The container revolution has both facilitated and driven globalisation. The transfer of production to low-cost regions and increasingly complex supply chains have been the major factors generating trade growth. <\/p>\n
The model is now changing. These changes \u2013 combined with technical shifts in container sector \u2013 are multiplying risks and increasing pressure on trading margins. The levels of risk are now as high as those that followed the Financial Crisis. The many shifts impacting on the container market are considered in a far-reaching new study, \u201cContainer Terminals: Paths to Profitability\u201d from respected market analysts.<\/p>\n
The container market since the Financial Crisis has seen steady volume growth and resulting high demand for port and terminal investment. But there are underlying problems and understanding of the prevailing risks should be the central preoccupation of investors and operators in each part of the container transport chain. It is far from clear that this is the case.<\/p>\n
So, what are these risks? The report outlines those that are external to the container business over which investors have very little control and those within the business.<\/p>\n
Other key factors considered are:<\/p>\n
Globalisation and protectionism: Containerisation has ridden the wave of globalisation and protectionism is now \u2013 once again \u2013 a major factor in risk analysis.<\/p>\n
Financial instability: Recovery since the Financial Crisis has been built on massive increases in debt. Essentially, consumer demand has been paid for by borrowing \u2013 the scope to extend this is limited.<\/p>\n
Structural demand change: A steady decline in the GDP:trade multipliers consumption is maximised, moving from an OECD-driven demand profile to an intra-Developing World
pattern \u2013 a significant risk increase.<\/p>\n
Near-sourcing: Increasing pressures to repatriate production to the major OECD economies is a manifestation of increasing protectionism and technological change.<\/p>\n
Technological change: Two clear issues exist, blockchain (digitisation) and 3D printing, with profound implications for the container sector.<\/p>\n
Environmental pressures: International shipping and terminal development has largely escaped from environmental pressures \u2013 until now.<\/p>\n
The port\/terminal developer has no direct control over any of these risks. Yet if these uncertainties were not enough, the terminal investor faces a whole set of container-specific issues: <\/p>\n
Shipping over-capacity and instability: Container shipping is a very difficult market. The search for scale economies by much larger vessels results in demand concentration terminal modification \u2013 a classic \u2018prisoner\u2019s dilemma\u2019 for developers.<\/p>\n
Alliance instability: Investing in a new terminal is a long-term project, but long term partnering almost impossible. Counter party risk is key.<\/p>\n
Shipping line terminal investment: Uncertain development driving up capacity and obscuring returns.<\/p>\n
Larger vessels and cascading: Forced larger vessels into trades ahead of demand \u2013 again, driving the need for investment.<\/p>\n
Unrealistic expectations and overcapacity: Extrapolation of unrealistic demand trends is prevalent in this sector.<\/p>\n
New company involvement: As new traders and logistics companies such as Amazon and Alibaba increase their presence, vertical investment in the transport chain will increase,
meaning new competition with investment capability.<\/p>\n
Tightening regulatory framework: Increased regulatory pressures and attempts to link approval to \u2018supporting\u2019 hinterland investments are intensifying.<\/p>\n
Identifying and managing risks and focusing on trading margins is essential to successfully deal with all these issues. The report defines the nature of risk and develops a comprehensive blueprint for long term profitability in the face of these issues. The days when increasing demand would rescue a marginal project are gone.<\/p>\n","protected":false},"excerpt":{"rendered":"
AJ Keyes reviews a new report that looks to identify and manage risks relating to container terminal investment.<\/p>\n","protected":false},"author":8,"featured_media":806,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[19],"tags":[],"sponsor":[],"class_list":["post-805","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-container-cargo-handling"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/posts\/805","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/comments?post=805"}],"version-history":[{"count":0,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/posts\/805\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/media\/806"}],"wp:attachment":[{"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/media?parent=805"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/categories?post=805"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/tags?post=805"},{"taxonomy":"sponsor","embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/sponsor?post=805"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}