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American Shipper

Drewry: Terminal operators ?weather storm’

Drewry: Terminal operators æweather storm’

   Global container terminal operators had their “toughest year ever” in 2009, said Drewry Shipping Consultants.

   But in a few years terminals may once again face a capacity crunch, the London-based consultants said in a summary of its Annual Review of Global Container Terminal Operators 2010.

   “Global economic trends meant that container throughput at the world's ports fell for the first time ever, from 524 million TEUs in 2008 to 473 million TEUs in 2009, a drop of almost 10 percent. Emerging markets were generally less hard hit than the mature markets. Volumes in North America and Europe fell by around 15 percent but in the Middle East and Africa the downturn was hardly felt,” Drewry said. The sharpest decline was in Eastern Europe where container volumes fell more than 35 percent.

Source: Drewry Shipping Consultants (click to view larger chart)

   While worldwide volumes fell 10 percent in 2009, the volume handled by the 22 international container terminal operators (as apportioned by their equity interest in terminals) was only 7.5 percent lower, Drewry said.

   '2009 was a year the like of which has never been seen before,' said Neil Davidson, senior advisor, ports for Drewry. 'Historically, for global terminal operators, it has always been about expanding and adding capacity as quickly as possible. Then, suddenly, they were all faced with changing their mindset towards drastic cost control and halting of projects.

   'It is a tribute to the resilience of the industry that, although volumes and revenues were well down, all of the major terminal operators managed to more or less maintain their EBITDA (earnings before interest, taxes, depreciation, and amortization) margins in percentage terms in 2009. Without question the global terminal operators weathered the storm,' he said.

   With economic prospects now brighter, Drewry said “container throughput is projected to increase globally by an average of 7.2 percent a year between 2009 and 2015. As a result, global container port volumes are forecast to rise by 245 million TEU, from 473 million TEUs to 718 million TEUs, an increase of just over 50 percent in this period.” That rate is below the double-digit growth rates seen in the early part of the 2000.

   But Drewry noted the capacity of the world's container terminals is forecast to grow by just 143 million TEUs during 2009-2015, a rise of just under 20 percent.

   “The much slower rate of container terminal capacity growth relative to throughput will inevitably increase global container terminal utilization rates unless more projects are brought back to life,” it said. “Several parts of the world could see the specter of congestion returning by 2015 if some of the originally planned expansion projects cannot be reactivated within the next three to five years.”

Source: Drewry Shipping Consultants (click to view larger chart)

   The top 10 container carriers handled about 215.6 million TEU in 2009.

   Drewry said PSA, which is owned by the government of Singapore’s Temasek Holdings, is the market leader by equity TEU, followed by HPH. PSA’s owns 20 percent shareholding of HPH.

   It said DP World moved ahead of APM Terminals into third, while COSCO remains a more distant fifth.

   “All shipping lines with container terminal portfolios have, surprisingly, kept these intact. Suggestions that such operators might need to sell off terminal assets as a result of financial problems affecting the core liner shipping business have proved unfounded — a remarkable achievement given the massive losses incurred by parent shipping line groups in 2009,” Drewry said.

   Terminal owners and operators are generally reviewing their portfolios and may seek disposals or acquisitions to adjust their balances, Drewry said.

   “There remains the question of valuations for ports and terminals in the 'new world' with the heady heights of 20-25 times EBITDA now gone, perhaps forever. Anecdotal evidence about what the new benchmark is suggests 8-10 times EBITDA is more realistic, but there have been a limited number of transactions since the global economic crisis took hold,” Drewry noted. But “many investors remain interested in the port sector and could now benefit from significantly lower prices for acquiring assets.” ' Chris Dupin

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