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Greenfield projects catch terminal operators' eye again - Drewry

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Strong post-Covid-19 performance by global shipping lines has led to a reassessment of the viability of greenfield terminals by international port players.

“Widespread container shipping trade recovery in the wake of the Covid-19 pandemic has boosted the global terminal capacity outlook, supported by global terminal operators’ (GTOs) increased appetite for higher-risk greenfield projects to deliver long-term growth,” research by leading consulting service Drewry has found.

In its latest report, entitled Global Container Terminal Operators Annual Review and Forecast, Drewry found that global container port capacity was projected to increase by an average annual rate of 2.4%, to reach 1.38 bn teu by 2026. However, it added that the worsening economic and geopolitical situation had led to a downgrading of the cargo demand outlook; as a result, container port utilisation is now projected to moderate to 70% in 2025 compared to last year’s projection of 75%.

It said that while the majority (70%) of GTO investment plans remained focussed on existing assets, there had been a notable increase in the number of greenfield projects—with CMA Terminals, Hutchison and TIL all expected to add 4 million teu of additional greenfield capacity by 2026.

“The renewed appetite for greenfield projects shows improved confidence in the market outlook,” Eleanor Hadland, author of the report and Drewry’s senior analyst for ports and terminals said. “However, the ability of CMA Terminals and TIL to secure volume guarantees from CMA CGM and MSC gives these companies an advantage over non-carrier affiliated operators.”

Increased cargo dwell times caused by global supply chain disruption in 2021, especially in the U.S., generated additional storage charges, boosting GTO revenue growth. “Once global supply chain disruption eases, which is now expected in 1H23, there is heightened risk that revenue gains will retreat as dwell times return to pre-pandemic levels,” Hadland said.

Drewry estimates that there are now 20 GTOs operating in global markets. It said growth in equity-adjusted throughput for the 20 companies was 7.0%, marginally higher than the 6.8% growth in global port handling recorded in 2021. While capital expenditures rose 31% year-on-year in 2021, GTOs now face the twin challenges of longer lead time for handling equipment and rapidly rising costs.

“In general, favourable terminal operator financial performance has translated into robust balance sheets. With the exception of COSCO Ports and ICTSI, net debt fell, leading to a reduction in net gearing by 8.5 percentage points to 54.7%,” Drewry said.

APM Terminals reported the largest absolute increase in equity-adjusted volumes, with volumes up 4.7 million teu (10.3%) year on year. PSA International was again the largest GTO by equity-adjusted throughput in 2021, with 63.4 million teu, up 6.5% on the year-earlier figure.

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