Daily Digital Magazine: Pg. 2 — March 11, 2019

Fitch Ratings believes port growth will moderate

Container volume growth will not outstrip global GDP to the same degree as in the past because many commodities once shipped in bulk already have shifted to containers.

   The rate of cargo volume growth seen at ports in past decades is likely to moderate in the future, predicts Fitch Ratings.
   The credit rating agency said in a new report on Monday that port traffic reflects a slowdown in China’s economy and a “maturing container shipping industry in the developed world, which has already reaped the benefits of shifting bulk goods into containers.”

Fitch Ratings believes port growth will moderate

Container volume growth will not outstrip global GDP to the same degree as in the past because many commodities once shipped in bulk already have shifted to containers.

Fitch Ratings believes port growth will moderate

Container volume growth will not outstrip global GDP to the same degree as in the past because many commodities once shipped in bulk already have shifted to containers.

 
Continued from previous page
   The rate of cargo volume growth seen at ports in past decades is likely to moderate in the future, predicts Fitch Ratings.
   The credit rating agency said in a new report on Monday that port traffic reflects a slowdown in China’s economy and a “maturing container shipping industry in the developed world, which has already reaped the benefits of shifting bulk goods into containers.”
   Fitch said the port industry is likely to see “growth much closer to that in global GDP than the much faster levels of the two decades before the financial crisis, when container throughput growth was a multiple of GDP.”
   “Fitch believes this shift towards containers is now maturing in developed markets as there are few goods left that can be containerized,” the report said. Between 2007 and 2011, Fitch said growth in port container throughput ranged from two to four times the rate of global gross domestic product growth. In the 2012 to 2017 period, container throughput slowed to one to two times the rate of global GDP growth, Fitch said.
   “In this lower-growth environment, overcapacity may become a lingering problem, resulting in stronger competition and price and revenue erosion,” it said.
   The growing size of ships means “smaller ports not equipped to handle the biggest ships may therefore suffer price wars if volumes shrink,” and in some parts of the world larger ships “may dictate that new port developments need to be closer to the open sea or a neighboring port may be better placed for growth than its competitor and take capacity away,” said Fitch.
   In the U.S., Fitch expects “port volume to remain consistent with the U.S. economy,” but added “individual ports with higher exposure to commodities or trading partners targeted by tariffs and trade policies may see greater volatility. As shipping consolidation continues in the next few years, M&A and changes to alliances could affect port service. Nonetheless, volumes are now at above-average levels.”
   It said port investment is expected to focus on “enhancements to accommodate larger vessels” and noted “investor interest in North American port assets appears to be increasing.”
   The report, titled “Ports-10 years in Infrastructure,” also said, “The increase in protectionist and anti-globalization rhetoric, particularly in the U.S. and U.K., represents a growing risk for the ports sector.”
   Fitch said automation and autonomous vehicles have the potential to “significantly reshape the way cargo movements are managed.” It estimated that roughly 3 percent of global container terminals are automated. In the U.S., longshore unions are resisting full automation of terminals.
   Global warming could result in more ship traffic through the Arctic Ocean to the benefit of some ports and the detriment of other ports. And rising sea levels mean the need “to prepare port infrastructure for increased incidences of flooding and inclement weather.”
We believe that the [container] industry’s supply-demand balance will benefit from a reduced appetite for ultra-large container vessels among the major carriers, some of which now have their eyes fixed on a bigger prize of becoming global logistics integrators.

Port management company International Container Terminal Services Inc. reported a consolidated volume of 9,736,621 TEUs in its 2018 fiscal year, which was a 6 percent increase.

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Fitch Ratings believes port growth will moderate

Container volume growth will not outstrip global GDP to the same degree as in the past because many commodities once shipped in bulk already have shifted to containers.

Mar 11, 2019 on Dec 27, 2018AmericanShipper.com

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Fitch Ratings believes port growth will moderate

Container volume growth will not outstrip global GDP to the same degree as in the past because many commodities once shipped in bulk already have shifted to containers.

Mar 11, 2019 on Dec 27, 2018AmericanShipper.com