The Port of Rotterdam is eyeing investment opportunities in Asia as it seeks to further develop its market and expand connectivity between Asia and Europe.
Marc Aartsen, programme manager, international port projects, at the Port of Rotterdam, told an online media briefing that Asia is an important market for the European gateway and it has been eyeing several projects to participate within the region.
“Asia for us at Port Rotterdam is very important because if you look at the container business, you see a lot of Asian trade there and if you look at the Port of Rotterdam’s international activities, we’ve already been active in Asia for quite some time,” Aartsen told the news briefing.
“We also have an office in Jakarta where we cater for the market in Southeast Asia, so we are travelling from Jakarta to all kinds of countries there like Vietnam, Myanmar, Cambodia and Indonesia to see if we can facilitate trade there and do projects there.”
Port Rotterdam is already active in Indonesia on a project in Sumatra, a greenfield location, where the port is working together with the Indonesian government, Aartsen said.
“There is a Chinese interest in that development so we’re working with the Indonesians and the Chinese to get it to see if we can develop a port there – a completely new port that will be a big development,” he said.
Europe’s largest seaport entered a joint venture deal with Indonesian state-owned port corporation Pelindo 1 back in 2016 to prepare the development of the port of Kuala Tanjung, a port project in North Sumatra, strategically located on the Strait of Malacca.
In 2019, the Pelindo I announced it will team up with two major world port operators – the Port of Rotterdam and Chinese firm Zhejiang Provincial Seaport Investment & Operation Group Co – to accelerate the development of Kuala Tanjung Port into a “world-class maritime hub.”
The Port of Rotterdam is also looking for opportunities in Malaysia and Vietnam. Currently, Aartsen said, there are students from universities in the Netherlands evaluating opportunities for the port in both Malaysia and Vietnam.
India market focus
In India, the Port of Rotterdam is also interested in participating in the Sagarmala project initiated by the Indian government to enhance the performance of the country’s logistics sector.
Aartsen noted that India has grown very quickly and that the economy in India is now at the stage that ports also have to adapt to facilitate the growing economy.
“The capacity of Indian ports needs to improve, and that is recognized by the government of India. There are also a lot of plans like the Sagarmala project where there are investment plans already in the making. We want to be a part of [those plans],” he said.
The port has two representatives in India; it also has representatives in China, Brazil, Russia, Indonesia and a few places in Europe.
India is one of the Top 3-focused countries of the Port of Rotterdam’s international strategy.
Meanwhile, given the long-term nature of port investments, port representatives noted that the current coronavirus pandemic will not impact the planned investments of the port in India and elsewhere.
“At the moment it’s difficult to start-up a project and to continue the projects that we’re already working on, but we will certainly come back when this situation has ended and we are very much committed to India to be a part of that development there,” Alexander Philipsen, business manager at Port of Rotterdam, told the online news briefing.
“We always see these kinds of developments in the long term, so we are not scared off by economic setbacks for the short term as these decision makings to invest somewhere also took a long time, especially if you are talking about greenfield locations,” he added.
The Port of Rotterdam also currently participates as a shareholder in two other overseas port projects, one in Sohar, Oman, and the other in the Port of Pecem, Brazil.
Diversification of production
Philipsen noted that one of the main impacts of Covid-19 to supply chains would be production centres becoming “more spread” and shifting to parts of the world other than China.
“On the Asia-Europe trade related to the pandemic, of course, based on what you hear, and what you read and what’s also our opinion, of course, is that countries and also companies would like to rethink their strategies and their current situation [where] all their eggs are in one basket,” Philipsen said. “They’re looking for diversification – perhaps not the full hundred percent, but more diversification – to countries like Vietnam, Myanmar, India and Bangladesh,” he said.
He noted that this will have an impact on the trade flows between northwest Europe – and particularly Rotterdam – and Asia, but that it would also mean an increase in trade from other areas.
“If production starts shifting from China to India, we expect growth there from Indian ports to Rotterdam,” Philipsen added, although clarifying that it’s still “premature to really say something about what the actual consequences will be.”
Philipsen noted that although production in China is getting back to normal, normalization would happen more gradually.
“Everything is already gradually improving, so that’s something that we expect for the coming months, but we shouldn’t expect everything to be back to normal volumes like we’ve seen pre-Covid in the next couple of months. It will be like a gradual improvement,” he said.
The Port of Rotterdam noted that the recovery of the world economy “depends very much” on whether there will be a second wave of virus infections.
“There is considerable uncertainty about how long the recession will last and when recovery will begin,” the port said in a separate statement. “A cautious recovery of the economy is expected in the rest of the year. As a result, volumes in the port will not decline further but there will probably be no full recovery of volumes.”
Total throughput volume for the whole of 2020, it added, is therefore currently expected to be significantly lower than in 2019.