As the outlook for global container port demand growth becomes more optimistic, Chinese players are on the acquisition trail in an aggressive and highly confident manner while traditional players remain cautious.
Major M&A deals are changing the landscape, with more to come, [ds_preview]according to the Global Container Terminal Operators Annual Report 2017, by shipping consultancy Drewry. The container port demand forecast is more positive than in last year’s report, exhibiting a 4 % CAGR (Compound Annual Growth Rate) and adding a further 152 mill. TEU of port throughput to the global total by 2021. This is a consequence of improved port throughput growth rates in the second half of 2016 and into 2017, and a more positive general global economic outlook.
Numerous risks and uncertainties remain at present, including tensions in the Middle East and Korean peninsula, the protectionist and unpredictable stance of the US administration, and the impact of Brexit, Drewry says. This might be one reason why the global container port capacity is projected to increase by a CAGR of 2.7 %, based on confirmed additions only. This is markedly lower than the forecast demand, and hence, average utilisation levels are expected to rise.
More than half of acquisitions made by Chinese players
Neil Davidson, Drewry’s senior analyst for ports and terminals says: »While there are certainly some encouraging signs for the demand growth outlook, the risk profile for terminal operators has increased and most of the traditional global/international players remain cautious. The exception to this are the Chinese port companies who are pursuing expansion and investment both at home and overseas in an unprecedentedly aggressive manner.«
M&A activity in the port sector is at a high level, Drewry data shows. About 3.1 bn $ worth of deals have been struck so far in 2017, driven by Chinese companies such as Cosco Shipping Ports and China Merchants Ports. In the last year, more than half of the acquisitions by global/international terminal operators have been made by Chinese players.
Cosco Shipping Ports has moved up Drewry’s operator league table as a result of the merger of Cosco and China Shipping, and will move further up in the coming years due to the acquisition of Noatum and OOCL’s terminals. The China Cosco Shipping group is projected to add the most capacity of any of the global/international terminal operators over the next five years.
»The Chinese players are more comfortable with risk than the established international operators right now, and have a geo-political strategy rather than a purely financial one. They are snapping up assets and opportunities and have the appetite and financial clout to take many more in the coming years,« adds Davidson.
