There may be complaints about the slowdown in global trade over the past year, however the state-owned Singaporean Port owner and operator PSA International Pte, still experienced growth through 2018.
The volume of containers handled by the whole business in 2018 grew by 9.1%, with the terminals at Singapore itself seeing an 8.9% increase in container throughput to 36m TEUs. Yet the sales derived from these containers was worth proportionately less, with revenue up just 3% year-on-year to S$4.1bn. Operating profit was effectively flat at S$1.7bn and profits after tax fell by 3.2%.
Looking at the less than fulsome numbers from PSA, it appears that pressure on profits was broad-based, but labour costs and depreciation increased in particular. The numbers do not appear to shed much light on why PSA’s revenue per container is falling. Mr Fock Siew Wah, Group Chairman of PSA did comment that “2018 was a year of constant change, beset by the headwinds of global economic and geopolitical uncertainty, escalating trade wars, and persistent operational challenges in the shipping industry due to overcapacity, low freight rates and rising fuel costs”, however he did not elaborate on how this had affected PSA’s business.
Comparing the results from PSA with those from DP World released on March 14 can provide further insight. The Dubai-based port giant saw numbers of containers handled in 2018 up just 1.9% even in gross terms (including acquisitions) yet revenue rose by 4.2%. Profits appeared to fall in ‘reported’ terms by 2.2%, although it is hard to tell with DP World claiming ‘reported’, ‘adjusted’ EBITDA up 13.7%.
It is likely that the ports business did slow down over the last quarter of 2018, but overall activity in the shipping sector seems healthy. It is hard to judge, but these meagre numbers suggest that the salient issue for the container port groups lies not with global trade volumes but with greater competition internal to the container port sector, with even leading global hubs such as Dubai and Singapore under pricing pressure.
Source: Transport Intelligence, March 26, 2019
Author: Thomas Cullen
