Algeciras weighs up development potential

25 Jun 2012

Costs for shipping lines in Algeciras are 50% more expensive than at Tanger-Med. Credit: Laura Fernandez
Hanjin-owned Total Terminal International Algeciras handled 650,000 teu last year and could reach 1m teu in 2012. However, no decision has yet been reached as to whether to proceed with a Phase B development of the terminal.
Around 92% of current traffic is transhipment. Chief executive Alonso Luque points out that expanding the terminal is therefore a “must” to reach the critical mass needed to make this business profitable.
“Margins in transhipment are minimal. You need a lot of volume to make a reasonable return or at least to cover costs. After that, it's import-export traffic that makes the difference between profit and loss,” he says.
But why is Hanjin seemingly reluctant to commit more investment? Part of the answer is that costs for shipping lines in Algeciras are 50% more expensive than at Tanger-Med.
“We therefore have to make a major effort to offset this difference. We need to attract more shipping lines and the best way of doing that is by offering good prices, whilst also providing service and productivity. However, if we can't offer the prices lines are looking for, really, there's no point!” Mr Luque says.
The port authority has already done Mr Luque stressing that just 10 are needed in TTIA.
“Anything above that represents an additional cost for us,” he says.
Unless this downsizing can be achieved, the Phase B development would be dubiously profitable. a lot of work in getting rates down, but there is still a 10%-15% differential to be overcome. TTIA is therefore aiming to cut labour costs. At present, the work force consists of 1,200 permanent stevedores, with 420 more casual workers seeking to join this pool. But labour gangs, which consists of 14-15 members, are larger than at either Barcelona or Valencia, with
“To go ahead, we either need a guarantee that gang sizes will fall or, at the very least, a stable functioning baseline that is acceptable to our business – and that will only come through an agreement with the workers,” he says, adding that Algeciras' big plus is that, to date, it has had labour peace. Nevertheless, he emphasises that quite how much reliability will feature in any negotiations with potential new shipping line customers is hard to say.