Prospect of shipping companies' investment in container terminal business

• Main Author: Hao, Yunpeng
• Other Authors: School of Civil and Environmental Engineering
• Format: Final Year Project
• Language: English
• Published: 2014
• Subjects: DRNTU::Business; DRNTU::Science
• Online Access: http://hdl.handle.net/10356/61056
• Institution: Nanyang Technological University

In the midst of worldwide economic recession, the demand for containerised transportation has drastically dropped, and the market is depressed by low freight rate. However, container terminal, an indispensable stage in port-to-port transport chain, extraordinarily outperforms the shipping market. This research was carried out to examine the prospects of container terminal investment/divestment from the perspective of container shipping lines. Relevant past work was intensively reviewed, and face-to-face interviews with industrial and academic experts were conducted. In addition, financial performance of selected shipping lines and terminal operators was analysed. The results reveal that the terminal operation business remains highly profitable compared with the struggling container shipping business. However, the intensive capital requirements build up a high entry barrier to those shipping lines with poor cash positions. Small lines should focus on the core business, port-to-port shipping, while the larger ones should diligently look into the terminal investment target if they would like to take risks in low markets. Such investment could be in a larger scale when the macroeconomic condition turns better. The research on investment prospects could potentially provide suggestions to those shipping lines that are interested in the game of terminal investment and divestment to maintain a decent return. Future studies on this topic could include more market intelligence and information from the industry through more interviews and talks.