Extra 168m teu port capacity needed by 2019

According to Drewry’s Global Container Terminal Operators Annual Report 2015, global container port demand is to grow by an average of 4.5% per annum through to 2019, equating to an additional 168 million teu of port traffic. This would bring the global total to almost 850 million teu. Asia alone accounts for over 60% of the forecast global demand growth.

In addition, the deployment of ultra large container ships and the formation of new mega alliances are adding to capacity pressures on global/international terminal operators.

“These two interrelated factors are placing significantly greater demands on ports and terminals and having far reaching consequences, driving up operating costs and capital expenditure requirements,” said Neil Davidson, senior analyst for ports and terminals, Drewry.

In response to these future challenges, a number of the 23 companies that are considered by Drewry to be global/international terminal operators are making significant investments in additional capacity over the next five years.

APM Terminals and DP World are the most active in terms of the number of new projects in the pipeline but PSA International is adding the most capacity, particularly in its home port of Singapore.

Elsewhere, Hutchison, CMA CGM, TIL and ICTSI also have significant plans, with the latter’s expansion representing a 40% increase over the current capacity of its portfolio. The primary expansion focus of the global/international terminal operators is Greenfield developments in emerging market locations, with acquisition and divestment activity having reduced from last year.

But, not all of the global/international players, mainly shipping line owned portfolios, are actively investing, and several have engaged in divestment of assets in order to raise cash.

At the same time, Drewry says there are several “aggressive” and “fast growing” companies seeking to join its ‘club’ of global/international operators. Ports America and Yilport are the leading contenders for such status in the coming years, while Gulftainer and Shanghai International Ports Group are also looking at international expansion. Meanwhile financial investors continue to buy and sell stakes in terminal and port companies.

Drewry adds that owning and operating container terminals on an international basis remains a profitable business but is also facing significant challenges ahead.

“The typical EBITDA margins for global/international terminal operators remain in a range from 20-45% and the 2014 financial results were much in line with previous years, illustrating the consistency and reliability of container terminal operators’ profitability. However, maintaining these margins will become increasingly challenging in the face of the demands created by bigger ships and alliances,” concluded Mr Davidson.