Page 14: of Maritime Reporter Magazine (March 1998)

L A COLD SPACE DESIGNED & CONSTRUCTED TO MEET ^ ^ THE DEMANDS OF THE MARINE INDUSTRY... j

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MARINE FINANCE est products, it may be that the container sector will again be looking at the forest trades.

In the early 1990s, western Canadian shippers — at least in the sawnwood sector— had the fallback of a strong presence in the European market. This has largely disappeared — the EU's prolonged prevari- cation over kiln drying was a factor but high prices in Asia were even more so — and is unlikely to be won back given that aggressive new players from the Baltic States have emerged.

The changing market structure in northwestern

Europe has impacted on ports, given that large vol- umes of wood-based products (primarily sawnwoods and panel products) now move as relatively small individual lots, and consequently, utilize relatively small ships, rather than the Handysize types that formerly served the trans-Atlantic sector. Pricewise, much of the traffic may be marginal business— that is, buyers will be willing to switch sources (and the port used) for very small price benefits.

Focus On Ports

The changing requirements of the often complex forest products logistics chain, typified by the chang- ing European pattern, have major implications for the requirements, developments and competitive position of forest products ports — this topic being a major feature of Drewry's latest report.

At the loading end, the port handling market is extremely fragmented and, indeed, specialized load- ing ports themselves exhibit marked differences in sophistication ranging from the leading edge of tech- nology to the very basic. In contrast, the discharge side has tended to see more development over the longer period.

Crucially, Drewry noted, "there is an increasing trend, particularly in Northern Europe, for dis- charge ports to act as a storage and distribution hub, rather than a pure transit facility." Drewry added that this has fundamental implications for shipping as it enables a port to create critical mass making it a "must call" facility for shipping lines and drawing in landslide traffic to further boost the distribution hub role.

Such developments also emphasize the control over the trade held by the shippers and distributors, a factor which enables them, and not the shipping line, to dictate port call preferences. As a result, businesses might well switch shipping operators rather than switch ports.

Looking at the forest products industries them- selves, Drewry noted a remarkable change over the past two decades.

The forest products companies of the 1970s gener- ally had a complete mix of operations —mfrom forestry to mill process and through to shipping and paper or timber merchants.

The forest products company of the late 1990s has been shaped and forced by shareholder pressures to sell-off non-core or under-performing units, to seek partners or accept bankruptcy, to bring manufactur- ing operations closer to the market and to make products that the consumers want.

Within the modern industry structure, there has been rapid growth by merger and acquisition. A number of these acquisitions have involved pur- chases of overseas companies encouraging the glob- alization of business.

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Maritime Reporter/Engineering News

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