Europe's King of Cargo

The Port of Rotterdam has an interesting relationship with the sea that provides its livelihood. Rotterdam has probably not seen a day without ongoing construction or expansion efforts since at least 900. Over 1,100 years of development port operators have built dams and dikes to hold back floodwaters while reclaiming land from the sea to provide for its expansion.

The Port of Rotterdam (www.port.rotterdam.nl) became a major transshipment point after completion of a shipping canal in 1350 that connected it to the larger Dutch towns to its north. It's position on branches of the Meuse and Rhine Rivers and its access to the North Sea made it the ideal port to connect England and Germany. As the Meuse and Rhine branches began to silt up, the Nieuwe Waterweg (completed in 1872) kept the port connected with global trade and helped it become the number one port in Europe.

Yet another expansion, known as "Maasvlakte 2," promising to reclaim yet more land from the North Sea, was approved in October 2006. Construction will begin in 2008 with the first ship dropping anchor in 2013. Alice Krekt, marketing manager North America for the Port of Rotterdam says the expansion could add capacity for 18 million twenty-foot-equivalent units (TEUs) per year. Coupled with other projects and throughput improvements, the Port of Rotterdam could reach 36 million to 40 million TEUs within 10 years, adds Minco van Heezen, the port's press officer.

The port will also benefit from another major infrastructure project that has just been completed, the Betuwe Route freight-only railway that connects Rotterdam with Germany. Envisioned in the 1980s, long before the sourcing explosion in Asia, the new line benefits the Netherlands' two major ports, Rotterdam and Amsterdam. Kees van der Hoop, the Port of Rotterdam's business manager for general cargo, calls the rail line "the only chance to make a strategic jump in rail transport in Europe."

Originally slated to have a north branch and a south branch, it evolved into a single line that shifted focus more to Rotterdam. In addition to funding challenges (the 160 km railway cost $6.1 billion), the line travels through one of the most densely populated areas in the world. The soil in the area is peat, so there were practical and environmental issues that affected the development.

Designed as a freight-only line, the Betuwe Route won't have to compete with passenger trains for access to rail infrastructure. It's capacity of 7 million TEU per year will reportedly help the Port of Rotterdam container operations by providing more capacity and better reliability.

As van der Hoop points out, the line is not limited to container traffic and will also handle chemicals and bulk dry cargoes. To put the reliability issue into perspective, he explains that for a unit train hauling coal, just two extra stops can make it unprofitable, and when freight and passengers compete for the same infrastructure in Europe, it is the passengers who win. Says van der Hoop, " Containers don't vote."

The Betuwe line passes through five tunnels (accounting for 10% of it's length) and uses 130 viaducts and bridges, but it was designed for safety and security. It avoids grade-level crossings, the tunnels have sprinkler systems and security measures were considered throughout, making it easier to move containerized or bulk hazardous goods. Though double stack is not yet a standard in Europe, the Betuwe line was designed to allow double stacking. Tunnel clearances and weight bearing capacity of the lines won't constrain growth in that direction.

The capacity of the line should be sufficient-for four to six years, says van der Hoop. The connections with the German rail system should be more than adequate until volumes build, then the constraint will be the double track line in the Netherlands. As the Netherlands' first major rail project since the 1930s, van der Hoop says the appetite for additional investment is pretty low after funding this project. But eventually the line will need a third track.

Historically, the Netherlands relies upon much larger volumes of intermodal barge traffic than rail intermodal. The modal mix for the Netherlands is 48% intermodal barge, 26% by road and only 5% by rail intermodal. Rotterdam's Krekt says there are over 900 intermodal barge moves per week to 72 destinations vs. 200 rail shuttles in the same period. Rail is an ideal mode to reach as far as Italy, says van der Hoop, and with congestion-in the port increasing, the port wants to increase its rail use.

As a gateway, the Port of Rotterdam handles 80% of the volume reaching the Netherlands and its closest markets, about 3 million TEUs. Outside the immediate region, Rotterdam faces stiff competition from ports such as Antwerp, Le Havre, Bremerhaven and Hamburg.

Comparing modes, Germany's strong rail system means 15% of cargo moving there goes by rail and only 13% by intermodal barge. Belgium looks much like Germany, balancing 13% of its volume by rail intermodal and 14% by barge intermodal. France moves 14% of cargo by rail intermodal and just 2% by inland waterway.

Proximity to consumer markets is one of the strengths of the Netherlands. There are 160 million people within 300 miles of the Port of Rotterdam. Expand the distance to 600 miles, and you can reach 220 million people. Stretch out 800 miles and at 350 million the size of the market exceeds the U.S. population.

Drawing a similar comparison in distances from New York City, 300 miles is still 100 miles east of Pittsburgh, 600 miles would reach to Detroit, 800 miles would reach Chicago.

Krekt points out, however, that, in Europe " demands may change every 300 km [186 miles]." Each country represents a complex and diverse market. Cultural differences are important for competition, she adds. Indeed, the markets within 1,000 miles of Rotterdam are as diverse as Ireland, Norway, Lithuania, Hungary, Italy and Spain.

The prime consuming area for the European Union is within a 600-mile radius of Rotterdam and covers southeast England, the Benelux region, Germany, Austria and Switzerland. The somewhat narrow band has been nicknamed the "economic banana" because of its slightly arched but long shape. At it's southern tip, it meets with another strong economic region covering northern Italy, southern France and extending into Spain. This area has been tagged as the "Latin arch," and though it is outside the 800-mile ring from Rotterdam, port representatives feel strong waterway access coupled with rail intermodal keeps the port in the game as an entry point for goods bound for these markets as well.

With about 9,000 distribution centers and 9% of its workforce employed in logistics, logistics spending in the Netherlands stood at $64.4 billion or 12.4% of GDP in 2000, twice the European average. Even with rapid growth in new European Union member countries, the Netherlands, northern France, Belgium and northern Germany continue to focus on developing logistics as a core strength and as a target industry for inward investment.