The impact of the pandemic coming on top of trade wars and changes in shipping patterns are expected to have a long-term impact on the container ports operations. A new report from global shipping consultancy Drewry forecasts that the pace of container port capacity expansion will contract by at least 40 percent over the next five years.
The Global Container Terminal Operators Annual Review and Forecast projects that global container terminal capacity will grow at an average rate of just over two percent for the next five years. Drewry says that equals an addition of just 25 million TEUs a year. By comparison, the average annual growth over the past 10 years was more than 40 million TEUs.
“Our five-year forecast for global container port handling has been cut back drastically due to the COVID-19 pandemic, and the risks remain heavily weighted to the downside,” says Eleanor Hadland, Drewry’s senior analyst for ports and terminals and author of the new report.
Port throughput is projected to grow at an average annual rate of 3.5 percent over the next five years this from 801 million TEU in 2019 to 951 million TEU by 2024. But risks remain to even this outlook according to Drewry should a resurgence in COVID-19 cases cause further widespread economic lockdowns over the forecast period.
As a result of the pandemic, Drewry reports that operators and port authorities are actively reviewing the delivery of planned projects. The drastic slowdown in economic growth and the uncertain short-to-medium-term outlook is causing ports to review their planning.
“Major expansion projects and greenfield projects that are already under construction and due for commissioning in 2020 and 2021 may face minor delays due to interruptions to global supply chains during 1H20,” says Hadland. “However, for projects which are currently at an earlier stage of planning, particularly where construction contracts and equipment orders have not yet been tendered, suspension or cancellation is more likely if market conditions remain poor.”
In recent years, Drewry reports that global operators had already scaled back investment plans, with only limited greenfield projects in the pipeline. Automation, however, is one area where ports had continued to invest, with the largest port operations leading the way. More than three-quarters of automated terminals are currently run by global and international operators, and of the 22 automated terminal projects currently planned (including both greenfield and brownfield), more than 80 percent will be delivered by the leading operators.
Looking back at 2019 performance, the group of 21 companies classified by Drewry as global/international terminal operators out-performed the market, with combined equity-adjusted volumes growing 4.3 percent compared to global growth in port throughput of 2.1 percent. However, according to Drewry, this figure disguises strongly divergent growth patterns. In 2019, six out of 21 global/international terminal operators reported lower volumes on an equity-adjusted basis.
Despite global throughput remaining flat year-on-year, PSA retained its top spot in Drewry’s rankings. By contrast, Hutchison Ports feel back to fourth place as it saw volumes fall by more than 2 percent. DP World, with 2019 throughput only marginally above 2018 levels, also dropped a position. China Cosco Shipping and APM Terminals both reported strong growth in volumes, and both moved up to take second and third place respectively in Drewry’s ranking of the leading port operators.
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