DP World isn’t ruling out another attempt to acquire a U.S. port terminal, though the company sees more potential to the north, the company’s general manager for Canada said in an interview.
The Dubai-based ports operator backed down from acquiring five U.S. terminals in 2006 amid backlash from lawmakers in Congress. Since then, the company has made significant investments in Canada, including renovations and expansions at its terminals in the country’s biggest West Coast ports, at Vancouver and Prince Rupert.
Both ports compete with U.S. gateways, and last year saw container traffic jump when ports from California to Washington State were snarled during protracted labor negotiations. Canadian volumes dipped in the first quarter of 2016, but DP World expects them to rebound, said Maksim Mihic, general manager of DP World Canada.
Mihic said DP World could attempt another U.S. acquisition if a “good value proposition” comes along.
He said, “We think Canada is a better market because you have terminals not operated by the shipping lines.”
DP World owns the Centerm terminal at the Port of Vancouver and recently acquired the Fairview terminal at the Port of Prince Rupert for 580 million Canadian dollars from Deutsche Bank. First-quarter volumes were down 6% at Centerm and DP World’s Prince Rupert terminal saw a 5% decline.
In December, DP World announced plans to study a further expansion at Fairview to increase its annual container handling capacity to 2 million 20-foot containers, or TEUs, from about 1.35 million.
Mihic said a study to expand the annual capacity for Vancouver’s Centerm to 1.5 million TEUs from 900,000 TEUs should be completed by the end of the summer. If approved, construction is expected to begin in the second half of 2017 and should be completed about two years later, he said.
DP World also operates the Duke Point terminal located on Vancouver Island’s east coast, a small container port with an annual capacity of 50,000 TEUs. Preliminary plans to expand that terminal are underway, Mihic said.
“There’s a lack of capacity on the west coast of Canada and vessels just keep getting bigger,” he said, adding “we are investing in the long term, for the next 50 to 60 years. Canada needs a strong second West Coast port [at Prince Rupert].”
In the short term, Canadian west coast ports shouldn’t see a repeat of last year’s boom in U.S.-bound cargo, Mihic said. Ports from Halifax to the Gulf of Mexico should benefit from better shipping rates and steal some market share from West Coast ports, he said.
Mihic said he doesn’t expect to see super-sized container ships, or those with a carrying capacity of 18,000 TEUs, to dock along Canada’s West Coast anytime soon.
“I would expect few routes to have those kind of vessels,” he said. “I would expect to see an 18,000 TEU ship to come to Prince Rupert as soon as California gets them. They need to probably call a few ports along the way from Asia.”
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