THE best solution for terminal operators is merger to avoid coming losses driven by softening demand, higher costs and a squeeze on rates from the formation of larger more powerful shipping alliances, according to London's Drewry Maritime Research
THE best solution for terminal operators is merger to avoid coming losses driven by softening demand, higher costs and a squeeze on rates from the formation of larger more powerful shipping alliances, according to London's Drewry Maritime Research. Failing to merge, the next best step would be to sub-contract specific customers to other terminals, which already happens in some ports, says Drewry senior analyst Neil Davidson.
Although a rush of M&A activity resulted in terminals being obliged to bill stevedoring on a lowest common denominator basis, in instances of carrier deals, the bigger ships and alliances now have less choice of terminal facilities, reported London's Loadstar.
Mr Davidson also noted that available terminal capacity was 'actually being shrunk by volume peaks'.
The next annual contract talks will be especially tense, he said, as carriers head for further losses in the second quarter and will keep cutting costs, including terminal charges.
Mr Davidson said the terminal sector also faces a risk from market volatility, along with threats to volumes from looming trade wars and sanctions.
To protect itself from adverse developments outside its control, container terminals are being proactive in developing strategies to mitigate exposure, he said
These include liner affiliation, including joint-venture agreements, terminal alliances and diversification into other business areas.
