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May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
May 2009 IAPH WB: state of the port sector
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May 2009 IAPH WB: state of the port sector

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the impact of the financial crisis on the port sector

the impact of the financial crisis on the port sector

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  • Trade prospects for 2009 remain heavily conditioned by the unfolding financial crisis.
    Ongoing turmoil in the financial sector and acute credit shortages will continue to inexorably spread.
    With the global economy remaining weak in 2009, a gradual pickup in trade volumes is not expected to take place before 2010.
  • Lay up : still costs usd 700,000/y for a small 1700 teu vessel
    Scrappage prices are tumbling - rates from Indian, Pakistan and Bangladesh hubs are down to USD300 per ldt, from a USD750 ldt high last summer.
  • Lay up : still costs usd 700,000/y for a small 1700 teu vessel
    Scrappage prices are tumbling - rates from Indian, Pakistan and Bangladesh hubs are down to USD300 per ldt, from a USD750 ldt high last summer.
  • Lay up : still costs usd 700,000/y for a small 1700 teu vessel
    Scrappage prices are tumbling - rates from Indian, Pakistan and Bangladesh hubs are down to USD300 per ldt, from a USD750 ldt high last summer.
  • Concentration to be expected
  • 17 govt Agencies have to look at the port concessions in Brasil
  • Transcript

    1. State of the Port Sector 2009State of the Port Sector 2009 11 The global outlook for ports and the maritime sector - IAPH 2009 - Michel Donner - Port and Maritime Transport Specialist C. Bert Kruk - Port Consultant The World Bank
    2. State of the Port Sector 2009State of the Port Sector 2009 22 Contents  Safe, clean and affordable transport  Trade decline  Ports decline  Private capital flow to developing countries  World Bank response  Impact of the crisis on port projects  Future of port infrastructure financing  Impact on maritime transport  Maritime transport industry losses  Positive ripples ?
    3. State of the Port Sector 2009State of the Port Sector 2009 33 “Safe, Clean, and Affordable Transport for Development”  The World Bank Transport Business Strategy 2008- 2012  The strategy addresses • Safe Transport (for Health and for Safety) • Clean Transport (for Air Quality and Climate), and • Affordable Transport (for Businesses and Individuals)
    4. State of the Port Sector 2009State of the Port Sector 2009 55 Global trade volumes to decline byGlobal trade volumes to decline by 6.1 % in 2009 and recover in 20106.1 % in 2009 and recover in 2010 (Source:(Source: World Bank, DEC Prospects Group) -10 -5 0 5 10 15 20 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 High-income countries Developing countries Annual percent change in the volume of exports of goods and services
    5. State of the Port Sector 2009State of the Port Sector 2009 66 Trade decline, ports decline  Number of overseas clothing factories actively serving the US market decreased from 22,000 in July 2008 to just 6,000 in October 2008  Furnitures imports are down 50% from one year ago  Some examples of declines in container throughput of selected ports (February 2009 compared to the same month in 2008) • Hong Kong: 20.6% • Los Angeles: 32.6% • Saint Petersburg: 27.3% • Rotterdam 19%, and • Singapore: 19.8%
    6. State of the Port Sector 2009State of the Port Sector 2009 77 Decline in infrastructure spending leadsDecline in infrastructure spending leads to decreased growth…to decreased growth… In Indonesia, the decline in total infrastructure spending following the 1997 Asian crisis was accompanied by declining growth Indonesia Total Infrastructure Investment (% of GDP) Indonesia Average GDP Growth Source: World Bank 7 6 5 4 3 2 1 0 1997 1998 1999 2000 % 7 6 5 4 3 2 1 0 1988-1997 1998-2007 % 8
    7. State of the Port Sector 2009State of the Port Sector 2009 88 Private capital flows to developing countries are now significantly lower than the peak of 2007 0 200 400 600 800 1000 1200 2007 2008 2009 (P) in$billion
    8. State of the Port Sector 2009State of the Port Sector 2009 99 World Bank response : InfrastructureInfrastructure Recovery and Assets (INFRA)Recovery and Assets (INFRA)  Counter-cyclical public spending in infrastructure isCounter-cyclical public spending in infrastructure is an effective tool to create jobs and provide thean effective tool to create jobs and provide the foundation for economic recovery and sustainedfoundation for economic recovery and sustained growthgrowth  Stabilize and maintain existing infrastructure assets  Ensure delivery of ongoing projects that remain government priority  Continue to support PPPs in infrastructure  Be sure to be ready to handle the recovery when it comes
    9. State of the Port Sector 2009State of the Port Sector 2009 1010 The Impact of the Financial Crisis New port projects and concessions Investment Banks back in 2006  Goldman Sachs purchased 49% of terminal operator Stevedoring Services of America (SSA)  American International Group (AIG) bought the US terminals of Dubai World Ports  What Now ??  Infrastructure Funds/Pension Funds were seeking long-term returns and once saw transport infrastructure as secure and stable  Will they keep this view ??
    10. State of the Port Sector 2009State of the Port Sector 2009 1111 The Impact of the Financial Crisis New port projects and concessions Quotations of the maritime press  Hutchison : “all investments for new projects in 2009 are frozen”  DP World : “DPW is reviewing its expansion strategy, cutting costs and freezing recruitment”. “DPW will defer half of its planned expansion”  APM Terminals : “Port projects will return to realistic levels and APMT has taken a time out to review the portfolio”  ICTSI : “ICTSI is not looking for expansion except for programs that were decided on before”  COSCO Pacific : “New port investments are too risky in the current market”  Eurogate : “Eurogate has suspended non-essential investments”  Gioia Tauro : “Our objective is to get through the slump somehow and then to see when the hurricane is past how we have come out,”
    11. State of the Port Sector 2009State of the Port Sector 2009 1212 Future of port infrastructure financing Extracts from the World Bank Transport Forum April 2009 debates involving port authorities, private sector, IFC, financial experts and other experts  While port congestion is easing in developed countries, there are still ports in developing countries that suffer heavily from congestion  Port projects must stay on the stimulus policies for development, so they will be ready to handle the upturning growth  Port projects will mostly remain modest in size and time-frame  Expectations and ambitions must adjust to “what can actually be financed”  Unrealistic and complicated concession terms and processes too often delay needed projects  Governments should facilitate more agile and simplified environmental approval procedures
    12. State of the Port Sector 2009State of the Port Sector 2009 1313 Future of port infrastructure financing (contd)  Projects will be expected to generate cash flows early on in their lifetime  Projects with less than 25% equity investment by the project proponent might not even be looked at  Investors will need to show more commitments to convince lenders  The existing portfolios of projects need to be combed, staged and reduced  Even IFIs as lenders of last resort need to rationalize their portfolios  This does not mean a return to 100% public. Public financing is also suffering and waning, in line with fiscal revenue  Evolution of PPPs : there are still private equity investorsthere are still private equity investors around looking for good projectsaround looking for good projects  Let some white elephants die or sleep  However it is preferable to scale back than to stop
    13. State of the Port Sector 2009State of the Port Sector 2009 1414 The Impact of the Financial Crisis Maritime transport  It takes 3 to 5 years to design, build and launch a set of 9-10 sisterships  Who in 2005 has predicted today’s crisis ?  More ships, less cargo  Earnings in free fall due to combined volumes and freight rates drops  Free fall of charter rates, but no customers  Lay up vessels, Scrap vessels
    14. State of the Port Sector 2009State of the Port Sector 2009 1616 The Impact of the Financial Crisis Maritime transport (Contd)  Lay off workers (shipping and ports)  Slow steaming, the Cape route, the Somalia piracy situation  Risk on shipyards  Idle vessels used as storage for empty containers or unsold cars  Will the survivors of the shipping industry still be able to carry the trade volumes produced in the post-crisis ?
    15. State of the Port Sector 2009State of the Port Sector 2009 1818 Volumes and monetary losses of major shipping lines in Q1 2009 Rank Company Q1 09 loss (*) Volumes loss (**) 1 Maersk 555 15 4 Evergreen 83 5 Hapag 302 15 6 Cosco 30 7 APL 245 27 12 Hanjin 191 26 (*) Million USD (**) Percentage compared to Q1 2008
    16. State of the Port Sector 2009State of the Port Sector 2009 1919 Positive ripples?  Singapore, Shanghai, Hong Kong, Shenzhen and Los Angeles / Long Beach saw a 29% volume rebound in March 09 compared to February 09  Analysts attributed this momentary rebound to the end of the traditional Lunar New Year slack. And the April figures for Singapore went 5% down  Santos handled 4.89% more cargo in Q1 09, compared to Q1 08  South Africa’s 0.8m TEUs capacity Ngqura terminal to go live in October  Benin is going forward with the 0.5m TEUs capacity Cotonou South Wharf project  Brazil is bravely pursuing major dredging works in most of its container ports (in spite of some setbacks) but port concessioning and environmental processes remain complex and slow  It is the aged vessels (less fuel efficient and more polluting) which are being scrapped first
    17. State of the Port Sector 2009State of the Port Sector 2009 2020 Positive ripples? (contd) Baltic Dry Index: A nascent recovery ? 0 2500 5000 7500 10000 12500 Apr Jul Oct 09
    18. State of the Port Sector 2009State of the Port Sector 2009 2121 Thank you very much for your attention

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