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Is Big Always Better?

Is Big Always Better?



Interview with Cecilia Eckelmann-Battistello, President of Contship Italia S.p.A.


To say that shipping is a resilient industry is an understatement. Even in our modern, speed-driven and technologically-advanced era, 90 per cent of our goods still travel the same way as they did more than 400 years ago: by sea.

This is especially true in Europe. Not only does it remain one of the oldest traditional industries in the region, but economically, the shipping sector is massive in size.

According to a report by Oxford Economics, it directly contributed €56bn to European Union’s (EU) gross domestic product (GDP) in 2013. Considering the industry’s monstrous size, it is no surprise that the sector requires a large and highly capable workforce, the implementation of smart integrated solutions, as well as significant monetary investment to keep up with demands and upcoming trends.

La Spezia Container Terminal (LSCT), for example, a division of Contship Italia Group, is investing €200m in its facilities over the next couple of years.

Despite having some doubts that the new generation of mega containerships will deliver on its high expectations, Ms Cecilia Eckelmann-Battistello, the President of Contship Italia S.p.A., believes it is important to invest in super structures and equipment to stay ahead of the competition.

In this one-on-one interview with Ms Eckelmann-Battistello, she shares with Supply Chain Asia her thoughts on the changing face of the global supply chain, the range of alternatives now available to shippers and what sets LSCT apart from the others as well as the ultimate fate of 20,000 TEU megaships.

Mediterranean freight paradise

The Port of La Spezia is located in the North Tyrrhenian Sea a natural harbour with positive attributes for sea and land transportation. Providing a good connection to southern, central and northern Europe, as well as North Africa, La Spezia’s 2,200-metre long breakwater also comes with over 3.5 kilometres of port roads and 17 kilometres of rail tracks leading directly to the national road and rail networks.

“If I have to name one special attribute of LSCT, it is the superior transit time we offer which results in saving end-to-end supply chain cost for shippers in Asia,” says Ms Eckelmann-Battistello, who has been working for Contship Group for the past 42 years.

The use of railway networks which are integral to the end-to-end supply chain in Europe, is a vital component in LSCT’s ability to deliver this.

“While the average rail freight in Italy is below 10 per cent of the total throughput, the figure is 35 per cent in La Spezia. This means about three out of every ten containers are transported in or out of our port via trains, she said.

“Rail freight is more environmentally friendly, encounters virtually no congestion and is cheaper going longer distance than trucks. With four trains moving from La Spezia to Milan, which is the main city, daily, it translates to transporting hundreds of containers and basically replaces 300 trucks on the road,” explains the leader of La Spezia, a woman who started in the Shipping line division of Contship company in the documentation department.

Not all about the numbers

“While Asia will continue to be the driver of world trade for the foreseeable future and will produce ever larger ports, I believe Europe will continue to prosper when it comes to other aspects of supply chain,” says the president, who has lived in Switzerland, France, the UK and the Gulf during her tenure at the company.

Reports have shown that more companies are adopting nearshoring in recent times and are moving manufacturing back to Europe from Asia. The region is changing, with some parts of Europe, including Italy, providing cost-competitive prices when it comes to setting up plants and factories in the region. Italy, for example, is frequently seen as a good spot as it is only a few miles away from North Africa, yet it provides the economic and political stability as a European country compared to perhaps Tunisia or Algeria.

“In the meantime, while I think North European ports, such as Rotterdam and Antwerp, will continue to be amongst the top performing ports in the region, I think other ports will catch up. In fact, if there is peace in North Africa, I think the Mediterranean will attract more ships due to our location.

“However, I would like to stress we are not necessarily competing with Rotterdam in terms of the quantity of goods shipped. We focus on adopting a viable, cost effective and efficient alternative to the northern European ports offering faster and reliable transit time and one single call to access multiple markets,” clarifies Ms Eckelmann-Battistello.

How long will megaships stay?

While the president acknowledges that not all ports in the Mediterranean are ready to accommodate 20,000 TEU megaships, they are catching up. But the bigger question is if megaships will even stay relevant in the long run.

“This is a very unpredictable industry. More than 30 years ago, Contship’s first ship could only carry 80 containers, but ships now carry 20,000 containers. I find it hard to predict that the current generation of mega containerships will last for more than one economic life cycle. Using megaships is only a good economic option if they are always full. They need to be full. In this case, I do not think big is always better, but it is necessary for us to be prepared,” stresses Ms Eckelmann- Battistello, who believes 10,000 to 15,000 TEU ships more practical and effective.

In addition, there are currently less than 10 ports in Asia that can accommodate 20,000 TEU ships. For example, Indonesia, which is one of the largest and most populous countries in the world, has only one port that can accommodate a 20,000 TEU vessel.

Keeping it competitive

Choosing to be competitive goes beyond just reducing rates. After all, shipping in itself is already cheap. According to the World Shipping Council, the standard cost for shipping a DVD/CD player from Asia to Europe is about US$1.50 while transporting a kilogramme of coffee is just fifteen cents.

“In this era, it is all about speed. Each day that the goods stay idle, whether on the sea or port, costs money to the operators. This is why we continuously find ways to streamline the time wasted. For example now, our customers can move goods from our port straight to Milan with no custom duties. This cuts down on two days of waiting and red tape bureaucracy.

“Italy is definitely not what it used to be 20 years ago. We are definitely catching up with the rest of Europe,” explains Ms Eckelmann-Battistello.

But the spirit of competitiveness needs to start from within. Ms Eckelmann- Battistello is well-known among her colleagues for her demanding nature, but she does not only expect the best from her team; she also demands perfection from herself.

“Even if there is a problem at 3am in the morning, I will wake up and manage the problem. Perhaps it is because I am a woman in this male-dominated industry, I tend to feel insecure. This is why I must strive for perfection and always push myself for better results,” says the Italian.