Global container terminal operators have taken their foot off the pedal when it comes to greenfield projects, carriers especially so, and are instead looking for growth, risk mitigation and opportunities through M&A activity, according to shipping consultancy Drewry.
The change of gear and strategies comes amid a change in the nature of their market environment changes due to slowing growth, bigger ships and larger liner alliances.
Namely, container terminal operators are rapidly changing their strategies in the face of a ‘perfect storm’ creating pressure on profit margins and rates of return due to 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.
This year, 24 companies qualify as global/international terminal operators in the Drewry analyses, however, the nature of the list of companies is already changing due to major M&A activity.
One clear strategic trend is the slowing of activity in greenfield terminal projects by the global/international terminal operators. The total number of active projects has fallen by almost half to 39 today compared with 64 back in 2006.
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.
“Carriers with terminal portfolios are clearly shying away from greenfield investments but are very active in terms of M&A and joint ventures,” Drewry said, adding that some have been selling assets to raise cash while others have been buying terminal stakes.