Contship Italia wraps up sale of Gioia Tauro to MSC
CONTSHIP Italia SpA has sold its 50 per cent stake in the southern Italian port of Gioia Tauro - home to Medcenter Container Terminal (MCT) - to Mediterranean Shipping Company for between EUR120-130 million (US$135-146 million), New York's FreightWaves reports, citing banking sources
CONTSHIP Italia SpA has sold its 50 per cent stake in the southern Italian port of Gioia Tauro - home to Medcenter Container Terminal (MCT) - to Mediterranean Shipping Company for between EUR120-130 million (US$135-146 million), New York's FreightWaves reports, citing banking sources. MSC already owned the other half of Gioia Tauro.
MSC holds the equity through its investment vehicle, CSM, which is 51 per cent owned by Terminal investment Limited (TiL) and 49 per cent owned by Global Infrastructure Partners (GIP). As for Contship Italia SpA, Eurokai owns two-thirds of the company and Eurogate owns the remaining one-third.
The deal was a closed negotiation, therefore, there was no public tender, meaning the exact price that MSC paid remains private.
According to Drewry's Neil Davidson: 'MSC and Eurogate had not been getting on in Gioia Tauro for several years, it was not a comfortable joint venture.'
Mr Davidson said there were many disagreements between the partners over the years with one of the key sticking points including investments at the facility. 'It sounded like one or other [partner] had to go,' he said. Drewry pointed out that MCT was the last major Mediterranean transshipment hub to switch from independent ownership to being affiliated with a shipping line.
A source close to the deal told FreightWaves that the sale was inevitable given the lack of understanding between the two companies. MSC was keen for Contship Italia to invest in container handling equipment, including new gantry cranes and straddle carriers. For its part Contship Italia was ready to make the investment if there were capacity guarantees.
'MSC was just not willing to make a commitment to volumes, and even if they did it was not clear if the company would honour those commitments; it had given similar assurances twice before and had not met them,' he said.
Mediterranean transshipment hubs are practically all in the hands of ocean liners apart from a small terminal in Limassol, Cyprus, and TC2 in Tangier, Morocco. Both are operated by Eurogate, although, CMA CGM has a share in TC2 in Tangier. 'All the smaller hubs [in the Mediterranean] have struggled, including Cagliari and Taranto,' said Mr Davidson.
Talks between Contship Italia and the MSC-backed consortium had dragged on for three years. At the height of its operations MCT handled in excess of 3.5 million TEU, where it has been the port's sole customer following the 2008 financial crisis and the departure of all other major shipping lines. Volumes had fallen to 2.5 million TEU.
Mr Davidson pointed out that there have been other changes to the container shipping market that have caused the Mediterranean transshipment ports to suffer. Terminals only have three major customers to choose from following the emergence of the mega shipping alliances: the Ocean, 2M and THE alliances.
In addition, the reshaping of the alliance system spurred orders of mega-ships that offer greater economies of scale. However, over-ordering of tonnage and a slow down in demand growth has meant that vessels in this size range have made more direct port calls as a consequence.
'Direct calls mean that the ship operators can use up more capacity,' explained Mr Davidson.
In addition, liner shipping companies such as Maersk have adjusted their operations to favour a two-hub strategy in the Mediterranean region. Maersk operates terminals in the eastern Mediterranean at port Said at the northern entrance to the Suez Canal and at Algeciras, near the Gibraltar Straits, in the west.
Regulatory approval is still needed for the MCT sale to MSC.