News

PENSION and infrastructure funds continue to view the port sector as a safe investment bet, according to Mercator International partner Steve Rothberg. However, he says concerns are growing over high-risk investments being made to handle big ships.

Mr Rothberg highlighted that investment in bigger, wider and faster cranes, longer quays, deeper berths and the like to meet the requirements of ultra large containerships has not gone unnoticed by funding schemes, which have invested heavily in the port industry for over a decade on the back of healthy returns.

For more, read the Lloyd’s List article here.

Dynamic market conditions continue to transform the logistics landscape and drive container carriers to invest in larger ships. And as the capacity of container ships grows, carriers find that they need to establish new alliances in order to fill these ships.

As market conditions evolve, new patterns of growth are emerging. The JOC recently reported that for the first time, the Port of Savannah is being called by more weekly trans-Pacific services than the Port of New York. (link)

In addition to understanding which ports are being called, it is imperative to understand the order in which ports are called on each service. Ports that are the first inbound port of call will attract intermodal cargoes above and beyond the levels dictated by local market demand. Similarly, last outbound ports of call will be most attractive to exporters. As Mercator predicted months ago, Charleston has attracted a new last outbound port of call on the trans-Pacific trade.

Mercator International has decades of experience in service network design, analysis, and forecasting. Our services are highly regarded and sought-after by port authorities, terminal operators, and beneficial cargo owners.

Tradepoint Atlantic has inked a 10-year deal with Host Terminals to manage most marine operations on the Sparrows Point facility in Baltimore, Maryland. Host Terminals has agreed to co-invest with Tradepoint Atlantic in $30 million in infrastructure improvements to the 3,100 acre facility.

The Tradepoint Atlantic Terminal is currently anchored by The Pasha Group, which began receiving and processing vehicle imports last year.

Mercator International was retained by Tradepoint Atlantic in late 2015 to conduct a market study and identify top tier and second tier opportunities. Mercator identified RoRo as the top priority, as Baltimore has a competitive advantage in RoRo traffic, and the Sparrows Point facility has ample acreage to accommodate a state-of-the art RoRo terminal.

For more information on the Tradepoint Atlantic – Host Terminals deal, click here.

As reported by infrappworld.com, the Government of Colombia is about to cancel a US$861m PPP project for navigation improvements to the Magdalena River due to financing challenges.  This contract had been earlier awarded to Odebrecht  of Brazil, but the latter company is facing lawsuits across South America and failed to provide the initial funding required in the concession agreement.  The project is of strategic importance to the country, as the River needs extensive dredging to be able to fulfill its potential for transporting cargoes between interior regions and the key ports of Barranquilla and Cartagena.

Rivers/waterways in key South American countries are becoming increasingly important routes for cargo traffic flowing into hinterland markets.  PPP-oriented projects are a viable structure for developing and maintaining channels and water depth.  However, financing can be challenging without keen understanding of both the technical and commercial risks inherent in such projects.

Mercator has studied river-based cargo traffic flows on a number of different projects in various countries, including Brazil, Argentina, Colombia, Germany, the U.S., and Canada.  We have studied Container On Barge (COB) opportunities, bulk commodities transport in barges, cargo route costing alternatives, and privatization of lock/dam infrastructure.

For more information on the Colombia waterway project, click here.

As reported by the Financial Times, a London-based arbitration panel has found in favor of DP World in a long-running dispute with the government of Djibouti over a port concession awarded to the company in 2006.  The arbitration claim was initiated by the government of Djibouti in 2014, when it rescinded the concession agreement and accused DP World of bribing the head of Djibouti’s port authority, Abdourahman Boreh, in order to achieve unfair non-market terms.  At the time, DP World rejected the allegations and said it would “vigorously defend” its position during the arbitration procedure.

The arbitration was conducted at the London Center for International Arbitration (LCIA).  The 3-member panel ruled strongly in favor of DPW and called for the Government of Djibouti to pay the costs of the arbitration.

Mercator International was called upon by DP World to provide expert testimony to the Tribunal.  Mercator analyzed the terms of a broad set of port concessions and compared them with the Djibouti concession, concluding that the Djibouti agreement was reasonable and consistent with market terms.

For more information, read this article from the Financial Times or this article from 4-Traders.com.

As the JOC reports, resin exports from the United States are in the early stages of what promises to be a sustained period of rapid growth, catalyzed by the country’s increased production levels of oil and natural gas in recent years.  This has already placed pressure on supply chains, introduced new dynamism and complexity for carriers faced with managing equipment, and increased volumes for selected ports (most notably the Ports of Houston and New Orleans).

Mercator International has analyzed resin storage capacity in the Houston metropolitan area for a major industrial real estate developer/investor, and have conducted analyses and forecasts of container equipment balancing requirements.  We have also evaluated ocean carriage capacity requirements within the Transpacific trade (which is likely the primary benefactor of this resin boom) on numerous occasions, along with analyzing energy markets in connection with this trade development.

For more information, click here to refer to the above-referenced JOC article.

Organized by the U.S. Embassy and the American Chamber of Commerce and Industry of Panama, Steve Rothberg, a Founding Partner of Mercator International, attended the forum “Panama: Expanding Opportunities”, covering a wide range of business and economic topics that will take place as a consequence of the Panama Canal expansion.

Many consumers, shippers, carriers, ports, industries, and other organizations have relied on the efficient movement of goods through the Panama Canal for more than 100 years—a critical artery for international trade. The third set of locks doubles the Canal’s capacity and along with recent developments in ocean trade routes are expected to directly impact economies of scale, maritime trade, and the land-side infrastructure of key ports.

The tolls charged by the Panama Canal Authority, the location of production facilities with respect to consumption centers, vessel services, and specific economies will influence the ultimate impact from the third set of locks on global logistics. Once larger freighters start capitalizing on the benefits from the third set of locks, transportation will be less expensive for companies and for consumers of commodities and products relying on the expanded canal.

Mercator has advised the Panama Canal Authority on anticipating short- and long-term trade volume prospects for Pacific Panamanian Ports and other assignments.

Click here for the article