Felixstowe Docks in trouble?

pickles110564

FungusFighter wrote: »

I did get bored and I went away, I came back and got bored again. I'm still bored and given the choice between spending the eveing at the pub or shooting the breeze with you I spent the evening at the pub

So what's the inside knowledge on the docks then Pickels mate? Any ships come in yet or are you all sitting around playing tiddlywinks? :j

There is always an upside to a downturn
Damian Brett
1833 words
5 January 2009International Freighting Weekly
English
© 2009 Informa PLC
Some in the port industry believe things aren't all that bad, and a slowdown in volume growth provides a welcome chance to take stock. Damian Brett reports
The container shipping industry is undoubtedly stuttering at the moment; volume growth is slowing - on some trades declining, banks are tightening credit facilities, staff are faced with pay cuts or redundancies, the number of services available are dwindling and businesses are going bankrupt.
Looking for a positive in all of this may seem somewhat perverse. But some observers believe that for the port industry things aren't all that bad and it won't be too long before the good times return.
Until the credit crisis hit, the growth of container traffic had been phenomenal. Global container port throughput grew by more than 11% between 2000 and 2007, with the star performer being the head-haul Asia-Europe trade, which grew by 16.6% last year, according to industry analyst Drewry.
But throughput growth at US ports, the first place to feel the effects of the sub-prime crisis, has been declining at a worrying rate and could act as an indicator of what is to come for Europe's ports.
In 2005, the transpacific trade grew by 13% and the transatlantic by 3.4%; in 2006, they were up by 9.7% and 4.3% respectively; but last year, the North American trades started to slow, with the transpacific growing by just 1.6%, while the transatlantic contracted by 2.5%.
"Growth in global container port activity has been remarkable until recently, " says Neil Davidson, director of ports at Drewry. "In the 1980s, it was 4% a year, in the 90s it picked up to around 10% and in the first seven years of this millenium it has been more than 11% a year - not many industries can claim that level of growth."
He adds: "That growth has been evident on many trade routes, spread in many ways.
The remarkable growth on the Europe-Far East trade route means it has nearly caught up with the transpacific and will probably pass it soon.
"The transpacific trade is slowing dramatically, but the really bad news for all involved, particularly container shipping lines, is that the Asia-Europe trade is slowing as well."
Drewry originally expected the Asia-Europe trade to grow by around 5% in the head-haul direction this year, but has revised this figure to 2%. It expects 2009 trade to remain static. It predicts the transpacific will contract by around 3% and the transatlantic by 4% next year. The reasons for this are clear, says the consultant.
"At the moment there are some fundamental issues that are really causing problems - actually being able to trade, to buy and sell goods, is extremely difficult at the moment. The basic mechanisms, the basic ways that trade happens, are all not there at the moment -importers and exporters are facing serious problems, " explains Davidson.
Richard Clarke, global director for ports and marine at consultant AECOM Group, claims the US ports are expecting a worse downturn and has projected volumes to shrink by 7-8%.
Doom and gloom But despite the downturn in volumes, both Davidson and Clarke say it's not all doom and gloom for the global port industry. "Among all the pessimism, there is a very mixed story in terms of growth this year [2008], " says Davidson.
"There were so many ups and downs in terms of volume growth. When you look at the figures it's not as bad as it seems: Guangzhou was up 24%, Singapore grew by 11%.
"We have to be very careful when we look at these shortterm changes and not panic if one month's volume is down.
You have to keep an eye on the longer term trends.
"Particularly at a time like this when there is so much uncertainty, we need to let everything settle down before we start talking about what the future holds.
"We've had a lot of growth in certain places and global container port volumes are probably going to grow by around 8% - sounds hard to believe, but it is likely to be that."
Davidson explains that in previous financial crises, container volume growth at ports held up relatively well. In the Asian financial crisis of 1998 volumes grew by 8%, and in the last US recession volumes were 5% up. The lowest ever growth was 4.6%, in 1985.
"What we've got at the moment is quite extreme and it will be interesting to see if the container port industry is able to grow. I think it may. We might see the lowest growth we've ever seen, but it might be still on the positive side, which will be pretty amazing, " he says.
He believes the prospects for demand growth outstripping capacity growth in the future are strong, so it will be difficult for shipping lines to secure rate reductions.
"Where can you find a terminal with 500,000teu of spare capacity in northern Europe or North America?
"On the one hand, they [lines] come to you [terminal operators] and say they have 500,000teu and want the best deal in town, but the terminal operators can say, 'if you don't come to my terminal where are you going to go?'
"What's the incentive for a terminal operator to reduce its prices? What difference is it going to make to anything?
Trade flow is determined by macro factors, and is a shipping line going to up and leave for $10 less per container in another port?
"Maybe, but that's not really going to save them from going under."
Applying pressure However, it may be different in terminals where carriers hold equity shares in a port operator as they might be able to exert pressure at the boardroom level, he adds.
Clarke says there are benefits to be found from a short-term downturn in volume growth.
"This pause does give the opportunity to do major work on terminals, " he explains. "The growth pattern we've had over the last 10 years has made upgrades on terminals extremely difficult. I've always preached, 'don't wait until things are full because it's impossible to do anything at that point', and this slowdown does give an opportunity.
"Okay, you've got to finance it, which is going to be difficult, but you should plan it now and look to finance it two or three years down the track, and you should have that upgrade in place when the market picks up again. If we get back to 10% growth, it's going to make it very difficult to make modifications.
"It does require a certain spirit of management to embark on an upgrade or expansion scheme at present, but bear in mind that if you start the planning now, you are not going to be spending the real money for another two or three years, and by then things will be improving.
"You only really spend significant amounts of money when you place orders for equipment or when you place the construction contracts - you've got quite a long gestation period before that.
"Some ports are doing that, while others are thinking it's grim, but I know who's going to win out in the long-term. The growth will come back, it always has in the past, now is the time to plan."
But he adds that this is only an easy thing if the company has spare cash.
But Martin Blaiklock, consultant on energy and infrastructure project finance at Independent Port Consultants, says banks are still interested in financing port projects.
"I am afraid I have to be a bit pessimistic; I think it'll be some months before we are through the worst of it, " he says.
"What this means for projects is that they haven't stopped completely, because putting together financial proposals for projects doesn't happen overnight, it takes several months.
"So if you've got a good project proposal, there are banks out in the market that are still open for business, for long-term business.
"But they can be selective because there are many fewer banks in the business. While I'm not suggesting you burn your files and go home, one has to make sure that the project is well structured and well thought through in order to gain acceptability."
Davidson adds that there may be opportunities to buy terminal operators at a cheaper rate because of the credit crisis.
He explains that over recent years many private equity companies, infrastructure investment funds and shipping lines have been buying stakes in terminals. But because of the state of the stock markets and the downturn in shipping lines' volumes, they may now be looking to quickly sell some assets.
"Certain big [terminal] operators have the appetite and the money to take advantage of any 'fire sales' and it seems hard to imagine there won't be any in the current climate, " says Davidson.
"Be that by financial investors, or more likely, shipping lines' portfolios - because as we have seen shipping lines are really feeling the pinch and maybe forced to sell their terminal assets - the big players will be waiting to pick them up. And they won't face as much competition as they may have in the past because other investors may find it hard to find the money."
There will always be spare container terminal capacity sloshing around the system, which makes it look like there is plenty of spare capacity. But, inevitably, the places where there is no spare capacity are the places everyone wants to get their cargo into - they are popular for a reason.
Right place, right time In Europe and the US, those that are in the right place at the right time find it difficult to expand to meet demand because getting planning permission for any sort of project takes so long.
As a result many have been firefighting to handle the traffic they have got.
Some have even lost cargo to other ports because of congestion - TraPac's terminal at the port of Los Angeles has lost three major clients to a rival terminal operator in neighbouring Long Beach as it awaited planning permission to modernise.
The current slowdown is giving the ports that operate at bursting point a chance to take stock and make plans for the future. Instead of losing cargo to rival terminals, operators should start making plans today to meet the demands of tomorrow, rather than making plans for tomorrow to meet the demands of today.
And although they may need to work harder to secure funding, if they have a viable business with viable plans it shouldn't prove impossible. It may be that in years to come this period isn't looked on as such a disaster for the container terminal industry.

HTH Best Rgds
Pickles

drbeat

Pickles Sir, would it possible if you could summarise the above for us thickies?

mewbie_2

I'll summarise it. Just take the first couple of lines...

The container shipping industry is undoubtedly stuttering at the moment; volume growth is slowing - on some trades declining, banks are tightening credit facilities, staff are faced with pay cuts or redundancies, the number of services available are dwindling and businesses are going bankrupt.


.. the rest of it is speculative fluff.

Vinegartits

mewbie wrote: »

I'll summarise it. Just take the first couple of lines...

The container shipping industry is undoubtedly stuttering at the moment; volume growth is slowing - on some trades declining, banks are tightening credit facilities, staff are faced with pay cuts or redundancies, the number of services available are dwindling and businesses are going bankrupt.


.. the rest of it is speculative fluff.

....which is exactly where I started this thread; 14 pages later, does this mean we all agree that Felixstowe Docks, in common with Southampton and every other dock in the country, is indeed in trouble?

PasturesNew

Poor pickles

mewbie_2

Vinegartits wrote: »

....which is exactly where I started this thread; 14 pages later, does this mean we all agree that Felixstowe Docks, in common with Southampton and every other dock in the country, is indeed in trouble?

I'm not sure. It depends very much on where you stand with regards to fractional reserve banking.

drbeat

mewbie wrote: »

I'm not sure. It depends very much on where you stand with regards to fractional reserve banking.

ROFL!!!! :rotfl:

FungusFighter

PasturesNew wrote: »

Poor pickles

And the rest of his gang, bring back Cranston :beer:

Now there's a cat who knows what's what!

FungusFighter

mewbie wrote: »

I'm not sure. It depends very much on where you stand with regards to fractional reserve banking.

Can I make the obvious gag about Pickles'es shrinking fractional reserve or does someone else want to do it ?

FungusFighter

pickles110564 wrote: »

There is always an upside to a downturn
Damian Brett
1833 words
5 January 2009International Freighting Weekly
English
© 2009 Informa PLC
Some in the port industry believe things aren't all that bad, and a slowdown in volume growth provides a welcome chance to take stock. Damian Brett reports
The container shipping industry is undoubtedly stuttering at the moment; volume growth is slowing - on some trades declining, banks are tightening credit facilities, staff are faced with pay cuts or redundancies, the number of services available are dwindling and businesses are going bankrupt.
Looking for a positive in all of this may seem somewhat perverse. But some observers believe that for the port industry things aren't all that bad and it won't be too long before the good times return.
Until the credit crisis hit, the growth of container traffic had been phenomenal. Global container port throughput grew by more than 11% between 2000 and 2007, with the star performer being the head-haul Asia-Europe trade, which grew by 16.6% last year, according to industry analyst Drewry.
But throughput growth at US ports, the first place to feel the effects of the sub-prime crisis, has been declining at a worrying rate and could act as an indicator of what is to come for Europe's ports.
In 2005, the transpacific trade grew by 13% and the transatlantic by 3.4%; in 2006, they were up by 9.7% and 4.3% respectively; but last year, the North American trades started to slow, with the transpacific growing by just 1.6%, while the transatlantic contracted by 2.5%.
"Growth in global container port activity has been remarkable until recently, " says Neil Davidson, director of ports at Drewry. "In the 1980s, it was 4% a year, in the 90s it picked up to around 10% and in the first seven years of this millenium it has been more than 11% a year - not many industries can claim that level of growth."
He adds: "That growth has been evident on many trade routes, spread in many ways.
The remarkable growth on the Europe-Far East trade route means it has nearly caught up with the transpacific and will probably pass it soon.
"The transpacific trade is slowing dramatically, but the really bad news for all involved, particularly container shipping lines, is that the Asia-Europe trade is slowing as well."
Drewry originally expected the Asia-Europe trade to grow by around 5% in the head-haul direction this year, but has revised this figure to 2%. It expects 2009 trade to remain static. It predicts the transpacific will contract by around 3% and the transatlantic by 4% next year. The reasons for this are clear, says the consultant.
"At the moment there are some fundamental issues that are really causing problems - actually being able to trade, to buy and sell goods, is extremely difficult at the moment. The basic mechanisms, the basic ways that trade happens, are all not there at the moment -importers and exporters are facing serious problems, " explains Davidson.
Richard Clarke, global director for ports and marine at consultant AECOM Group, claims the US ports are expecting a worse downturn and has projected volumes to shrink by 7-8%.
Doom and gloom But despite the downturn in volumes, both Davidson and Clarke say it's not all doom and gloom for the global port industry. "Among all the pessimism, there is a very mixed story in terms of growth this year [2008], " says Davidson.
"There were so many ups and downs in terms of volume growth. When you look at the figures it's not as bad as it seems: Guangzhou was up 24%, Singapore grew by 11%.
"We have to be very careful when we look at these shortterm changes and not panic if one month's volume is down.
You have to keep an eye on the longer term trends.
"Particularly at a time like this when there is so much uncertainty, we need to let everything settle down before we start talking about what the future holds.
"We've had a lot of growth in certain places and global container port volumes are probably going to grow by around 8% - sounds hard to believe, but it is likely to be that."
Davidson explains that in previous financial crises, container volume growth at ports held up relatively well. In the Asian financial crisis of 1998 volumes grew by 8%, and in the last US recession volumes were 5% up. The lowest ever growth was 4.6%, in 1985.
"What we've got at the moment is quite extreme and it will be interesting to see if the container port industry is able to grow. I think it may. We might see the lowest growth we've ever seen, but it might be still on the positive side, which will be pretty amazing, " he says.
He believes the prospects for demand growth outstripping capacity growth in the future are strong, so it will be difficult for shipping lines to secure rate reductions.
"Where can you find a terminal with 500,000teu of spare capacity in northern Europe or North America?
"On the one hand, they [lines] come to you [terminal operators] and say they have 500,000teu and want the best deal in town, but the terminal operators can say, 'if you don't come to my terminal where are you going to go?'
"What's the incentive for a terminal operator to reduce its prices? What difference is it going to make to anything?
Trade flow is determined by macro factors, and is a shipping line going to up and leave for $10 less per container in another port?
"Maybe, but that's not really going to save them from going under."
Applying pressure However, it may be different in terminals where carriers hold equity shares in a port operator as they might be able to exert pressure at the boardroom level, he adds.
Clarke says there are benefits to be found from a short-term downturn in volume growth.
"This pause does give the opportunity to do major work on terminals, " he explains. "The growth pattern we've had over the last 10 years has made upgrades on terminals extremely difficult. I've always preached, 'don't wait until things are full because it's impossible to do anything at that point', and this slowdown does give an opportunity.
"Okay, you've got to finance it, which is going to be difficult, but you should plan it now and look to finance it two or three years down the track, and you should have that upgrade in place when the market picks up again. If we get back to 10% growth, it's going to make it very difficult to make modifications.
"It does require a certain spirit of management to embark on an upgrade or expansion scheme at present, but bear in mind that if you start the planning now, you are not going to be spending the real money for another two or three years, and by then things will be improving.
"You only really spend significant amounts of money when you place orders for equipment or when you place the construction contracts - you've got quite a long gestation period before that.
"Some ports are doing that, while others are thinking it's grim, but I know who's going to win out in the long-term. The growth will come back, it always has in the past, now is the time to plan."
But he adds that this is only an easy thing if the company has spare cash.
But Martin Blaiklock, consultant on energy and infrastructure project finance at Independent Port Consultants, says banks are still interested in financing port projects.
"I am afraid I have to be a bit pessimistic; I think it'll be some months before we are through the worst of it, " he says.
"What this means for projects is that they haven't stopped completely, because putting together financial proposals for projects doesn't happen overnight, it takes several months.
"So if you've got a good project proposal, there are banks out in the market that are still open for business, for long-term business.
"But they can be selective because there are many fewer banks in the business. While I'm not suggesting you burn your files and go home, one has to make sure that the project is well structured and well thought through in order to gain acceptability."
Davidson adds that there may be opportunities to buy terminal operators at a cheaper rate because of the credit crisis.
He explains that over recent years many private equity companies, infrastructure investment funds and shipping lines have been buying stakes in terminals. But because of the state of the stock markets and the downturn in shipping lines' volumes, they may now be looking to quickly sell some assets.
"Certain big [terminal] operators have the appetite and the money to take advantage of any 'fire sales' and it seems hard to imagine there won't be any in the current climate, " says Davidson.
"Be that by financial investors, or more likely, shipping lines' portfolios - because as we have seen shipping lines are really feeling the pinch and maybe forced to sell their terminal assets - the big players will be waiting to pick them up. And they won't face as much competition as they may have in the past because other investors may find it hard to find the money."
There will always be spare container terminal capacity sloshing around the system, which makes it look like there is plenty of spare capacity. But, inevitably, the places where there is no spare capacity are the places everyone wants to get their cargo into - they are popular for a reason.
Right place, right time In Europe and the US, those that are in the right place at the right time find it difficult to expand to meet demand because getting planning permission for any sort of project takes so long.
As a result many have been firefighting to handle the traffic they have got.
Some have even lost cargo to other ports because of congestion - TraPac's terminal at the port of Los Angeles has lost three major clients to a rival terminal operator in neighbouring Long Beach as it awaited planning permission to modernise.
The current slowdown is giving the ports that operate at bursting point a chance to take stock and make plans for the future. Instead of losing cargo to rival terminals, operators should start making plans today to meet the demands of tomorrow, rather than making plans for tomorrow to meet the demands of today.
And although they may need to work harder to secure funding, if they have a viable business with viable plans it shouldn't prove impossible. It may be that in years to come this period isn't looked on as such a disaster for the container terminal industry.

HTH Best Rgds
Pickles

Strewth mate, you could have just posted a link to say their fewked! :rotfl: