Lloyds List: Amazing year of legal lows and handling highs for Rotterdam: “Further bad news hit the port in November when oil majors Shell, ExxonMobil, Kuwait Petroleum and BP-Texaco (Nerefeco) initiated legal proceedings which may result in a € 300m charge for the port authority.” (ShellNews.net) 28 Jan 05

Jan 28, 2005

THE past year at the port of Rotterdam has been an amazing roller-coaster ride of highs and lows for Europe's premier port.

Record throughput figures and the cementing of funding for its new Maasvlakte II development have been undermined by the suspected fraud of former port chief executive Willem Scholten, which rocked the port in September, and a fresh legal case brought by oil majors.

Mr Scholten, chief executive of the Port of Rotterdam for the past 12 years, was forced to resign at the end of August after an investigation was launched into €100m ($121m) worth of bank guarantees the port boss personally gave to RDM, a defence company specialising in the manufacture of armoured vehicles.

The scandal rocked the city of Rotterdam and a number of investigations are continuing, with court cases likely as a result of the investigations.

The outcome of the investigation could also result in central government acquiring a larger stake in the port than was originally intended.

Meanwhile, former Schiphol boss and Rabobank chief executive Hans Smits has been appointed interim director until a permanent replacement for Mr Scholten is found later this year.

Further bad news hit the port in November when oil majors Shell, ExxonMobil, Kuwait Petroleum and BP-Texaco (Nerefeco) initiated legal proceedings which may result in a € 300m charge for the port authority.

The case was launched as the oil giants believed they had fallen victim to an abuse of economic dominance with a bias towards container shipping levies in preference to the tanker sector.

As a result two cases are pending, one before the tax courts and the other in the civil courts.

These two incidents have taken the gloss off record throughput figures for all sectors revealed earlier this month.

The port broke through the 350m tonnes barrier with cargo throughput reaching 354m tonnes, 8% and 26m tonnes more than in 2003.

Oil products and containers led the way to the record, with increases of 22% and 16% respectively, but all sectors showed a positive growth.

Container throughput increased to 8.2m teu from 7.1m teu.

Total imports rose by 7%, more than 17m tons, to 273m tons. Exports increased by 12% to 81m tons. Only once has annual growth been higher, a figure of 11% in 1979.

Mr Smits says: 'In 1979, more than two-thirds of the 29m ton increase came from crude oil.

'The increase now is more widely distributed and it can be justifiably said that in the space of just one year we have achieved an increase in throughput that is more than the total throughput of a middle sized European port. We are now seeing a better balance in the levels of bulk cargo and general cargo. In one or two years' time containerised cargo is likely to overtake even crude oil as the largest cargo sector.

'This strengthening of our position in general cargo, containers, ro-ro and other general cargo had a favourable impact on our market share in western Europe.'

Mr Smits believes the impact of the emergence of China should not be measured on volumes alone.

'This factor is sometimes said to be the most important cause,' he says. 'But I see it more as a catalyst in a much more complex process.

'What is taking place there is highly relevant, but the decisive fact is the way in which we respond to it.'

Container business for the port was also boosted by the Dutch government's announcement in May that it is willing to fund Maasvlakte 2, the massive land reclamation project which will give the port a further 1,000 hectares of port and industrial terrain that will largely be earmarked for container handling, chemical and distribution activities.

To be constructed in the North Sea, immediately to the west of the existing Rotterdam port area, the project means the port area will be enlarged by 20% and will see the government commit itself to €726m, more than the €600m for which the Rotterdam city authorities had originally asked.

This will be pre- financed by the port of Rotterdam and will be paid back in a two-tranche deal in 2011 and 2012.

Another piece of good news for the container sector was received in December when plans by P'O Nedlloyd and Hutchison-owned Dutch stevedore Europe Container Terminals, to build a jointly owned container terminal, were approved by the European Commission.

The proposed Euromax facility will have an annual capacity in the first phase of 1.7m teu but it will eventually be able to handle around 2.4m teu a year and is likely to be operational by 2008.

Brussels found the joint venture 'would not significantly impede effective competition' in the region.

'The parent companies of Euromax operate in vertically related markets,' the commission said in a statement.

Euromax will increase the number of terminals controlled by ECT in the port of Rotterdam, but the stevedore will still have a market share in northern Europe of less than 10%, Brussels has calculated.