Red ink is the most common feature of most liner operators’ results in 2013 and it looks like there is more pain on the way prompting, in turn, more asset sales with container terminal assets high on the list.



CMA CGM and Maersk are the two notable exceptions in the liner operating sector that did turn in positive results in 2013 but, to a significant extent, CMA CGM’s results were due to the contribution made by the sale of 49% of its Terminal Link portfolio of terminals to China Merchants Holdings International (CMHI) for €400m.

This gave CMHI equity positions in 15 terminals around the world effectively giving it the status of a global terminal operator as opposed to one that had previously been largely China oriented aside from recent independent acquisitions in Africa.



Mediterranean Shipping Company as a private company does not disclose its financial results but it is noticeable that it too during the course of 2013 concluded the sale of 35% of its Terminal Investment Limited (TIL) arm which had at the time approximately controlling or joint controlling interests in 30 container terminals worldwide. This was sold to Global Infrastructure Partners (GIP) and a group of LP Co-Investors for a consideration of $1.9bn, including certain payments contingent on TIL’s future performance.

Undoubtedly the injection of this cash was well received by MSC given the recent weak freight rates and high cost of bunkers.

Hanjin has also trodden a similar path. The company announced that IBK Securities Company and Korea Investment Partners Company (KIPC) has agreed to buy a 70% stake in its Total Terminals International Algeciras (TTIA) container terminal in Algeciras, Spain for Won180bn (€121.8m). This represents part of a comprehensive package of measures aimed to stabilise the company after its financial position deteriorated significantly in 2013.

They also include the sale of 76% of Hanjin’s dry bulk fleet (36 ships) to the equity fund Hahn & Co for Won300bn ($284m). Further sales from its container terminal portfolio are additionally possible given the continuing presence of negative conditions in the container liner market.

There has been some discussion on the valuation of these deals and particularly how the prices paid have dropped significantly in real terms since the ‘crazy days’ in 2007 when Deutsche Bank’s infrastructure investment arm RREEF acquired Maher Terminals for $2.7bn. At the time Maher’s New York facility handled around 1.5m teu and it was also preparing to open a new facility at the Canadian port of Prince Rupert.

This contrasts with the €400m paid to CMA CGM for 49% of its 15 terminals which are believed to have handled 8.5m+ teu in 2013 and perhaps even more poignantly with the €121.8m paid to Hanjin by IBK and KIPC for 70% of its TTIA facility which handled 1.21m teu in 2013.

It is manifestly clear that no-one is prepared to pay the prices that prevailed since 2007. A rule of thumb might be that terminal acquisition prices have halved since the financial crisis but some would argue that they are generally lower than this.

(Source : Port Strategy, To be continued)