Financial markets are in disarray, political instability is at every turn, ocean freight rates are collapsing, and ship rotations are curtailed. Are the Terminal Operators “boxed in” by an industry predicated on global trade growth? Or will emerging markets buoy growth for global Terminal Operators? Despite it all, there is still considerable terminal expansion underway with TOs begging the question, how far away is the double Century - 100 terminals and 100-million teu throughput?By George Lauriat, AJOTBoxed In? The global Terminal Operators (TOs) are boxed into difficult market conditions. The world’s post-recession rocking horse has the containership operators pitching between the “best and the worst times,” in so much as a blink of an eye, completely different for a industry experienced with long rollers and adverse to short chop. Added to the economic maladies is the rapid deployment of a new generation of mega-containerships that at upwards to 20,000 teu, dwarf even those ships of a few years ago. According to the industry tracker, Alphaliner, there are 63 newbuildings of over 10,000 teus scheduled for delivery during the next 14 months. With such a huge increase in the inventory of mega-boxships and accompanying slots, freight rates plummeted, routes cut, slow steaming instituted and the consolidation (Re: death roll) of carriers looms as a very distinct possibility. These are troubling developments for a capital-intensive industry that must look long to meet short term challenges. APM Terminals Vice President and Chief Financial Officer, Christian Moller Laursen, at the Port Finance International Conference held in London last month, outlined in his speech that with the prospect of global port container throughput currently around 600 million TEUs doubling within 15 years, and the increase in boxships in excess of 10,000 Teus, port and terminal operations facing major challenges in both “capacity and productivity,” that will be difficult to reconcile in an era noted for being risk adverse. Hedging the betWith such wild swings in the containership business, it’s hard for any sane port pundit to take a sober look at the future. Yet investing in the container terminal business is a long-term commitment. The global TOs, like any investor, want to balance growth against risk. They like to hedge their bets against economic (and political) calamity by diversifying their portfolio. One of the easiest ways for the TO to diversify the portfolio is to take in partners to spread the risk. Nearly all the major terminal operators have numerous partners in their projects. For example, using an “equity” approach, Singapore-based PSA International, is the world’s largest TO accounting for over 51 million teus in 2010, far ahead of Hong Kong’s HPH (Hutchinson Port Holdings, part for the Hutchinson Whampoa group) at 36 million teus in 2010. But HPH with a gross throughput of 75 million teus is much lager than PSA’s throughput of 61 million teus. Another terminal operator, China Merchants Holdings International Co., Ltd. (CMHI), has even a greater disparity between their “equity” based throughput and gross throughput. CMHI in 2010 had an equity throughput of 17 million teus but a gross of 52 million teus. In many respects this makes CMHI’s business model one of a “terminal investor” than a terminal owner. There are a number of real advantages to partnership. It enables the portfolio to be spread, not only on the books, but geographically as well. Engaging partners, that include local authorities, also mitigates risks based on political and social issues of the locale. Entangling AlliancesAnd there are plenty of partners to choose from. Strangely, other terminal operators are often logical partners in new ventures requiring high commercial leverage and apples-to-apples expertise. But the containership operators themselves are often the best partners in terminal ventures as they bring ship calls to the deal. With the major operators, this can me