The world may be in the throes of an escalating trade war but there is still some life in marine logistics. Results from two of the World’s more important terminal companies suggest that the past six months have seen continued moderate growth in container traffic but more particularly the logistics activity around it.
DP World announced on Friday that over the past half year it had seen revenue increase by 31.9% year-on-year, representing an underlying increase of 10.8% after accounting for acquisitions. Profits measured in terms of EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) grew by 21.9% to US$1,611m, an underlying growth rate of 9.9%. However, it appears that this was not driven by container volumes as these rose only by 0.5% on a gross basis to 35.811m TEU, although DP World said this represented a rise of 4.9% on a consolidated basis. DP World has been busy making non-container acquisitions recently, such as a marine oil field service company and a ferry company, and it is these that appear to have been propelling the company forward.
The situation at HHLA had some similarities. The Hamburg-based port group saw its top line container volumes rise 3.8%. However, much of this was due to acquisitions in other ports, notably in the Baltic whilst the core Hamburg Port assets saw volumes move in a “sideways trend”, up 0.1% at 3.47m TEU for the half year. What appears to be happening is that HHLA has been able both to reduce its costs and increase its prices, driving up revenue for the container terminal business by 5.6% and EBITDA by 12.7% year-on-year. The other parts of the group in contract logistics and intermodal traffic saw strong demand and were also able to harden prices leading to a 22.3% increase in overall EBITDA.
HHLA has not really turned around its core Hamburg terminal business, which is still growing slowly however its diversification into other ports and other types of logistics assets seems to be working. Much the same might be said about DP World although its broader range of container terminals continue to grow respectably, if not violently. As seen by the Maersk results last week, the wider market for container ports is subdued, growing in low-single digit percentages, but there are opportunities in related areas.
Source: Transport Intelligence, August 27, 2019
Author: Thomas Cullen
