The Port of Hamburg - an Analysis

Introduction

Hamburg is Germany’s second biggest city with a population of 1.75 million (Statistical Offices of the Federation and the Laender, 2008). It is located in the North of the country on the banks of the river Elbe. The Port of Hamburg is one of the biggest ports in the world and has great influence on the development of the economy in Germany. For these reasons it is called “Germany’s Gateway to the World”.

This report analyses the economic perspectives of the Port of Hamburg. In the first section, background information regarding the history of the port and important facts on the current stage of development of the port are given. In the second part, a SWOT analysis is conducted pointing out the strengths, weaknesses, opportunities and threats of the port. Based on the analysis, recommendations for the future strategy of the Port of Hamburg are developed and presented in the last section. Finally, the results of this report are summarised in a conclusion.

1 Background of the Port of Hamburg

1.1 The History

Hamburg’s over one thousand year old history dates back to 825 AD when the castle of Hammaburg was built to prevent the invasion of the Vikings. In 1188, a group of Hamburg merchants received a charter for the building of a new town close to the old one with a harbour on the river Elbe. This was confirmed and enhanced on the 7th of May 1189, the official birth of the Port of Hamburg. In a charter, the emperor Frederick I. Barbarossa allowed the budding port special trading rights, toll exemptions and navigational privileges. (Port of Hamburg Marketing, 2008a)

An important year in the history of the Port of Hamburg is 1321 when Hamburg joined the Hanse League. The Hanse League was the most important trading federation of cities in the Northern and Baltic Sea in the Early and High Middle Ages contributing to the incredible economic growth of the port. Some decades later the security of the port was interrupted with many piracy incidents, most of them conducted by Klaus Störtebeker. These incidents continued until 1401 when the pirate Störtebeker was beheaded at Grasbrook, an island in the river Elbe. At this time Germany had no naval forces and Hamburg protected itself from pirates by means of so-called convoy ships. (Port of Hamburg Marketing, 2008a)

In 1492, the discovery of the American continent had major implications for the Port of Hamburg changing its principal trading partners and starting to trade with countries allocated on the Atlantic Ocean. In the mid sixteen hundreds, the port industry in Europe started to grow rapidly and many ports started to compete with Hamburg. However, Hamburg became the most important maritime trading city in mainland Europe until the end of the 19th century. The port developed its successful position as a trading basis with the newly developing countries of Africa, Central and Southern America, and the Far East. (Port of Hamburg Marketing, 2008a)

The government looked forward and started to modernise the port including enlargements of its area. The Freeport and the Speicherstadt (Warehouse City) were built between 1881 and 1888. The Speicherstadt remains the world’s largest single warehouse complex even nowadays. All these efforts to improve the port were destroyed during World War I and World War II. The port was especially affected in the Second World War when attacks of the Allies destroyed eighty percent of the port’s facilities. However, in the years following the war, the city invested an amount of € 115 million for its reconstruction and by 1955 the port handled the same volumes that it handled before World War II. (Port of Hamburg Marketing, 2008a)

In 1989, the port celebrated its 800th birthday. Big celebrations dignified the capability of the port to revive from heavy setbacks and to keep one of the top places on the list of the most important ports in the world. (Port of Hamburg Marketing, 2008a)

1.2 The Port of Hamburg Today

Today, the Port of Hamburg is the ninth biggest in the world and second biggest in Europe with respect to containerised cargo handling. (Port of Hamburg Marketing, 2008b) The management of its wide ranging operations is conducted by the Hamburg Port Authority facilitating operations by unifying policies and regulations in one institution. Thus, its foundation in 2005 was an important step to alleviate transactions by reducing bureaucracy and thereby helping to improve service levels by simplifying all clearance and documentation processes. (Duecker/Reuter, 2006, p. VI)

Operations within the port are carried out mainly by three operators; the HHLA, Eurogate and the Buss Group whereas more than 70 percent of all operations are conducted by the stock company HHLA (Hamburger Hafen und Logistik Aktiengesellschaft). (HHLA, 2008a, p. 23/Port of Hamburg Marketing, 2008d) As the majority of shares of the HHLA are owned by the city of Hamburg the government has major control in decision-making processes of port operations. The city’s influence is of major importance as the trade conducted within the port is of high public interest. According to official statistics more than 154,000 jobs in Hamburg are directly or indirectly dependent on the trade conducted in the port equalling twelve percent of total employment in the city. (Sorgenfrei, 2006, p. VII)

The physical infrastructure of Hamburg’s port consists of four container and eight multi-purpose terminals, 25 berths and 60 quayside cranes dedicated for the handling of containerised cargo (Port of Hamburg Marketing, 2008c). Last year, the port handled 9.9 million TEU’s. The handling volume increased continuously since 1992 (2.3 million TEU’s) with especially sharp increases in recent years (Port of Hamburg Marketing, 2008d).

All port operations are supported by a sophisticated software system called DAKOSY enabling the port to manage all its operations virtually in a most efficient way.

2 SWOT-Analysis

2.1 Strengths

During the past two decades, the Port of Hamburg has become one of the world’s top ten ports. Its increase in market share from 19 percent in 1985 to 29 percent in 2006 for containerised cargo among the so-called northern range ports including Hamburg, Rotterdam, Antwerp and Bremerhaven was favoured by several developments and advantageous location factors (Handelskammer Hamburg, 2007).

Most importantly, its strategically ideal location between the North and Baltic Sea making the Port of Hamburg the gateway to the Northern and Eastern European markets comprising a population of 460 million is a major strength (Financial Times Deutschland, 2008a). The port’s inland location around the banks of the river Elbe in close proximity to major road and rail networks facilitating a rapid intermodal change to these transport modes ensures most efficient cargo transfer. While transhipment onto barges going further up the Elbe plays a minor role in the onward movement of goods the further road and rail transport can be effectively conducted as both the road and rail network linking the port with its hinterland are highly developed. Especially the efficient and strongly utilised railway connections to major cities in Central and Eastern Europe are a main advantage in comparison to the ports of Rotterdam and Antwerp. Thus, the port is rather a load centre than a transhipment port.

Another striking advantage of the Port of Hamburg is its sophisticated infrastructure encompassing warehousing and terminal facilities including the highly automated and most advanced terminal in the world in Altenwerder that was taken into operation in 2002 (HHLA, 2008b). Important to mention in this context are also the investments made to increase security within the port. Today, fences, electronic gates and cargo screening devices ensure the security of facilities and goods making the Port of Hamburg one of the most secure ports worldwide (hamburg.de, 2005); an aspect of particular importance as terrorism and thefts are main concerns.

Furthermore, high local demand in conjunction with long term contracts with many customers together accounting for 45 percent of total cargo handled today ensure a substantial trade volume in the future (Port Authority Hamburg, 2005, p. 14-15).

As Germany’s “Gateway to the World” the Port of Hamburg benefits from the countries huge export volume and value. In 2006, Germany was the leading exporter in the world in terms of value of goods exported (1,112 billion) (World Trade Organisation, 2007). As approximately 50 percent of all exports leave the country through Hamburg’s port high turnovers are generated (Spiegel-Online, 2008). Substantial revenues are not only generated in the logistics sector but also in tourism. In recent years, the port’s market share in the cruise business sharply increased. The intown location of the port in direct proximity to the historic city centre with its many sights convinced many cruise operators to lay Hamburg (Moldenhauer, 2006, p. VIII). Finally, an aspect that is not to be underestimated with regard to the ports future development is the positive image of the port among the local people. In the absence of a true landmark the port is often stated as the number one attraction of Hamburg and thus the support and identification of the cities residents with the port is very high. Its prosperity is important to the city and its people as many jobs are linked to the business within the port.

2.2 Weaknesses

As mentioned before, the location of the Port of Hamburg is a major strength. However, it is a main weakness, too. The port is located 110 kilometres away from the North Sea linked to it by the wide estuary of the river Elbe. The inland location causes problems with regard to the accessibility of the port especially for larger cargo carriers.

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