Margin pressures will ease for container terminal operators

That’s according to some latest insight from Drewry Shipping Consultants.

”Despite economic headwinds, Drewry expects container terminal operator earnings to recover through the course of the year on reduced cost pressures and inflation-linked revenue protection,” said Eleanor Hadland, senior analyst, ports and terminals, Drewry.

Testing times

Widespread easing of port congestion reduced average container dwell times at terminals and led to a corresponding fall in storage revenues in the last quarter of 2022.

That’s according to the latest readings from Drewry’s Global Container Terminal Revenue Index, which is published in the Ports and Terminals Insight.

Indeed, in their financial statements, both APMT and Westports confirmed that their storage income has dropped back to 2020 levels.

Meanwhile, costs continued to rise, according to Drewry’s Global Container Terminal Cost Index, due to continuing inflationary pressure particularly from escalating labour and energy costs.

This together with softening revenues put pressure on operator margins, sending Drewry’s Global Container Terminal Earnings Index down 19% YoY and 21% QoQ in the final quarter of last year.

”Looking ahead, while weakening container traffic will depress total revenues, the impact on per unit revenues will be partially offset by inflation-linked annual tariff increases,” said Ms Hadland.

“Additionally, if carriers continue to use blank sailings to manage trade-lane capacity then average terminal dwell times could settle at a level above pre-pandemic norms which would see some of the storage revenue gains maintained.”

On the cost side, she said, Drewry expects personnel costs, which are partially inelastic and typically account for the highest proportion of unit operating costs, to increase with the rise in annual salaries.

Drewry’s analysis of recent pay deals underpins its previous expectation that global average dock workers’ wages will rise by 6-9% in 2023.

Meanwhile, fuel and energy costs are expected to fall over the course of the year and lower volumes will lead to further easing of port and landside congestion which will provide some efficiency gains.