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Sept.19. 2016

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INTERNATIONAL MARITIME IMPORTING | EXPORTING | PORTS | CARRIERS | BREAKBULK | GLOBAL LOGISTICS 18 THE JOURNAL OF COMMERCE SEPTEMBER 19.2016 By Turloch Mooney THE REIGN OF container terminals as supply chain profit leaders is coming under heavy pressure as poor throughput g row th, excess capacit y and declining revenue become increasingly common. With a generally poor outlook for global trade, operators are concerned over busi- ness prospects in the short to medium term, while fears of overexposure to global regions battling a high probability of overcapacity cloud the longer term. One major concern: Having exhausted numerous other means of reducing costs, struggling liner shipping companies are focusing more intently on bringing down terminal handling bills. This could signifi- cantly dent the healthy return on capital and strong profit margins terminal opera- tors have enjoyed for decades. As the midyear reporting season unfolded over the past month, there were increas- ing signs of stress, and little relief expected through the remainder of the year, at least. For DP World, a 1.4 percent drop in com- parable year-over-year throughout in the first half precipitated the slowing of capacity expansion plans at its flagship transshipment hub at Jebel Ali in the United Arab Emirates, which suffered a 6 percent fall in volumes during the first six months of the year. DP World still managed growth in comparable revenue and net income of 2.5 per- cent and 4.3 percent in the six months to June and did not announce any significant reduction in projected capital expenditure for the remainder of the year. Management of the Dubai-based company, however, is treading more carefully in softer global trade conditions. Netherlands-based APM Terminals, the terminal operating arm of Maersk Group, managed comparable year-over-year throughput growth of just 0.2 percent in the second quarter. Profit fell 30 percent in the period after declining 41 percent in the first quarter. APMT was hit by exposure to oil- exporting developing economies such as Nigeria, and comments by group CEO Soren Skou at the time of the group's half- year results announcement suggest it's also suffering from lower rates paid by its biggest customer, Maersk Line. Throughput and revenue slid 7 percent and 6 percent, respectively, in the first half of the year at Singapore-listed Hutchison Port Holdings Trust after the company, which owns deep-sea container terminals in Hong Kong and mainland China, reported a 1 per- cent decline in volume and flat revenue growth in 2015. HPH Trust's first-half results were an improvement on those of the first quarter, but management said it remained cautious on vol- umes for the rest of the year, given the poor outlook for global trade and fallout from Brit- ain's exit from the European Union. Container throughput growth at the top 30 ports in the world, which account for approximately half of global container throughput, was just 0.2 percent year-over- year in the first half, its lowest level since 2009. Volume likely will improve only mar- ginally over the remainder of the year. There are some bright spots, primar- ily in emerging markets in South Asia and Southeast Asia. Operators with a higher pro- portion of facilities in these markets, such as Manila, Philippines-based International Container Terminal Services Inc., have delivered growth ahead of the market. China, too, hasn't delivered a completely PAIN AT THE PORTS Weak growth in volume is squeezing profits at terminal operators, and more pressure may be coming

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