Drewry Warns Of Potential Hutch’ Deal Consequences

This deal, which would bring the MSC/TIL portfolio to “a staggering 196m TEU” capacity, would mean that for the first time, three hybrid operators are represented in the top five global terminal operators (GTO), said Eirik Hooper, Senior Analyst, Ports & Terminals, Drewry. “These three hybrid operators are also among the top four liner carriers by fleet capacity – which begs the question whether truly independent GTOs are still able to compete with global hybrid operators when it comes to portfolio capacity expansion and if they are able to compete on an even playing field for new capacity,” he said.

Whether terminal operators should be concerned about MSC’s growth and dominance depends on the market and on the shape of the final deal once the relevant competition authorities have gone through it with a fine toothcomb, said Hooper.

While all terminal operators have naturally allied with their own customer base and provide logistics efficiency and networks which attract customers whether or not they are a hybrid operators or are financially aligned with the shipping line, if the Hutchison deal goes ahead, Hooper warned, “This should give all other operators pause for thought as to how they should adapt their commercial and competitive strategies to defend against what could be a significant risk to their underlying business.”

Since the time of the webinar COSCO has also emerged as a potential partner to the tune of around 20%, a development that is seen as satisfying the requirements of the Chinese Government. At the same time, however, it remains to be seen as to the reaction of the Trump administration to such an arrangement. The Panama Government, at the time of writing, with the support of the Trump administration was making moves to expel Hutchison from its two Panamanian terminals at either end of the Canal. Trump is on record as disapproving of Chinese involvement in the workings of the Panama Canal and so it remains to be seen about COSCO’s involvement if the two Panama terminals are involved.

CMA – CGM is another entity that has expressed interest in getting in on the deal.

Then there are the diverse anti-trust hurdles to get past. The story continues to unfold – expect a few more twists and turns!