The container sector is shifting from a growth period into one of value, writes David Hunter, director of maritime advisory services.
We’ve seen the proliferation of alliances and acquisitions, both across shipping lines and with port operators building up their portfolio terminals. Shipping companies are also increasingly investing in their own operating arms.
Inevitably, these organisations are going to serve their own interests, bringing both opportunities and threats for others in the industry. Those that can make it into the premier league of destinations, especially for the mega-ships, stand to gain advantage. Those relegated to the lower leagues face tougher prospects. Whole regions could find themselves isolated and their cost of trade going up if they are off the main trade corridors.
The ability to read the direction of traffic has seen the role of lenders’ technical advisors and due diligence become more important: Investors want to steer clear of potential white elephants such as the over-concentration of ports in geographic hot spots that will suffer from excessive competition, or backwater destinations likely to be bypassed.
Sovereign states often regard deep ports as prestige assets, and get carried along by optimism bias. It is the responsibility of consultants to offer neutral advice that reveals where investment in port development is in the best interest of the country, or would be better spent elsewhere – health or education, for example.
Even if a port might work well in times of plenty, what happens in a global downturn, or if the container fleet changes? It is important also to recognise vulnerabilities such as terrorism, climate change and piracy.
And what of changing technologies and supply chains? Hard questions are worth asking. Owners and operators that can find answers have much to gain.