hkskyline
June 22nd, 2005, 07:33 PM
Looking ahead to the ports of tomorrow
Changing ownership structure is the most conspicuous characteristic, writes Mike Mundy
20 June 2005
Lloyd's List
Looking into the crystal ball at the container ports of tomorrow, the changing terminal ownership structure is the striking feature.
The march of the private sector into container terminal operation since the mid-1980s is well documented, but the shape of this investment has changed dramatically since the early days.
In particular, it is notable that there has been a comparatively recent swelling of the bigger terminal operating groups at the top end of the global operators’ throughput league.
From the originals of Hutchison and P&O Ports, PSA International has joined the big league and following on from this APM Terminals and more recently Dubai Ports after acquiring CSX World Terminals’ portfolio.
Between them these terminal operating entities, according to Drewry Shipping Consultants, accounted for nearly 38% of the 188.2m teu handled by the top 25 container terminal operators in 2002-03, which include independent terminal operators and those from the shipping line sector.
Equally, this select grouping highlights two other important forces shaping the containerport industry — shipping lines joining the race to secure terminal capacity, and the appetite for expansion by acquiring terminal properties in large blocks. This latter trend was recently demonstrated by Dubai Ports with CSX World Terminals, and before that, by P&O Ports along the eastern and Gulf coasts of the US, and by Hutchison in conjunction with the Hyundai Merchant Marine and IIHC portfolio of terminals.
APM Terminals’ entry into the container handling sector can be seen as a rather different approach from that of a largely shipping line driven group.
By merging its existing Maersk container terminal properties with those acquired from Sealand, it effectively created a new terminal operating group branded in such a way as to stand alone from its container shipping activities undertaken by Maersk Sealand.
Its first success was to sign up the container terminal management contract for the Port Authority of Jamaica and since then it has gone on to add a significant number of new terminal operations to its terminal portfolio.
But in certain regions it still struggles to be viewed as a completely independent terminal operator in the same way as, say, PSA, the pan-European operator Eurogate or the Manila niche operator International Container Terminal Services.
Shipping line interest in container ports in the main, however, now appears to be driven by two factors — business opportunity and, more recently, the need to secure regular terminal capacity in a congested environment, resulting largely from the “China factor”.
In the former context, Mediterranean Shipping Co stands out as a shining example, the Aponte family making strategic investments in terminals in diverse locations around the world and forging numerous alliances with different terminal operators to do so. Drewry, in its Annual Review of Global Container Terminal Operators for 2004, forecasts for MSC an average annual growth in terminal capacity of just over 19% annually in the period 2003-2009.
A lot of liner operators come into the picture when it comes down to the second factor — namely, securing container terminal capacity through ownership in a congested environment.
One notable line that fits into this category is Cosco, China’s biggest shipping line, which recently voiced its interest in acquiring a stake in the new Euromax terminal in Rotterdam being jointly developed by ECT, the container terminal operator, and P&O Nedlloyd.
Cosco voiced its interest after AP MØller-Maersk made its bid for P&O Nedlloyd and its perception that this might present a terminal opportunity in Rotterdam.
Interestingly, the interest expressed by Cosco follows hot on the heels of it acquiring a 25% stake in Antwerp Gateway, the P&O Ports project focused on establishing a 3.5m teu terminal complex in the port of Antwerp.
Clearly, securing the right capacity in the right place is intertwined in certain cases with the new business opportunity factor.
And this latter fact perhaps also shines through again when it is appreciated that in the current calendar year alone Cosco has earmarked $350m for investment in container terminals in China at Tianjin, Nanjing, Taicang and phase two of the Guangzhou Nansha terminal.
Overall, there is little doubt that the future will see an increasing interest on the part of lines to secure new terminal capacity to support the needs of their core businesses and, in particular, to complement system changes that are seeing a progressive expansion of containership capacity, an increase in the average size of box exchanges and an overall scaling up of terminal activity including at the landside gate.
Once a certain scale is reached, a dedicated terminal or dedicated terminal capacity becomes a serious option and is already a concept that long-established common-user terminals such as the port of Felixstowe will have to embrace in one way or another.
But, then again, the traffic in terms of investment by shipping lines in port facilities is not all one way. There is also now a relatively small but steadily growing traffic the other way by independent terminal operating groups investing in leading lines.
Notable in this respect is the mid-2004 purchase by Hutchison Whampoa of 12% of the shares of Hyundai Merchant Marine and its reported interest in investing $150m in the planned IPO of Cosco Holdings, the amalgamation of Cosco Container Lines and 52% of Cosco Pacific.
Temasek, Singapore’s state investment company, is also said to be in for the same figure.
Signs are, therefore, that while shipping line investment in container terminal facilities will increase, so too, slowly but surely, will investment move in the opposite direction, the net result being a closer integration between key large terminal operating groups and certain leading lines.
However, unlike in the past, when shipping lines encountered hard times and sold off their terminal assets, this level of integration is likely to continue or even develop, as it complements both parties’ respective core businesses.
As was witnessed at the beginning of this month, when PSA International purchased a 20% stake in Hongkong International Terminals and Cosco-HIT for $925m, there is also the prospect of certain strategic alliances between the terminal operators. P&O Ports is another possible contender in this respect as it leaves its shipping roots behind it.
Underpinning all this there is likely to be increased activity in the port resale market including the acquisition of port assets on a partial or whole basis by investment funds or other financial interests. Ports are expected, step by step, to become a much more popular utility in which to invest, though this will to some extent be determined by how many stock market listings are undertaken in a ports sector which as yet has seen relatively few.
Last but not least, the ownership structure of the industry will not just be dominated by the “big guys”. There will continue to be room for niche operators such as ICTSI with the special skills to make terminals “dance and sing” in the range from 100,000 to 1.5m teu a year.
Changing ownership structure is the most conspicuous characteristic, writes Mike Mundy
20 June 2005
Lloyd's List
Looking into the crystal ball at the container ports of tomorrow, the changing terminal ownership structure is the striking feature.
The march of the private sector into container terminal operation since the mid-1980s is well documented, but the shape of this investment has changed dramatically since the early days.
In particular, it is notable that there has been a comparatively recent swelling of the bigger terminal operating groups at the top end of the global operators’ throughput league.
From the originals of Hutchison and P&O Ports, PSA International has joined the big league and following on from this APM Terminals and more recently Dubai Ports after acquiring CSX World Terminals’ portfolio.
Between them these terminal operating entities, according to Drewry Shipping Consultants, accounted for nearly 38% of the 188.2m teu handled by the top 25 container terminal operators in 2002-03, which include independent terminal operators and those from the shipping line sector.
Equally, this select grouping highlights two other important forces shaping the containerport industry — shipping lines joining the race to secure terminal capacity, and the appetite for expansion by acquiring terminal properties in large blocks. This latter trend was recently demonstrated by Dubai Ports with CSX World Terminals, and before that, by P&O Ports along the eastern and Gulf coasts of the US, and by Hutchison in conjunction with the Hyundai Merchant Marine and IIHC portfolio of terminals.
APM Terminals’ entry into the container handling sector can be seen as a rather different approach from that of a largely shipping line driven group.
By merging its existing Maersk container terminal properties with those acquired from Sealand, it effectively created a new terminal operating group branded in such a way as to stand alone from its container shipping activities undertaken by Maersk Sealand.
Its first success was to sign up the container terminal management contract for the Port Authority of Jamaica and since then it has gone on to add a significant number of new terminal operations to its terminal portfolio.
But in certain regions it still struggles to be viewed as a completely independent terminal operator in the same way as, say, PSA, the pan-European operator Eurogate or the Manila niche operator International Container Terminal Services.
Shipping line interest in container ports in the main, however, now appears to be driven by two factors — business opportunity and, more recently, the need to secure regular terminal capacity in a congested environment, resulting largely from the “China factor”.
In the former context, Mediterranean Shipping Co stands out as a shining example, the Aponte family making strategic investments in terminals in diverse locations around the world and forging numerous alliances with different terminal operators to do so. Drewry, in its Annual Review of Global Container Terminal Operators for 2004, forecasts for MSC an average annual growth in terminal capacity of just over 19% annually in the period 2003-2009.
A lot of liner operators come into the picture when it comes down to the second factor — namely, securing container terminal capacity through ownership in a congested environment.
One notable line that fits into this category is Cosco, China’s biggest shipping line, which recently voiced its interest in acquiring a stake in the new Euromax terminal in Rotterdam being jointly developed by ECT, the container terminal operator, and P&O Nedlloyd.
Cosco voiced its interest after AP MØller-Maersk made its bid for P&O Nedlloyd and its perception that this might present a terminal opportunity in Rotterdam.
Interestingly, the interest expressed by Cosco follows hot on the heels of it acquiring a 25% stake in Antwerp Gateway, the P&O Ports project focused on establishing a 3.5m teu terminal complex in the port of Antwerp.
Clearly, securing the right capacity in the right place is intertwined in certain cases with the new business opportunity factor.
And this latter fact perhaps also shines through again when it is appreciated that in the current calendar year alone Cosco has earmarked $350m for investment in container terminals in China at Tianjin, Nanjing, Taicang and phase two of the Guangzhou Nansha terminal.
Overall, there is little doubt that the future will see an increasing interest on the part of lines to secure new terminal capacity to support the needs of their core businesses and, in particular, to complement system changes that are seeing a progressive expansion of containership capacity, an increase in the average size of box exchanges and an overall scaling up of terminal activity including at the landside gate.
Once a certain scale is reached, a dedicated terminal or dedicated terminal capacity becomes a serious option and is already a concept that long-established common-user terminals such as the port of Felixstowe will have to embrace in one way or another.
But, then again, the traffic in terms of investment by shipping lines in port facilities is not all one way. There is also now a relatively small but steadily growing traffic the other way by independent terminal operating groups investing in leading lines.
Notable in this respect is the mid-2004 purchase by Hutchison Whampoa of 12% of the shares of Hyundai Merchant Marine and its reported interest in investing $150m in the planned IPO of Cosco Holdings, the amalgamation of Cosco Container Lines and 52% of Cosco Pacific.
Temasek, Singapore’s state investment company, is also said to be in for the same figure.
Signs are, therefore, that while shipping line investment in container terminal facilities will increase, so too, slowly but surely, will investment move in the opposite direction, the net result being a closer integration between key large terminal operating groups and certain leading lines.
However, unlike in the past, when shipping lines encountered hard times and sold off their terminal assets, this level of integration is likely to continue or even develop, as it complements both parties’ respective core businesses.
As was witnessed at the beginning of this month, when PSA International purchased a 20% stake in Hongkong International Terminals and Cosco-HIT for $925m, there is also the prospect of certain strategic alliances between the terminal operators. P&O Ports is another possible contender in this respect as it leaves its shipping roots behind it.
Underpinning all this there is likely to be increased activity in the port resale market including the acquisition of port assets on a partial or whole basis by investment funds or other financial interests. Ports are expected, step by step, to become a much more popular utility in which to invest, though this will to some extent be determined by how many stock market listings are undertaken in a ports sector which as yet has seen relatively few.
Last but not least, the ownership structure of the industry will not just be dominated by the “big guys”. There will continue to be room for niche operators such as ICTSI with the special skills to make terminals “dance and sing” in the range from 100,000 to 1.5m teu a year.