So farewell then, P&O Ports

It expanded to take in an increasingly large part of the port scene in Australia and New Zealand. Capt Richard Setchell and his colleagues in the Sydney Office took their entrepreneurial appetites, their knowledge of shipping and the changing world of the waterfront and began building the nucleus of the modern port company. They had little capital at their disposal, a sardonic view of government involvement in the port sector in various parts of the globe, and men willing to take up expatriate residence as managers in such garden spots as Vostochney, Irian Jaya and Shekou. They were in their day probably the most successful of the have-a-go port operators and managers. When Lord Sterling and his financial men decided that ocean container shipping was no longer necessarily the most important or profitable function of the company, P&O Ports was acclaimed as the new core activity.

Port underwriters know that making a surplus off P&O Ports is a tall order. With their many locations, they are bound to have plenty of casualties – ships touching cranes, cranes collapsing, windstorm losses – just a few of the incidents described on the company’s loss statistics.

Assuming the acquisition by DP World goes through, what kind of challenge will the combined risk represent to the insurance industry? A large one by any measure, more prone to loss and probably even more surrounded by eager souls offering ever greater discounts and bargain rates. The truth is that this kind of massive port group is at the disappearing end of the insurable wedge nowadays, only the underwriters are not necessarily facing all the facts. Denial in circumstances of utmost good faith as it were.

But the new owners will need time to understand the nature of P&O Ports, how it was put together over a period of 20 years rather organically, mostly by piecemeal acquisition. Typically, until recently, the capital employed in this acquisitive campaign was rather meager and many of the deals struck were on BOT terms. This may be why in the end the price to be paid (a little over £3bn) is so comparatively modest. Just think of it. The pride of the British merchant marine (ports division) going overseas to new owners for about half the price of a rather rackety mobile phone operation like O2. There’s post-modern, post-industrial life for you.