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Monday, 24 August 2015

‘Significant investment’ in port capacity to drive 4.5% growth rate

A surge in global demand for container shipments will drive ‘significant investments’ in additional capacity by terminal and port operators, according to research agency Drewry Maritime Research.

The figures, published as part of the firm’s yearly Global Container Terminal Operators Annual Report, predict average global container port demand growth of 4.5% per annum through to 2019.

“The global container terminal industry is facing unprecedented challenges as a result of the deployment of ever larger container ships, combined with the creation of larger shipping line alliances. These two interrelated factors are placing significantly greater demands on ports and terminals and having far reaching consequences, driving up operating costs and capital expenditure requirements,” Neil Davidson, Drewry’s Senior Analyst for Ports and Terminals said.

Asia remains the primary source of growth, accounting for 60% of global demand growth. In total global traffic is expected to reach 850 million TEU by 2019, an increase of 168 million TEU.

Drewry identifies 23 companies as ‘global/international terminal operators’ and suggests that between them investments by these firms will drive the sector forward.

“APM Terminals and DP World are the most active in terms of the number of new projects in the pipeline but PSA International is adding the most capacity in absolute terms, particularly in its home port of Singapore. Hutchison, CMA CGM, TIL and ICTSI also have significant plans, with the latter’s expansion representing a 40% increase over the current capacity of its portfolio,” Davidson explained.

Emerging markets were identified as a source of growth potential and in particular  greenfield developments. This contrasted with the past few years where difficult economic climates have driven acquisition and divestment activity.

Despite the predictions of investment growth margins are expected to remain tight. Shipping line owners in particular are seen to be struggling with several forced to divest  assets in order to raise cash.

“The typical EBITDA margins for global/international terminal operators remain in a range from 20-45% and the 2014 financial results were much in line with previous years, illustrating the consistency and reliability of container terminal operators,” Davidson added.

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