In its Annual Review of Global Container Terminal Operators 2009, Drewry Shipping Consultants says 2008 was a turning point for the container terminal operators. The final quarter of the year saw unprecedented volume declines which Drewry says are set to worsen in 2009, leaving the industry facing its toughest trading conditions since the inception of containerization in the 1960s.
On a number of key measures, 2008 represented continuity with previous years as far as the global terminal operators were concerned. The top five players remained the same, and their market shares stayed close to 2007 levels.
Drewry expects to see little or no growth, and anticipates that it will be 2011 before a modest recovery in demand growth will return and it will be 2012-2013 before most regions see their throughput regain their 2008 levels.
Despite this turmoil, the relative importance of global container terminal operators as reflected by global capacity and throughput is unlikely to diminish significantly, said Drewry. However, the global container terminal operators’ scope to achieve organic throughput growth will inevitably be limited by the recession and its impact on world GDP growth over the next few years. The financial crisis may also make it more difficult to secure funding for new projects, or achieve growth through acquisition. The viability of many planned projects may also be put into question by forecast reductions in container throughput growth levels.
Most of the leading global container terminal operators are forecast to add capacity to their networks by 2014. However, this report makes clear that the changed economic situation means they have adopted a more cautious assessment of future prospects. “Capacity expansion projects are being shelved, deferred or canceled on an unprecedented scale, although there is a lack of transparency about global operator plans which makes accurate assessment of capacity development plans very difficult,” said Neil Davidson, Drewry’s Director-Ports.
As recently as a year ago, there were still widespread concerns over a growing shortage of capacity in the container terminal sector relative to demand, causing periodic supply chain bottlenecks. Now, container terminal capacity will come under much less pressure over the next few years as the world’s container trades shrink, or at least grow much more slowly than originally forecast. Utilization levels will fall significantly in 2009 and 2010, even with the scaled back capacity plans. By 2014, average utilization levels at the world’s container terminals are expected to be no more than their 2008 level, i.e. around 70-75%. By comparison, in last year’s pre-recession report, it appeared likely that by 2013 average utilization would have reached close to 90%.
The global economic crisis and the woes of the liner shipping industry in particular may generate merger and acquisition activity. “The general economic slowdown may well result in some investors having to sell off terminal interests and this may create opportunities for those global terminal operators and financial investors with ready access to the necessary funds,” comments Davidson. “The most likely terminal portfolios which may become available are, in Drewry’s view, those owned by shipping lines. With all container lines under severe financial pressure–and some bankruptcies expected–the sale of some terminal assets owned by carriers in the near future seems likely.”