First the pandemic, now the war: Global supply chains are disrupted; containers are idling on the world’s oceans and get to ports and shops late. Many places are missing replacement parts and products. Angela Titzrath, who manages the Hamburg port operator, knows what political decisions should be made – and what individuals can do.
Ms. Titzrath, have you already bought Christmas presents?
Often, when I see something I think my friends or family would like, I buy it and build up a little stockpile of gifts. But not everyone has to do that yet.
In view of the backlog in the ports, people might start thinking about it in July, though. At the moment, we don’t know which goods and products will be in short supply in the autumn or winter.
I don’t want to call on people to hoard things. People shouldn’t be ordering more than they really need.
When we spoke two years ago, the pandemic was already raging around the world. You said you didn’t know where to put all the empty containers. Orders were constantly being cancelled. Now fully laden container ships are backed up in the German Bight. What happened?
Supply chains have undergone massive disruption over the past two years. The various lockdowns in the Chinese ports; a container ship’s blockage of the Suez Canal for days; storms in many parts of the world; the war in Ukraine and sanctions against Russia – and the ongoing pandemic: All these events didn’t happen at the same time, but in waves that reinforced each other. Though each of the challenges would be manageable by itself, the combination amplifies their effects and makes the situation unpredictable.
When you drive alongside the port, it looks as well orchestrated as the model railway at Miniatur Wunderland. Where exactly did the system get out of sync, and what consequences does that have for HHLA?
We operate a highly complex logistics system in which various subsystems interact on the water, on the rails and on the roads. Temporally and spatially. In sequences and in processes. With the arrival and departure of goods. This system fell apart. Reliable punctuality no longer exists, so there is no predictability with the ships or with the hinterland, which is reached by rail. As a result of ship delays, import and export goods sometimes arrive too early and sometimes too late. The containers that are not picked up create bottlenecks and delays in handling operations. We are making every effort to get the system back under control. But we can only do that with the cooperation of all participants in the logistics chain, with improved communication and the collaboration of everyone involved
We are making every effort to get the system back under control. But we can only do that with the cooperation of all participants in the logistics chain, with improved communication and the collaboration of everyone involved.
Like a Lego box that was once well-sorted but has had all the colours mixed together.
Sounds banal, but yes, that’s an apt analogy. And if you want to restore order, you have to sort everything out – colour by colour and by size by size.
That no doubt takes longer than it did to create the chaos in the first place.
That’s right. We also face additional challenges. The Deutsche Bahn is investing in new tracks, trains and digitalisation. This is to be welcomed, but it means that a lot of capacity has been taken out of the system at the moment, due to maintenance and construction work. At the same time, the shipments are having to travel further by rail.
That’s crazy considering all that’s happening these days.
Also, passenger transport has increased by 20 percent on some routes, and that takes priority over freight traffic.
So is the € 9 ticket partly to blame for the chaos at Hamburg airport?
I wouldn’t go that far. It’s like the Lego box. If everything is mixed up, it doesn’t help to just shake it. You need time and patience to get things back in order.
More than a dozen container ships are currently anchored in the German Bight. What does that cost every day?
Nearly three to four percent of the world’s gross national product is currently idling on the world’s oceans – only a small proportion of it in Europe. The economic damage occurs not so much because the containers are on the ship but because specific products that are in the containers are lacking on land, so that products can’t be manufactured or sold. The automotive industry and its many suppliers from Germany’s SMEs are one example of this. Many construction and chemical companies, as well as retailers, are also struggling with delays.
Have the port operators forgotten how to manage globalisation?
No, we have adapted to manage the fluctuations of the global markets better with additional investments and digital solutions. However, that reaches limits if the system is not designed to be equally flexible. We have been calling for the digitalisation of rail transport for years. Nothing has happened for too long.
A container used to spend two days in the port, now it’s five. Does that mean the port would have to be twice as big for things to run smoothly?
If you invite 50 guests to your birthday party, you don’t permanently redesign your living room. We have the same situation now. In the North Range...
...which includes the largest continental European ports on the North Sea...
...there is overcapacity, as measured by global growth. The handling capacity is sufficient for normal operations, but not if all ships arrive at the same time. So we need to rethink things. Why don’t we do away with the Sunday ban on truck transport for a few months and open up the delivery areas outside the normal hours?
But there are already far too few drivers.
Yes, but the ones who are driving would spend much less time in traffic. If every truck has to come on weekdays between 9 a.m. and 4 p.m., traffic jams are bound to occur.
People have been warning about the lack of truck drivers for years. But when it comes to higher pay, people ask who’s going to pay for it. Why is logistics worth so little to people?
Logistics is an invisible service if everything works. It always was taken for granted that, when you bought something online, you didn’t have to pay extra for shipping and the products would be at your door the next morning. We customers are spoiled.
Do companies also have to rethink the way they do things?
Yes. For decades, industry has operated on principles like just-in-time and just-in-sequence production, and concentrated on optimising individual processes. The more efficient, the better. Those with market power could put more pressure on suppliers and service providers. We now need a radical rethink.
To be a resilient company, you need not only efficiency but the ability to deal with sudden fluctuations.
The big shipping companies are earning so many billions right now that US President Joe Biden wants to end this “rip-off”, as he calls it, by law. Is that a good idea?
I’m a believer in the market and I think the market should regulate it. Many shipping companies were suffering heavy losses just a few years ago. For this reason, the EU granted them an exemption so they could form consortiums to offer joint services for maritime transport. This measure restricts competition and is still in place until 2024. It needs to be reviewed.
HHLA paid out € 60 million in dividends last year. Shouldn’t the dockers on strike be given more money too?
We offer secure employment and good wages. The employers recently offered pay increases of up to eight percent in twelve months. The overall package is for up to 12.5 percent, which is much higher than the rate of inflation and comparable pay raises in the industrial sector. In the current situation, industrial action jeopardises the supply of the German economy.
HHLA also owns a container terminal in the Port of Odessa. It is currently in operation?
The port itself has been mined and is not currently accessible to commercial vessels. However, the hinterland connections, primarily via rail, are open for transport – to the extent the war allows.
The port was known for trading in wheat and gas. Is this conceivable at the moment?
Only to a very limited extent. Currently, wood and sunflower oil are the main goods being transported.
How many employees do you have there?
463, of whom 32 are currently enlisted as soldiers in the war. All others are working willingly in the port. For us, Ukraine isn’t just an abstract war-torn country that you see in the news. For us, the war bears the faces and names of our colleagues. The conscripted soldiers are the same people we were discussing market expansion and targets with just a few weeks ago. That really affects you on a human level.