European ports’ evolving and multi-dimensional role

Europe’s major ports have had to deal with the fall-out from the Red Sea crisis on ocean shipping since the end of last year — chaos and disruption to schedules and the congestion created when ships finally make it to harbor.

A more fundamental challenge is having to adapt to radical change in their operating environment and adopt new functions on top of their traditional role of multimodal logistics hubs serving international trade and supply chains and connecting the sea with hinterlands.

Ports are now also hubs and facilitators of sustainable energy, clusters of industry and the circular economy, as well as important pillars of geo-political and geo-economic resilience, according to a study prepared for the European Sea Port Organisation (ESPO), in cooperation with ports and logistics consultant, Peter de Langen.

‘Societally-Responsible’ Projects

Entitled, Port investments study 2024: the investment pipeline and challenges of European ports, it serves as an update of previous EPSO-commissioned research in 2018.

The evolving and multi-dimensional role of Europe’s ports is reflected in the investment pipeline, the new study notes.

Next to spending on developing basic port infrastructure and keeping it state-of-the-art, port authorities are investing more and more in projects of a strategic and societally-responsible nature and which contribute towards achieving Europe’s ambitions. However, this often implies projects with slow, low and risky returns on investment.

The prime example is energy transition which is steadily dominating the port landscape. New energy sources and related commodities are being handled in Europe’s ports. These come with specific transport needs, infrastructure adaptions and new connectivities (both maritime and to the hinterland), storage requirements and new supply chains.

While investments in energy transition and sustainability accounted for less than 10% in 2018, the share had increased to almost 25% by 2023.

A closer look at the different types of projects within this category shows that a large portion involves investments in “infrastructure and services related to the energy transition of the economy”, another large share consists of investments in “infrastructure and facilities for reducing the environmental footprint of shipping” while a smaller share concerns “investments to reduce the environmental footprint of port operations.”

While container traffic remains a key segment in port expansion, its prominence diminished in 2023 when compared to 2018, the study finding that general trade growth was less important an investment driver last year than energy transition.

CCS…Shore Power…Green Hydrogen

Europe’s biggest port, Rotterdam is at the forefront of decarbonization and energy transition initiatives. A prime example is the Carbon Capture and Storage (CCS) project, named Porthos, which makes provision for some 37 million tonnes of CO2 to be transported from industrial companies based in the port and stored in empty gas fields under the North Sea. CO2 will be collected over a period of 15 years from the likes of Shell, ExxonMobil, Air Liquide, and Air Products.

Infrastructure investment costs in the Porthos system, which is expected to be operational by 2026, are estimated at €1.3 billion (US$1.42 billion).

Recognized as making an important contribution towards meeting climate targets, Porthos has been declared a Project of Common Interest by the European Union and was awarded subsidies of €102 million (US$111.32).

In addition, construction is also well underway at the Port of Rotterdam to build a national hydrogen network. Open to all hydrogen suppliers and buyers, it will eventually span 1,200 kilometers and provide green hydrogen to five Dutch industrial hubs.

Meanwhile, at Europe’s second-biggest port, Antwerp-Bruges, addressing energy transition is also high on the agenda. Earlier this year, it announced a project for the first shore power installation for deep-sea vessels in Belgium.

It will allow moored ships to connect to the local electricity grid via a ‘socket’ on the quay and contribute to reducing emissions of CO2, nitrogen oxides, sulphur oxides and particulate matter.

Two fixed shore power connections, attracting investment of between €25-€30 million (US$27.29 million - $32.74 million), will be installed at the Antwerp Euroterminal which handles car carriers and con-ro vessels. They are scheduled to be operational by 2026 and are designed for future proof expansion, enabling additional vessels to connect. The ‘100% green electricity’ will initially be produced by the three wind turbines located at the terminal site.

Numerous connection points for quayside electricity are already available for barges and tugs at the port and at Zeebrugge, quayside electricity will be available for cruise ships from 2026. Port of Antwerp-Bruges is also committed to providing shore power for the largest container ships by 2028.

Climate-friendly Transport

As for the Port of Hamburg, the EU’s third-largest port for container traffic, its aiming is to be climate-neutral in its operations from 2040.

A new development plan, endorsed by the city’s Senate, gives special attention to the port’s railway network and rail infrastructure with the hinterland which makes it “a pioneer of the climate-considerate transformation of freight traffic.”

Dr. Melanie Leonhard, Hamburg’s senator for economic affairs, commented: “Our port is already more essential than ever. In the next few decades, we will require large quantities of renewable, rather than fossil, sources of energy. These will reach (the city of) Hamburg via the port that we are now remodeling to be the driving force for the energy transition. Maritime logistics can therefore play an essential part in climate-friendly transport and decarbonization of society as a whole. In Hamburg, our port is the key player for this.”

Need for Attractive Investment Climate

Returning to the EPSO study, Europe’s ports require large investments if they are to transform into energy hubs, it observed.

(Global) investment needs of European port authorities are estimated at €80 billion (US$87.31 billion) over the next 10 years and the study highlights that Europe’s ports, more than ever, need access to sufficient public funding.

“They must be able to rely on dedicated port envelopes within the different EU funding instruments – in the first place through the Connecting Europe Facility, but also through the Innovation Fund, the Just Transition and the Modernisation Fund.”

The study recommends that Europe foster a stable and attractive investment climate and must make sure investors continue to be willing to invest in European ports.

“The role ports will play in supplying Europe’s economy and society with new energy sources is unprecedented and is reshaping the port landscape. This transformation requires a whole rethinking of the port ecosystem – both by the port and different stakeholders, and by the legislator.

The study points to the European Union’s new Trans European Transport (TEN-T) Network Regulation which recognizes that ports cannot only be measured and prioritized on the basis of tonnes and TEUs.

“Their contribution to the diversification of EU energy supply and an accelerated roll-out of renewable energies must be considered as well. Yet, this is not enough: recognition must translate into adequate support.”