At least a 40% drop in container terminal capacity expansion predicted over the next five years due to pandemic volume contraction, according to Drewry. Investment in container port capacity is expected to tumble over the next five years following coronavirus-induced global trade slowdowns.
According to the latest Global Container Terminal Operators Annual Review and Forecast report published by Drewry, container port capacity expansion will contract by at least 40% over the next five years in the wake of COVID-19 economic contractions that have hit container trade volumes.
The shipping consultant expects global container terminal capacity to grow at an average annual rate of 2.1% over the next five years, equating to an additional 25 million TEU per year.
“This is well below the capacity growth seen over the past decade, when the average annual increase was more than 40 million TEU a year,” noted Drewry.
Port throughput is projected to grow at an average annual rate of 3.5% over this period from 801 million TEU in 2019 to reach 951 million TEU by 2024.
Drewry also warned a resurgence in COVID-19 cases causing further widespread economic lockdowns over the study period was a major risk for the container sector and could see forecasts further revised downwards.
“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,” said Eleanor Hadland, author of the report and Drewry’s senior analyst for ports and terminals.
As a result of the pandemic, operators and port authorities are actively reviewing delivery of planned projects in the light of the drastic slowdown in economic growth and uncertain short-to-medium-term outlook.
“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,” added 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.”
Leading global operators had already scaled back investment plans in recent years even before the coronavirus crisis, with only limited greenfield projects in the pipeline. Many instead had been eyeing the potential of further terminal automation.
Currently more than three quarters of automated terminals are operated by the world’s leading port companies. Of the 22 automated terminal projects currently planned including both greenfield and brownfield, more than 80% will be delivered by this group of leading operators.
“Looking back at 2019 performance, the group of 21 companies classified by Drewry as global/international terminal operators (see Top 5 table above) out-performed the market, with combined equity-adjusted volumes growing 4.3% compared to global growth in port throughput of 2.1%,” noted Drewry.
“However, this headline figure disguises strongly divergent growth patterns. In 2019 six out of 21 global/international terminal operators reported lower volumes on an equity-adjusted basis.”
Hadland said divestment of non-core assets, and the fall-out from the US-China trade war were key factors behind the results.
“Despite global throughput remaining flat year-on-year PSA retained its top spot in Drewry’s rankings,” she said.
“By contrast, Hutchison Ports saw volumes fall by more than 2% and dropped back to fourth place. 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 the table to take second and third place respectively.”
Source: Lloyd’s
