On October 25th TradePoint Atlantic and Terminal Investment Ltd. (TIL) announced a joint partnership to build a 165-acre container terminal and on-dock rail facility. The proposed container terminal is the latest venture in the redevelopment of the site of the former steel mill on Sparrows Point in Baltimore. The new container terminal is destined to complement the multimodal logistics and industrial enterprises that have risen from the ashes on TradePoint Atlantic’s 3,300-acre site.
It is not hyperbole to say that the construction of a new container terminal on the U.S. East Coast is a big deal. Kerry Doyle, Tradepoint Atlantic’s managing director noting the importance of the deal said, “This is one of the most important and consequential announcements we have made since setting out with our initial plans to redevelop the former Sparrows Point Steel Mill.”
Doyle’s right. A new container terminal located on the Mid-Atlantic coast is a game-changer for Baltimore, TradePoint, and especially TIL. A foothold in a strategic location like Baltimore is a significant move for the world’s sixth-largest container terminal operator. TIL counts Mediterranean Shipping Corporation (MSC) – the world’s largest containership operator and the shipowner with the largest number of new vessels on order – as its anchor carrier client. And since opening its doors in 2000 the Geneva-based terminal operator has grown rapidly and now has a stake in over forty terminals around the world, generally in partnership with other terminal management entities.
The East Coast market share of container volumes heading to the U.S. is forecast to rise with the shift in the sourcing of Southeast Asia and the nation’s problematic relationship with China. And where the new container capacity will be added is problematic on the heavily populated U.S. Eastern Seaboard.
But this is not just about the East Coast, the U.S., or even North America, global terminal operators (GTOs) are searching the world over to find the right locations to add to their terminal portfolio. The GTOs are forecasting a new wave of containers heading their way and they are seeking new opportunities for investment.
Watershed for GTOs
In many respects, this post-pandemic period could well be a watershed moment for the twenty or so GTOs, which constitute a very small club with enormous clout in container shipping. Unsurprisingly, like the containership operators, GTOs have experienced a tumultuous yet enormously profitable stretch during the recovery from the COVID-19 pandemic over the last two years.
But there are signs the historically profitable run is coming to an end. The deteriorating economic and geopolitical condition has dampened the container trade outlook. Freight rates have already nose-dived.
There are already some telling figures. The Ningbo Container Freight Index (NCFI) a measure of container freight rates by route, pegged the composite Index at 1390.95 down 20.79% for month-to-month and minus 65.68% for the year-to-year tally. The composite Shanghai Containerized Freight Index (SCFI) for November 11, 2022, was off 135.92 points from the November 4, 2022, rate. By way of comparison, the SCFI…