Terminal operators adapting to tough box shipping market, says Drewry
AGAINST a backdrop of slowing world trade and the rising dominance of mega ships and mega shipping alliances in the market, global container terminal operators have been changing tack to meet the challenges.
According to Drewry's latest Global Container Terminal Operators Annual Review, box terminal operators are confronting a 'perfect storm", which is squeezing profits.
Drewry summarises these pressures as being the "significant softening of demand growth, higher opex and capex costs due to bigger ships, increased business risks from larger liner alliances and loss-making carriers pressuring for lower terminal handling charges," reports Lloyd's Loading List.
Top terminal operators were already changing because of major merger activity, namely Cosco and China Shipping as well as the CMA CGM takeover of APL and APM Terminals' buyout of Grup TCB.
One trend Drewry has observed is the slowing of activity in greenfield terminal projects by the global or international terminal operators. The total number of active projects has declined from 64 back in 2006 to 39 toay.
"As significantly, the number of projects being developed by the carrier category of terminal operator has fallen to near zero, as carriers have re-trenched and become more and more cash-strapped," said Drewry.
"Carriers with terminal portfolios are clearly shying away from greenfield investments but are very active in terms of M&A and joint ventures.
"Some have been selling assets to raise cash but others, notably China Shipping and Cosco, have been buying terminal stakes," said Drewry.
Another potentially significant trend is "stevedore" terminal operators making joint venture deals with shipping lines. "The establishment of the three mega liner alliances in 2017 will increase business risk for terminals run by operators not affiliated with carriers, especially those focused on transhipment, and terminal operators are seeking to mitigate this, said Drewry.
"Having a shipping line as a shareholder can be seen as a way of trying to tie in alliance volumes, although the choice of terminal by an alliance is never down to a single carrier's wishes."
AGAINST a backdrop of slowing world trade and the rising dominance of mega ships and mega shipping alliances in the market, global container terminal operators have been changing tack to meet the challenges.
According to Drewry's latest Global Container Terminal Operators Annual Review, box terminal operators are confronting a 'perfect storm", which is squeezing profits.
Drewry summarises these pressures as being the "significant softening of demand growth, higher opex and capex costs due to bigger ships, increased business risks from larger liner alliances and loss-making carriers pressuring for lower terminal handling charges," reports Lloyd's Loading List.
Top terminal operators were already changing because of major merger activity, namely Cosco and China Shipping as well as the CMA CGM takeover of APL and APM Terminals' buyout of Grup TCB.
One trend Drewry has observed is the slowing of activity in greenfield terminal projects by the global or international terminal operators. The total number of active projects has declined from 64 back in 2006 to 39 toay.
"As significantly, the number of projects being developed by the carrier category of terminal operator has fallen to near zero, as carriers have re-trenched and become more and more cash-strapped," said Drewry.
"Carriers with terminal portfolios are clearly shying away from greenfield investments but are very active in terms of M&A and joint ventures.
"Some have been selling assets to raise cash but others, notably China Shipping and Cosco, have been buying terminal stakes," said Drewry.
Another potentially significant trend is "stevedore" terminal operators making joint venture deals with shipping lines. "The establishment of the three mega liner alliances in 2017 will increase business risk for terminals run by operators not affiliated with carriers, especially those focused on transhipment, and terminal operators are seeking to mitigate this, said Drewry.
"Having a shipping line as a shareholder can be seen as a way of trying to tie in alliance volumes, although the choice of terminal by an alliance is never down to a single carrier's wishes."