The challenges for container terminals in handling Ultra Large Container Vessels (ULCVs) are past their worst, although they still present significant challenges for ports and their customers, according on one senior analyst.

Drewry’s senior analyst for Ports & Terminals, Neil Davidson, told Lloyd’s Loading List that terminals had now largely learned to effectively manage handling ULCVs, but they still presented some significant challenges, especially if they arrived at terminal off-schedule. “This, and volume peaks caused by the combination of bigger ships and reduced service frequency will continue to make life challenging,” he added.

“The good news for the industry is that there will be no significant increase in maximum containership size. Maximum teu intake is going up but physical dimensions are not.”

As reported this week Drewry has “greatly reduced” its expectations of new orders for ultra-large container vessels (ULCVs) as a result of an apparent change of focus among some of the major carriers towards broadening and deepening their involvement in the wider container logistics market, trends it believes will aide the overall container shipping supply-demand balance.

However, the cascading of larger vessels into trades where ports are used to handling smaller vessels will create handling issues. “Each port will see increasing pressure on whichever berths are able to handle the biggest ships, and increased obsolescence of older berths,” Davidson added.

Davidson forecasts that global container terminal industry will remain “a very solid, profitable business” this year, with throughput of over 800 million teu set to generate EBITDA in excess of US$25 billion. 

“We will see a softening of the global container port demand growth rate, down from an estimated 4.7% in 2018 to just over 4% in 2019, although 4% is still very respectable and adds over 30 million teu to the world total,” he said.

“However, the projection for 2019 is highly uncertain due to the US-China tariff wars, Brexit etc. So there is a big caveat.”
The uncertain demand outlook is expected to dampen investor and operator enthusiasm for new capacity investments.

“Returns are not what they used to be,” he said. “Even Chinese players may be affected if China’s economy slows markedly.

“Greenfield expansion projects will be the area hardest hit. Nevertheless, a global capacity addition of over 25 million teu can be expected in 2019, representing a spend of circa US$7.5 billion.”

According to Davidson, port and terminal operators will face a number of new technology challenges this year, particularly as they try to find elbow room to generate more revenue up and down their highly competitive hinterland supply chains.

“The opportunities offered by digitisation, automation, blockchain, smart ports, IoT, and hyperloop will continue to be vigorously explored by both terminal operators and port authorities,” he said. “However, the big challenge remains: how to find the way through the minefield of options to focus on what will really work and what has the best potential.

“Linked closely to [the tech challenge], terminal operators and port authorities will continue to seek to expand their activities beyond the port gate into the wider supply chain, to try and diversify sources of revenue, tie in traffic and get closer to cargo owners.

“But it’s a crowded field, with the heavyweight liner shipping companies aiming to do the same thing.
“It remains to be seen if anyone can succeed at it.”