Global container terminal operators opt for mergers for growth, risk mitigation

Global container terminal operators are rapidly changing their strategies in the face of current stormy economies creating pressure on their profit margins and rates of return due to significant softening of demand growth, higher opex and capex costs due to bigger ships, increased business risks from larger liner alliances and loss-making carriers pressuring for lower terminal handling charges.
According to a recent report by Drewry, global container terminal operators have taken their foot off the pedal when it comes to greenfield projects, carriers especially so, and are instead looking for growth, risk mitigation and opportunities through mergers and acquisition (M&A).
The change of gear and strategies comes amid a change in the nature of their market environment changes due to slowing growth, bigger ships and larger liner alliances.
This year, 24 companies qualify as global/international terminal operators in the Drewry analyses. However, the nature of the list of companies is already changing due to major M&A activity.
One clear strategic trend is the slowing of activity in greenfield terminal projects by the international terminal operators. The total number of active projects has fallen by almost half to currently 39  compared with 64 back in 2006.
According to the shipping consultancy, as significantly, the number of projects being developed by the carrier category of terminal operator has fallen to near zero, as carriers have re-trenched and become more and more cash-strapped.

Carriers with terminal portfolios are clearly shying away from greenfield investments but are very active in terms of M&A and joint ventures,”Drewry said, adding that some have been selling assets to raise cash while others have been buying terminal stakes