All of a sudden ports have become a cool business, attracting the attention of Asian billionaires and aggressive equity fund managers.

The runaway boom in the tanker market that has sent freight rates to 30-year highs is making the headlines. But the transformation of the ports sector during the past two decades, which few other industries can match, is arguably a bigger 'story' for world trade.Ports, which have traditionally been run like a government department, are becoming a normal industry thanks to the infusion of private money that promises greater competition, higher productivity and eventually lower costs which will be passed on to importers and exporters.

In the Eighties, Britain's ports were either government-owned or run by local authorities, hugely overmanned and always at the mercy of strike-happy dockworkers. Today, AB Ports, the company which took over nearly 20 state-owned ports, is strong enough to reject out of hand a $1.25 billion takeover bid from Nomura, a Japanese investment bank. Mersey Docks and Harbour Company, the operator of the port of Liverpool, which was dug out of bankruptcy by the government, has just unveiled record second half profits and is scouring Europe for cargo-handling acquisitions. Predators are stalking Powell Duffryn, a ports and engineering group which owns the port of Teeside and has $150 million to spend on a second port, and Edinburgh-based Forth Ports recently spurned a $540 million bid from Duke Street Capital, a private equity investor.

Meanwhile, an international bidding war is in the offing following reports that Manila-based International Container Terminal Services has put its foreign assets, including facilities in Veracruz, Mexico, Buenos Aires and Karachi, on the block.

Mainland Europe is catching up with Britain, as most governments, with the notable exception of the French, loosen their grip on ports which are becoming landlords, leasing facilities to private companies.

Public-owned ports are becoming more commercially-minded too: the Port Authority of Rotterdam, the world's largest port, has just received the green light from City Hall to establish a wholly-owned private company with an operating capital of 15 million guilders ($6.2 million), which will take over the port's 'outside' interests, including a 35 percent stake in European Combined Terminals, Europe's biggest container handler, and shareholdings in rail terminals in the Czech Republic and Slovakia.

Private investors have also built brand new ports in the Mediterranean to siphon off containers from vessels sailing between Europe and Asia. And the influence of the private sector will grow significantly by the end of the year when the Maltese government privatizes the 1 million TEU-a-year Marsaxlokk transshipment hub, while the Greek government is preparing to sell a slice of Piraeus, the country's leading port, to private investors. The retreat of the government from the business has forced ports still in government hands, like Genoa, to boost their productivity to keep hold of their traffic.

The industry is also becoming less insular as leading companies in rival ports merge. The benchmark was set by least year's merger of Eurokai, the Hamburg stevedore, and BLG, its Bremen-based counterpart, creating Eurogate. The company has a 16.3 percent stake in Lisbon's Liscont container facility and owns Contship Italia.

Port authorities also are linking up. Malmo and Copenhgaen have just cemented the world's first cross-border merger to meet the threat from the recently-opened Oresund road/rail bridge joining Sweden and Denmark. Meanwhile, Amsterdam and Duisburg are planning a joint venture coal terminal in the German inland port.

More consolidation is in the pipeline with Britain and Germany likely to lead the process. Eurokai is eyeing possible acquisitions in Europe after shareholders approved its management's plan to buy back shares, giving it the currency for alliances or takeovers.

To be sure, it's not all plain sailing. ECT was forced to pull out of container terminal ventures in Trieste and Estonia but is still looking at facilities in other European ports. Ceres, the U.S. terminal company, has just lost its management contract of the container terminal at the Ukrainian port of Odessa following differences with the port authority over pricing policy, but is pressing ahead with a project to boost Amsterdam's miniscule container throughput.

The spread of privatization around the world's waterfronts is creating more opportunities for the select group of global port operators to boost their portfolios. And almost unnoticed, some companies are building a sizeable market clout: Hong Kong's Hutchison Port Holdings, for example, controls an estimated 10 percent of world container throughput via interests in key container handlers including a strategic stake in Rotterdam's ECT. Britain's P&O Ports is in sight of its 2 million TEU-a-year target after acquiring New Jersey-based International Terminal Operating Company and Seaport Terminals, Antwerp, and is expected to announce within days it will build a new port complex, including a 1 million TEU-a-year terminal and a distribution hub, on the site of a mothballed liquefied natural gas terminal on the River Thames.

This is putting pressure on rivals like Singapore's PSA Corp., Eurogate and Seattle-based Stevedoring Services of America to respond with the upcoming sale of Malta's Marsaxlokk providing an excellent chance to catch up. Even as they look overseas, the big players have to keep an eye on their increasingly demanding customers. PSA, which has been preoccupied while raising over $ 800 million in two bond issues in the run-up to an initial public offering on the Singapore Stock Exchange, has just learned that Maersk Sealand, the world's biggest container shipping line, is quitting the port for Tanjung Pelepas in neighboring Malaysia.

This shows that running ports is fast becoming just another business.

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