Provence sets up its logistics in Europe

by Didier GOUT

A logistics cluster has just been set up on the Provencal ground; its primary mission will be to launch its application vying for the "competitiveness cluster" label of international stature. This cluster is designed to help the region develop a sustainable position as a multimodal hub between Southern Europe and the Mediterranean, not to mention fostering the creation of first-class logistics companies with high added-value, the most advanced tools and relevant training.

Provence will soon have all resources required to meet its goals, seeing that it already boasts many companies and platforms in full expansion in such fields, with unique means of transport covering sea, road, air and river. There are many positive signs indicating that Marseille Provence is really changing, such as: 1) development of traffic on the Rhone river, 2) future motorway projects aiming at relieving the traffic in the Fos area, 3) the transport boom associating road and railway operated by public and privately-owned providers, 4) the increasing capacity of Marignane in terms of freight and passengers, including in particular the "Low Cost" activity starting this autumn, and 5) the increase in capacity in terms of containers with the "Fos 2 XL" project for which a financial plan has just been completed by the Marseille port authorities (PAM). This region is definitely equipping itself with all necessary assets needed to get a foothold in the centre of the Mediterranean region.

The importance of a label

Logistics is the art of transporting goods under the best conditions at reduced costs: just like Monsieur Jourdain , everyone uses logistics but not everyone is aware of what they are. This partly explains why companies in this field strive to create added-value without necessarily caring about other players involved in the same activity. And yet, logistics represent a whole chain. Should one link happen to be weak, then all other links suffer from this shortcoming and more generally speaking, the economic development of an entire region will suffer from the situation. This is how the idea came about of having all players within the chain working together in Provence, a territory that boasts many assets in this field, which can be optimised if players collaborate. Here lies the first short-term benefit of the logistics cluster. This cluster was launched on July 11 by Christian Frémont, the regional Prefect of the Provence-Alpes-Côte d'Azur (PACA) region, Jacques Pfister, President of the Chamber of Commerce (CCIMP), and Jean-Pierre Marcorelles, the President of the Provence Logistique Club. The cluster intends to federate logistics players to work on gaining the "competitiveness cluster" label. This idea was expressed by Christian Estrosi, acting Minister for regional planning and development, on a visit to the region during which he asked the local authorities to study this possibility. The Prefect appointed the CCIMP to do this.

Marseille Provence must enforce its assets

The results of this study pointed out that Marseille Provence possesses all the assets needed to accommodate a competitiveness cluster for advanced logistics. First of all, the PACA region is a heavyweight in this field with its 10,440 logistics transport companies, representing 9 % of nation's logistics force. These companies generate 63,000 jobs on a local level. Each link of the logistics chain is represented: PAM, the Arles River port, the Provence Logistique Club together with its member companies, and big names in the logistics activity located in the region like Daher, Gefco, SDV SCAC, TNT, Katoen Natie, Danzas, CMA CGM, CMM, etc. Yet another advantage: the Bouches du Rhône department is one of the only French departments that benefits from all transport means: sea, road, rail and river. The study from the CCIMP's Innovation & Industry cluster stated: "Marseille Provence is a global logistics cluster through its expertise and unique multimodal infrastructures, with the Fos area being one of the few versatile sites on the Mediterranean". It offers port logistics and all relevant skills required in the shipping industry: ship owners, shipping agents, forwarding agents, tugs, fullers, freight companies, etc, representing almost 15,000 direct jobs for the Marseille territory. Warehouse logistics involve receiving goods from various origins and natures that are stored before their order processing. Transport company logistics involve myriads of trucks leaving in the morning to load parcels and coming back late in the afternoon, before loading up even heavier trucks leaving in the evening for other road platforms located in Toulouse, Lyon, Barcelona, etc. The two above-mentioned types of logistics are booming.

For Distriport, an active area

These activities experience a yearly increase of 5 to 6%, mainly in the west of the department in Salon de Provence, Arles, Saint Martin de Crau, Istres, Miramas and Fos, not to mention the newly created area, Fos Distriport, that was built and is now managed by the port authorities.

Firstly, CLESUD is the oldest of the new platforms, with the first building dating back to 2001 and representing 520,000 m≈ of warehouse located on 220 hectares of grounds capable of accommodating for 700,000 m≈. CLESUD currently has 70,000 m≈ of warehouse and will boast twice this surface area by 2007, including a further 140,000 m≈. Secondly, the industrial estate of la Crau de Salon has 195,000 m≈ and stretches over 120 hectares of grounds. Last of all, the industrial estate located in St Martin de Crau boasts 320 hectares and 256,000 m≈ of warehouse, with another 70,000 m≈ under construction. This represents a total of approximately 1 million square metres of warehouse that have been built in ten years, thus creating 5,000 direct jobs. Within the next four years, 400,000 additional square metres will be added, among which 210,000 m≈ for the three construction phases amounting to 70,000 m≈ each belonging to Ikea only in the Fos port area. Most goods for the Swedish brand will be shipped in, representing about 60,000 containers a year. What do companies gain in settling in this area? The great success of Ouest Provence located west of the Berre lake is a demonstration of its advantages and more generally speaking those provided by the Provence region. "This is due to several factors", Pierre Marcorelles explained, "the vicinity of a quality port platform, associated with communication routes making it possible to rapidly reach Northern Europe but also cross Europe from West to East, combined with a real estate that still remains relatively cheap". In this case, why Fos and not Barcelona or Genoa? Even if the Spanish port is bigger, it nevertheless offers less space at a higher cost. As for the Italian port, its geographic location represents a deadlock owing to the mountains..

Three means of transport in Marseille Provence

The three land-based means of transport in Marseille Provence - road, railway, river/ sea - can also be extended to include air-based transport represented by the Marignane platform. Marignane has the second-largest airport in France in terms of freight, which will be extended this year with a new "Low Cost" terminal opening this autumn. This is an advantage that no other port area can claim. "The river is the most important asset. Its activity will obviously increase due to environmental problems and sustainable development" Jean-Pierre Marcorelles pointed out. "Barge transport is of course more environmentally-friendly and cheaper than railway and truck transport, though the latter have the advantage of being quicker", he added. Barges currently represent 5% of goods transport, whereas road represents 80% and railway represents 15%. But who knows what tomorrow will bring, with environmental restrictions sure to reinforced and ever-increasing container transport on increasingly bigger ships. Some ships connecting Asia and Europe can reach a capacity of 12,000 TEU containers, which is twice the capacity of ships holding the record only five years ago. This also represents a length of 70 kilometres per ship if the containers were placed end to end.

The Rhone and its advantages

The River Rhone can be reached from the container wharf in Fos via the Arles canal downstream from the city. It is then possible to reach Pagny in the Côte d'Or department to the north of Chalon-sur-Saône where the Rhone-Saône terminal is currently located for larger ships, until the extension towards the Rhine river is finalised, which will connect Northern Europe and the Mediterranean Sea. Accordingly, the river represents a wonderful asset that is not exploited to its full potential. Companies such as RSC, River Shuttle Containers and Alcotrans have begun working with this in mind. RSC, for example, acquired five 90 m long barges, with a capacity of 144 TEU. In a configuration of two pushed barge convoys, they can only go as far as Chalons since Pagny is not yet equipped to receive containers. Of course, their capacities are limited compared with the huge ships sailing between various continents. What is the advantage of using such transport? "A two-barge pushed convoy with a 288 TEU capacity is equivalent to 288 trucks on the road … I can transport the same quantity with only one departure and in only one trip", explained Fatiha El Amrani, the transport line manager at RSC. And it works! According to Alain Maliverney, the branch manager of Alcotrans and RSC competitor, 50,000 TEUs were conveyed in 2005 compared with 10,000 in 2001, to which must be added 12,000 TEUs for the two self-propelled convoys belonging to this subsidiary of the German company Imperial Reederei: this activity increased by 30 % in 2006, considering Alcotrans opened in December 2004.
The economic edge in using river transport on the Rhone - 10 to 15 % cheaper than road transport - is also an advantage. Nevertheless, this advantage is more pronounced in countries of Northern Europe. They have been focusing on bulk transport by barge or train for a long time now, means that are far more environmentally-friendly than road transport. "The Rhone River conveys goods coming from Fos, whereas rivers in the north of Europe (Escaut and the Rhine, etc.) are connected with Antwerp, Rotterdam, etc.", commented Fatiha El Amrani. "Barge transport over there is also cheaper than here: costs are between 20 and 25 % lower than road transport. Handling costs and terminal handling charging (THC) are more competitive over there because they include barge handling costs into wharf handling costs, whereas THC here doesn't include those costs…", she added. A specialist explained: "In Fos, the material handlers and the stevedores (the companies Seayard and Eurofos) are not in a position to consider all land-based ( sea and river) handling means on a global level because the gantry crane belongs to the Marseille Port authorities. River transport pays the material handlers twice to use a maritime gantry". More precisely, the THC only includes handling of goods from the ship onto the wharfs, from the wharfs into the warehouses and from the warehouses onto trucks or railway wagons. Since river transport has to resort to maritime handling afterwards, it has to pay a significant additional cost. "In the north, the material handler can manage all handling means - personnel, gantries, supporting frames and the whole terminal in general. It is therefore possible to reason in terms of overall costs". This said, the river really represents a true asset to be developed for the logistics combination located in Western Provence and Marseille Provence. We will see later that the Fos
2 Xl project aiming at extending container capacity will greatly contribute to this expansion, provided that the cost be really competitive or at least comparable with Northern European practices, while providing greater flexibility than today, with the possibility of globalising costs.

An advanced logistics competitiveness cluster in Provence

In order to become a competitiveness cluster specialized in advanced logistics thanks to the strength of this activity in the region, the Provence region will first have to iron out problems owing to its broad range of transport. "The need to reinforce land and rail infrastructures is obvious as well as the river-sea interface", stressed Philippe Zanin, Manager of the Marseille CCIMP Innovation and Industry cluster. As far as land transport is concerned, the weaker link has been identified; this is primarily the connection between Fos and the motorway networks towards the Rhone valley, and with Spain and Italy. The 40 kilometres of narrow roads between the container wharfs in Fos and the A54 motorway in Arles and Salon represent over an hour's drive by truck, not to mention the various types of pollution for the environment and the residents. "The opening of the IKEA logistics platform on its own should represent an extra truck every two minutes in the area", an observer calculated. There is therefore an urgent need to complete the A56 motorway, which will connect directly the Fos basin with the A54 motorway, by the Merle traffic interchange located in the west of Salon. Only one lane has been partly finished, including a few engineered structures. A second phase would consist in extending the A55 motorway after Martigues while bypassing Port de Bouc, instead of driving through the city, as is the case today. This investment would also reduce the risks linked with the transport of hazardous goods. Both investments should relieve congestion in the area, provided that the project agreement between the State and the Region over 2007-2013 can assume such costs.

Railways must become reliable

As far as the National Railway Company of France (SNCF) is concerned, progress is expected in the freight industry. Though the SNCF built its success on high speed and schedules, freight seems to have drawn the short straw. It lacks reliability and often suffers from delays in container delivery. In defence of the freight industry, it must be admitted it does not benefit from the same careful attention as the high-speed train does. The SNCF still hasn't managed to balance freight business, despite its 800 million euros of public recapitalisation funds that has been allotted since 2003. The decision reached by the CMA CGM to distance itself from the SNCF, while recently signing an agreement with the Company Veolia Environment to organize the railway transport of its goods through two subsidiaries using French ports, emphasized this delay and was considered a snub. "More than 15 % of traffic entrusted to the National Railway Company of France clocks up more than 24 hours delay"... explained Alain Wiels, the General Manager of CMA GGM. And yet today customers want global services within very tight delivery times. At the beginning, CMA CGM wished to acquire interests in the Naviland Cargo capital, a subsidiary of SNCF specializing in transport associating railway and road for containers unloaded from ships. In the meantime, the negotiations dragged out and CMA CGM changed its mind. What objective is CMA CGM targeting through this alliance with Veolia Environnement? That railway transport represent 10 to 15% of container transport by 2010, seeing that today only 5 % transit through European ports by train, against 95% by road. The main routes for this traffic are Le Havre-Lyon-Marseille, Antwerp-Lyon but also Hamburg-Munich. At SNCF, Arnaud Sohier, the sales manager for Mediterranean freight, was keen to put this alliance into perspective. "This is just normal healthy competition taking place. Competition has really been effective since March 2006: the monopoly of goods transport by railway on domestic territory came to an end and restrictions on international transport were lifted in March 2003. Moreover, CMA CGM remains one of our main customers". Finally, there still are reasons to remain optimistic about the railway goods transport, of which SNCF intends to remain the leader. "The 800 million euros invested in freight by the State as a shareholder will make it possible to renew a fleet of one thousand engines within three years, the average age of which - almost 35 - contributes to our reliability problems, even if the latter are not only attributable to the engines" he added. The position of goods transport by railway in the French ports is also considered positive. "It represents almost 17% of the French port activities for in-and on forwarding, which is higher than the European port average of about 8%". Railway goods transport is also considered strong in the Bouches du Rhône department, which concentrates three quarters of the PACA region's traffic. "The port authorities represent a key point for us and we intend to support the extensions scheduled", Arnaud Sohier indicated.

Developing combined transport

The share of goods transport combining road and railway is also considered as satisfactory in the Bouches du Rhône department, where it represents almost 20% of the global railway activities amounting to 12 million tons. It is to be noted that the multi-technical site for goods transport combining road and railway has just been set up. This investment of 22 million euros is scheduled to become operational in 2008, under the responsibility of Novatrans, who will be purchasing its engine and driver section from SNCF or its competitors: this is now common practice in the transport sector combining rail and road. SNCF or its competitors act as the owner-operator according to a transport schedule established by the operator. Associated with the CLESUD platform, this multi-technical site will make it possible to compose trains directly from this area, without having to stop at the sorting platform. It will therefore also develop railway transport in the region with a capacity of several goods trains per day, just in the vicinity of the Miramas yard, SNCF's turntable for the goods network in the Southeast. "The idea behind this type of equipment - considered as contributing to sustainable development - is to streamline traffic on the A7 motorway in the Rhone valley in order to comply with freighters and customer needs", a specialist commented. "Such an investment is in line with the majority of opinions expressed during the public debate on the transport policy in the Rhone valley and the Languedoc arc, which took place from April to July 2006 and which revealed that the public did not want to see trucks crowding motorways any longer. Nor do the public accept the idea of doubling the capacity of the A7 motorway between Marseille and Lyon to ease traffic. Rail infrastructures in Roussillon also require upgrading, and the absence of a railway bypassing Lyon will need to be remedied in the long-term, which could become a bottleneck for goods. But bypassing Lyon by rail is far from being a priority, seeing that today's infrastructures still have supply capacities left", the same specialist noted. A new connection between Marseille and Turin through the Durance valley, including boring a tunnel under Montgenevre, offers an alternate route to the Rhone valley and secures a logistics line between the PACA region and Italy, the main economic partner of the region. "This line is even a top priority, considering the opening of the Swiss railway tunnels of the Lötschberg in 2007 and of the Saint Gotthard tunnel scheduled for 2013, which will completely change the situation between central Europe and the Mediterranean ports in favour of North Italy and to the detriment of Marseille". The regional decision-makers prefer a solution connecting them to the new north-south axle through Switzerland. The solution would consist in updating and extending the line of the Durance valley (Marseille, Aix-en-Provence, Gap, Briançon) while boring a twenty kilometres long tunnel, the cost of which would amount to 1.3 billion euros in order to meet with the Lyon-Turin railway. According the regional decision-makers who support this project, this solution would be 10 times less expensive than doubling the Lyon-Turin railway line that would cost 15 billion euros. Today's stakes are to cope with transport flows that are rapidly increasing between Italy and Spain through the Rhone valley. This railway line via Montgenevre that would encourage railway goods transport is one of the projects that CCIMP would like to see listed on the 2007-2013 State-Region project agreement.

Need for container ports

The container ports are another point to be developed in view of improving logistics in Provence. The port activity of this area amounted to 98 million tons in 2006, which represents a slight increase (+ 1.54 %) compared with 2005. This figure is higher than the one in Le Havre, but it is attributable to the hydrocarbon tonnages that enable Marseille-Fos to be the first French port in terms of tons carried. As for Le Havre, it ranks first for miscellaneous goods. In Marseille, goods have been classified into five main segments: hydrocarbons with 63 million tons, liquid bulk with 3 million tons, miscellaneous goods with 16 million tons (55 % for containers, 25 % for Roll on/Roll off and 20 % for conventional goods) solid bulk with 15 million tons, and passenger transports with a estimate of 1,950,000 passengers for 2006, picking up slightly by 4%. "In maritime logistics, the container segment has the biggest growth, since it is a very reliable method of packaging compared with pallets" explained Chantal Helman, strategy and finance manager at the Marseille Port authority. "Containers offer safety, reliability and better productivity because they are rapidly loaded and unloaded". Today, the region boasts two container ports. One is in Fos, with a capacity of 650,000 TEU, specialized in intercontinental exchanges, particularly from Asia, and capable of accommodating for big ships with a capacity of 4,000 TEU or even 6,000 TEU. The other port is in Marseille and offers a 300,000 TEU capacity focusing on niche markets, mostly with Maghreb for ships with an average capacity of 1,000 TEU. The Fos 2 XL project will literally increase this capacity threefold after the construction of two additional terminals with a capacity of 1.5 million TEU, thanks to an investment amounting to 450 million euros: 206.4 million for the Port Authority - financed up to 70 %, equivalent to €151 million by the public institution, €27.4 million by the State, and €13.7 million each for the PACA Regional Council and the Bouches du Rhône Departmental Council - all the above was approved by the Board of Directors on 6th October 2006. This sum will be used to finance infrastructures: wharfs and dredging, railway network, road connections and power supply. Both providers - the Mediterranean Shipping Company (MSC) and biggest ship owner in the world, and the third-ranked PortSynergie (CMA CGM and P&O Ports cluster) - will invest between 200 and 250 million euros to be dedicated to superstructures (tooling). Each of them will be in charge of running one terminal: PortSynergie will have terminal "A", which represents 600 long wharfs, 50 ha and a yearly capacity of 660,000 TEU, whereas terminal "B" will be operated by MSC, with wharfs totalling 800 meters long and a yearly capacity of 800,000 TEU, against land dues and an obligation of traffic. The two existing terminals are jointly run by PAM and the freight companies, the gantry cranes and the relevant staff fall under the responsibility of the Port authority, whereas the material handling companies manage the stevedores. The Fos 2 XL project is scheduled to start operations in 2009 - construction work has already started - and is supposed to take over the activity of both previously-mentioned public-owned terminals, which are expected to reach saturation by 2008. If these terminals are the source of legitimate concerns, including fears that jobs could disappear on the existing terminals especially for gantry-crane operators - assuming the new terminals will absorb the totality of traffic - they also represent much hope for Marseille Provence logistics. It is true that both installations are supposed to create almost 4,500 direct and indirect jobs, along with the whole logistics chain within this scope. They are going to supply logistics and road platforms similar to Fos Distriport. River and railway traffic will also increase, according to the capacity that will come with these means of transport. "Railway shuttles leaving from the existing terminals already connect Lyon, Strasbourg, Paris, le Havre, Antwerp, etc." Chantal Helman specified. For example, RSC has predicted that its barge traffic on the River Rhone will double thanks to Fos 2 XL. In the long term, all links of the logistics chain should take advantage of these investments.

A unique location

"Marseille Provence's main strength lies in the fact that its location is unique thanks to its geographical environment and its potential growth found nowhere else; the real estate possibilities in the Fos area are so extensive that it is very difficult to put a figure on it", Philippe Zanin explained. "All spaces that can be linked with logistics have already been allotted and the possibilities of extending new construction phases, in particular on Distriport, are under consideration". In his opinion, the challenge facing this logistics cluster is the sustainable development of the Fos area, "in order to turn it into an exemplary economic area, well integrated into the environment and especially on the outskirts of the port area". This can be achieved while setting-up lighter industries with higher technological levels that are easier to integrate in terms of sustainable development. Logistics or advanced technology companies are good examples, having high-performance infrastructures and services at their fingertips (broadband networks, services offering information access and economic intelligence, etc). In the long term, this area will be connected with others to form what the regional employers' union has named "The Star Valley", to be implemented in partnership with the CCIMP, that is a high-performance economic network to be developed along the ITER fusion project itinerary, designed for the transport of heavy components. This 'valley' will extend from Fos to Cadarache and include three or four of these exemplary areas, with Fos being the leader. The advanced logistics cluster exactly justifies its existence at this stage. It should be composed of several elements, one of them could, for example, relate to commercially promoting a platform that not only belongs to the ports but is shared by other means of transport, pooling infrastructures and services in matters of logistics.

The first step has been made

All players within the procedures federated through the Club Provence have accepted to get together to focus on the cluster project.

They have already reinforced their cooperation. The second step will consist in rounding up the appropriate means to make the cluster projects come true, beginning with research and development in matters of advanced logistics that can lead to a competitive cluster, together with the participation of firms, research institutes and training centres. Research includes the Mediterranean University for example, which houses the research university lab for sciences specialized in logistics management and numerous R & D structures like prestigious education institutes - EGIM, Euromed (Marseille Management school), CECE/CSTI (foreign trade study centre and the high school for international transport), as well as the Universities of Aix Marseille - and the CNRS, National Centre for Scientific Research. As far as training is concerned, a very comprehensive and varied offer for logistics education has already been implemented, including all levels of higher education, such as a Master called "Managers in international trading and logistics". Some topics for research and development have already been contemplated: e-logistics and e-international trade, innovative trades for transport and goods, the "second generation automation" for warehouses and the supply chain, the development of new logistics systems, etc. This second stage will also aim at finding means to implement other regional development programmes, shared resources and services that the cluster wishes to announce in 2007. Once the various transport means, networks and companies networks have been interconnected, Provence will have one of the most outstanding logistics spaces in Europe at its fingertips. Thanks to fully optimised infrastructures, this still geographically-unexploited territory will finally be better linked with the major economic spaces in Europe and on the Mediterranean.