SCAREMONGERING by US President Trump about perceived Chinese influence over the entrance to the Panama Canal has resulted in some unintended consequences. Hutchison Port Holdings (HPH), a Hong Kong-based company that owned ports at both ends of the Panama Canal has sold its holdings to the Black Rock-TIL Consortium (BRTC). However rather than just those two ports it has decided to sell all of its ports and terminals outside China/Hong Kong to the consortium. The HPH portfolio has interests in 40 ports and terminals in 23 countries including two container terminals in Australia.

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HPH is 80% owned by CK Hutchison Holdings and 20% PSA International Pte Ltd. The BRTC consists of Black Rock Inc. and Terminal Investment Limited (TIL) which is owned 70% by Mediterranean Shipping Company (MSC), 20% Global Infrastructure Partners (which in turn is owned by Black Rock) and 10% Government of Singapore Investment Corporation. The acquisition will put TIL at the top of the global container operator table leapfrogging number one, PSA International, by about 20 million TEU annual throughput.

Because of the mix of ownership of the BRTC and its related companies in a number of other container terminals around the world, there is still a lot of uncertainty with regard to competition issues in several countries, but certainly in NW Europe. For instance, in Rotterdam Hutchinson already has a major share in three large-volume container terminals that would now come under TIL’s (i.e. MSC’s) control whilst MSC already owns nearly 50% of a large Hamburg terminal and has large holdings in the Port of Antwerp.

Similarly in Spain TIL owns the MSC Terminal Valencia and would become owner of the BEST Terminal in Barcelona after the takeover. The Panama Maritime Authority, which oversees shipping and port infrastructure in the country, has already asked for more details on the take-over deal concerning the ports of Balboa and Colon. Experts believe it would take at least a year before all these competition issues are sorted out. As far as Australia is concerned HPH operates container terminals in Port Botany and Brisbane that currently only have a relatively small market share and that service mainly COSCO vessels. I believe the sale will raise no competition issues in Australia, but we’ll have to wait and see what the Australian Competition and Consumer Commission will have to say about that.

However, if the new consortium needs or wants to divest some of its newly acquired assets it could be an opportunity for operators like China Merchants Ports, DP World, APMT (the terminal division of Maersk) or others to acquire some strategic assets. If so, this could be an opportunity for ICTSI (owner of the Victorian International Container Terminal) in Melbourne to acquire the HPH terminals in Brisbane and Sydney so it can offer its clients a fully integrated East Coast service.

No doubt shipping lines will be busily ascertaining what this means for their container stevedoring contracts, especially as currently COSCO Shipping is very much aligned with HPH. However having TIL as the new owner of certain terminals, they might decide to no longer call at these terminals. In turn MSC might want to direct more of their vessels and services to their newly acquired facilities. Change of ownership might also trigger the break clause in the shipping line contracts with their stevedoring providers.

If the above upheaval is not enough Trump has also decreed that, in order to revitalise American owned and crewed ships and US-based ship building, all Chinese owned and built ships calling at US ports will be hit with a substantial port fee. About 25% of the fleet of the three largest shipping lines could be hit with these fees. Comments from the CEOs of these lines suggest that this could be damaging to the lines and their customers and increase costs to all participants in the supply chain.

All this means an uncertain outlook for the shipping industry going forward and who knows what the guy in the White House will come up with next!

Peter van Duyn, Maritime Expert, Director of ICHCA Australia