Port of Hamburg: “Existence” of Terminals “Endangered”?

The most important handling company in the port of Hamburg is complaining internally about the difficult situation in the container business. After research by NDR and WDR Among other things, savings in staff are apparently planned.

Hamburger Hafen und Logistik AG, HHLA for short, presents itself as a successful company with its finger on the pulse of the times, as a “gateway to the future”. A current internal self-description of Hamburg’s most important port company, on the other hand, sounds very different. The presentation about planned savings and restructuring that NDR and WDR available paints a rather gloomy picture of the economic situation.

“Our market share is shrinking,” says the November 24 paper. Drops in handling and overcapacity threaten “the loss of competitiveness”. In a video speech that NDR and WDR were also able to see, board member Jens Hansen refers to the growth in handling at the competing ports of Rotterdam, Antwerp and Gdansk. He is responsible for the important container business.

Savings in staff

“The existence” of the terminals in Hamburg is “endangered,” the internal paper warns drastically. The words “existence” and “endangered” are in bold. The company identified excessive costs as the source of the problem. It is therefore planning drastic cuts, especially in terms of staff. According to the presentation, 1,250,000 working hours will be lost between 2023 and 2025. That should correspond to several hundred jobs. In total, HHLA has a little over 6,000 employees. HHLA did not answer a detailed catalog of questions about the internal presentation and the video. The company did not want to comment, pointing out that the response period was too short.

The future of the Port of Hamburg had caused heated arguments in the federal government in recent months: While the six specialist ministries rejected a planned entry by the Chinese state shipping company Cosco in the operator of the Tollerort terminal, the Chancellery pushed through an opportunity for participation – even if this took place 35 percent may only be 24.9 percent. Nothing is known yet about the conclusion of the negotiations between HHLA and Cosco.

HHLA denies the accusation that the deal would dangerously increase China’s influence. Hamburg’s Mayor Peter Tschentscher (SPD) also repeatedly emphasizes how economically important the close cooperation with Cosco is for the port: “It is of the utmost importance for Germany’s security and independence that the port of Hamburg is not left behind, that it is in the international competitive and works efficiently on an equal footing with others,” said Tschentscher, for example, at the SPD state party conference.

China exploits economic weaknesses

The internal company presentation now sheds light on how precarious HHLA assesses its own economic situation: “The market is dominated by a few large shipping companies,” it says. Their “bargaining power” has increased. The Chinese shipping company Cosco is one of these few big ones. Its owner, the Chinese state, wants to become the leading trading power on the oceans. In a confidential assessment, the Federal Ministry of Economics describes the expansion strategy of the leadership in Beijing as follows: “China exploits the economic weaknesses of its cooperation partners for its own benefit.”

According to HHLA’s internal presentation, output is to be increased at the same time as the savings in personnel. In the future, a bridge crane will apparently be able to load or unload 30 containers per hour, which would mean an increase in performance of 20 to 25 percent. The costs for container handling are to be reduced by 30 euros per box. In this way, 120 to 150 million euros are to be saved annually with the aim of being able to offer shipowners a cheaper service.

Less staff should therefore bring more performance for a lower price. That sounds ambitious, especially since the company complains in the presentation that staff shortages in some shifts lead to “low reliability” towards “our customers”. That’s why you want to better organize the shifts on weekends and peak loads.

Last April, when peak loads in container handling became apparent due to the ship jams in the German Bight, the management of Burchardkai, the largest of the three HHLA terminals, requested overtime for the workforce. So it wasn’t that long ago that personnel policy actually went in a completely different direction than what is now outlined in the presentation.

Automation and restructuring

The Hamburg Senate holds 70 percent of HHLA. With a salary of more than one million euros, CEO Angela Titzrath is the top earner in municipal companies. Would you and other board members forgo part of their pay given the need to cut costs? HHLA is also silent on this question.

The port company intends to bridge the gap between staff cuts and cost reductions on the one hand and improved performance on the other with automation and changes to the company structure. For example, self-propelled container transporters, so-called AGVs, are to be used more frequently on the quayside. HHLA is to be centralized in its structure. The previously separately organized container terminals are to be combined in a holding company. In the future, employees will be able to jump between the individual terminals as needed.

HHLA under the leadership of Titzrath has not lacked for bold technological visions in the recent past. Within the port, containers could be relocated with drones in the future, the port company explained in 2019. However, the “flying containers” quickly turned out to be science fiction.

A tabular comparison of the target and actual status in the internal presentation shows that HHLA is lagging behind its own cost-cutting goals. In a diagram, the terminal operator also indicates a scenario in which 530,000 of the working hours that are actually to be reduced could be retained. This is explained somewhat vaguely with “quantity growth (increased personnel requirements)”.

This scenario could refer to the planned participation of the Chinese state shipping company Cosco in the Tollerort terminal. If Cosco were to participate in the container terminal, it would then upgrade Hamburg to a preferred transshipment point in Europe, meaning that it would bring more cargo to the Hanseatic city. Does the apparently calculated “volume growth” in handling have anything to do with Cosco’s entry? HHLA also left this question unanswered.