The Economics of Container Transhipment in Northern Europe

Abstract

Traditionally, maritime economists, ports and shipping lines have considered container transhipment to be more expensive than direct call services, mainly by virtue of the extra feeder costs and container lift charges involved. This seems contrary to ongoing industry developments, with transhipment hubs now quite common in most major regions. Here, modelled costs for transhipment in northern Europe have been estimated and compared with an alternative multiport service. The conclusion is that transhipment can offer substantial operating and capital cost advantages compared with multiport direct call services. The explanation for transhipment advantages relates to diseconomies both at sea and in port associated with multiport style itineraries, coupled with container handling cost and productivity advantages pertaining to pure transhipment terminals, added to enhanced feedership economies of scale. In line with a move towards hub–hub shuttles and associated feeder services, these results indicate that further developments might be expected in regard to offshore transhipment hub terminals being provided as low-cost container transfer points for very large vessels. Policy makers need to be aware of the net benefits, both ecological and economic, resulting from increased use of offshore transhipment terminals as an alternative to continued artificial development (and duplication) of big ship container terminal capacity within constrained traditional port locations, and any requirement for support thereof.