Although the mega-terminal operators represent an increasingly higher percentage of the global container throughput, there nevertheless is a new generation of terminal operators making waves. The question is, whether a decade from now, will the same group of TOs occupy the top spots?
There is no doubt that among terminal operators the big get bigger and the global share of container throughput among the top ten is rising, nevertheless it is a new generation of terminal operators that are making waves. And given time it might turn out to be a tsunami’s worth of throughput.
There are a number of examples of just how quick a small operator can be a global mainstay. Manila based-ICTSI was founded in 1987 and didn’t open its first foreign concession until 1994 (Terminal 5 Port of Buenos Aires, Argentina). In 2015 ICTSI handled nearly 7.8 million TEUs from thirty terminal concessions. This places the company in the top fifteen as a terminal operator. A feat accomplished in under thirty years or roughly the average length of time of a concession. Their rapid expansion was accomplished by developing terminals in emerging markets, in one respect skipping around the mega-terminal operators and looking for opportunities with few competitors.
Kicking off the Future?
SIPG (Shanghai International Port Group), founded in 2003 (listed on Shanghai stock exchange in 2006), is a little different as it is the “municipal” terminal operator for the Port of Shanghai (initially a state controlled and CMSN company). This meant it was almost immediately a major player and in 2015 handled nearly 18 million TEUs out of Shanghai’s leading 36.5 million TEUs. Nearly all SIPG’s development is concentrated in the Shanghai region, but this could very well change launching SIPG as a global group to be reckoned with. Oddly it begins with the 2022 World Cup in Qatar (see AJOT Matt Guasco blog). Qatar plans to build nine new stadiums and renovate three existing facilities spreading the games among twelve venues in seven cities.
In July Qatar signed an MOU (Cooperative Framework Agreement) with Shanghai Port. Under the agreement, a trade center in Qatar would also be maintained not only to coordinate the distribution of cargo for the World Cup but also to serve as a resource for the countries’ other building projects. The main resource is a new 600-acre SIPG built Yangshan Port and is scheduled to be the primary staging area for World Cup activity in China. The question is whether this becomes the staging area for global investment by SIPG.
Middle East Staging Ground
Although DP World is now considered to be a charter member of the pantheon of mega-global terminal operators like Hutchinson Port Holdings, PSA or APM Terminals, the group wasn’t founded until 2005 and didn’t go public on the Dubai stock exchange until 2007. Now the Group has over 60 terminals and is handling over 60 million TEUs spread across the globe.
Although it is older than some of the other terminal groups, the Gulftainer Group from a global perspective is a new player. Like DP World, it has parlayed the core Middle East business into a global venture. The Sharjah, UAE-based TO is billed as “the largest, privately owned, independent port management company, in the world.” It was formed in 1976 by Crescent Enterprises to operate and manage the container terminal in Sharjah. In 2013 it took a major leap with the acquisition of a 51% state in Saudi Arabia’s Gulf Stevedoring Contracting Company (GSCCO), which enabled Gulftainer to fully manage three Saudi terminals in Jeddah and Jubail. Thus overnight, Gulftainer became the largest port operator in the Middle East and controlled 40% of the terminals capable of handling containerships of 12,000 TEUs or over.
The TO’s aggressive strategy has been built around looking for niche opportunities with high upsides. Back in 2012 the company’s goal was tripling the number of terminals to 35 and increasing throughput to 18 million by 2020. In 2016, the company, after registering a 4% growth in 2015, expressed that it could through both organically and through leveraging current contracts triple its volumes by the end of 2026.
Perhaps the most significant expression of this confidence is Gulftainer’s venture in Port Canaveral. In June of 2014, Gulftainer inked a 35-year concession to develop a greenfield terminal in the Floridian port.
It was a remarkable agreement given the problems DP World had in attempting to secure the former P&O terminal interests in the U.S.
The deal called for an investment of $100 million in the terminal and related works, spread on a 20-acre footprint serviced by two gantry cranes, with an estimated capacity of 200,000 TEUs. In January the terminal secured the “Blue Stream” service calls that will link Central America to Port Canaveral with onward service to the United Kingdom and Europe. Blue Stream is operated by StreamLines N.V. part of the Seatrade Group, which specializes in reefer freight. The service employs a rotation of five ships of 1300 TEUs with 250 reefer plugs. Although these ships are not mega-vessels that grab headlines, this service represents an important first phase in establishing Port Canaveral and GT USA as a player in the emerging market in the Caribbean and South America.
Joe Cruise, Commercial Manager for GT USA, in an interview with AJOT, explained, “land is our friend” stating that while the current development is on 20 acres, potentially there is another 80 acres available. Even on the existing footprint, the throughput could be as high as 750,000 TEUs with changes in equipment, larger gate complex and other landside developments.
But the real investment value in the Port and terminal complex is in the land. Simply put, this is a large amount of acreage located, “in” the South Atlantic with a very short pilotage to open water - basically land banked for development as the economic situation dictates. Cruise also pointed out that the Port Canaveral, which is situated in a natural lee, has no air draft restriction and is blessed with a sandy bottom and that can be easily dredged to accommodate increasingly larger ships. What is the potential of GT USA’s terminal and the Port Canaveral? Well as Cruise says, that in the future the State and region may have to decide whether it will be a “niche, regional or national gateway.” Basically every possibility is on the table.