New port range a taste of Conti’s expansion strategy

Over the last decade or so Continental has focused heavily on its automotive businesses, and with an annual turnover of 32.76 billion euros it today ranks as the world’s third largest automotive supplier (behind Denso and Robert Bosch). But now the pendulum is swinging the other way. During a recent press conference, Nikolai Setzer outlined the company’s current strategy of investing into non-automotive areas in order to balance Continental’s footprint. The Tire division head also said investment is being undertaken to reduce vulnerability to automotive sector downturns.

“We bought and integrated VDO in the year 2000. Now we want to clearly grow those parts which are more non-automotive and on the rubber side of the business,” he comments. Setzer added that areas of anticipated future growth are a particular investment focus, and Continental’s Commercial Specialty Tires (CST) business has been an early beneficiary. In June, the German manufacturer presented a range that reflects this focus – a CST portfolio featuring newly-developed technology and aimed at the expanding port industry.

Ports and harbours were a logical choice for Continental. Current estimates place the global container trade at around 600 million teu, or 20 foot container equivalents, per annum. And if the experts’ predictions pan out, this business will grow significantly in the coming years. Little wonder then that Continental identified this as an interesting segment. The TOC Container Supply Chain Europe exhibition in Rotterdam (June 25 to 27) was chosen as the venue for the harbour tyre portfolio’s official debut; during the launch the head of Continental’s Commercial Vehicle Tires business unit discussed opportunities within the segment and the technology expected to optimise total cost of ownership for end-users.

“In the years until 2024, container shipments will double to 1.2 billion teu,” shares Dr. Andreas Esser. “We want to grow together with the market development in the harbour segment in the future, and our answer is that we’ve created a specialised product portfolio for the harbour business. We want to support and benefit customers with great solutions that bring them benefits, and by doing so we also want to want to increase our market share in the port business.”

Development of this new, specialised portfolio began by analysing end-user needs. According to Dr. Michael Maertens, managing director of Continental Commercial Specialty Tires, the number one customer requirement was identified as safety – straddle carriers, for example, have a tendency to tip over with spectacular destructiveness if incorrectly maneouvered. Pushing against this safety requirement are productivity pressures resulting from the need to load and unload ever larger vessels in the same amount of port space, while cost competitiveness and total cost of tyre ownership (TCO) are other key issues that harbour customers face. “After fuel, the tyre spend is already the second biggest cost in port operation,” Maertens comments. “More than that, 20 per cent of a vehicle’s fuel consumption originates in the rolling resistance of tyres. With our new high-quality portfolio we offer our customers in the harbour business a complete solution that increases reliability and safety. At the same time it helps to keep operating costs down and to optimise the environmental performance of their fleets.”

The new portfolio includes customised tyres for all vehicle types operating in port logistics, including straddle carriers – a vehicle described by Maertens as “the most demanding vehicle in port operations and therefore the target of our development”, reach stackers, rubber tyre gantry cranes, terminal tractors and trailers, and heavy-duty forklifts. Most tyres in the range are based on something Continental calls “V.ply technology”. This is, Maertens elaborates, a design that takes the best elements of cross-ply and radial technology. 

“We took the stability of cross-ply and tried to bring it to the rolling resistance level of a radial tyre,” he explains. “We changed the cross-ply cord angle from ‘x’ ply to ‘v’ ply so that we have a cord angle that runs in a radial direction, so the tyre is much stiffer but still maintains stability in its sidewalls. That brings it close to radial rolling resistance while retaining the stability needed to prevent accidents. It offers the best of both worlds.” The use of ‘V.ply’ allows for the production of sidewalls three times thicker than those used in radial tyres. A V.ply casing consists of up to 20 layers of cross-ply fibre woven into three separate wire beads. As steel cord does not provide an optimal bond between the carcass construction and the rubber shell, V.ply technology uses high-resistance polymer. 

The new V.ply range consists of three products – the Straddle Master for straddle carriers, ContainerMaster and DockMaster for reach stackers, heavy-duty forklifts and empty container handlers (the DockMaster is a slick version of the ContainerMaster), and the CraneMaster for rubber gantry cranes, mobile harbour cranes and automated guided vehicles. Michael Maertens reports that the range is currently undergoing testing in ten locations around the world. “The tests are not yet finished, but what we can say is that they are pretty close in lifetime to radial tyres,” he shares. “There is a gap, but it is less than a ten per cent magnitude.” He adds that, in terms of price positioning, Continental will adhere to its aim of offering the best total cost of ownership, and therefore “the price will be according to performance.”  

Continental’s premium brand strategy

This new line-up will be solely marketed under the Continental brand name. And when further products join the CST portfolio – Andreas Esser declares “there are three areas where we’ve said we want to grow, where we want to place a focus. These are industrial material handling, OTR material handling and underground mining” – these too will also be marketed as Continental tyres; General-branded underground mining tyres will be phased out. 

And Simex will head in the same direction. Continental ‘inherited’ the Simex brand through its joint venture with Sime Darby in Malaysia, which ended in May 2012 following Continental’s acquisition of its partner’s 30 per cent share in the operation. Nikolai Setzer and Andreas Esser indicate that the Simex brand will not play any major future role in Continental’s specialty tyre segment; the Continental brand name will be utilised as new product lines are rolled out. “In the past we were very active with our Malaysian brand, Simex,” says Esser. “We want to change that now, with a stronger focus on high performance and into a Continental-branded product.” Incidentally, the former joint-venture facility in Malaysia, now renamed Continental Tyre Malaysia, manufactures the new ‘Master’ port and harbour tyre range.

Continental’s interest in specialty tyres even extends to the larger of the breed and Setzer says an entry into the ‘giant’ tyre segment is conceivable, although the barriers to entry are higher here than for other market segments. Naturally, Continental cannot invest in every business area and market at once, and Nikolai Setzer foresees that agricultural tyres will be the company’s next investment focus. Continental has not participated in this highly dynamic market since it divested this business area in Europe and sold it to the CGS Group (Mitas). 

Whichever product area Continental turns its attention to next, the key point here is that the Continental brand is the company’s premium product and will be increasingly promoted as such. While Nikolai Setzer didn’t go as far as officially announcing the end of the General and Simex brands within the Commercial Specialty Tires (CST) business unit, both of these will take a back seat in the coming years.