Posted on September 6, 2023
PSA International, a port operator and logistics services provider owned by Singapore state investor Temasek, is looking to take advantage of opportunities created by Europe’s green logistics push as it copes with a slowdown in global container shipping growth.
The company’s recent European investments include a deal in July to buy 22% of Duisburg Gateway Terminal (DGT), a facility at the German port that is intended to be Europe’s first 100% climate-neutral inland container terminal when it becomes operational at the end the second quarter of 2024.
In June, PSA launched an EV battery logistics warehouse in Dunkirk, France, to serve the Hauts-De-France region, which is becoming an EV battery production hub in Northern Europe.
“Whereas as a rule of thumb, container growth has for decades been twice as fast as GDP growth, the growth has slowed down significantly in recent years, at times even below GDP growth,” David Yang, PSA’s Regional CEO EuroMed & Americas, said in a recent interview with Nikkei Asia. “This isn’t going to come back, forcing us to take a leading role in adapting to new realities, as demonstrated by our recent moves in Europe.”
PSA’s emphasis on investment outside of Singapore can be seen in its results last year. Its overseas throughput — the amount of cargo handled — amounted to 59% of the total in 2022, up from 55% in 2018.
Yang said PSA’s strategy for Europe and countries in the southern Mediterranean is aligned with the EU Green Deal, a set of European Commission initiatives aimed at making the EU climate neutral in 2050.
PSA, which has set the same target for itself, has benefited from EU funding as it has brought innovative straddle carriers — a blend of truck and forklift used to move containers — to its terminals at the Port of Antwerp-Bruges in Belgium, Europe’s second-largest port.
To reduce the use of diesel-powered equipment at Antwerp-Bruges, PSA and its Belgian partner CMB. TECH in March 2023 launched the world’s first dual fuel straddle carrier, which can replace up to 70% of diesel with carbon-neutral hydrogen. PSA also recently launched the first fully electric straddle carrier on the European mainland at its PSA European Terminal joint venture in Antwerp.
“We are looking at innovative solutions for our straddle carriers because almost 90% of our emissions come from our horizontal movement of containers in the yard,” said Yang. “Straddle carriers with hydrogen fuel cells are revolutionary, and we are at the forefront of their development and commercialization.”
Similarly, CO2-less trucks, barges and straddle carriers are expected to play a big role at DGT in Duisburg, which is inherently intermodal, given the number of Europe’s main rivers, highways and railways that cross there.
PSA did not disclose the amount of investment, but Juergen Sorgenfrei, a professor with a focus on maritime business at Hamburg-based NBS Northern Business School, said the deal made strategic sense because of the benefits of inland shipping.
“Inland shipping is comparatively environmentally friendly and has more free capacity than rail cargo,” he said. “Another good strategic aspect is that a bigger foothold in the hinterland brings PSA closer to the exporters and importers that own the cargo, which will push up their margins significantly, if compared with the meager 5-7% margins that pure port operations bring along.”
PSA is taking part in the EU’s effort to bring more EV battery production to Europe from Asia through a unit called PSA BDP, created by its 2022 purchase of U.S.-based logistics service provider BDP. In April, PSA BDP became the logistics service provider for Automotive Cells Company (ACC), a joint venture between Saft, Stellantis and Mercedes-Benz.
Yang projected that Europe would need about 50 battery gigafactories, translating into increased demand for warehouses like the PSA facility in Dunkirk. To cope with the fire risk of EV batteries, it features in-rack sprinklers, temperature and humidity monitors, quarantine containers and water basins.
“Managing contract logistics and transportation of EV batteries on a large scale is a very new sector that coincides with the boom of electric cars in Europe and across the globe,” said Yang. “It requires special handling.”
Analysts expect that demand for battery warehousing at European ports will peak in 2024-25 as the continent increases domestic production of battery cells rather than importing them from China.
“Nevertheless, even under the new modus operandi of transporting the cells from European battery factories to European car factories by train, more warehouses will be needed, including buffer warehouses for periods of reduced production capacity,” said Wolfgang Bernhart, a battery expert at Germany-based strategy consultancy Roland Berger.