The strategies of the major shipping lines regarding terminal ownership are surprisingly varied, with carriers facing a dilemma with their container terminal ownership strategy: whether to sell, to buy, to do both – or do nothing, according to Drewry’s Global Container Terminal Operators Annual Report 2015.
Much has been said and written about the financial challenges facing most major shipping lines, and a number of them have been selling some of their container terminal assets in order to raise cash. It is tempting to assume that this is a common strategy for all carriers but this is not the case, according to Drewry.
Assessing the strategies of global alliances – 2M, Ocean Three, G6 and CKYHE – with regard to terminal ownership is complex due to the varying approaches each has, Drewry says in the report. For example, Maersk Line has no terminal interests as all activity of this nature is carried out by sister company APM Terminals, operating at arm’s length. Leaving aside Maersk, when it comes to terminal ownership, the remaining 15 carriers forming the four alliances by no means conform to the herd mentality often levied at them when it comes to ordering bigger ships.
Five carriers have so far followed the predicted route and engaged purely in the disposal of some of their terminal assets, or stakes in those assets: Hanjin, Yang Ming, K Line, Hyundai and MOL.
Three have sold stakes in terminal assets but at the same time are also still making terminal acquisitions: TIL/MSC, CMA CGM and NYK. In the case of TIL/MSC and CMA CGM, minority stakes in their existing portfolios have been sold, but the overall strategy remains to continue investment in the terminal sector – using terminal companies that have separate identities to their shipping line parents and a degree of independence.
Two carriers have only indulged in buying more terminal assets: the Cosco Group and China Shipping which, given their respective financial pressures, might have been expected to sell some of their terminal assets, Drewry suggests. Instead, they have recently made some significant additions to their portfolios. China Shipping acquired a 20% stake in HPH’s Terminal 8W in Hong Kong, a 10% stake in Yang Ming’s Kao Ming terminal in Kaohsiung and a 24% stake in APMT’s Zeebrugge terminal. Cosco acquired a 40% stake in Terminal 8W and a 10% stake in the Kao Ming terminal.
Should the rumoured merger between the two companies go ahead, it will be interesting to see what is done with the respective terminal portfolios. If merged, the combined equity-adjusted throughput of their terminals would make them the fifth largest global/international terminal operator, potentially serving as a springboard to further expansion of the terminals business.
There are five remaining carriers with no recent change with regard to terminal assets. These vary widely in their positions:
Drewry predicts that given the ongoing financial pressures in the liner industry, further change in carriers’ terminal portfolio ownership seems inevitable, but it may not necessarily be a case of simply selling off the family silver.