There’s a reason they’re called “emerging markets.” Although markets such as India, Vietnam, Brazil and Russia offer the highest upside, it can take years — more than a decade, even — for them to truly “emerge.”
So, with Europe in recession and China’s container trade slowing, the world’s largest terminal operators are looking to North America for growth over the next few years, while waiting for rapid growth in emerging markets to justify huge investments.
China, home to the world’s fastest-growing ports during the last decade, offers less of an investment opportunity, because its ports have plenty of capacity to handle current and forecast demand over the next few years. Chinese ports now handle 30 percent of the world’s total international container volume, more than double that of 10 years ago, according to the 10th edition of Drewry’s Global Container Terminal Operators Annual Review & Forecast.
“Most terminal investors are quite cautious about Chinese ports at the moment because of the boom in construction over the last few years and the slowing of growth,” said Neil Davidson, senior adviser for ports at Drewry Shipping Consultants and author of the new report. “They expect Europe to be a challenging market in the short term, especially South Europe. They are more optimistic on North America next year and the year after, and are looking at Asia, Africa and South America for more robust growth in the next two or three years.”
The big terminal operators see opportunities for more transshipment activities in the Caribbean as a result of the expansion of the Panama Canal in 2015. But Davidson said opinions are divided about how much of an effect it will have on East Coast ports. “The important thing for the Gulf and East Coast ports is to decide what they want to be in terms of capturing that trade,” he said. “Do they think they can be a mainline port of call, or are they better off marketing themselves as a feeder? It’s a tough choice to make.”
Global container port throughput jumped to 558.8 million 20-foot-equivalent units last year, double the 279.3 million TEUs in 2002. Global and international terminal operators’ share of total throughput increased to 76 percent from 58 percent. Adjusted for equity shares, however, global operators’ share is less than 45 percent.
The report sees global container volume increasing 6 percent this year, but rates will vary widely by region, with Europe flat, North America showing slight growth and emerging nations showing the strongest gains, though from a much smaller base.
There’s been little change at the top of the global terminal operators ranking during the past 10 years. Indeed, the same large global terminal operators have held down the top five positions. But the positions of the top five operators ranked by volume changed slightly in the last year. Hutchison Ports retained the No. 1 slot, while APM Terminals jumped into the No. 2 position, bumping PSA International into third place.
Terminal Investment Ltd., the terminal-holding group affiliated with Geneva-based Mediterranean Shipping Co., appears for the first time on the list, in sixth place. “It has become clear that most of the terminals previously thought to be owned by MSC are owned by Terminal Investment,” Davidson said. “It’s a separate company associated with MSC, but not owned by it.”
Another new entry, China Shipping Terminal Development, ranked seventh.
Some carriers, hit last year by large losses and slowing trade volumes, are scaling back plans to turn their terminals into separate units. APM Terminals, the terminal-operating division of A.P. Moller-Maersk, and Terminal Investment are putting distance between themselves and their carrier affiliates to operate as stand-alone divisions that cater to all shipping lines.
But the terminal units operated by Taiwan’s Yang Ming and Evergreen are intrinsic parts of their carrier business. APL, the container shipping arm of Singapore-based NOL, has stopped reporting separate results from its terminal operating unit and seems to be keeping it as an in-house division that mainly serves APL vessels and those of its alliance partners. At one point, APL appeared to be moving in the direction of operating its terminal division as a separate unit.
A number of smaller terminal companies are “knocking at the door,” including Gulftainer, China Merchants Holdings International, SAAM Ports, Noatum and Ports America, the report found. Gulftainer, based in Sharjah, United Arab Emirates, plans to invest $275 million to co-develop and operate a multipurpose cargo terminal at Russia’s Baltic port of Ust-Luga. China Merchants Holdings is teaming up with two Sri Lankan partners to build a $500 million container terminal in Sri Lanka’s Port of Colombo. SAAM Ports, the terminal unit spun off by Chilean carrier CSAV, operates South American terminals. And Noatum, the new Spanish operator created out of the Dragados terminal unit, has holdings in 27 terminals.
“They are all keen to join the ranks of international operators,” Davidson said.