TERMINAL OPERATIONS
TERMINAL TRANSITION Johan-Paul Verschuure of the Rebel consultancy group looks at the new-found wealth of shipping lines and the implications for the terminal operating sector
8 Increased shipping line investment in strategic terminal capacity is underway – recently CMA CGM has bought back the Fenix Marine C.T. in LA, MSC has been buying back TIL shares and Hapag Lloyd has declared its interest in the sector
It’s hard to grasp that an industry offering very cheap transport across the globe for years – even below the actual costs to the liner – is now making billions in profit. The favourable position the shipping lines find themselves in seems set to continue in 2022, with more supply chain disruptions. The lines are certainly ‘making hay while the sun shines. Due to very thin margins the industry stretched itself in all direction to make ends meet. All of a sudden – within a time span of 12 months – the world has changed completely. But what to do with the mega profits? WHERE TO INVEST THE PROFITS? So, what are the options for the shipping lines? So far, the emphasis has been on paying back their large debt burdens and alongside this investment in new vessels is now at an unprecedented level. The first wave of the new ‘Corona Vessels’ is likely setting sail in the course of 2023 and onwards. There are however more investment options available to the shipping lines, not least further vertical integration in the supply chain. This has become an increasingly popular approach with shipping lines such as CMA CGM and Maersk buying into 3PL providers and even air freight operators. Another strong option is to secure strategic
22 | DECEMBER 2021
container terminal capacity. And this will likely have a significant impact on the industry. Terminal operators are only now starting to see revenues increase following supply chain problems. Global demand at container terminals has seen a healthy but manageable growth with volumes on average returning to the levels witnessed in 2019. Longer dwell times at the container yards and in warehouses are boosting storage revenues. Terminal operators are seeing their buffers grow, but not to the same extent as shipping lines are experiencing. What will this mean for the independent terminal operator not linked to shipping lines? SHIPPING LINE DIRECTIONS Ordering new vessels in the current situation won’t make much difference. Current supply chain problems stem from short term labour problems as a result of infections – especially with regard to securing terminal capacity and trucks as well as empty containers in the correct locations. Secondly, vessels being ordered now will only set sail after these problems have been alleviated (it is hoped!). With the problems easing in a couple of years, container turnover rates should return to typical pre-pandemic levels.
For the latest news and analysis go to www.portstrategy.com/news101
