Bulk and tanker operators less boxed in by downturn

The fortunes of operators in these fields are largely decoupled from the shipping and intermodal strategies pursued by many owners in the container sector. Competition for port calls and the development of transhipment-based economies of scale are also less apparent given the specialist handling requirements and geographic restrictions which often dictate port choice.

Dry and wet bulk terminal operations are also often linked to the cargo interest. And, where they are not, private operators often benefit from a better balance in revenue – unlike at container terminals, handling charges are usually less important than storage revenues or land lease arrangements which can provide more long-term protection from the vagaries of commodity demand.

This explains why Vopak, a leading tank terminal operator, had no problem readily accessing the financial markets recently. The company concluded a new SGD$210m (US$146m) senior unsecured notes issuance in the Asian Private Placement market, with 11 institutional investors participating in the issuance.

The Notes in the issuance have a ‘bullet maturity’ of five years, and a fixed interest rate of 5%.”This Private Placement Notes Issuance in Asia is an encouraging reconfirmation of Vopak’s access to flexible long-term financing sources from different (regional) capital markets across the world,” says Jack de Kreij, member of the executive board and chief financial officer of Vopak.

Another factor that favours those active in the dry and wet bulk terminal markets is that quite often government help is at hand when it comes to the import or export of natural resources.

In India, for example, growing volumes of coal and other commodity imports are behind the government’s commitment to build 50 new ports over five years at a cost of over $11bn.

China, Brazil, Indonesia and Australia are also pushing forward with major port upgrades.

Paul Slater, chairman of First International Corp, predicts that the port sectors most likely to attract investors in the coming years will be in the wet and dry bulk markets. “The only area of interest and potential growth is in bulk terminals with expansion plans in Australia and Brazil and new facilities in West Africa, but these are directly linked to commodity suppliers and not to independent operators,” he concludes.