The container terminal industry may well have to learn to live with higher risks and lower returns, maritime industry professionals were told at the TOC Europe Conference & Exhibition, which took place at the Hamburg Messe, Germany.
The aftermath of the 2008-09 financial crisis has been followed by several years of readjustment in global trade flows, which proved deeply challenging to container terminal owners and operators, as well as their shipping line clients, Neil Davidson, Senior Analyst – Ports & Terminals, at Drewry Maritime Advisors, said during the TOC Container Supply Chain (CSC) conference.
An era of strong demand growth has been transformed into one of weaker demand growth. Meanwhile, the exponential growth in vessel size, along with much bigger and more complex liner alliances, has seen falling returns for terminal operators.
The creation of the new alliances has only served to raise the volatility of port market shares, which is feeding into a period of uncertainty about market direction and demand growth. This makes for a highly uncertain landscape against which terminal businesses have to plan future investments.
Davidson posited some possible solutions for terminal owners out of this impasse, including more alliances – or even more mergers and acquisitions. Further joint ventures between terminal operators and shipping lines could also be possible.
Alternatively terminal operators could just learn to live with higher risks and lower returns, or pull back further from making new investments. Although such an environment might also see some investors exit the industry.
One particular route to investment in container supply chain infrastructure is being pursued by China’s government, through its “One Belt One Road” (OBOR) transport network.
During the CSC conference, Hercules Haralambides, President of Haralambides & Associates, said that while “the century of Eurasia is coming,” the OBOR policy was part of wider strategy to solidify its presence at key nodes in global supply chains.
“There are investments in the Australian port of Darwin, as well as the Nicaragua canal, which despite financing difficulties is still on the table, and so I see the OBOR becoming a global ‘around-the-world’ policy that will sit in competition with the transpacific trade partnership (TTP),” he said.
Haralambides added that the two European ports the Chinese authorities are focusing on the most are Piraeus, in Greece, where Chinese terminal operator Cosco Pacific now has the concession to manage container operations, and the Italian gateway of Venice.
“You should also look at Port Said – the Chinese are taking a great interest in East Port Said because they see Suez as an alternative to Panama,” he said.
Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.