THE container port and terminal business 'faces greater uncertainties now than at any time since the container revolution started in the late 1970s', according to a 221-page report by industry veterans Remco Stenvert and Andrew Penfold, who warn that many of the risks confronting the industry are 'beyond the control of operators'.
The report, 'Container Terminals: Paths to Profitability', suggests future investment by operators and investors will need to be more carefully considered than ever before, reported UK's The Loadstar.
According to the report, the uncertainties that the container port and terminal business face 'represent systemic and intrinsic risks that could dramatically impact the outlook for port demand, profitability and investment in the next 10 years.
'All investments need to take a clear view on these risks, the days when expanding container demand could be relied upon to save marginal projects have passed,' the authors write.
The study outlines a range of external factors: the retreat of globalisation in the face of rising protectionism; the growing financial instability since 2009, with most growth since the financial crisis funded by mounting levels of debt; and structural change in the nature of demand with many developed economies now effectively reaching peak container throughput.
The other external factors stated are the challenge of near-sourcing strategies; the technological challenges posed by blockchain and 3D printing; and mounting environmental issues that port operators need to take into account when planning new projects.
There is also a long list of factors internal to the shipping and terminal industry: shipping overcapacity and under-utilisation; alliance instability, which increases in terms of risk as volume growth slows; shipping line terminal investment; the pressure of ever large vessel sizes; terminal overcapacity in some regions; and the potential for the industry to be disrupted by new operators altogether.
'The world is changing and the impact on the container port sector remains unclear. As the major new traders and logistics companies such as Amazon and Alibaba increase their market presence, there will be clear pressures for them to invest vertically in the transport chain.
'This may well see increased potential for joint ventures but could also see increased competition for investment in an uncertain market,' the report said.
The good news, however, is that even under the worst cases scenario envisioned by the authors, between now and 2030 there will be some growth for the market.
If the threat of trade wars and protectionism dissipates, and the global economy enjoys a period of stable growth, the report predicts world port throughput of 1.37 billion TEU in 2025, up 35.4 per cent compared to 2018, and further growing to 1.7 billion TEU by 2030.
A less-optimistic scenario imagines nations locked in a spiral of introducing retaliatory protectionist measures as divisions over trade deepen and container volumes take a hit, and would see world container throughput hit 1.29 billion TEU in 2025 and 1.53 billion in 2030.
'Should another downturn be recorded, the scope for a rapid recovery will be more limited. In the current market there is much less scope for demand stimulation with interest rates already at very low levels and government indebtedness at such high levels that fiscal stimulus will be difficult to achieve.
'The actual implications of this uncertainty are difficult to forecast but, in overall terms, there is scope for an absolute reduction in demand over 2019-2021,' the report added.
WORLD SHIPPING
The report, 'Container Terminals: Paths to Profitability', suggests future investment by operators and investors will need to be more carefully considered than ever before, reported UK's The Loadstar.
According to the report, the uncertainties that the container port and terminal business face 'represent systemic and intrinsic risks that could dramatically impact the outlook for port demand, profitability and investment in the next 10 years.
'All investments need to take a clear view on these risks, the days when expanding container demand could be relied upon to save marginal projects have passed,' the authors write.
The study outlines a range of external factors: the retreat of globalisation in the face of rising protectionism; the growing financial instability since 2009, with most growth since the financial crisis funded by mounting levels of debt; and structural change in the nature of demand with many developed economies now effectively reaching peak container throughput.
The other external factors stated are the challenge of near-sourcing strategies; the technological challenges posed by blockchain and 3D printing; and mounting environmental issues that port operators need to take into account when planning new projects.
There is also a long list of factors internal to the shipping and terminal industry: shipping overcapacity and under-utilisation; alliance instability, which increases in terms of risk as volume growth slows; shipping line terminal investment; the pressure of ever large vessel sizes; terminal overcapacity in some regions; and the potential for the industry to be disrupted by new operators altogether.
'The world is changing and the impact on the container port sector remains unclear. As the major new traders and logistics companies such as Amazon and Alibaba increase their market presence, there will be clear pressures for them to invest vertically in the transport chain.
'This may well see increased potential for joint ventures but could also see increased competition for investment in an uncertain market,' the report said.
The good news, however, is that even under the worst cases scenario envisioned by the authors, between now and 2030 there will be some growth for the market.
If the threat of trade wars and protectionism dissipates, and the global economy enjoys a period of stable growth, the report predicts world port throughput of 1.37 billion TEU in 2025, up 35.4 per cent compared to 2018, and further growing to 1.7 billion TEU by 2030.
A less-optimistic scenario imagines nations locked in a spiral of introducing retaliatory protectionist measures as divisions over trade deepen and container volumes take a hit, and would see world container throughput hit 1.29 billion TEU in 2025 and 1.53 billion in 2030.
'Should another downturn be recorded, the scope for a rapid recovery will be more limited. In the current market there is much less scope for demand stimulation with interest rates already at very low levels and government indebtedness at such high levels that fiscal stimulus will be difficult to achieve.
'The actual implications of this uncertainty are difficult to forecast but, in overall terms, there is scope for an absolute reduction in demand over 2019-2021,' the report added.
WORLD SHIPPING