3.   INDUSTRY TRENDS

Global Operators 

In the past year, the stevedore-based companies were the biggest and fastest growing group of global operators.  3 out of 4 of the largest global operators – Hutchison, PSA and P&O Ports - are stevedore-based.  APM Terminals, seen as a ‘hybrid’ due to the shipping interests of the Maersk group, is making clear efforts to establish itself as a stand alone stevedore.  The big 4 above accounted for over 1/3 of total global container terminal volumes.  According to Drewry Shipping Consultants APM is the leading global operator in N. America; Hutchison in N. Europe, Central America/Caribbean and Far East; P&O in South Asia; and PSA in SE Asia.

A number of other companies are also significant regional players e.g. Eurogate in Europe, SSA Marine in the Americas and Bolloré in West Africa.  Two further terminal operators are worth mentioning: Dubai Ports Authority which has been expanding aggressively in the past year, including acquiring CSX World Terminals, and ICTSI of the Philippines which is pursuing an active program to acquire new terminal concessions throughout Asia, the Americas, Europe (including Baltic), the Middle East, and Africa. 

Shipping lines’ interest in container ports appears to be driven by two main factors: business opportunity and the need to secure regular capacity, particularly in the light of congestion from the ‘China effect’.  Important players include Cosco (now the 5^th largest operator and expected to catch up with P&O in the next few years), MSC, Hanjin, CMA CGM and Evergreen.  Analysts expect to see an increasing interest on the part of shipping lines in securing new terminal capacity. 

There is also a relatively small but growing flow of investment by terminal operating groups into shipping lines e.g. Hutchison Whampoa’s 12% shares in Hyundai Merchant Marine.  Another example of inter-industry partnership is the PSA-Cosco joint venture in Singapore.  The president of Cosco has been quoted as saying that Cosco planned to encourage its ships to use ports managed by PSA worldwide.  Strategic alliances between terminal operators are also emerging e.g. PSA’s purchase of a 20% stake in Hongkong International Terminals (Hutchison) earlier this year.

Many global operators are pressing for deregulation in countries around the world so that new markets are opened to them.  Port ‘reform’ and privatisation often pave the way for the acquisition of new terminals.  The big players, with their deep pockets and global experience are at a significant advantage when bidding for contracts.

Competition: impact of vessel size, logistics and shipping developments

Technological developments in container shipping, supply chain competition and shipping liner alliances are increasingly important factors in intensifying port competition.

• Although the commercial viability of large vessels is still being debated, their emergence has significant effects.  Firstly, it clearly affects the size of berths and depth of draughts.  A recent ESCAP[1] study suggests that by 2011, a total of 490 very large container vessels will be in service globally, out of which about 130 will be 10,000 TEU and above.  In some ports, it will not be possible to achieve the necessary physical adaptations.  Earlier in the year, an industry journal also highlighted how mega ships can sail directly from European and Chinese ports, avoiding the large transhipment centres in Asia, an attractive proposition for shippers preferring direct services.  Interestingly, a report for ESPO[2] noted that in Europe, new shipping liner service networks and larger ships force previously non-competing ports into head-on-head competition, including those located far away from each other.  This was particularly the case for transhipment traffic.  The proposed expansion of the Panama Canal to handle larger containerships is also expected to have significant implications for traffic flows to ports in the Americas and the Caribbean. 
  
  Unsurprisingly, the lion’s share of the world’s Super-Post-Panamax gantry cranes are operated by the global terminal operators.  With more very large containerships of 10,000 TEU and above likely to be delivered to shipping lines over the next 5 – 10 years, this is likely to further strengthen their position in the main gateway and hub ports.
  
  
•  Ports now have to deal with big companies that have a strong bargaining advantage.  The purchasing power of large shipping companies