Surefooted Terminal Operators Show Increased Appetite for Higher-Risk Greenfield Projects

Global terminal operators are showing an increased appetite for higher-risk greenfield projects in the wake of the COVID-19 pandemic, according to industry analyst Drewry.

Global port capacity is projected to increase by an average annual rate of 2.4% to reach 1.38 billion TEU by 2026 even as economic and geopolitical uncertainties have contributed to an overall downgrading of the cargo demand outlook.

While the majority of global terminal operators’ investment plans remain focussed on existing assets, there has been a notable increase in the number of greenfield projects, referring to those that are built from scratch rather than on existing sites, Drewry says in its latest Global Container Terminal Operators Annual Review and Forecast Report. CMA Terminals, Hutchison and TIL all expected to add 4 million TEU or additional greenfield capacity by 2026.

“The renewed appetite for greenfield projects shows improved confidence in the market outlook,” said Eleanor Hadland, Drewry’s senior analyst for ports and terminals and author of the report. “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.”

Global supply chain disruption resulted in increased cargo dwell times in 2021, leading to additional storage charges and lifting terminal operators’ revenue growth above that which could be justified on the basis of volume recovery alone.

Port congestion does not appear to have adversely impacted port operators’ financial performance. Despite a widespread decline in productivity levels, revenue-raising mechanisms such as paid-for overtime and storage charges have offset congestion-related operating costs. For most terminal operators, this has translated into robust balance sheets as net debt fell. Continuing cost control measures implemented in response to COVID-19 have also helped to boost margins, according to Drewry.

“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,” added Hadland.

Drewry’s report also points out that the top 20 global terminal operators tracked have seen equity-adjusted throughput increased 7% in 2021, which is “marginally higher than the 6.8% growth in global port handling recorded in 2021.” Overall, these 20 leading operators handled over 48% of the global port volumes on an equity-adjusted basis, stable on a like-for-like basis vs. 2020.

Leading the pack, Maersk’s APM Terminals saw the largest absolute increase in equity-adjusted volumes, with volumes up 4.7 million TEU, or 10.3%, year over year in 2021.

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