American Shipper

Downturn could lead to terminal sales, Drewry says

Downturn could lead to terminal sales, Drewry says

   Drewry Shipping Consultants said global container terminal operators face their 'most challenging year ever” and suggests that some investors may be forced to sell off terminal assets.

   “The general economic slowdown may well result in some investors having to sell off terminal interests and this may create opportunities for those global terminal operators and financial investors with ready access to the necessary funds,' said Neil Davidson, Drewry's director. 'The most likely terminal portfolios which may become available are in Drewry's view those owned by shipping lines. With all container lines under severe financial pressure — and some bankruptcies expected — the sale of some terminal assets owned by carriers in the near future seems likely.'

   Just this week Hapag-Lloyd agreed to sell its stake in Hamburg’s Container-Terminal Altenwerder for 315 million euro, ($446 million) to a group of its shareholders as part of a plan to support it during the current shipping downturn. However, the companies said the deal was a bridge to help the carrier through the current downturn and there were plans for Hapag-Lloyd to buy back the terminal when it is stronger.

   If companies do sell terminal assets, they are likely to fetch less money. Where terminals were being valued at multiples of more than 20 of earnings before interest, taxes, depreciation and amortization during 2005-2007, Drewry said, “anecdotal evidence suggest that multiples of around 8-12 times EBITDA are the new benchmark, but there have yet to be any deals go through to cement these new levels in the market.”

   Drewry said the top five terminal operators — PSA International, Hutchison Port Holdings, APM Terminals, DP World, and COSCO — handled 31.1 percent of global port throughput in 2008 or 162.5 million TEUs. (Because many terminals are joint ventures, it measures throughput based on how much equity each company has in terminals.)

   Those five companies, their “equity throughput” and percentage of global port throughput is as follows:

   ' PSA, 50.4 million TEUs, 9.6 percent.

   ' HPH, 34.4 million TEUs, 6.6 percent.

   ' APM, 33.8 million TEUs, 6.5 percent.

   ' DP World, 32.9 million TEUs, 6.3 percent.

   ' COSCO, 11.1 million TEUs, 2.1 percent.