Back in the game

South and Latin America continue to attracting investment from the big operators South and Latin America continue to attracting investment from the big operators
Industry Database

Rapidly growing markets and the promised rise of new, affluent middle classes have got pulses racing, as Felicity Landon discovers

Cautious… selective … more focused on financial performance – these were some of the promises made by the world’s international port and terminal operators as they emerged embattled from the economic meltdown and considered their strategy for future expansion.

The global crisis certainly focused the minds of the operators in terms of future concession bids, and the focus is largely on the obvious targets, including South America, Asia, the Middle East, Africa and Eastern Europe.

“In all of those regions, growing middle class populations are the new consumers with new buying power, so shipping will follow quickly,” says Tom Boyd, APM Terminals’ communications director. “We are really focusing on Latin America where all those ports need upgrading. But we are also looking at Eastern Europe, where we have just opened in Georgia (Poti) on the Black Sea.

“In Africa, we continue to look at opportunities on all coasts. It is the same in Asia; we are looking at where there are business opportunities. We are keen to invest, so it just comes down to working with the ports, port operators and governments, and finding joint venture partners. This is an extremely active year for us with a lot in the pipeline.”

At DP World, Natasha Bukhari, global corporate communications manager, says: “With a pipeline of expansion and development projects in key growth markets, including India, China and the Middle East, our capacity is expected to rise to around 95m teu by 2020, in line with market demand.”

Among recent developments, DP World Karachi’s Terminal 2 at Port Qasim has been expanded from 900,000 teu to 1.2m teu capacity; built on 13 ha of reclaimed land, Terminal 2 has a 670 metre long quay with three gantry cranes to handle ships of around 6,700 teu. In India, DP World Cochin’s Vallarpadam International Container Transshipment Terminal is being built in three phases; the first phase, inaugurated in February, has provided a 600 metre quay with 14.5 metre draught. It has been designed to serve ships of around 10,000 teu, and with 1m teu annual capacity.

At the UK's London Gateway site, the area of land so far reclaimed equates to 4,000 Olympic-sized swimming pools.

Elsewhere, APMT is expanding its presence in South America, where its presence includes facilities in Brazil and Argentina. In March, it was granted the concession to build and operate the new port of Moin in Costa Rica. APMT will invest nearly $1bn in Moin in three phases; the terminal will be built on land reclaimed using material from the channel dredge. The first ships should be handled in 2015, says APMT Moin managing director Paul Gallie, and throughput of 1.2m is expected for the first full year of operation, 2016, with a very high proportion of reefer boxes carrying pineapple and banana exports.

In April, APMT announced its selection to run the new Terminal Muelle Norte in Callao, Peru – where it is committed to an investment of $749m to modernise the facility. At full capacity, the terminal will be able to handle 2.9m teu and 9.9m tonnes of non-containerised cargo.

Hutchison Port Holdings is also investing in South America, as well as elsewhere. Further expansion and facilities upgrades are under way at Balboa and Cristobal, in Panama.

HPH’s Yantian Port Phase III expansion project is nearing completion after the final berth started trial operations last September. And the development of a new container terminal in Huizhou is progressing: “It will become Huizhou Port’s first dedicated container terminal, with a berth length of 900 m and an area of 60 ha,” says an HPH spokesman. “The first berth is targeted to be operational in 2012.”

HPH is also developing new container port facilities in Brisbane and Sydney, both due to be operational next year, and in Pakistan, with a completion date of 2013.

In Europe, HPH is developing Moerdijk Container Terminals as an extended gate for the ECT terminals in Rotterdam and as a hinterland terminal for the nearby sea ports. The new deepwater berths 8 and 9 are nearing completion at Felixstowe.

PSA’s Pusan Newport International Terminal (PNIT), a joint venture with Hanjin Corporation, started operations in March 2010 and handled about 550,000 teu in its first nine months. Its Zeebrugge International Port started operations with four quay cranes in the fourth quarter 2010, and its facilities are to be expanded in line with demand. However, the EastPort Great Yarmouth container project, in which PSA had a 60% stake, has apparently now been formally suspended.

PSA is among the bidders for India’s JNPT 4 container concession (Jawaharlal Nehru Port Trust) – and so, now, is APMT, after India’s Supreme Court ruled that it should not be barred from the bidding process.

Few were expecting container volume growth in 2011 to match that of 2010. But the figures are still looking promising. “We see growth in 2011, though not as strong as in 2010 – but that may be because 2009 was a low base,” says one operator. “The Japan quake/tsunami/radiation thankfully did not seem to disrupt global flow of trade too much. We hope to see growth continuing in the second half of 2011; barring some catastrophic global event, we think global container volume growth will be a high single digit for 2011.”

APMT’s Tom Boyd says: “European volumes are looking good. We have seen increases in our terminals in Egypt, Algeciras and Tangier. Whether this will continue the rest of the year is a question mark. But we do expect a small peak in July, August and September.

“Of course, we are watching Greece closely; because if there are continuing challenges there, then consumer confidence is also affected – and that will have an impact on the market.

“However, the broader market view is that we are still very optimistic in terms of our global activities. So much of the world infrastructure needs upgrading and that is the key driver of the economy. We will continue focusing investment on the high growth markets; our business plans recognise strongly the growth of the middle class in these markets whereas in the developed markets it seems people are spending less and saving more.”

DP World saw a 12% increase in volumes across its 49 terminals in the first quarter 2011, to 12.6m teu – driven by strong growth in the UAE, Africa and the Americas region. “We remain confident about the long-term outlook for the container terminal industry,” says Ms Bukhari.

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