What is the goal of coastal shipping

Coastal shipping: background, context, perspectives

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A major reason for the decline in coastal shipping in recent decades is the increasing quality and availability of the land-based transport infrastructure. Thanks to the expansion of roads and railways, almost every coastal region is now connected to the high-performance European transport network and linked to the hinterland and other coastal regions. The ship is no longer the only alternative means of transport for the exchange of goods between coastal regions.

While Europe's roads are increasingly threatened with traffic congestion, especially small ports away from the international seaports are competing for their share in the turnover of goods. The potential of coastal shipping may not yet be properly realized.
Nevertheless: The flow of cargo in the field of bulk goods between peripheral regions (with sea port access) and metropolitan areas will grow. The increased demand for transport can lead to increased demand for coastal shipping if the overall coastal shipping system (ports, ships in cooperation with shippers, recipients) actively adapts to transport requirements and develops efficient offers.

About the term coastal shipping

Coastal shipping today can be divided into three segments:

  • Container (feeder) traffic, i.e. the transport of standardized cargo in coastal traffic;
  • RoRo traffic, i.e. in particular the transport of rolling loads such as (loaded) trucks and rail wagons and
  • Dry and liquid bulk cargo and bulk cargo in coastal traffic.

Each individual segment exists parallel to the others and represents its own system with regard to e.g. necessary transshipment facilities in ports and ship construction. The following considerations about coastal shipping are based on the third category (unless otherwise stated), but can often also include the others Categories are transferred.

Economic context

The basis for the existence of coastal shipping (here: transport of bulk goods such as animal feed, grain, fertilizers, minerals, oils, chemicals and bulk cargo such as wood, certain building materials) and regional ports is the fact that certain goods travel between certain places of origin and destination can be transported more efficiently by sea than by competing means of transport (economic principle).

A sustainably successful coastal shipping system requires an economically sensible offer (ship transport in coastal traffic) that satisfies an economically meaningful demand (ship transport service). In the long term, factors such as environmental protection, regional tradition, local employment, and decentralized economic development only play a role for the coastal shipping system where they affect demand and supply via economically calculable factors (costs, revenues). A sustainably viable coastal shipping system is the result of transport decisions that make economic sense for the provider and the customer of the transport service.
A coastal shipping system is only viable if it is based on economic principles. Basically, the following important relationships exist:

  • Coastal shipping fulfills transport tasks that result from commercial transactions.
  • Coastal shipping serves the exchange of goods between senders and recipients in regions that have direct or indirect access to a suitable port.
  • For the handling of trade between regions that are separated by the sea (the sea as a natural barrier and thus the only transport route), ship transport is the only way of exchanging goods and is therefore not in competition with alternative means of transport.
  • For the handling of trade between regions that are on the same coast but are not separated by the sea, ship transport is an alternative to road and rail transport (sea as an alternative transport route).
  • As the distance between the point of dispatch and receipt increases from the coast, the attractiveness of alternative modes of transport for the uninterrupted transport of goods between regions that are not separated by the sea increases.
  • Ports fulfill the function of bundling the flow of goods between regions that are separated from the sea and are dependent on ship transport. The more efficient the sea and land connection of the port (i.e. the more easily accessible the port for ships and land transport), the larger the hinterland geographically, i.e. the further away the regions that can use the port as a transshipment point and the greater its potential handling volume .
  • Ports also fulfill the function of bundling the flow of goods between regions that are on the same coast. For these regions, sea transport is an alternative to land transport. As a rule, the shorter the distance or the more efficient the land connection between these regions and their ports, the greater the advantage of land transport over sea transport when exchanging goods between these regions

Regardless of the means of transport, the transport costs per ton generally decrease with increasing transport quantity / lot size ("economies of scale").

The value of a commodity depends on the place where the commodity has to be provided. The value of a commodity at the place of manufacture differs from the value of the same commodity at the place of consumption, among other things by the costs incurred by the transport of the commodity between producer (supplier) and consumer (customer). The higher the transport costs per ton, the stronger the influence of the transport costs on the value of the goods at the place of consumption, i.e. the total transport costs per ton increase with increasing distance, the value of the goods at the place of consumption increases with increasing distance from the place of manufacture. The maximum value of a product per ton at the point of consumption is limited by the price per ton that can be achieved on the market.

With a given value of the goods at the place of manufacture and a fixed market price at the place of consumption, this means that the higher the difference between the price of the goods per ton at the place of consumption and the value of the goods at the place of production, the higher the possible transport cost surcharge - i.e. the greater the possible spatial distance between Place of manufacture and consumption and / or the higher the possible transport costs per ton that the goods can "tolerate". Conversely: the lower the price per tonne at the point of consumption, the lower the possible transport cost surcharge - i.e. the smaller the possible distance between the place of origin and destination and / or the lower the possible transport costs per tonne.

As a result, goods of higher value (price / ton) can usually be transported over longer distances than goods of lower value. In addition to the transport distance, the transport quantity also has an influence on the transport costs. As the transport volume increases (batch size), the transport costs per ton generally decrease, i.e. even low-value goods can be transported over long distances if the transport volume exceeds a critical volume.

In particular, due to the differences in capacity (loading capacity in tons) of the means of transport, the transport costs per ton drop more sharply with increasing transport volume for ship transport than for land transport. In the case of low-value goods, the degression of transport costs must be fully exploited - i.e. large batch sizes - the further the transport distance to be overcome. Here, the capacity restriction of the individual means of transport limits the natural range of the transports. The maximum batch size for the railway is up to approx. 4000 tons (payload), for trucks up to approx. 30 tons, for ships up to approx. 300,000 tons (Kümo approx. 1,500-4,500 tons).

Against this background, it can be assumed that the competitiveness of ship transports compared to land transport in the exchange of goods between regions on the same coast (parallel coastal traffic) is potentially given if low-value goods have to be transported in large quantities over longer distances and competitiveness is to be assumed, if at least the first criterion (low-value goods in large quantities) is met. The competition between sea and land transport is irrelevant if the sea acts as a natural barrier and hinders the exchange of goods between regions. In this case there is competition between alternative sea transports (sea-bridging transport).

The importance of coastal shipping for the transport of bulk and general cargo has decreased in the past. Some reasons for this are in the area of ​​sea-bridging maritime transport:

  • Concentration of cargo flows, i.e. (decentralized and smaller) industrial production facilities in peripheral regions are abandoned in favor of large-scale industrial production facilities at central locations in metropolitan areas = decentralized transport demand at peripheral locations decreases, cargo potential for coastal shipping, the strength of which is the regular transport of smaller quantities of production facilities in peripheral locations Space to the industrial metropolitan areas is decreasing.
  • Increasing ship size, i.e. the international competitive pressure is increasing, therefore "economies of scale" are becoming more important in the transport sector. The demand for larger ships is increasing in order to take advantage of economies of scale in transport costs (euros / ton). Large ships usually call at large ports because the corresponding transport volumes can be bundled there and the nautical requirements are met. Smaller ship sizes, such as those used in coastal traffic, are becoming less competitive and there is a tendency for there to be less demand. This is accompanied by the loss of importance of small ports, whose task was originally to supply peripheral coastal regions.
  • Increasing standardization. The comparative advantages of industry in (labor-intensive) Northern Europe consist in the production of relatively high-quality industrial and consumer goods. The higher the quality of the goods, the more capital is tied up and the greater the pressure to bring them to market quickly. The requirements for transport chains for high-quality goods in terms of price, speed, reliability and security have become more stringent. In order to meet these requirements, the interfaces between different means of transport must be optimized in particular. Standardization (e.g. standardized transport containers such as ITU, Swap, TEU, etc.) enable time and cost savings.

One of the main reasons for the decrease in parallel coastal traffic is the increasing quality and availability of the land-based transport infrastructure. Thanks to the expansion of roads and railways, almost every coastal region is now connected to the efficient European transport network and connected to the hinterland and other coastal regions. The ship is no longer the only alternative means of transport for the exchange of goods between coastal regions. Industry requirements for the transport chains such as "just-in-time" delivery and speed (short capital commitment) can generally be better met by land transport means than with coasters and port handling facilities, which often no longer meet today's standards, as the efficiency of the land-based transport infrastructure increases. In addition, it is also true here that peripheral, relatively small production facilities, which would be particularly suitable for coastal shipping, are becoming rarer. This reduces the cargo potential for coastal shipping.

Today, parallel coastal shipments are predominantly container-feeder traffic. Ports supply metropolitan areas in coastal regions and the hinterland with goods that are loaded in containers and transported over any distance worldwide. The underlying trade flows are in particular the consequence of the strong production cost gap between, for example, Europe and China. The container-feeder traffic serves worldwide trade and is transshipment or transit traffic in the ports; the container-feeder traffic mostly does not serve the trade between neighboring coastal regions in the Baltic Sea area. Container shipping parallel to the coast in the Baltic Sea region is therefore not to be equated with coastal shipping in the original sense.

Sea ports and port functions

Sea ports in the sense of sea trading ports are places where goods of all kinds transported or to be transported by ship are transshipped (often transshipment between sea and land means of transport). In connection with the transshipment, goods are also stored, packed and also processed in a port.

For the regions in the immediate vicinity (the hinterland) and regions that do not have access to the sea, the ports fulfill the function of facilitating the movement of goods and goods by sea. This transport function of a port (transport offer) results from the need for transport (transport demand), which arises as a consequence of the trade (exchange of goods) between remote regions.

If the transport demand arises from goods and goods producing or requesting companies in the immediate vicinity of the port, then it is a local transport demand. If the transport demand arises from goods and goods producing or requesting companies in more distant regions without access to the sea, it is a question of transit transport demand. Local and transit demand generally exist at the same time and in parallel in all seaports. The shares of both components in the total transport demand in a port can, however, differ greatly and are correlated with aspects such as transport accessibility and local industrial and population density. The higher the transport demand at a port (for whatever reason), the larger the port.

Development of small ports

Small ports in peripheral regions were usually used to handle sea transport demand from local companies. The proportion of the transit volume, i.e. the port users who are not located in the immediate vicinity of the port, was low.
In the course of the industrialization process, companies emerged in many regions that produced goods - often on the basis of locally available raw materials and traditionally acquired skills. The production of these goods on an industrial scale meant that more goods were produced than could be purchased in the immediate vicinity of the company. The goods had to be transported from the production site to the places where there was a demand for these products. These were mostly metropolitan areas. The advantage of producing goods in a place that is far from demand (in the periphery) was thus given as long as the costs of the factors of production (capital, labor, land) on site plus transport costs were lower than the comparable costs of the required factors of production at the place of demand.

Technical progress increased industrial efficiency and with it the possibility of producing larger quantities faster and more cost-effectively. Production costs per piece usually decrease as the production volume increases. The larger the production quantities, the lower the unit costs - and the greater the possible transport cost mark-up that the goods can "bear" in order to be offered at market prices at the point of demand.

In the course of industrial mass production and the parallel development of more efficient means of mass transport, transport distances no longer meant natural protection against competition. Competition developed between companies that produce comparable goods at different distances from a market. The demand from metropolitan areas could also be met by companies in peripheral regions. This was and still applies not only to industrially manufactured goods, but also to agricultural products and raw materials.

In times of barely existing transport infrastructure on land, ocean-going ships were the only efficient means of mass transport. Companies in peripheral regions looked for locations close to ports and use local ports to ship their goods to the metropolitan areas. Companies in regions without direct access to the sea were looking for efficient transit connections for the import and export of goods. If a sea route was required, ports were selected that could best be reached from the respective location with the same transport offers - i.e. had the best hinterland infrastructure.

Recently there has been a tendency towards concentration. Industrial companies are merging and amalgamating to create larger central production units in one place, while smaller production sites are disappearing. This often affects companies in peripheral locations and applies on a global as well as on a national scale. Growing industrial transport demand is therefore concentrated on fewer ports, which as a result tend to grow steadily.There are fewer peripheral, smaller ports for local, decentralized manufacturing companies. The transport potential of these smaller ports is steadily declining, with agriculture and forestry being the predominant user. Agricultural and forestry goods will also have to be produced in peripheral regions in the future due to their land requirements.

With the increasing efficiency of rail transport, the ship is no longer the only efficient means of mass transport. The declining transport demand for industrial bulk goods in remote regions is thus divided between rail and sea. This is another reason for the declining demand for port handling in small ports.

In summary, it can be stated that the importance of small ports, which are predominantly located in remote areas characterized by agriculture and forestry, has continuously decreased. The handling volume in these ports has often reached such a low level that the costs for safe operation can no longer be covered. The sense of maintaining such ports in their traffic function in the changed environment is increasingly being called into question.

Future of coastal shipping

The importance of coastal shipping has steadily decreased in the past. The future development of coastal shipping in the Baltic Sea region depends on the extent to which the coastal shipping system can react to the changing demand for transport services in the region and can offer efficient, competitive offers.
This offer should take the following aspects into account:

  • Efficient transport (time, costs, quality, risk), i.e. high-performance range of transport services (ships, transshipment facilities, IT, networking with other transport carriers, etc.)
  • Analysis of the competitive situation (road, rail) and concentration on promising offers, i.e. on which routes and for which cargo there is - under today's framework conditions - an advantage for coastal shipping.
  • Concentration on cargo with a "Kümo-transport-specific" profile (relatively low value per ton with a relatively large batch size (= liquid and solid bulk cargo, bulk cargo (e.g. wood), little time sensitive, little susceptible to damage)
  • Transport infrastructure connection of the origin and destination of the cargo (production / storage / dispatch near the port and consumption / further processing / reception near the port)
  • Make offers in the area of ​​coastal shipping known to transport customers, ensure customer-friendly handling of sea transports, offer customers comparable information about the transport process as in truck transport.

Coastal shipping operates in an environment that is characterized by both positive and negative factors influencing development prospects. Important trends and framework conditions are in particular:

  • Rising costs for energy and fuels,
  • Strong competition from trucks and trains (both systems use infrastructure; costs for creating, maintaining and expanding this infrastructure are only partially charged to the modes of transport),
  • The proportion of container transports in ship transports is increasing, i.e. always bulk goods and bulk cargo are transported by container,
  • The proportion of standardized transports (containers, trailers, SWAP, etc.) in general cargo volume (general cargo) is increasing,
  • Ship sizes are generally increasing
  • Concentration of cargo flows, but increasing handling factor, i.e. goods are loaded, unloaded and reloaded more frequently,
  • Shipping companies / 3-PL / shipping companies decide more often about the means of transport / route, no longer the manufacturer of the goods to be transported,
  • General cargo / bulk cargo: Better to load smaller batches more often than larger batches less frequently (shorter capital tie-up time). This also means that the need for "capacity per order" is falling, but the handling factor is increasing,
  • Fixed routes, fixed timetables with a high frequency enable a high degree of flexibility and planning security for shippers who send less than “entire shiploads”.
  • Shipping companies are multinational corporations, and ship owners as captains are very rare.
  • The nature of the cargo flows in general cargo traffic (transshipment, transit of standardized cargo units) changes the demands on the location of a port: land-based accessibility for trucks and trains is usually more important than industrial companies (and thus transport demand) in the immediate vicinity of the port. This does not apply to cargo flows in bulk transport.
  • Decentralized demand for bulk goods is increasing due to changed energy supply strategies (decentralized CHPs, bioethanol / biodiesel production at locations close to ports). The energy producers' flexible purchasing strategies with regard to the origin and quantity of the required raw materials create new demand for flexible and efficient transport chains.

Theses on the future development of coastal shipping

Possible approaches for a revitalization of the coastal shipping system can be derived from these trends and framework conditions. These approaches are exemplary and should be understood as the basis for future discussions. A sufficient verification of the "theses" in practice has not taken place:

Charge starting point: Transport of raw materials for energy and fuel production in the Baltic Sea region

In the course of saving fossil fuels, biomass power plants are increasingly being used on a decentralized basis to generate electricity and heat. A large part of wood-like biomass is used as raw material. This raw material is usually obtained in peripheral regions and is in increasing demand in various metropolitan areas. With a relatively large mass, woody biomass has a comparatively low value and is therefore a potential cargo for coasters.

In the area of ​​fuel production, fossil raw materials (petroleum) are increasingly being reduced through the use / admixture of so-called biofuels such as bioethanol and biodiesel. Grain is usually used to produce bioethanol in the Baltic Sea region, and vegetable oil (especially rapeseed oil) is used to produce biodiesel. Grain and rapeseed oil are usually obtained in peripheral regions and there is increasing demand in larger ports (often the location of oil mills) or industrial locations. These agricultural products are already today and will be cargo for coasters in the future.

Starting point ship types: Flexible, cost-efficient transport carriers as an integral part of transport chains

In order to become more competitive with land transport carriers, i.e. in particular to keep the total transport costs per ton between the load source and the place of demand attractive compared to land transport carriers, flexible concepts for the coastal shipping system have to be developed. With regard to the tonnage used in coastal transport, in particular river-sea ships, tug-barge combinations and consumption- / cost-optimized ships that have been specially adapted to the transport demand still have potential for shifting cargo flows from land to water. It is generally assumed that maritime transport systems are somewhat more complex (often broken traffic), but in close cooperation and with the support of the shippers and port operators (long-term concepts, adapted frequencies, “just-in-acceptable-and-agreed-time” instead of “just -in-time “deliveries etc.) can be made competitive.

Starting point peripheral ("small") ports: Technical and economic optimization of the land-sea interface and active marketing

With its core functions of handling and storage, the port offers plenty of scope for cost savings and increased efficiency. Due to long-term losses in handling volume and declining commercial port use, many previously important trading centers have lost their importance as regional economic centers and their economic strength. Alternative usage concepts for harbors envisage stopping commercial use entirely and instead investing in leisure facilities / housing / tourism. With this change in use, the possibility of port transshipment disappears and with it the chance to participate in the increasing demand for coastal ship transport. Smaller ports are interesting for future goods handling if their handling and storage facilities are optimally tailored to the flow of goods from the hinterland and are technically and organizationally integrated into individual transport chains. A clear analysis of the current and future potential of a port is often insufficient, and the role of a pro-active service provider for transport customers in the hinterland is often not perceived. The ports could be developed to a greater extent instead of (as is often the case) predominantly managed.

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