Almost two years after the coronavirus triggered dire forecasts for global trade, one of the world’s largest port operators is looking to expand despite a challenging environment that its billionaire owner calls a “war against an invisible enemy.”
“There have been a lot of difficulties with the pandemic, but in spite of all those, we’re having probably our best year,” Enrique Razon, president and longtime chairman of Manila-based International Container Terminal Services Inc., said in an interview. “Whatever opportunities come up in Africa, we’ll seriously look at it, the Middle East and other markets. We’re definitely in expansion mode in markets that fit our strategy and profile.”
Razon’s company, ranked by Lloyd’s List as the eighth-biggest container port operator, runs 34 terminals in 20 countries including Australia, Mexico and Poland. Shares of the Philippines-listed company have jumped more than 50% this year, on pace for their biggest annual advance in more than a decade.
Revenue from port operations totaled $1.37 billion in the first nine months of the year, a 24% increase from the same period a year earlier, as container volume rose 11% to 8.3 million 20-foot equivalent units.
While ports in the U.S. and Europe are gaining attention for the record volumes they’re handling this year, the business has been tougher to navigate in developing markets, like ICTSI’s terminals in Iraq and Madagascar.
Rich vs Poor
Shipping lines have shifted container capacity away from such economies to make more money on busier routes to the developed world — moves that some observers worry will widen the gap between the world’s rich and poor.
Razon said performance has indeed been patchy depending on the location, but the company’s overall average growth should remain solid heading into 2022.
“In our port portfolio, we’re looking at probably just beyond 5-6% — that sort of growth,” he said. “In some places we’re going to shrink 15%, some ports will grow 25%, some will be flat. But the overall average, we’re not expecting anything beyond single digits.”
The pandemic has both accelerated online shopping and underscored the importance of the services needed to move products globally.
Read More: How the Pandemic Saved the World’s Retailers
“You can’t deliver any product over the phone — you still have to move it, warehouses are needed, ports are needed, ships are needed,” Razon said. “I don’t see anything that’s changing that in the foreseeable future.”
Razon said it might take two or three more years to work though the pandemic and the shipping disruptions it’s caused. In the meantime, there’s a risk that governments might overcorrect trying to slow inflation and tip their economies into recessions. “That would certainly solve the trade backlog,” he said. “The virus seems to outsmart mankind at every turn.”
—Brendan Murray in London
Charted Territory
Slowing Exports
The growth of South Korea’s shipments abroad is slowing as 2021 winds down
Source: Korea trade ministry, customs office
South Korea’s export gains look set to slow this month, as supply bottlenecks disrupt shipping during a key holiday season and a spike in global Covid cases puts a damper on reopening plans overseas. Exports rose 20% in the first 20 days of December from a year earlier, according to data from the customs office released Tuesday.
Today’s Must Reads
- Harbor town | Across the street from America’s busiest port in Los Angeles sits the blue-collar neighborhood of Wilmington, where residents say the supply-chain chaos is disrupting daily life — and comes with fewer economic benefits to the community.
- Olive branch | President Joe Biden closed another chapter on his predecessor’s trade disputes with the European Union by declining to appeal an adverse World Trade Organization ruling over American tariffs on Spanish olives. Separately, the WTO said the volume of global merchandise trade fell by 0.8% in the third quarter, ending a 12-month run of solid expansion.
- Failing grades | More than a third of Australia’s largest listed companies have poor modern slavery disclosures, indicating they don’t understand the risks in their supply chains, according to a new report.
- Shoe repair | Nike’s business in China plummeted last quarter, but growth in the U.S. help buoy its overall results. The world’s largest athletic brand was dealing with production delays mainly from a Covid-19 outbreak in Vietnam that shuttered factories.
- Russia dispute | The WTO agreed to review a EU dispute complaint that alleged Russia illegally discriminated against 290 billion euros ($328 billion) worth of European goods.
- French connection | MSC, the world’s No. 2 container shipping line, offered to buy the African transport and logistics business of Bollore SA for 5.7 billion euros including debt.
- Small fry | McDonald’s in Japan will only offer french fries in small sizes starting Friday after flooding at a Vancouver port and the coronavirus pandemic have cut off supplies of one of its key offerings.
On the Bloomberg Terminal
- Holiday break | The North American spot-trucking market tightened significantly last week, a move Bloomberg Intelligence attributed to drivers parking rigs before Christmas and increased precautions over the recent surge in Covid-19 cases.
- CEO search | The next catalyst for shares of Canadian National will be the announcement of a new CEO following the surprise retirement of J.J. Ruest, according to Bloomberg Intelligence.
- Use the AHOY function to track global commodities trade flows.
- Click HERE for automated stories about supply chains.
- See BNEF for BloombergNEF’s analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
- Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.
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— With assistance by Ian C Sayson, and Albertina Torsoli
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