Excerpt
Table of Contents
1. Introduction
2. The Port of Hamburg
3. China business of the Port of Hamburg
4. The Belt and Road Initiative and Europe
4.1 Challenges for the Port of Hamburg - is Chinese trade shifting away to South Europe?
4.2 Chances for the Port of Hamburg - success through new routes?
4.2.1 Hamburg as major railway port
4.2.2 Hamburg's interest in the Polar Silk Road
5. Policy recommendations
6. Conclusion
7. Bibliography
1. Introduction
Hamburg is a traditional center of European-Chinese trade since 1731, when the first ship arrived from Guangdong province delivering tea, silk and porcelain.1 Today, 5.900 Chinese citizen are living in the Hanseatic city. More than 550 Chinese companies have their seat in Hamburg, most of them in the logistics, aerospace and energy sector. Amongst others, the state- owned China Ocean Shipping (Group) Company (COSCO), the biggest Chinese shipping company, has its European headquarter in Hamburg. Only in North Rhine Westphalia (1.100) and Hesse (700) are more Chinese companies registered.2 In 1986 Hamburg established a twinning agreement with Shanghai, where Hamburg operates the Hamburg Liaison Office (HLO). In 2016 a second dependence opened in Beijing. Furthermore, the north German metropolis is staging the biennial high-level conference “The Hamburg Summit: China meets Europe”, one of the most important fora of Sino-European cooperation.
Economically or politically, the Port of Hamburg is the transmitter of Hamburg's and Germany's close ties to China and dominated the EU-China trade together with Dutch and Belgian ports for the last decades. However, changing geopolitical landscapes, namely the introduction of the Chinese Belt and Road Initiative (BRI), challenge the former “top dog”. The Port of Hamburg has to face ongoing pressure from inner-German competitors like Duisburg and ports in the Mediterranean Sea. This paper focuses on the economic outlook of the Port of Hamburg in general and challenges and chances presented by the BRI especially. Leading research question is: Is the Port of Hamburg profiting by the BRI or is it risking being left out by this century's major development program?
In order to elaborate on this question this paper relies on a mixture of academic journals, newspaper articles, trade journals and governmental sources. The paper is going to proceed as follows: The second chapter “The Port of Hamburg” is designed as a fact sheet on features like business structure, economic performance as well as the unique shareholder structure of the Port of Hamburg. In the third chapter “China business of the Port of Hamburg” the meaning of the China business of the Port of Hamburg and the significant role of the Port for German- Chinese trade is being examined. The fourth chapter “The Belt and Road Initiative and Hamburg” illuminates the upcoming challenges for the Port of Hamburg in the wake of the BRI due to rising competitors and alternative trading routes. In the second part potential chances for the Port of Hamburg through changing transportation means are examined. “Policy recommendations”, the fifth chapter, seeks to gather suggestions in order to counter those challenges and make best use of the chances presented by the BRI for the Port of Hamburg. In the final conclusion all findings are being summarized.
2. The Port of Hamburg
The Hamburger Hafen und Logistik AG (HHLA), founded in 1885 under the name of “Hamburger Freihafen-Lagerhaus-Gesellschaft“3, is the main operator of the Port of Hamburg with altogether three terminals. Together with the Hamburg Port Authority (HPA), the responsible authority for the port management, HHLA run the third biggest port in Europe (1. Rotterdam 2. Antwerp)4 and the 19th biggest in the world5 with a yearly traffic volume of 8.7 million Twenty-foot Equivalent Unit (TEU) (compared to 8.8 million TEU in 2017)6. Next to HHLA the Bremen based company Eurogate also operates one container terminal at the Port of Hamburg.
The HHLA's revenue was nearly 1.3 billion Euro (2018).7 Most important segments are the container (59%), intermodal (34%), logistics (4%) and real estate business (3%).8 The so called “intermodal” refers to services offered by the railway subcompanies of HHLA. The Port of Hamburg, more specific the marshalling yard in Maschen9, is Europe's biggest railway port10. Formerly completely owned by the city of Hamburg HHLA made its debut on the stock market in 200711 and is now listed in the SDAX at the Frankfurt Stock Exchange. Still, the city of Hamburg holds a majority share of 68% at its most important port company.12 In 2001 HHLA took over one terminal at the Port of Odessa at the Black Sea. The terminal operator in Muuga close to the Estonian capital of Tallinn was purchased in 2018.13
The company is one of the main employers in Hamburg with around 5.900 employees.14 The number of indirectly employed workers in and around Hamburg is expected to be way higher. Estimations go up to 150.000 working places directly and indirectly related to the Port of Hamburg15 - roughly 10% of the whole working force in Hamburg.16 Furthermore, the port of
Hamburg generates up to 800 million Euro in tax revenue every year. Next to that, HHLA transfers a yearly dividend to the city of Hamburg (42 million Euro in 2018).17
3. China business of the Port of Hamburg
The Port of Hamburg generates 2.6 million TEU (2017) of its overall trade (see p. 3) with the People's Republic of China (PRC).18 The China business constitutes for roughly every third container traded at the port, thus making China the by far biggest trading partner in seawardside container traffic19, the most important business segment of HHLA. Three-quarter of the overall German trade with China run through the Port of Hamburg, there are twelve regular shipping lines between Hamburg and eleven Chinese port cities20 - Hamburg truly is the gateway for German exports to China.
However, since the seaward-side trade is stagnating worldwide and especially in Asia21, the HHLA faces challenges. In the course of the trade conflict between the USA and China the traffic volume growth in China slowed down more than half to 3.6%.22 On the other side the importance of transportation by rail is growing23. The first freight train between Hamburg and China was established in 2008. Ten years later, 235 weekly connections are established between Hamburg and 27 Chinese cities (see p. 9).24
Next to the intensive trading contacts stands a growing involvement of Chinese companies at the Port of Hamburg itself. In 2017 a contract to build a new container terminal capable of handling Ultra Large Container Vessels (ULVC) was awarded to China's Communications Construction Company, upsetting local manufacturers.25 Later, the Senate of the city faced strong criticism for publicly considering that Chinese companies could invest in a new terminal at the port.26
4. The Belt and Road Initiative and Europe
The Belt and Road Initiative (BRI), a loose development strategy with the target to boast worldwide interconnectivity, was publicly announced by president Xi Jinping in 2013. The BRI has two columns: The Silk Road Economic Belt strives to connect Asia and Europe, whereas the 21st Century Maritime Silk Road connects China, South- and Southeast-Asia, Africa and Europe.27 Moreover, there are also several projects with the aim to connect the Americas and other world regions - further underlining the global and ever evolving character of the initiative. The above-mentioned Silk Road Economic Belt consists of four continental routes: 1. The North Route or the Northern Eurasian corridor (via Trans-Siberian Railway) leads along Central Asia, Russia and North Europe 2. The Central Eurasian Route (part of the Second Eurasian Continental Bridge) passes Central and West Asia and terminates at the Mediterranean Sea28 3. Currently, the future Southern Eurasian railway corridor is being realized29 4. The South Route connects China and South- and Southeast-Asia. The development strategy mainly focuses on infrastructure construction, energy supply and setting up advanced telecommunication systems along those routes and corridors.30
This chapter concentrates on describing the major transformations of the European logistic network, whether on the water via ship or on land via rail. The BRI offers major challenges and chances for rising and established logistic hubs.
4.1 Challenges for the Port of Hamburg - is Chinese trade shifting away to South Europe?
The Port of Hamburg repeatedly underscored its interest for an intensified cooperation with the Chinese side in the course of the BRI. On the occasion of the last Hamburg Summit Hamburg's mayor Peter Tschentscher underscored the cities strong interest to deepen cooperation with China: “Als traditionelles Zentrum des europäisch-chinesischen Handels kann Hamburg auch ein natürlicher Knoten- und Endpunkt der Neuen Seidenstraße sein.“31
However, developments show that Hamburg is not profiting yet - at least when speaking about seaward-side trade.32 The Port of Hamburg is losing market shares in container shipment since years already. Partly due to the global trend but also because of its unfavorable location seaward-side trade at the Port of Hamburg shrank slightly in 2018 while competitors like Rotterdam and Antwerp manage to increase traffic volume.33 Hamburg is not only losing ground to above mentioned North range-ports34 but also to South European ports like Valencia, Piraeus and Barcelona35. In recent years, Europe's fastest growing ports are in the south - and here is where China comes into play.36 COSCO bought a concession in Greek port of Piraeus, with the aim of turning the port into one of Europe's top five container ports. Transit time between Shanghai and Piraeus is around 22 days, 10 days less compared to the transit time between Shanghai and the North European ports of Rotterdam and Hamburg.37
The acquisition of the Port of Piraeus is part of a major attempt to create intermodal container traffic along multiple routes from Suez, Turkey, and Central Asia to Central Europe, southern Germany, and the Baltics.38 Planed since the early 1990's, China established direct freight train lines to Europe beginning from 2008.39 Piraeus, the BRI's maritime gateway to Europe, will be connected to the future Budapest-Belgrade railway connection40, which will be connected to the Northern Eurasian corridor. This way transportation of Chinese goods to Western Europe will considerably shorten.41 The railroad between the Hungarian and Serbian capital, also called Trans-Balkan route42, is made possible by Chinese loans under the framework of the BRI43 and is considered as flagship project of the so called “16+1” format of China and 16 Central, Eastern and Southeastern European states (CESEE). The CESEE matters particularly for China as the Northern Eurasian corridor (see p. 6) runs through the region.44
Moreover, COSCO now runs the Port of Valencia and Zeebrugge and seeks to link them with the evolving railway network.45 With its engagement at ports in South Europe China wants to ensure that its goods arrived in Europe in short time, paying low port and freight fees and thus keeping Chinese exports competitive.46 Those plans are also directed to reduce China's dependence on comparably far and expensive North European ports as Hamburg, Rotterdam, and Antwerp.47 While the North range ports still dominate the list of Europe's top ports, computer manufacturers like Hewlett-Packard, ZTE, Huawei or Sony already turned in favor of the Port of Piraeus in order to ship their in China produced goods.48 Also the German logistics giant DHL expands its presence in Greek Piraeus, calling it the hub of the “maritime Silk Road”49. Eszterhai Viktor concludes:
“Most probably, the stagnation in the container turnover of the Port of Hamburg experienced in recent years has largely been affected by Piraeus, while in the longer term the increasing number of railway shipments within the framework of the OBOR will keep decreasing the role of German ports. ” 50
Hamburg, Europe's traditional center of seaward-side trade with China, is expected to lose market shares following the trend of the last years, delays in the implementation of the Elbe river deepening and ever growing sediment deposits negatively affecting the maneuverability of big container ships.51 And, last but not least, the competition between South European ports like Piraeus and the North range ports, especially Hamburg, is predicted to absorb business from the Port of Hamburg.
4.2 Chances for the Port of Hamburg - success through new routes?
4.2.1 Hamburg as major railway port
While the seaward-side trade is expected to continue lagging behind international competitors in the near future is the outlook in the intermodal business segment (see p. 3) rather promising - contrary to Viktor's estimation (see p. 8). Europe's biggest railway port handles 48% (2017) of all railway traffic of the North range ports52 and is the central junction of three European railway corridors53. Under the Trans-European Transportation Network (TEN-T) framework, the umbrella for the European Union's (EU) mobility policy, Hamburg plays a major role. Since the EU and China created the EU-China Connectivity Platform in order to promote interregional transportation within Europe and between Europe and China54, Hamburg has legitimate hopes to get linked up as potential end point to west Europe.55
In fact, Hamburg already sees a steep increase in railway trade with China: The setting up of several China railway express routes, e.g. between Zhengzhou-Hamburg, Hefei-Hamburg56, the container demonstration train between Beijing-Hamburg and Urumqi-Hamburg57 in recent years underline the growing importance. It takes up to 60 days58 for maritime transport of goods from Chinese ports to Hamburg. Whereas the transport of goods by road and rail from Chongqing to Hamburg lasts only 14 days.59 The Hamburg Chamber of Commerce praises, Hamburg has “beste Voraussetzungen, vom wachsenden Schienengüterverkehr zwischen China und Europa zu profitieren. “60 Still, the relative importance of railway transportation is low compared to the seaward-side trade. Railway transportation constitutes for not even 3% of trade between the EU and China. However, railway transportation gains market shares on a rapid pace, from 2014 to 2017 railway Sino-EU trade quintupled.61 The Chinese side wants to further accelerate railway trade from a freight load of 145.000 TEU (2016) to 670.000 TEU (2027).
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1 Chunyan Zhang, “Germany's link to China”, http://www.chinadaily.com.cn/world/2014livisitgrl/2014- 10/10/content_18719175.htm (accessed June 11, 2019).
2 Handelskammer Hamburg, “Hamburg - Europa-Hub auf der „Neuen Seidenstraße“” (2018), p. 7.
3 Hamburger Hafen und Logistik AG, “Chronik: HHLA Hamburger Hafen und Logistik AG”, https://hhla.de/de/historie/chronik.html (accessed June 11, 2019).
4 Hafen Hamburg Marketing e.V., “Top World Container Ports - Europe”, https://www.hafen- hamburg.de/en/statistics/top-world-container-ports (accessed June 11, 2019).
5 Hafen Hamburg Marketing e.V., “Top World Container Ports”, https://www.hafen-hamburg.de/en/statistics/top- 20-container-ports (accessed June 11, 2019).
6 Hamburger Hafen und Logistik AG, “Geschäftsbericht 2018”, p. 27.
7 Ibid.
8 Ibid.
9 Handelskammer Hamburg, “Hamburg - Europa-Hub auf der „Neuen Seidenstraße“”, p. 4.
10 Port of Hamburg, “Hamburg und China”, Port of Hamburg Magazine (2019), https://www.hafen- hamburg.de/en/press/media/brochure/port-of-hamburg-magazine-2-2019-hamburg-and-china---38039, p. 39.
11 Hamburger Hafen und Logistik AG, “Chronik: HHLA Hamburger Hafen und Logistik AG”
12 Olaf Preuß, “Hamburger Wirtschaft: So soll der Hafen effizienter werden”, https://www.welt.de/regionales/hamburg/article179778688/Hamburger-Wirtschaft-So-soll-der-Hafen-effizienter- werden.html (accessed June 11, 2019).
13 Olaf Preuß, “HHLA sucht Terminals auch jenseits von Hamburg”, https://www.welt.de/regionales /hamburg/article189642977/HHLA-sucht-Terminals-auch-jenseits-von-Hamburg.html (accessed June 11, 2019).
14 Hamburger Hafen und Logistik AG, “Unternehmen: HHLA Hamburger Hafen und Logistik AG: Unternehmen”, https://hhla.de/de/unternehmen.html (accessed June 11, 2019).
15 Spiegel Online, “Elbvertiefung kann trotz weiterer Klage von Umweltschützern beginnen”, https://www.spiegel.de/wirtschaft/soziales/hamburg-elbvertiefung-kann-trotz-weiterer-klage-von- umweltschuetzern-beginnen-a-1230063.html (accessed June 12, 2019).
16 Hafen Hamburg Marketing e.V., “Wirtschaftliche Bedeutung des Hamburger Hafens - HPA veröffentlicht Fortschreibung der PLANCO-Studie”, https://www.hafen-hamburg.de/de/news/wirtschaftliche-bedeutung-des- hamburger-hafens-hpa-veroeffentlicht-fortschreibung-der-planco-studie---33890 (accessed June 12, 2019).
17 Olaf Preuß, “Hamburger Wirtschaft: So soll der Hafen effizienter werden”.
18 Handelskammer Hamburg, “Hamburg - Europa-Hub auf der „Neuen Seidenstraße“”, p. 4.
19 Sarmiza Pencea, “China-Europe BRI Connectivity: What's wrong, what's next”, p. 200.
20 Handelskammer Hamburg, “Hamburg - Europa-Hub auf der „Neuen Seidenstraße“”, p. 4.
21 Hamburger Hafen und Logistik AG, “Geschäftsbericht 2018”.
22 Ibid., p. 27.
23 Dieter Fockenbrock and Christoph Schlautmann, “Freight Transport: Traffic Jams on the Silk Road,”, https://www.handelsblatt.com/today/companies/freight-transport-traffic-jams-on-the-silk-road/23540480.html? ticket=ST-1788926-EjPgH6t1KFgOsSNPHcL3-ap3 (accessed June 11, 2019).
24 Olaf Preuß, “Deshalb setzt Hamburg auf China”, https://www.welt.de/regionales/hamburg/article184518786/Deshalb-setzt-Hamburg-auf-China.htmEutm_source =headtopics&utm_medium=news&utm_campaign=2018-11-26 (accessed June 11, 2019).
25 Ronald H. Linden, “China is Buying Up Ports and Influence Across Europe”, https://nationalinterest.org/feature/china-buying-ports-influence-across-europe-26210 (accessed June 11, 2019).
26 Thomas Tuma and Christoph Kapalschinski, “Hamburger Hafen will Endpunkt der Seidenstraße werden”, https://www.handelsblatt.com/journalismus-live/handelsblatt-wirtschaftsclub-hamburger-hafen-will-endpunkt- der-seidenstrasse-werden/23966232.html?ticket=ST-3722-wlNtat2VpfJRBY1KmreK-ap3 (accessed June 11, 2019).
27 Handelskammer Hamburg, “Hamburg - Europa-Hub auf der „Neuen Seidenstraße“”, p. 2.
28 Ibid., pp. 2-3.
29 Dusko Dimitrijevic and Nikola Jokanovic, “China's "New Silk Road" Development Strategy,” The Review of International Affairs 67 (2016), p. 26.
30 Handelskammer Hamburg, “Hamburg - Europa-Hub auf der „Neuen Seidenstraße“”, pp. 2-3.
31 Senatskanzlei Hamburg, “Chinesischer Vize-Ministerpräsident Liu He im Rathaus - Chancen für Hamburg durch „Neue Seidenstraße“ von Asien nach Europa”, https://www.hamburg.de/pressearchiv-fhh/11892524/2018- 11-27-pr-china/ (accessed June 13, 2019).
32 Jan Gaspers, “Germany Wants Europe to Help Shape China's Belt and Road Initiative”, https://thediplomat.com/2016/12/germany-wants-europe-to-help-shape-chinas-belt-and-road-initiative/ (accessed May 15, 2019).
33 Hafen Hamburg Marketing e.V., “Top World Container Ports - Europe”.
34 “North range” ports refer to West European ports along the North Sea which includes Rotterdam, Antwerp, Hamburg, Bremen, Le Havre, Zeebrugge and Wilhelmshaven. Other ports might be associated with the term depending on the individual definition of “North Sea” too.
35 Ibid.
36 Ronald H. Linden, “China is Buying Up Ports and Influence Across Europe”.
37 Nenad Rancic, “Europe at the Crossroads - The East-West and North-South Bridge for China,” Economic and Social Development: Book of Proceedings (2017), p. 428.
38 Jacopo M. Pepe, “China's Inroads into Central, Eastern, and South Eastern Europe: Implications for Germany and the EU,” DGAP-Analyse 3 (2017), pp. 5-6.
39 Miroslav Antevski and Sanja Jelisavac Trosic, “Chinese Respones to Transatlantic Trade and Investment Partnership and Trans Pacific Partnership,” The Review of International Affairs 67 (2016), p. 133.
40 Zhang Rui, “China-Europe land-sea fast transport route opens”, http://english.cctv.com/2017/02/08/ARTIG9baSlrmjBhzWicECgsi170208.shtml (accessed June 11, 2019).
41 Eszterhai Viktor, “The One Belt One Road from Germany's perspective”, http://www.geopolitika.hu/en/2017 /08/15/the-one-belt-one-road-from-germanys-perspective/#_edn19 (accessed June 11, 2019).
42 Margot Schüller and Yun Schüler-Zhou, “Chinas Seidenstraßen-Initiative trifft auf transeuropäische Infrastrukturpolitik,” (2015), p. 7.
43 Inna Steinbuka, Tatyana Muravska and Andris Kuznieks, “Cooperation formats of China and Europe: Synergies and divergences,” Baltic Journal of European Studies 7 (2017), p. 106.
44 Anastas Vangeli, “China's Engagement with the Sixteen Countries of Central, East and Southeast Europe under the Belt and Road Initiative”, China & World Economy 25 (2017), https://onlinelibrary.wiley.com/doi/full/10.1111/cwe.12216, p. 104-105.
45 Keith Johnson, “Why Is China Buying Up Europe's Ports?”, https://foreignpolicy.com/2018/02/02/why-is- china-buying-up-europes-ports/ (accessed June 12, 2019).
46 Christoph Giesen, “Chinas neue Seidenstraße”, https://www.sueddeutsche.de/politik/konkurrenten-chinas- neue-seidenstrasse-1.3123257 (accessed June 11, 2019).
47 Pepe, “China's Inroads into Central, Eastern, and South Eastern Europe: Implications for Germany and the EU”.
48 Christoph Giesen, “Chinas neue Seidenstraße”.
49 Thomas Wöhrle, “Multimodal halfway around the world”, https://dhl-freight-connections.com/en/multimodal- halfway-around-the-world-2/ (accessed June 11, 2019).
50 Eszterhai Viktor, “The One Belt One Road from Germany's perspective”.
51 Olaf Preuß, “Hamburger Hafen: Das sind die Herausforderungen und Perspektiven”, https://www.welt.de/regionales/hamburg/article151064133/Hamburg-darf-nicht-zum-Zubringerhafen- werden.html (accessed June 12, 2019).
52 Handelskammer Hamburg, “Hamburg - Europa-Hub auf der „Neuen Seidenstraße“”, p. 4.
53 European Commission, “Mobility and Transport - TENtec Interactive Map Viewer”, http://ec.europa.eu/transport/infrastructure/tentec/tentec-portal/map/maps.html (accessed June 12, 2019).
54 National Development and Reform Commission of the People's Republic of China and the European Commission, “EU-China Connectivity Platform Short-Term Action Plan,” (01.09.2015).
55 Handelskammer Hamburg, “Hamburg - Europa-Hub auf der „Neuen Seidenstraße“”, p. 3.
56 Sarmiza Pencea, “China-Europe BRI Connectivity: What's wrong, what's next”, p. 193.
57 Dimitrijevic and Jokanovic, “China's "New Silk Road" Development Strategy”, p. 26.
58 Nenad Rancic speaks of only 32 days transit time between Shanghai and Hamburg (see p. 7).
59 Antevski and Jelisavac Trosic, “Chinese Respones to Transatlantic Trade and Investment Partnership and Trans Pacific Partnership”, p. 131.
60 Handelskammer Hamburg, “Hamburg - Europa-Hub auf der „Neuen Seidenstraße“”, p. 4.
61 Gabriel Felbermayr, “Chinas Neue Seidenstraße - Chance für den Handel, Bewährungsprobe für die Politik,” Port of Hamburg Magazine 2019, p. 24.