Drewry: Good News and Bad News for Container Ports in 2019

The global container terminal industry is expected to remain a very profitable business in 2019, with its throughput set to exceed 800 million TEU generating an EBITDA worth over USD 25 billion, according to UK-based shipping consultancy Drewry.
Drewry: Good News and Bad News for Container Ports in 2019 1

The projection is being made despite the upcoming headwinds the sector faces from growing geopolitical uncertainties like US-China tariff wars and Brexit. As such, Drewry anticipates to see a softening of the global container port demand growth rate, down from an estimated 4.7 pct in 2018 to just over 4 pct in 2019. Nevertheless, 4 pct is still very respectable and adds over 30 million TEU to the world total.

“We can expect to see continued caution by investors and operators in terms of investment in new capacity because returns are not what they used to be. Even Chinese players may be affected if China’s economy slows markedly,” Drewry said.

“Greenfield expansion projects will be the area hardest hit. Nevertheless, a global capacity addition of over 25 million TEU can be expected in 2019, representing a spend of ~USD 7.5 billion.”

On the positive note, the sector will not have to deal with significant increases in maximum containership sizes this year, as physical dimensions of the vessels remain the same despite some upticks in maximum TEU intake.

However, the shipping consultancy believes there will be mounting pressure on ports from cascading of vessels across all trade routes, especially for berths that are able to handle the biggest ships, resulting in increased obsolescence of older berths.

Moving forward port operators and port authorities are expected to continue to look into the opportunities offered by digitization/automation/blockchain/smart ports/IoT/hyperloop as well as expanding their supply chain portfolio as they endeavor to diversify revenue sources.

In doing so, they are likely to face fierce competition from top tier liner shipping companies which are trying to do the same thing, Drewry concludes.

Press Releases: Drewry

Photo Courtesy: Drewry

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