Are lines selling off terminal assets to raise cash?

Drewry’s newly released annual report on the global container terminal industry finds that the strategies of the major shipping lines regarding terminal ownership are surprisingly varied.

“Much has been said and written about the financial challenges facing most major shipping lines, and a number of them have been selling some of their container terminal assets in order to raise cash,” it said. “It is tempting to assume that this is a common strategy for all carriers - but this is not the case.”

The publication looked at the activities of the 16 carriers that make up the big four global alliances (2M, Ocean Three, G6 and CKYHE).

“Assessing their strategies with regard to terminal ownership is complex due to the varying approaches each has. For example, Maersk Line has no terminal interests as all activity of this nature is carried out by sister company APM Terminals, operating at arm’s length.

“Leaving aside Maersk, when it comes to terminal ownership, the remaining 15 carriers by no means conform to the herd mentality often levied at them when it comes to ordering bigger ships.”

It also noted that there is a dilemma faced by lines.

“Terminals are generally attractive assets and so have great value in terms of raising money in the short term if sold off,” it said. “Yet at the same time, owning terminals may well be a profitable part of a line’s activities, so a good business to stay in for the long term - even perhaps to expand further into.

“There is also the fact that terminals often provide access to port capacity in key locations in a line’s network, and so are strategically important assets (even if only run as a cost centre rather than a profit centre).”

All of which boils down to being another Catch 22 for the lines.