ITMMA - University of Antwerp and Antwerp Maritime Academy, Belgium
Dept. of Global Studies & Geography, Hofstra University, New York, USA
European Conference on Shipping & Ports
– ECONSHIP 2011
Chios, Greece, June 22-24 2011
The Charthouse Group

1) Emergence
2) Entry and Expansion
Global Terminal Operators: An Emerging
Geography of Intermodal Assets
3) How Global?
4) Rationalization?
The Charthouse Group

The Charthouse Group

Typology of Global Port Operators: Three Sides of the same Coin
Stevedores
Horizontal integration
Port operations is the core business; Investment in container terminals for expansion and diversification.
Expansion through direct investment.
PSA (Public), HHLA (Public),
Eurogate (Private), HPH
(Private), ICTSI (Private), SSA
(Private).
Maritime Shipping
Companies
Vertical integration
Financial Holdings
Portfolio diversification
Maritime shipping is the main business; Investment in container terminals as a support function.
Financial assets management is the main business;
Investment in container terminals for valuation and revenue generation.
Expansion through direct investment or through parent companies.
Expansion through acquisitions, mergers and reorganization of assets.
APM (Private), COSCO
(Public), MSC (Private), APL
(Private), Hanjin (Private),
Evergreen (Private).
DPW (Sovereign Wealth
Fund), Ports America (AIG;
Fund), RREEF (Deutsche
Bank; Fund), Macquarie
Infrastructure (Fund), Morgan
Stanley Infrastructure (Fund).
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Port
Vertical and Horizontal Integration: Moving along the Foreland and Hinterland
Horizontal
Integration
Vertical
Integration
Maritime Services
Inland
Port
Port Services
Inland Services Intermediate hub
Port Holding
Terminal
Port
Rail / Barge
Distribution Center
Maritime
Shipping
Port Terminal
Operations
Inland Modes and Terminals
Commodity Chain
Distribution
Centers
The Charthouse Group

Top Twelve Global Container Terminal Operators in Equity-Based Throughput
APL
HHLA
CMA-CGM
Eurogate
SSA Marine
Evergreen
MSC
COSCO
APM Terminals
DPW
Hutchison Port Holdings
PSA
0
3,6
4,4
4,6
6,1
6,3
7,2
8,2
10,9
10
31,1
31,5
32,2
20 30
Million TEUs (2009)
40
45,0
50
The Charthouse Group

Number of Terminals and Total Hectares
Controlled by the Twelve Largest Port Holdings
CMA-CGM
ICTSI
Hanjin
Cosco Pacific
Shanghai International Port…
SSA Marine
Ports America
Eurogate
APM Terminals
Dubai Ports World
Port of Singapore Authority
Hutchison Port Holdings
412
466
559
686
734
939
1 270
1 646
2 038
2 347
2 604
3 248
0 1 000 2 000
Hectares (2010)
3 000
Terminals
14
16
13
14
10
20
50
38
47
11
9
42
4 000
The Charthouse Group

The Charthouse Group

Factors behind the Interest of Equity Firms in
Transport Terminals
Asset (Intrinsic value)
Source of income
(Operational value)
Diversification
(Risk mitigation value)
Globalization made terminal assets more valuable.
Terminals occupy premium locations (waterfront) that cannot be substituted.
Traffic growth linked with valuation.
Same amount of land generates a higher income.
Terminals as fairly liquid assets.
Income (rent) linked with traffic volume.
Constant revenue stream with limited, or predictable, seasonality.
Traffic growth expectations result in income growth expectations.
Sectorial and geographical asset diversification.
Terminals at different locations help mitigate risks linked with a specific regional or national market.
The Charthouse Group

Major Port Terminal Acquisitions Since 2005
Date
2005
Early 2006
Mid 2006
Mid 2006
End 2006
Early 2007
Mid 2007
July 2007
Transaction
DP World takes over CSX World Terminals
PSA acquires a 20% stake in HPH
DP World acquires P&O Ports
Goldman Sachs Consortium acquires ABP
AIG acquires P&O Ports North America
Ontario Teachers’ Pension Fund acquires OOIL Terminals
RREEF acquires Maher Terminals
Goldman Sachs acquires a majority share in Carrix, the parent company of SSA Marine
Price paid for transaction compared to EBITDA
14 times
17 times
19 times
14.5 times
24 times
23.5 times
25 times
Not disclosed
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The Strategies of Terminal Operators
Financial Assets Large financial assets and the capacity to tap global financial markets. Terminals as equity generating returns.
Managerial Expertise Experience in the management of containerized operations.
IT and compliance with a variety of procedures.
Gateway Access
Leverage
Traffic Capture
Global Perspective
Establishing hinterland access.
Creation of a “stronghold”.
Provides a stable flow of containerized shipments.
Development of related inland logistics activities.
Negotiate with maritime shippers and inland freight transport companies favorable conditions.
Some are subsidiaries of maritime shipping companies.
Capture and maintain traffic for their terminals.
Comprehensive view of the state of the industry.
Anticipate developments and opportunities.
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World’s Main Intermediate Hubs and Markets,
2008
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The Charthouse Group

Dimensions of the Global Orientation of Terminal
Operators
The Charthouse Group

Geographical Coverage: Container Terminal
Surface of the World's Major Port Holdings, 2010
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Container Terminals of the World's Four Major
Port Holdings, 2010
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Container Terminals of Some of the World's
Minor Port Holdings, 2010
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Regional Share in the Terminal Portfolio of the
Twelve Largest Global Terminal Operators
(Hectares, 2010)
CMA-CGM
ICTSI
Hanjin
Cosco Pacific
Shanghai International Port…
SSA Marine
Ports America
Eurogate
APM Terminals
Dubai Ports World
Port of Singapore Authority
Hutchison Port Holdings
0% 20% 40% 60% 80% 100%
Africa
Australia
North America
South America / Caribbean
Pacific Asia
South Asia / Middle East
Mediterranean
Europe Atlantic
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The Charthouse Group

Potential Rationalization Strategies followed by
Global Terminal Operators
Intensified cost control
Review, postponement and cancellation of terminal projects
More selective investment decisions
Complex ownership and partnership structures to hedge risks
Divestment in terminals
Revisiting inland strategies
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Intensified cost control helped to keep margins level
GCTO
HPH
PSA
APMT
DPW
Eurogate
2008
60.6%
29.8%
18.4%
40.8%
28.3%
2009
60.3%
28.9%
24.4%
38.0%
25.3%
2010
58.6%
NA
25.3%
40.3%
26.5%
Note: EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization.
Source: company websites (2010 figures) and Drewry 2010 (2008 and 2009 figures)
Revision of investment plans, equipment maintenance schedules, asset deployment strategies and renegotiation of concession agreements and throughput levels .
The Charthouse Group

Hedging the risks
Inter-firm Relationships in the Three
Main Container Ports of the Rhine-Scheldt Delta, 2010
HUTCHISON PORT
HOLDINGS
Majority shareholding
ECT
100% Delta Terminal
100%
50%
Waal- and
Eemhaven
Euromax phase 1
Rotterdam World Gateway
(Maasvlakte 2)
Operational by 2013
APM Terminal Maasvlakte
Terminal 1
(Maasvlakte 2)
Operational by 2014
ROTTERDAM
Minority
Shareholding (4)
50%
60%
30%
10%
20% PSA
100%
MSC
NYK
CYKH
Alliance
New World
Alliance
50%
50%
PSA
(Antwerp/
Zeebrugge)
100%
50%
50%
100%
42.5%
DP World
ZIM Line (1)
Cosco Pacific
CMA-CGM (2)
35%
10%
20%
10%
65%
100%
100%
APM Terminals
(AP Moller Group)
Shanghai
International Port
Group (SIPG)
100%
75%
25%
ANTWERP
MSC Home terminal
North Sea Terminal
Europe Terminal
Deurganck Terminal
Antwerp International
Terminal (AIT)
DP World Delwaidedock
Antwerp Gateway
CHZ
Albert II-dock north
APM Terminal
ZEEBRUGGE
Shipping Line
(Global) Terminal
Operator
Terminal
PORT
Financial Holding
The Charthouse Group

APL
NYK
100%
100%
Mitsui OSK 100%
Evergreen
Yangming
50%
40%
MSC
OOIL
K-Lines
Hyundai
Cosco Pacific
Hanjin
50%
100%
100%
100%
51%
60%
Global Gateway South
Yusen Terminals
TraPac Los Angeles Berth
136
APM Terminals Pier 400
Evergreen Terminal
West Basin Container
Terminal
LOS ANGELES
LONG BEACH
Terminal C60
Terminal A
Long Beach Container
Terminal
Pier G Berth
California United Terminals
Pacific Container Terminal
Total Terminals International
Hedging the risks
Inter-firm Relationships in the Three
Main Container Ports of North America, 2010
Ontario Teachers'
Pension Plan
100%
Global Container
Terminals
100%
50%
60%
50%
49%
40%
APM Terminals
(AP Moller Group) 100%
100%
Deutsche Bank
RREEF
100%
Maher Terminals 100%
Ports America
Stevedoring
Services of
America
Macquarie
Infrastructure
100%
100%
AIG Highstar
Capital
New York Container Terminal
Global Terminal and
Container Services
APM Terminals Port
Elizabeth
Maher Terminal
Port Newark Container
Terminal
NEW YORK
Shipping Line Terminal Operator Terminal PORT Financial Holding
The Charthouse Group

Modern
Terminals
Hedging the risks
Inter-firm Relationships in the
Main Container Ports of the Pearl River Delta, 2010
65%
20%
25%
APM Terminals
(AP Moller Group)
China Shipping
Group
ZHUHAI
Zhuhai International
Container Terminals
50%
20%
40%
50%
GUANGZHOU
Guangzhou South China
Oceangate Container
Terminal
Nansha Container Terminal
Nanhai International
Container Terminals
Guangzhou Huangpu
Xingang Terminal
Guangzhou Huangpu Xinsha
Terminal
Dongguan Container
Terminal
Shenzhen Yantian
Port Group
30%
Yantian International
Container Terminals
Da Chan Bay Terminal One
Shekou Container Terminals
Chiwan Container Terminal
SHENZHEN
70%
35%
HUTCHISON PORT
HOLDINGS
Shenzhen Municipal
Government
80%
75%
China Merchants
Holdings International
DP World
39%
41%
60%
49%
49%
50%
33%
67%
100%
66%
55%
Cosco Pacific
Guangzhou Port
Group
PSA
10%
Moderns Terminals
COSCO-HIT Terminal
Hong Kong International
Terminals
Asia Port Services
DP World Hong Kong
Asia Container Terminals
HONG KONG
10%
20%
33%
Shipping Line Terminal Operator Terminal PORT Financial Holding
The Charthouse Group

Changes in the Terminal Portfolio of APM
Terminals Between April 2008 and April 2011
= investment/entry
= divestment/exit
April 2008-April 2011
• April 2011 : Acquisition of an 80% share in Poti Sea Port (Georgia - Black Sea) from Ras Al Khaimah Investment Authority (RAKIA).
• April 2011 : Selected to run “Terminal Muelle Norte” in the port of Callao (at full capacity 2.9 million TEU).
• March 2011 : 33 year concession for the design, financing, construction, operation and maintenance of the new Moin Container Terminal (TCM) in Costa Rica.
• Dec 2010 : Idea launched to construct a new container terminal at the Port of Monfalcone in the North Adriatic.
• Oct 2010 : Signing of a 25‐year concession agreement for the operation of the Port of Monrovia in Liberia. Operations officially start ed in Feb 2011.
• Aug 2010 : Acqusition of 50% of the shares in Brasil Terminal Portuario (BTP), a container terminal being built in Santos. Partner is Terminal Investment Limited.
• July 2010 : Terminal Link, CMA CGM’s subsidiary dedicated to container terminal investment, increased its shares in Nord France Termina l International o.u.
(NFTI) from 30% to 91% through the acquisition of APM Terminals 61% share. The other 9% remain owned by the Port Authority of Dunkirk.
• July 2010 : Increase of share in Mobile Container Terminal LLC (MCT) from 80% to 100% through the acquisition of Terminal Link’s 20% share.
• June 2010 : APM Terminals and the Virginia Port Authority enter into an agreement that will lease APM Terminals’ Virginia facility to VPA for a term of 20 years.
APM Terminals will continue to own the facility and its principal capital assets.
• May 2010 : APM Terminals and Shanghai International Port Group (SIPG) finalized an agreement for SIPG to acquire a 25% share of APM Te rminals Zeebrugge for
EUR 27.16 million.
• May 2010 : Hanjin Pacific takes over APM Terminals facilities at Piers 76 and 77 in Kaohsiung, Taiwan.
• Dec 2009 : Announcement of extension of Aqaba Container Terminal (ACT) which will increase annual container throughout capacity to 2 million TEU.
• May 2009 : APM Terminals partner in Bolloré Africa Logistics consortium to develop a container terminal at Port of Pointe‐Noire in Congo (27‐year concession).
• February 2009 : APM Terminals (Jamaica) concludes operations management contract with the Kingston Container Terminal (KCT). KCT is owned by the Port
Authority of Jamaica and has been managed by APM Terminals since 2001. Management is transferred back to the port authority.
•
June 2008 : Opening of APM Terminals Apapa, Lagos, Nigeria
• April 2008 : APM Terminals has agreed to sell its 20% share in Qasim International Container Terminal Pakistan Limited (QICT), located in Karachi, Pakistan to DP
World. DP World is currently the operator and majority shareholder of the facility.
• April 2008 : APM Terminals assumes management and operational control of the container facility at the Port of Pecém in Northeastern Brazil.
• April 2008 : Vancouver Fraser Port Authority has selected a joint venture between APM Terminals North America and SNC‐Lavalin as the pre ferred proponent for the Terminal 2 Project.
The Charthouse Group

Changes in the Terminal Portfolio of DP World
Between April 2008 and April 2011
= investment/entry
= divestment/exit
April 2008-April 2011
• Feb 2011 : Vallarpadam terminal in Cochin – India officially opened.
• Jan 2011 : New container terminal in Port Qasim near Karachi in Pakistan officially opened.
• Dec 2010 : Marine terminal operations at Abu Dhabi’s Mina Zayed will be handled by Abu Dhabi Terminals (ADT) instead of DP World
• Dec 2010 : DP World Limited and Citi Infrastructure Investors (CII) formed a strategic partnership to invest in, operate and manage DP World’s five marine terminals in Australia (Brisbane, Sydney, Melbourne, Adelaide and Fremantle). This transaction sees DP World monetise 75% of its shares in DP World Australia. Management and staff of DP World Australia are retained.
• Nov 2010 : Official opening of Phase 1 of the expansion of DP World Tarragona, Spain.
• Oct 2010 : Agreement to double the size of DP World’s container operations in Sokhna Port, Egypt.
• Oct 2010 : DP World Callao in Peru officially inaugurated (concession was granted in July 2006).
• June 2010 : Concession for the port of Maputo in Mozambique extended to 2033 with an option to extend for a further ten years.
• March 2010 : Major work starts at DP World London Gateway, UK.
• Jan 2010 : Official opening of Saigon Premier Container Terminal (SPCT) in Ho Chi Minh City, Vietnam.
• Aug 2009 : DP World and Odebrecht enter into a partnership to acquire a majority stake at Embraport, Santos, Brazil.
• June 2009 : DP World takes over operations at the Port of Djen Djen in Algeria (30-year operating concession).
• Feb 2009 : Opening of the Doraleh Container Terminal, Djibouti.
• July 2008 : DP World to operate and develop the container facilities at the Port of Aden.
• June 2008 : DP World acquires a 60% stake in Contarsa Sociedad de Estiba SA, concessionaire for Tarragona Container Port Terminal, Spain.
• May 2008 : DP World increases ownership of Chennai Container Terminal, India from 75% to 100%.
The Charthouse Group

Conclusion: A Globalized but Highly Regionalized
Industry
Four major terminal operators (HPH, APM, PSA and DPW) have a strong globally-oriented portfolio; Regional orientation remains prevalent.
More selective investment policy.
Cancellation or postponement of terminal projects.
Sale, equity swaps & divesture.
Rationalization inevitably leads to concentration?
The Charthouse Group