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Alliances of shipping companies become large hybrid groups of dockers and carriers.
The emergence of the mega-liner alliances coupled with large-scale M&A in the container shipping sector is changing the nature of the terminals business as well. For the last 15 years, Drewry has published its acclaimed analysis of the container terminal industry and its leading global and international players in the Global Container Terminal Operators Annual Review and Forecast.
Drewry puts the companies it classes as global/international terminal operators into three sub-categories: stevedores, carriers and hybrids. In this year’s report, a key finding is the rise of hybrid global terminal operators.
While the stevedores remain the largest category, it is the hybrids that have shown the strongest growth over the last few years, while the pure carrier portfolio volumes have declined.
The primary business of the stevedores is port and terminal operations, aiming to maximise profits by achieving greater operational efficiency, commercial advantage and economies of scale by operating an international container terminal network.
Those terminal portfolios in the carrier category are ones where the core business is container shipping and the container terminal networks exist primarily to support the liner shipping activity. Terminals that often run as cost centres are integrated with a global shipping services network and are generally dedicated to the specific needs of an individual carrier and its alliance partners, at least at the outset.
Global/international hybrids meanwhile are companies for which the main activity is container shipping, but one where a separate terminals division exists as a business unit. These companies generally handle third-party traffic as well as the associated liner shipping business, and are generally more profit centres than cost centres. However, the extent to which the terminal divisions operate independent of their parent shipping line varies (that is, not all hybrids are the same), and the dividing line between stevedores and hybrids on the one side, and carriers and hybrids on the other, is not distinct.
he operators and their categories as laid out are already undergoing change. Hanjin is no more, and OOCL is being acquired by China Cosco and so will move across to the hybrid category. When the three Japanese lines merge in 2018 and their international terminal portfolios come together as part of this process, the international MOL and K Line terminals may well join NYK in the hybrid category. Lastly, the recent corporate restructuring and strategic change by APM Terminal’s parent AP Moller suggests that in the future, APMT will operate in closer conjunction with Maersk Line, moving it more towards the hybrid category.
This will leave just Evergreen, Yang Ming and Hyundai with terminal portfolios in the carrier category. The two Taiwanese lines have done little with their terminal portfolios over the last few years, perhaps due to financial pressures on the parent lines. Hyundai meanwhile has been actively mopping up former Hanjin terminal stakes, and it remains to be seen what strategic direction the enhanced Hyundai portfolio will be taken in. Highly relevant in this is Hyundai’s relationship with the 2M.
When looking at the three alliances, it is clear that 2M and Ocean members have far more substantial terminal interests than The alliance members (see Table 2). The Ocean alliance in particular is seeing a greater coalescence of terminal interests, with the acquisition of OOCL by China Cosco and an MoU between CMA CGM and China Cosco designed to foster cooperation between their two terminal portfolios.
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