Port Investments get a setback

The water is being muddied by a lack of enthusiasm for spending money and withdrawals from existing investments. The dramatic decline in trade during the last six months has finally impacted the ports with virtually all terminal operators reporting shrinking numbers of lifts and tons.

The assumption that growth was permanent has hit a number of industry players hard. In the US, Maersk Line announced that it would reduce calls at Charleston and then pull out completely as a result of declining volumes and labour union intransigence. The port chief executive appeared to lose his job.

The proposed port of Punta Colonet in Mexico may finally stop being a dream as it fails to find any investors or funding.

Hutchison announced that it was pulling out of Thessaloniki due to economic reasons. It was also reported that DP World were calling a temporary halt to their new port investments.

Meanwhile, in India, ZIM Line pulled out of their team bidding for Ennore port and in Kingston, Jamaica, APM Terminals ended their contract.

Does all this bad news mean that we are at a crossroads with the private sector no longer able or willing to fund the expensive infrastructure projects? Are we going to see national port authorities moving away from full privatisation and coming back to fund a greater part of the financial package?

The answer to all of these may be a qualified “yes” as we settle in to a recession that is going to take a long time to end, with 2011 perhaps being the first year of good tidings. What this means for the port industry is that the recession is bringing new rules and changing relationships that will require financial re-thinking.

The spectre of under investment could well be an outcome of this and with this, congestion is certainly in prospect as we look beyond 2015, assuming of course that there will have been demand growth after the recession.