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Margin pressure to ease for container terminal operators: Drewry

While weakening traffic will depress revenues, impact will be partially offset by inflation-linked annual tariff hikes

Margin pressure to ease for container terminal operators: Drewry
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Container terminal operator earnings have declined as slowing trade and escalating costs have brought margins under pressure, according to the Drewry’s Global Container Terminal Revenue Index published in the Ports and Terminals Insight.

"But an improving economic outlook and falling energy costs are expected to provide some reprieve through the second half of the year," says the report.

Widespread easing of port congestion reduced average container dwell times at terminals and led to a corresponding fall in storage revenues in 4Q22. "In their financial statements, both APMT and Westports confirmed that their storage income has dropped back to 2020 levels."

Costs continued to rise, according to Drewry’s Global Container Terminal Cost Index, due to continuing inflationary pressure, particularly from escalating labour and energy costs. This together with softening revenues put pressure on operator margins, sending Drewry’s Global Container Terminal Earnings Index down 19 percent YoY and 21 percent QoQ in the final quarter of last year.


The index measures quarterly changes in industry earnings per TEU based on the financial results of selected global terminal operators.

"Looking ahead, while weakening container traffic will depress total revenues, the impact on per unit revenues will be partially offset by inflation-linked annual tariff increases. Additionally, if carriers continue to use blank sailings to manage trade-lane capacity, average terminal dwell times could settle at a level above pre-pandemic norms which would see some of the storage revenue gains maintained."

On the cost side, Drewry is expecting personnel costs, which are partially inelastic and typically account for the highest proportion of unit operating costs, to increase with the rise in annual salaries. "Drewry’s analysis of recent pay deals underpins our previous expectation that global average dock workers’ wages will rise by 6-9 percent in 2023."

Annual tariff increases are expected to have helped offset the loss of storage revenues in H123 but higher manpower costs will keep margins under pressure and falling cargo demand could lead to diseconomies of scale. "Despite economic headwinds, Drewry expects container terminal operator earnings to recover through the course of the year on reduced cost pressures and inflation-linked revenue protection."

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