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Terminal operators face “perfect storm”

LONDON: September 12, 2016. Drewry Maritime Research says global container terminal operators are changing strategies in response to slowing growth, bigger ships and larger liner alliances.

Operators face what the company describes in a new report as a "perfect storm" of a drop in growth; higher operating and capital expenditure costs due to bigger ships; increased business risks from larger liner alliances; and loss-making carriers pressuring for lower terminal handling charges.

MSC SalalahAs a result, while carriers with terminal portfolios are "shying away" from greenfield investments, they remain very active in M&A and joint ventures. Some have been selling assets to raise cash but others including China Shipping and Cosco have been buying terminal stakes, says Drewry.

Another strategy is "stevedore" terminal operators making joint venture deals with shipping lines to mitigate the risk of not being affiliated with one of the three mega liner alliances next year. Having a shipping line as a shareholder can be seen as a way of trying to tie in alliance volumes, according to Drewry.

"International terminal operators have understandably taken their foot off the pedal when it comes to greenfield projects, carriers especially so," declares the report. "In its place, the key players are looking for growth, risk mitigation and opportunities through M&A activity. This is leading to more joint ventures, co-shareholdings, and more complex inter-linking of terminal ownership."

At the port of Salalah, Oman (right) operator APM Terminals, part of the Maersk Group, has reported a 29 percent increase in throughput for the first half of 2016 to 1.6 million TEU, with 90 percent transshipped throughout the region.

APM says some of the growth is the result of the port's ability to accommodate the largest of the Ultra-Large Container Ships (ULCS) entering the Asia/Europe trade lanes including the MSC Zoe, with a capacity of 19,224 TEUs.

"We are seeing a trend of deployment of these large vessels on major trade lanes and we expect to see more of these calls in the near future", said Port of Salalah CEO David Gledhill. "With the shipping industry witnessing significant changes in terms of structure and alliances, we have seen enhanced connectivity to East Africa, Somalia and North Oman in 2016," he added.

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