Thursday, May 30, 2013

Major Shipping Line's Container Freight Terminal Handling Sale Finalised

Global Ports Witness Ownership Adjustment as MSC Sells to Infrastructure Investment Specialist
Shipping News Feature

SWITZERLAND – WORLDWIDE – When a company as substantial as MSC, otherwise known as Mediterranean Shipping Company, builds up a fleet of over 450 vessels and establishes itself as the second largest container line in the world, it needs to ensure that, whatever routes it chooses to operate on, it will always have facilities available to turn the freight carriers around no matter what the political, labour or geographic situation in the country concerned.

MSC has always been a bit of an enigma, privately owned and formed in 1970 it remains a relatively recent entrant into the ocean shipping market whilst hailing from a country with no maritime borders whatsoever. The group’s rapid growth demanded it establish a network of box terminals on every continent over which it had a degree of control and thus secure the terminal capacity it needed whatever part of the globe its vessels ventured to.

The answer was Terminal Investment Limited SA (TIL) which MSC founded thirteen years ago and since which it has gained a foothold in virtually every important corner of the shipping world map. The term foothold probably undersells it, in Northern Europe its influence extends beyond Rotterdam, Antwerp, Bremerhaven and Le Havre whilst in the America’s it maintains a presence in numerous major ports including Long Beach, Oakland, Seattle and Montreal plus Santos and the Bahamas. From Turkey to China, Spain to India. If it’s a location important to major routes on the ocean freight supply chain, TIL probably has property and equipment in the vicinity.

Now MSC has confirmed that the sale announced recently of 35% of TIL to an independent infrastructure investment fund, Global Investment Partners (GIP) which already has some interests in the ports sector, has been finalised. GIP already owns Great Yarmouth in the UK outright and has a half share in International Trade Logistics in Buenos Aires and 27% of the Port of Brisbane. Far from diminishing its interest MSC says the $1.929 billion it will receive from the sale of TIL (assuming performance achieves projected levels) will strengthen its position to invest in future acquisitions whilst the new partnership will enable TIL to develop even more quickly.

TIL already has 27 terminals in 25 ports with more under negotiation and the company will have a new president in Alistair Baillie who transfers from his position as Executive Chairman of International Port Holdings, a wholly-owned ports investment affiliate of GIP and who currently sits on the Board of Directors of the Port of Brisbane. Mr Baillie has a previous link with Switzerland having gained an MBA at the International Institute for Management Development (IMD) based in Lausanne.

With this latest development TIL is confirmed as being the sixth largest container terminal operator in the world in a field in which deep water port facilities are acquiring more importance as the size of the box ships increases. The deep water berths and infrastructure needed to accommodate this perceived rationalisation of the industry to accommodate the new generation of bigger vessels with the resultant economies of scale, means more investment is required to secure, or retain, the importance of individual ports worldwide and the development of new ones.

Photo: Containers being handled at the TIL terminal in Ningbo, China.