3.  INDUSTRY TRENDS

MAERSK LOSES WHILE HUTCHISON GAINS

AP Moller-Maersk posted a net profit of US$2.9 bn for 2006, well down from the US$3.62 bn in 2005.  The company said its container business lost US$568m after tax in 2006.  Its activities were hit by freight rates that were 10% lower and 25% higher fuel costs.  Maersk’s figures also reflected the problems of amalgamating P&O Nedlloyd.  A Danish press source has suggested that APM Terminals, its port operating arm, wants more independence from the company as it believes it will make it easier to attract other shipping customers.  Hutchison Whampoa Ltd. on the other hand reported a 40% increase in 2006 earnings despite some losses in its third-generation mobile telecommunications business known as 3G. The Hong Kong conglomerate’s earnings were boosted by a strong performance in its ports operations thanks to a boom in exports from China. The company also gained US$3.12 bn from the sale of a 20% stake in its ports business to PSA.

SINGAPORE AND HK STILL ON TOP BUT CHINA CATCHING UP

Singapore has retained its top spot as the world’s busiest container port.  Hong Kong held on to second place but Chinese ports are growing quickly and catching up with both.  According to Lloyds List, Singapore has almost certainly lost some business to the neighbouring Malaysian port of Tanjung Pelepas from the merger of Maersk and P&O Nedlloyd, but this had no appreciable affect on PSA.  Most of PSA’s core transhipment markets (PSA Singapore is around 85% dependent on transhipment volumes) are seeing good growth, and neighbouring countries are some way from developing infrastructure required to attract direct mainline calls that would cut Singapore out of the picture, a long-term threat to the country’s business.  The paper predicts that in the longer term Singapore will most likely have to content itself with the number two or three spot based on the growth being seen in South China and Shanghai. However, it said that the demise of Singapore as a major transhipment hub, as many were predicting a few years ago, seems to have been greatly exaggerated.

4.  AMERICAS & THE CARIBBEAN

DPW COMPLETES US PORTS SALE TO AIG

DPW has completed the sale of its subsidiary, P&O Ports North America, to AIG Global Investments, maintaining the current trend of widespread interest among private equity firms in acquiring ports.  The price of the acquisition is said to be around $700 million.  DPW was forced to sell its US operations which it acquired following its purchase of P&O Ports in 2006 after fierce Congressional opposition to its ownership on security grounds.  The Chief Executive of AIG’s global investment unit is reported to have said that he planned to keep the current management team.

ICTSI MOVES INTO ECUADOR

Philippines-based International Container Terminal Services Inc. has won a 20-year concession to operate the Guayaquil container terminal in Ecuador.  ICTSI is expected to start controlling the port in 3-4 months, once the necessary paperwork is done.  The port master plan was developed by the port authority and the transport division of the United Nations Economic Commission for Latin America and the Caribbean.

IDB FUNDS BRAZIL’S 1ST PRIVATE CONTAINER PORT

The Inter-American Development Bank (IDB) is providing 55% of the total 300 million reais (US$143 million) invested in the construction of Brazil’s first private container port Itapoá in the southern state of Santa Catarina.  A consortium composed of Grupo Battistella and Hamburg Sul subsidiary Aliança Navegação is contributing the other 45%. Battistella has a 70% controlling interest in the consortium while Aliança Navegação accounts for the other 30%.  The port will offer a natural water depth of 16m and have two berths that will be able to handle container ships up to 9,000 TEUs. It is estimated that annual capacity will reach 300,000 TEUs in the first three years, rising to 500,000 in five years.

5.  ASIA PACIFIC

ADB TO FUND COLOMBO PORT EXPANSION

The Asian Development Bank (ADB) is lending US$300 million to help finance the expansion of Colombo Port.  The expansion project will be funded through a public-private collaboration.  The public sector will be responsible for infrastructure improvement works in the harbour, including dredging and breakwater construction to open the way for three new container terminals.  The private sector will develop and operate the container terminals, which are to be constructed in phases.  The objective is to improve Colombo’s position as a transhipment hub for South Asia.

SHANGHAI PORT GROUP WANTS TO BE A MAJOR INTERNATIONAL OPERATOR

The Financial Times has reported that the Shanghai International Port Group (SIPG) has ambitions to follow other Chinese corporations in becoming a major international force by investing overseas.  The company which made its first external investment last year in Zeebrugge, Belgium acknowledges that it faces strong competition from established global operators.  Nevertheless, SIPG which is 70% owned by Shanghai’s municipal government, sees turning the company into a major international terminal operator as an important part of its strategy.  At Zeebrugge, SIPG took 40% of a terminal built by APM Terminals, which is reported to want to build a relationship with it.

US – VIETNAM MARITIME AGREEMENT

The USA and Vietnam have signed their first maritime agreement which enables US companies to operate on an equal footing with local companies in the Vietnamese market.  The agreement, which will benefit terminal operators, requires US companies to enter into joint ventures with local partners for the first five years.  SSA Marine is in a joint venture to develop terminal facilities at Cap Mai.  Vietnamese ports are too shallow to accommodate the largest ships, so cargo is currently usually fed to Singapore or Hong Kong.  However, the government apparently has an aggressive transportation infrastructure development program.

continue reading>>