A talk with Luc Arnouts of the Port of Antwerp

“We should continue to build on our trump cards”

The port of Antwerp in Flanders, Belgium, is an important hub in the heart of Europe accessible to capesize ships. It ranks second behind Rotterdam by total freight shipped and handled 235.2 million t of sea cargo in 2018. We talked to Luc Arnouts, Director International Relations & Networks, about the latest developments in the industry.

“We have always been a logistics platform and not just a transshipment port.”

Luc Arnouts highlights the strenghts of the Port of Antwerp.

“The UK is our second most important overseas trading partner. We immediately reacted and started a Brexit Task Force in 2016.”

On the port's preparations for the Brexit.

Located at the upper end of the tidal estuary of the river Scheldt, the Port of Antwerp has the nautical accesibility of a deep sea port and reaches as far as 80 km inland. Within a radius of 250 kilometers around the harbor lie five capitals and the German Rhine-Ruhr metropolitan region with 10 million inhabitants. Additionally, 60 percent of the EU's purchasing power is located within a radius of 500 km. As a result of this advantage, the port of Antwerp has become one of Europe's largest seaports. We were pleased to have the opportunity to talk to Vice President Luc Arnouts about the latest successes and future plans.

Interviewer: Your figures from 2018 show a steady and positive growth: with a total transshipment volume of 235.2 million t, Antwerp sets a new record. Are you confident enough to already make a prediction for the year 2019?

Luc Arnouts: If we look at the figures for the first eight months, they are mainly driven by two engines. The biggest one is container business, the second one – due to the presence of the chemical cluster in the port – is the flow of liquid bulk. Those are the factors which made us outperform. We see that the containers are doing very well with a growth rate of 5.8%, but liquid bulk is a little bit slower, so overall we expect to land somewhere around 1.5% growth, which would bring us slightly over 240 million t. So, we expect container transshipment to rise further and the overall growth to continue, but not at the high pace we had in the last years.

With nearly 17 million t of freight in 2018, the UK is the second largest overseas trading partner for the Port of Antwerp. The port is believed to be one of “Great Britain’s important deep water ports” and a very vital transshipment hub for goods crossing the English Channel. Until now, goods got unloaded and immediately shipped to the UK without time-consuming customs clearance processes. With the looming Brexit, are you getting more nervous with every day?

Brexit seems to be the buzzword of the year! As you rightly mentioned, the United Kingdom is our second most important overseas trading partner. We immediately reacted after the referendum and started a Brexit Task Force in 2016. It consists of people not only from the Port Authority – that is, ourselves – but also from the customs authorities, from the food administration authority and a few private companies that have intensive business with the United Kingdom. We created this task force to immediately keep everybody involved and then see how we best prepare.

Basically we do not have ferry services with trucks going onto a ferry and then going to the UK or the other way around. We are more into the lift-on/lift-off business with containers, which is different because there are no trucks and no drivers involved. Another factor to consider is that a large part of the business between Antwerp and the UK consists of liquid bulk volumes which are in the hands of trading companies. In this field, we are used to fluctuations, because the trading market is of course highly dependent on the day-to-day price evolution. It’s a volatile business where you decide if it is time to export or import from the UK or not.

Besides, we also immediately appointed a permanent representative in the UK and Ireland which we found in the person of Justin Atkin, who joined us last year. He is helping us to sensitize companies in the UK and Ireland to the possibilities of the Port of Antwerp, but also to the Brexit in general. Our representatives have also started lobbying on different levels in the UK as well as the EU to argue that it would be best for our business if the UK stayed in the Customs Union.

Well, unfortunately nothing has changed so far and there is still the risk of a “hard Brexit” causing delays and congestions in existing supply chains. How is the port authority further preparing for such an unpleasant event?

We have been closely working together with customs authorities and the food administration recently and received the newest figures of 386 new people that are to be hired from the customs side, with around 300 already in place. So we think that Belgium is relatively well prepared in terms of strengthening customs administration. That's good news in terms of preparation, which of course also helps the port of Antwerp.

Overall, I always say that a port like Antwerp, connected to thousands of ports around the world, has experience in dealing with third countries, so this is not something completely new to us. In our opinion we are prepared. Does it mean we are fully confident that everything will run well? No, we are not. It's going to be disruptive, but I think that we have done what is possible to be prepared and that the specificity of the port will also help us to get through it as smoothly as possible. Who knows what will happen by the end of October. Let's see what happens or if it will happen at all. (laughs) We don't know. Nobody knows.

“We should continue to build on our trump cards, which are not only low costs but also our service reliability and our multi-modal offering.”

Luc Arnouts on the competition with China’s “New Silk Road” or Europe’s southern ports.

Maritime transport has been faced with a challenging market situation for a while now due to frequently shifting imbalances between supply and demand. How do you at the Port of Antwerp view these developments? What is your personal assessment: Do you think that this phase is over for now, or are further mergers and acquisitions on the horizon?

Thus phase had the effect that there are now three big alliances and basically only nine big carriers left. It is perhaps possible that one or two more carriers will merge or an acquisition may happen, but I think it's also important for the industry that we keep a little bit of choice between different carriers to not get too monopolistic. We will see what the future brings.

On the other hand, we see intensified work collaboration between ports. For instance, there is the initiative called “chain ports” which consists of eleven ports from around the world, and Antwerp is one of them. We meet regularly to discuss innovation and digitalization initiatives and learn from one another to improve the whole industry, for example to further enhance transparency in the supply chain. That's something that I clearly see happen and I expect it to happen more and more. I wouldn't call it alliances of ports, but it could be something like a much closer collaboration between ports around the world.

International shipping will have to adhere to stricter environmental regulations issued by the International Maritime Organization starting January 1, 2020. The sulfur content of fuel burned on the high seas will be limited. How is the Port of Antwerp responding to this environmentally friendly measure and do you see a long-term alternative in LNG (Liquefied Natural Gas)? Would an increased demand for LNG terminals represent an infrastructure challenge in your opinion?

We have what we call a multi-fuel strategy based on three pillars. The first pillar is traditional heavy fuels that we will evidently continue to deliver, as Antwerp is one of the biggest bunkering ports. So we will continue using these fuels, but we will monitor the use more closely, as there will be stricter conditions before you get a permit to bunker sea ships for instance. Of course we will include new fuels with low sulfur and make sure they are available in the Port of Antwerp.

The second pillar is LNG. Today we have the possibility of loading “truck to ship”, meaning that the ships which come along the quay get LNG fuel from trucks on the shore. In addition, we are currently in the process of constructing an LNG bunker station in the middle of the port to get the fuel from terminal to ship, managed with additional barges. This new opportunity should be ready by the middle of next year.

So I guess the third pillar is sustainable energy like hydrogen, because I recently read about a hydrogen-powered tugboat you ordered, called “Hydrotug”. How has the first project progressed and when will the Hydrotug be operational?

That’s right, the third pillar is about new alternative energies. We are actively working on methanol hydrogen and electricity as sources of energy for ships. In that context, we are heavily investing in our own tugboats as well, and we will have a tugboat running on methanol in the near future. As you rightly point out, we have also ordered the construction of the first hydrogen-powered tugboats which will be available in the second half of next year. Generally speaking, hydrogen is a very interesting source of power, but I have to remark that we need to make sure that it's “green hydrogen”. As you may know, the process of turning water into hydrogen via electrolysis demands a lot of electricity. And of course, if this electricity is generated by gas or oil, you don't have green hydrogen – you have “grey hydrogen”. Don’t get me wrong: hydrogen as such is great because it has nearly zero emissions, but it's important to use green energy, such wind energy or solar energy, to produce it.

Heavily dependent on exports, China has massively invested in the “New Silk Road” and is looking to provide trans-Asian freight train corridors as an alternative to the longer routings supplied by container ships. Do you see these as a challenge?

Our port has always been much more than just a transshipment point of cargo from ship to shore and shore to ship. We have by far the most covered warehouse space in the whole of Europe. It's more than 630 hectares or 6.3 million square meters of covered warehouse space. That's our strategy – we have always been a logistics platform and not just a transshipment port. And in that respect, we want to cover the whole supply chain with as many alternatives and solutions as possible.

Whether it’s inland waterways, trucks or in this case also rail transport. All the terminals in Antwerp are connected by rail, so every terminal can receive cargo or export cargo by rail. The New Silk Road and the rail port are just enriching the choices that supply chain managers have. If you look at the absolute figures, there are something like 160 trains between China and Europe per week with every train counting more or less 80 containers. This is just a minor part compared to what the ships of the ocean carriers move. So, we don’t see it as a threat – on the contrary, it adds possibilities for our customers.

Beside China expanding rail traffic across Asia, the southern ports of Koper, Piraeus and Trieste have also increased their transshipment numbers. Are there circumstances in which Antwerp might have a long-term geographical disadvantage compared to other regions in Europe?

I think this is something we should at least be aware of and we should stay vigilant, but for the moment, the main cargo flows are still going to and from the heart of Europe, which means Germany, the north of France, the Netherlands, Belgium. So in that important part of Europe, we evidently have the geographical advantage, but we should not be blind for the evolution going on at the Mediterranean ports. If you just look at the figures, you clearly see that ports like Piraeus, but also Valencia and some others have been growing fast in the last five or six years. So they do have their position in the surrounding region, but we do not see them as a threat toward central Germany. We are absolutely sure that this part of Europe will be served by northwest European ports in a cheaper way.

The further you go to the south, however, the more we will be confronted with competition from many southern ports in the future. In this case, we should continue to build on our trump cards, which are not only low costs but also our service reliability and our multi-modal offering. If you use Antwerp, you can get to any destination by rail, by barge, by truck – for liquids we can even use the pipeline network from Antwerp. We have to work on that and continue to sell these trump cards.

Thank you for the interview!