MSC wants full control to turn around Gioia Tauro

MSC wants full control to turn around Gioia Tauro

Medcenter Container Terminal in the Italian port of Gioia Tauro has an annual capacity of 4.2 million TEU, but the port has struggled to arrest declining volume following the departure of Maersk Line in 2017. Photo credit: MCT.

Mediterranean Shipping Co. aims to take full control of the southern Italian port of Gioia Tauro, a transshipment hub that has struggled to reverse declining throughput since Maersk Line moved out in 2017.

The Geneva-based carrier has begun talks with Contship Italia Group to acquire the 50 percent stake in joint venture Medcenter Container Terminal (MCT) held by Contship subsidiary CSM Italia Gate. MCT has a 50-year concession to run the terminal until 2044.

The two sides have yet to put a price on the purchase, but Contship said in a statement, “In order to speed up the deal, Contship Italia has appointed the law firm that will assist the process as well as an independent financial advisor, who has been given the task of expressing the correct value of the terminal activity and assets.”

While Gioia Tauro in southern Italy is able to handle the largest vessels deployed on the Asia-Mediterranean routes, the port has struggled to match the growth of its regional peers since Maersk Line stopped transshipment calls in July 2017.

Maersk at the time was the port’s biggest customer, with 25 percent of the total volume, but switched its transshipment business to Malta’s Freeport Terminal, maintaining a feeder service between Gioia Tauro and Genoa. Once Maersk moved out, MSC became the port’s biggest customer and is now virtually its only one.

According to Alphaliner, MSC has offered to guarantee a minimum cargo handling volume of 4 million TEU at Gioia Tauro over a period of two years. But the analyst said given the terminal's design capacity of 4.2 million TEU annually, that would translate to almost 50 percent of guaranteed terminal utilization.

Jolke Helbing, project director at consultancy Royal Haskoning, said MSC would likely try to switch volume from other locations in the central Mediterranean to Gioia Tauro to increase traffic.

“The port volume could come out of Malta where the 2M of Maersk Line and MSC calls, or from Port Said, from Israel, or Turkey,” he told JOC.com.

Continental competition

Container throughput at Gioia Tauro has continually declined from a high of 3.4 million TEU recorded in 2007. In 2018, volume fell 6 percent year over year to 2.3 million TEU, and although growth was flat at Genoa, the northern Italian rival port handled 2.6 million TEU last year. An advantage of Genoa is that for a relatively short additional ocean voyage transit time from Asia — one day longer than to Gioia Tauro — the port provides shorter rail connections to the key Rhine-Alpine corridor that connects it to the hinterlands of Italy and North Europe, the Mediterranean corridor that runs from east to west, and the Adriatic-Baltic corridor.

Helbing said Gioia Tauro was a pure transshipment port and would not become a gateway to Europe. Located roughly 700 miles south of Genoa, Gioia Tauro faces similar issues as its Greek transshipment counterpart, Piraeus. Containers heading to and from the hinterlands of Europe need to be railed or trucked for some distance before reaching the rail hubs that connect with the 10 main corridors crossing Europe. 

“The distance is far too remote and a carrier may as well sail to Genoa or La Spezia," Helbing said. The Milan-Melzo intermodal hub, for example, is about 100 miles north of Genoa and 800 miles from Gioia Tauro.

Another possible cause of Gioia Tauro’s eroding volume is the growth of other ports in the region. The Italian free port of Trieste in the northern Adriatic Sea has been steadily building its container throughput and handled 1.4 million TEU in 2018, an increase of almost 8 percent compared with the previous year.

Trieste will also benefit if Italy signs up to China’s Belt and Road initiative. Negotiations are ongoing and a deal could be announced when China’s President Xi Jinping makes a state visit to Rome on March 22. The deal would secure vitally needed investment in Italian port and rail infrastructure that will expand Trieste’s containerized reach.

Trieste’s nearby neighbor, the Slovenian port of Koper, grew its throughput 8 percent last year to just short of 1 million TEU. Valencia increased its 2018 volume by 5.6 percent year over year to 5.1 million TEU, and Algeciras grew its throughput by almost 9 percent to 4.7 million TEU.

Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler.