S1E2: Bart Kuipers, Erasmus Center for Urban, Port and Transport Economics

[Music] Hello, you are listening to the podcast of the Supply Chain Talks by the Port of Rotterdam. My name is Enouchele Hei and this series I discuss some of the most influential developments trends and innovations with industry leaders and experts in shipping and logistics. Today, joining me, Bart Kauper's Port Economist at the Rosmos Centre for Urban Port and Transport Economics with the Rosmos University Rotterdam. Yes, Bart, welcome to the show. Thank you. How are you doing? Thank you. I'm doing very well. Nice to be here. Well, wonderful. Yes, Bart, in one of your recently post messages on LinkedIn, you were telling us that you were enjoying the wild beauty of the Rotterdam harbor in the evening sun, but that you, because of the lockdown measures, was missing a typical Dutch snack, the bitter baller. Is that the most important thing that you can eat when you are at a harbor? Well, I don't think it's the most important thing. It's not very healthy. So, I often eat it at the entrance of the port of Rotterdam and I eat it to wait for the arrival of interesting ships. There is a very interesting part of the port where you can watch all those very big container ship approaching the port. But sometimes you have to wait and then these types of snacks is very nice. Yes, where does your passion for ships and ports and vessels, where does it come from? Well, I grew up in the vicinity of the port under the smoke of the port of Rotterdam, they used to say, in the then tiny village of Spakonism, that was when I was born, it was only 3,000 inhabitants and it developed into a city of 70,000 developments and quite a lot of the people that came to this town of Spakonism, they were working in the port. And also my parents came to Spakonism because it rose as a location also to the growth of the port in the 1950s and 60s. So, the development of the port and the growth of the port was really something that was in my DNA. Yes, wonderful, wonderful. So, that's your passion, that's where your passion comes from. Absolutely. Yes, your youth and your background, wonderful. So, let's also talk about the latest news because the last few months they have underlined a strong interdependency of world trade and container shipping and not only because of the corona pandemic, but also of course because of the recent blockage of the Suez Canal. So, what have you ever seen this kind of enormous disruptions in the global supply chain? No, this is very unusual and if you look at the statistics and those statistics are going back to some two decades, this is not seen in the maritime system, this type of disruptions or this type of lengthening of lead type, of lead times in shipping, it's unique, so to say. And well, the basis of course was COVID-19, which was well, it was a very disruptive influence in 2020. First of all, because of the lockdowns and all the blanks' sailings in the first half year, but especially with what happened in November, December when an enormous increase of the tariffs of the east-west rates occurred, in which the tariffs rose by a factor of four, they quadripled and that was very special and never seen in almost two decades, of which I have records. Yes, because you are actually walking along road already in shipping and in shipping and economics. So, what do you think, what will be the impact of the blockage? Let's focus also on the blockage of the Suez Canal. The Suez Canal blockage, well I think that will have a short-term effect. It has a big disruption and now and in the coming months, but it's building on top of more structural trends related to COVID-19. So, it was exactly the wrong time to have this type of blockage happening in the Suez Canal because of the already happening in the maritime supply chains. So, it increased the drama, so to say. Yes, so it is an increasing of the drama. Could we have done anything that would actually decrease the impacts like more collaboration or something like that? Well, I think that the cause of COVID-19 and the impact on shipping, I think that is hardly anything to do from the port perspective. There is an enormous growth of the amount of the economies of Europe and of the United States related to the underlying trends in COVID-19. Because of COVID-19, we cannot go to restaurants, we cannot go skiing, we cannot go on holidays. So, we spent our money on products. We all changed our houses to virtual offices. So, there is a big demand for hardware, for office desks. I especially very much needed to do some extra exercising and quite a lot of other people too. So, there is a real demand on running shoes, bicycles. And that meant that all those electronics, all those consumer products, all those sport products, most of it is still produced in China. And the effect of this huge demand for products instead of services, mainly coming from China, that was the real effect on the supply chain. And the port system and the container carrier system, well, they only can react. And what is sure that this influence is way too important and way too big for the container system to handle. So, that is something that happened and well, it resulted in this enormous rise of tariffs. It resulted in an increase of earnlability. And what is very important, it increased in a shortage of empty containers. Yes, because this has everything to do with our business model of sureing, of course. And in our last podcast, Annette Custer, our guest, she also left a question for you about reassuring. But because do you think is it a threat or an opportunity in this respect? Well, I think it's an opportunity. What you see right now is that the increase in tariffs is for some type of exporters way too high. It is related to the value of the cargo or is increasing the value of the cargo. And you should be aware that the container tariff is only a part of the total costs of exporting. You have also financial risks costs. You have also all kinds of other costs like repositioning costs, insurance costs, etc. It all adds up. And I think that for certain types of exporters, this will result in, I think, not reassuring. So, the production will not brought back to countries like the Netherlands. But I think of near-suring in the vicinity of the markets. And I think of North Africa, I think of East and Europe. So, I think that instead of producing in China, there will be a boost of producing in countries like Poland, Hungary, Morocco, etc. To be near the market. And you see that some very successful brands in fashion like Zara, they already have this near-sourcing strategy. They are sourcing their products from Portugal, from Spain, from Turkey, very close to the market. And they can react to the market. So, will it make the chain less vulnerable then? Yeah, I think that there will be some strategies related to, indeed, making the chain less vulnerable. So, making the chain shorter, making it less complex. And even that I think a bit more supply, bit more warehousing. And I think all those strategies will be considered together. So, it's not that you do one thing or the other thing. I think what we're doing right now, only one source of supply in China, I think there will be alternative supplies. What will be the impact on the world economy then? Because China now has a very dominant and important position. Well, I think that in the long run China will still be a dominant country for production. But I think it will not grow that fast anymore. And I think that we see regional growth. So, I think it's more or less regionalism. And I think it's a form of de-globalization. Ik denk dat het niet heel specutisch is. Het zal wel iets van de commissie komen. Er zijn veel meer als die politische tenties in de moment dat het te zullen. Dan kan je ook zeggen dat er issues dat het te zullen zijn. Dat is ook een favorie van de scherke supply chains, instead van. en gebruiken vermoeideren voor het Worldwide Transport en de Relatie Emissions. Ik denk dat alles gebeurt. Ik wou dat. dat de groots van de minis het geeft. We zien in 2010. 200-2008 we zien dat de global-containerindustrie zegt 6% groots op alle year. De global-prijs is tot 4% groots op alle year. Ik denk dat de crisis is tot 19. Deze is dus van 6-4-2. En misschien ook even lower. We gaan terug naar normaal. Het geeft er een keer als het vermoeider is. De Amerika wil meer opgeven als we de coronatechek van de governatie gaan. We hebben ook de afdelsommer in Europe en de U.S. van de christmasse shift. Dus, dan denk je dat de crisis of de geos. waar er een bekeerder normaal te doen? Ik hoop dat we we nu naar de crisis zijn. Als we in de Eerste, en in Brasil, dan denk ik dat we in de producten. en in de zee. Ik denk dat in een jaar, in twee jaar, we gaan meer de zee. zoveel je elektronische advies, je je nieuwe reiningen. en je je niet meer naar de nieuwe reiningen. En als je je vreden hebt, natuurlijk? Ja, en als je vreden hebt, ik denk dat er een boer op de volgende ofste hoogstelijke. hollydays, etc. Dat wil meenal less producten. Wat we ook zien is dat de vermoeideren zijn die een groot profiteit. En wat zijn ze doen met deze profiteits? Nou, een van het is dat ze op een nieuwe kentenaar vermoeideren zijn. En de volgende 2021. de eerste 3e mond zoiets een enorme rijk in nieuwe reiningen. Het is dat in twee jaar de global kentenaar is, de kentenaar van kentenaar. tot zal er een hoger zijn. Dus als er meer van zijn. lees de mond eventueel, dan, ik denk dat er weer een effect op de loteer is. Dus de heel high level van de loteer nu. ziet er iets van er nu en twee, drie jaar. Ja, omdat het ook wel heel interessant is om je gezien. We hebben die zoveel, zoveel, en er zijn ook wel een groot, groot, een groot. veel jaar. Het is een groot, groot, 24000 te u. Dat is enorm. Dus wil je expect dat ze ook nog een groot geval. zoveel, omdat je het vermoeider is, dat er minder goed is, of minder de mond van goed is. Nou, ik ben niet het opgeven om een geval te geven, omdat ik. en ik ben dat de maximale geval van 22000 euro en ik ben een heel goed bevind van het. en ik ben het losd. Ik denk dat er geen economische. raatige deelde van de heel groot geval van de. zoveel, dat de economie van de geval van de geval. en die de economie van de geval van de terminal. en ook de interlente. Dus het is echt de optimale van. en dat het optimale geval van de heel groot en groot geval. zoveel in de ingestie van de ingestie van de heel groot geval. en dat het ook nog wel gebeurt, dat het een partie in de ingestie van de. chain decide to make such a huge facels, knowing. dat niemand kan proberen. Ja, het is starten met. merk dat ze ervaringen dat de e-class. as een measure van being meer efficiënt dan de. competitors. En ik denk niet dat. dat ze er echt voorzohd, de effect. on de kompetitors dat ze ook bijn. even larger ships. En dat het was. zoveel een rast op de botten, want. if je het een graf. indt het een feitige graf van de. zoveel grote contenten. at het moment dat we erboven. de historische graf. zoveel 30.000. or even meer. Maar ik weet niet dat de. chips van de. zoveel grote. zoveel grote congestionen en de. dus economie van de. gevel. En het is echt. zoveel wat je ziet is. zodan een heel groot. chip. en er een port. Het is juist late. only 35%. zoveel grote contenten. zoveel op het moment, het. en het increased. 40% last. maar only 40% is ontime. 40% 40% 40% 40%, zo 60% is het niet ontime en onverdicht. Dat is alles dat doen met de de sens van de facel. Ja, ik denk dat wat jullie nou zien is dat. Usually, die heel groot facel, facel, ze zijn niet uitgesteld. en dat de maximale facel zijn. En, well, dat de maximale, die ook relatief ook zijn. Ik denk dat de grootste cargoer was 21.400 of iets zoals dat. We hebben al het kapaciteit gehad. Ik denk dat het een theoretische kapaciteit is veel lower. Maar nu zien we dat de kapaciteit is als een zichtbaar. Dat is ook een van de regelen van mijn opinion, in het suilskinal. Er waren geen werelds waar de grote biedt te lopen, de maximale facel, en er waren heel vulnerable voor de winst, etc. Dus je weet niet dat dat wel een feest van de feest van de betere, dat ze de betere totale. Ik denk dat ik niet denk dat, omdat de gegevenheid is enorm, de effect van de thermos is enorm. De disruptie van de thermos is enorm. En de deze thermos zijn niet gezien voor de grote biedt. Hoe gaan we terug naar de kleine facel? Dat is een volgende. Ik hoop dat. Enweb Universiteit, professio-sees, ze maakten een calculatie. In hun rezerste 13-16.000 was de optimale scale van een perspektie. Even de thermo, even de hinterland. En ik denk dat dat makes sense dat je dat dat je should be de dimensions of de sea ships should be on par with the terminals in the hinterland. En wat ik denk is heel hitteerd is dat je in certain markets die are strange things are happening omdat de kruisers in global voor de DHL hijden en de cargoships van de kruisers van de Singapore van de moordak in de Nederlandse. Dat is de development totaal de kruisers van de kruisers van de system. Dat is heel interessant. Ik denk dat ik nu naar de industrie wat ik denk dat ik nu niet alleen de temperatie is. Het is een heel goed student van mijn deel van de deel van de ship van 1500 TU. Dat niet naar de big terminals en naar de schuilverste. En hij deel klopt en dit ship zal ook op 20 noots te doen. Instead van superloos teeming. Dat is een groot plek dat die deel van de卑 is niet van de big terminal. Ik ben heel interessant in dat. En je ook de vroegde treden waar je een klein of alle container-referenten-ships ook heel interessant is. Dus kan je dat eigenlijk de blokken van de suur is dat een gegeven moment? Ik denk dat de gegeven moment is wat is de event van de deel van de deel van de deel van de prijs en de heel veel van de verschillende consen en de schuilverste van de container. Dus de real container-pijs. Ik ben van de 50, dus ik ben echt een energie-pijs in 1973. En je ziet peraleleel met die kruisers, omdat dat was ook een droppeling van de oorl. En dat was ook een droppeling van de prijs van een asset, die was vital van de global economy, zoals de container-referentie is nu. Ik denk dat de suur is een incident dat was in dit verantwoordigde container-referentie. Het was dus wel de perfecte locatie en de perfecte tijd van de maximale effect. of awareness probably to all parties in the chamber. Because how can they prepare for this game-changing event that's already happening then? What would be your advice for all those parties? Can they prepare and how can they prepare? - Well, what we see in the port of Rotterdam is that in the last years, the port of Rotterdam prepared very much for the big problem number one that was the Interlund congestion. And the Interlund congestion, especially the handling of containers to the barges, to inland shipping, that was the congestion problem number one in the port of Rotterdam. And in the last five or six years, the port of Rotterdam took the lead in a broad coalition to solve this problem. And a number of solutions were developed, such as fixed windows, such as a barged transpharium on the mass-flact terminal of ECT. And a number of other issues, next logic, the IT solution for that. So what we see in the last number of years is that they worked on to diminish the problems that were already created. - But that's as a port. - Yes. - And how can they involve all those parties more? Can they do more? - Well, I do not think that as a port, you can do something on a really something on the global container system. I think this market position of the carriers is very strong. So you should cooperate with all the ports together. And well, what you see right now is that there is now something that's called the block exemption rule. That is a rule which allows the container carriers to perform in the alliance structure. Alliances do have some very big advantages for container carriers. But they also see are seen as a, well, as a really concentration of power. And well, I'm very, I think that that's one of the issues that you can do something about is very powerful position of the carriers. Just think of how useful is the block exemption rule. And well, you also should be very much aware that the position of the carriers, it's just they are also overwhelmed by what happened with COVID-19 and with the effects that I described that I talked about on, well, the consumption of goods, instead of service, et cetera. But I think that it is very important to see are these alliances really the answer to the future. And I'm not saying that it's not, but you should very much research that and be very careful just to see, well, what will be the future of the container system as a whole. So I think that ports, well, they do not have the big impact compared to the powerful positions of the carriers. But there are some parties who have this impact. And one of the parties that's the European Union. And I think they should be very carefully monitoring what is the real cause of the problems we see. And I think that that academic parties really should think in the coming years, what can we do to strengthen the system? What can we really do to improve the system? Should we search? An involvement of the European Union or governments in broader sense? Do you think that's a good idea or do we have to leave it up to the market? Well, I think that the involvement of parties is a very good idea because now we let it over to the market. The crisis in 2008 and 2009, that was also left to the banks. If you leave it to the market, I think there is really some market failure at the moment. And I'm also talking about the environmental costs we are going to see emission trading. That is very important for global shipping in the future. So that is really on the agenda. That is really the disruption of the coming years will be, I think, very much related to climate issues, to huge tornadoes, etc., which is also at the moment something that makes, that is of influence of the container system as it is functioning right now. So enough challenges, actually. Yes, and like Annette, our previous guest for the podcast, you also, you may leave a question for our next guest in the show. So what would be your question? What are you curious about? Well, my question is, what are the Dutch carriers, which are very much related to European traffic? How are, what are they going to do to react on the increasing intra-European trade? Can they take the fruits of more regional trade and can the Dutch-Sorchi sector really grow in Europe because of the regionalization of the production as a result of this deglobalization which I talked about before? So will there be a new renaissance of a shortchishipping in Europe? What does she think? Wonderful. Well, wonderful question. Let's see who our next guest will be from the podcast. Well, thank you very much, Bart, for sharing your ideas and your thoughts about the shipping industry and what will be happening in the near future. So thank you very much. - Good pleasure. - Good pleasure. We are going to close this first podcast. Are you enthusiastic, subscribe and leave a comment? My name is Nuskele Hei and this production is commissioned by the Port of Rotterdam, technique by Burgonya, production and edit by Louder Brent Activation. Thank you for listening and stay tuned. (upbeat music)