Container port industry slow growth still means big absolute increases


Published on

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Container port industry slow growth still means big absolute increases

  1. 1. CONTAINER PORT INDUSTRY: SLOW GROWTH STILL MEANS BIG ABSOLUTE INCREASES 12/08/2013 The global container port industry is now so large that even with modest growth, absolute throughputs will still increase dramatically. In a recent interview with the Financial Times, Maersk Line Chief Executive Officer Søren Skou predicted that future demand growth for containerised cargo will remain in the 4-5% per annum range, not the heady 10% per annum seen prior to the economic downturn. “I think the reality is that our industry has to get used to lower growth than we had in the past,” he remarked, making the point that offshoring and the containerisation of breakbulk cargoes were trends that had largely run their course. This view chimes well with Drewry’s latest container port demand projections, which forecast compound average global growth of 5,4% per annum through to 2017. However, percentage growth rates can be deceptive. Even at this level, growth will reach 30% in absolute terms over 5 years. As the global container port industry handled a staggering 620 million teu in 2012, this means that, by 2017, ports will have to accommodate another 190 million teu. To put this into context, that is more than the entire 2012 throughput of North American, European and Middle Eastern ports combined. Forecast Global Container Port Demand Growth in Context (million teu) Source: Drewry Maritime Research At port level, the numbers are even more staggering. Even if Singapore and Shanghai only performed at the world average of 5,4% p.a, it would add almost 10 million teu to each port’s total throughput by 2017. A figure of 10 million teu is more than the entire container port throughput of the UK, India or Brazil.
  2. 2. As shown in the Figure below, although the global volume of container cargo handled by ports fell sharply at the beginning of the economic recession at the end of 2008, it didn’t take long to recover, and currently sits at over 20% more than at the beginning of 2008 – ie before the recession. Global Port Throughput Index: Jan 2008=100 Source: Drewry Maritime Research All this illustrates what a colossal and sturdy industry the container port business has become – something that is often overlooked due to its wide geographic split across nearly 1.300 terminals around the world. In money terms, Drewry estimates that the world’s container terminals had a turnover of around $45 billion in 2012 and, taking a mid-range profitability margin, will have generated a global EBITDA of over $10 billion. However, whilst the industry is satisfactorily profitable, it is one that requires continuous and substantial capital investment. Using a ballpark investment cost of $350 million per million teu of capacity (covering both terminal infrastructure and equipment), an extra 190 million teu means that an approximate investment cost of around $65 billion over the next five years will have to be found. Clearly this represents the upper end of the likely cost, as some of the growth will be accommodated in pre-existing capacity. Nevertheless, the required investment will be as colossal as the industry it serves. Our View Although future container volume growth will be significantly more muted than in the heydays of the 1990s and 2000s, very substantial capital investment in port/terminal capacity will still be required over the next five years. (Container Insight Weekly / Drewry Maritime Research)