CMA CGM and China Merchants Port strengthen collaboration

SHANGHAI: The Chinese port operatorChinaMerchantsPorthas entered into strategic cooperation Momorandum of Understanding withCMACGM.

Accordingtotheagreement,the two parties will establish middle and long-term cooperation on vessel calls, terminal services, logistics, technology innovation and regional majorprojectdevelopment.

“China Merchants Port and CMA CGM have clear advantages in their respective fields. CMA CGM has been an important partner of China Merchants Port and we are providing high-quality and efficient service to CMA CGM. Signing of the agreement lays a solid foundation for deepening our cooperation,” said Lu Yongxin, COO and general manager of ChinaMerchantsPort.

Drewry’s GTO report: PSA remains at Top, Chinese operators on the rise

Cont’d. from Pg. 3

Eleanor Hadland, author of the report and Drewry’s Senior Analyst for Ports and Terminals said: “Increased M&A and privatisation activity will see the number of GTOsincrease–HapagLloyd,ONE,Adaniand Abu Dhabi Ports Group are all set to feature in nextyear’sleaguetables.”

In 2022, there was a net increase in the number of companies that qualified as GTOs from 20 to 21. While HHLA dropped out of the rankings due to the closure of its terminal in Odessa after the Russian invasion of Ukraine, MSC and Wan Hai entered the rankings in 7thand19thposition,respectively.

LeadingGlobal/InternationalTerminalOperators, Equity-adjustedthroughput,2022

Annual growth in equity-adjusted throughput for the 21 GTOs was 0.6%, which is slightly above the 0.5% increase in global port handling recorded in 2022. The leading operators handled over 48% of the global port volumes on an equity-adjusted basis,stableonalike-for-likebasisvs.2021.

China Cosco Shipping gained ground on back of its increased stake in Tianjin Container Terminal, while China Merchant’s equity-throughput gains follow on fromtheupliftinshareholdinginShanghaiInternational PortsGroupandNingboZhoushanPortCo.

In contrast, APMT slipped down the rankings due to the full-year impact of the sale of Rotterdam Maasvlakte in 2021 and sale of minority stake in Wilhelmshaven in 2022. Similarly, DP World’s monetisation strategy, which has reduced its equity-stake in its flagship Jebel Ali terminal to less than 68% underpinned the 3.1% drop in equitythroughputin2022.

Revenue of terminal operators rose in 2022, despite a slowdown in volume growth. However, by 2H22 the widespread easing of congestion saw storage revenues plunge as dwell times quickly returned to pre-pandemic levels. The easing of port congestion led to recovery in terminal productivity, lowering costs on a per unit basis; for example, less requirement for overtime working and lower levels of rehandling in container yards. However, labour costs, which are partially fixed and account for the highest proportion of opex per unit, jumpedin1Q23duetoyear-endsalaryincreases.

In 2022, the Drewry Global Container Terminal Earnings Index dipped 16.3% YoY led by falling revenue and rising cost per unit. However, the pace of decline slowed in 1Q23 due to reduction in operating costs perteu.

“We expect this downtrend to recede as the impact from reduced storage revenues weakens in 2H23,” addedHadland.

In 2022, the sampled terminal operators’ capital expenditure (capex) grew by 18% YoY, marking the second consecutive yearly increase since 2020, when the industry opted to build onto their cash positions by delayingnon-essentialcapexduetothepandemic.

In 2023, high-interest rates have already increased the opportunity cost of funds invested. We believe that interest rates will remain elevated in the short term, which will see operators reappraise business cases for capital investments as the hurdle rates of return move upwards.

Small-scale projects that can be funded from cashflow, especially those which generate productivity and/or sustainability gains are less likely to be delayed than greenfield projects and major terminal expansions.