Downturn blessing in disguise

“This is a kind of call to get a little bit back to reality,” he said. “Port valuations had come to a completely unrealistic level. Construction costs and the price of getting services were getting to an excessive level and I think also some investors had begun to see ports as more like a real estate industry.”

Now, he said, “it has become clear this is not the case”.

“It is all about providing efficient services and value to the shipping lines and their customers. It is now once again all about being the best in terms of how we operate in this industry.”

Full-year volumes through APM Terminals’ global facilities were 34m teu in 2008 and revenue for was up 24% to $3.1bn. However, after a strong first three quarters, APMT saw a sharp downturn in volumes in the fourth quarter.

In October, the company embarked on a series of measures, including freezing all uncommitted future project investments, cutting down on capex related to projects where there was already some commitment, and reorganising the corporate structure.

“These are critical times and we decided to prepare for the worst when we saw the situation really hitting the port industry,” said Mr Fejfer.

He said that while container markets in January were probably down 20% year on year, APM Terminals saw a 13% downturn. Early indications are that February, March and probably April are all looking “very bad”, he said.

The company has adopted a three-part strategy in response – earning customers, taking costs out, and driving performance. Job losses have happened and are ongoing, he said.

“The pendulum swings from one end to the other and the only thing you can be sure about is that one day it will start to swing the other way again – but when that will happen it is simply impossible to predict right now.”