How did Euroports go through the storm?
 Euroports is a recently formed company which has aggregated port
companies with long presence in port operations (sometimes 100 years in
business);
 Across a very long horizon, we would see that Euroports’s companies
have regularly increased its volumes over the years (+2.5% per year);
 Losses across the portfolio are always recovered by cargo gains in
another facilities or sectors;
Cargo Split Euroports Excl. Industrial Activities, China The impact of the current recession is
and RORO limited at an annual volume decrease of
60,000
10% across the portfolio.
50,000
40,000
30,000
20,000
10,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
23 Heavy Bulk Minor Bulk GC and Containers Liquids

24. Thank You
www.euroports.com