THE VOLUME: REVENUE RELATIONSHIP

However, a look at the annual reports of some leading landlord PDCs like Port of Rotterdam, The Netherlands; Port of Barcelona, Spain; Port of Sohar, Oman and Gladstone Ports Corporation, Australia suggests that volumes handled may not be as central to revenue growth as one might assume.

Take the Port of Rotterdam; while volumes were down more than six per cent in 2020, mainly due to the effects of COVID-19, revenues were up six per cent. A similar performance was achieved by Gladstone, where volumes were down two per cent but revenues up by more than seven per cent and Gothenburg, Sweden, by way of another example, (vol. – two per cent and revenue growth up three per cent).

All these ports managed to grow revenues in the face of declining volumes, due to non-volume linked revenue streams, mainly rental fees for land leased to third parties operating in the port.

It is not all positive though; some PDCs experienced exactly the opposite: volumes were up but revenues were down. This was the case in Esbjerg, Denmark and Pecem, Brazil. And then there were some ports where both volumes and revenues were down, but not necessarily in the same fashion: Port of Amsterdam experienced a throughput decline of around fourteen per cent and a revenue decline of around seven per cent.

Arguably, a limited dependence on volumes for revenue growth makes PDCs more resilient. Even when they can no longer grow the port volumes, they still have opportunities to grow revenues by expanding and developing their ‘port business ecosystems’ in other directions, be it as sustainable energy hubs, as sites for leisure or for other activities.

In this context it is interesting to note that all of the PDCs mentioned above made substantial investments in 2020. Some of the PDCs invested over 20 per cent of total revenues, which is very high, in a very uncertain market environment.

A fundamental question has to be: did enough of these investments go into further diversifying the port business ecosystem?