Niels Kjær-Richardt (photo) is Director of Shortsea in Unifeeder and made a presentation named "Shortsea the Unifeeder way" on our Shortsea15 conference in Copenhagen.
The key shortsea value proposition for Unifeeder is cost saving, according to Niels Kjær-Richardt. Transit time is often longer, the shipping frequency is lower and the geography may be challenging. Customer are compensated for this by lower transport and logistic costs. The green profile of container transport by sea is undisputed, but environment is not a deciding factor for most of the shippers.
Scale is important
Survival on market terms requires scale of operation. Customers require 10-30% cost saving, wide geographical coverage, one or two shipments per week and acceptable transit times. Large investments are necessary to delivery this. An annual volume of 400.000-500.000 TEU is required to achieve the necessary economy of scale, in Kjær-Richardt's opinion. In 2013 the total intra-European shortsea container marked was 2.1 million TEU. This means that there is just room for 3-4 dedicated players.
Unifeeders business model is that shortsea (intra-Europe) and feeder work in tandem to achieve economy of scale. In this way the connected network is larger, the capacity is higher, the prices are lower, the service is better and the geographic reach is wider.
Unifeeder now operates 45 vessels in 39 ports in North-Europe.
Warning - No public meddling
Kjær-Richardt warns that public funding programmes like EUs Marco Polo may distort markets. Some of the new lines supported by Marco Polo ended up competing with existing services. In one case a loss making service was competing with Unifeeder, who was already returning profit on the same route. Also, a large share of the new lines are no longer in service.
Level playing field
Instead, regulators should remove barriers and create level playing field. Customs and and business-to-government reporting is still a major obstacle. - Action is required, says Niels Kjær-Richardt, Unifeeder.
Presentation by Niels Kjær-Richardt:
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