Prospects of shipping company’s investment in container terminal business

Abstract

With the trend of globalization, container terminal industry has experienced several waves of privatization in the past half century. Within recent decades, together with pure terminal stevedores, shipping lines has emerged to be one of the main player in container terminal investment. The main purposes of vertical integration for shipping lines are gaining larger control in the supply chain, enjoy the secured terminal capacity and priority of facility utilization in order to support the core sea-side business. However, disadvantages come hand in hand with the potential advantages. Drawbacks can be in terms of distraction from core business, heavy burden of capital cost and fierce competition against pure stevedores who are more experienced. After the financial crisis in year 2008, most if not all shipping lines has been going through hard times to survive the downturn of business cycle. Last year has witnessed several major shipping lines sold their shares in the container terminal sector. There has been rumors predicting the trend that shipping lines are withdrawing from terminal industry back to the core shipping business. This paper aims to analyze the pros and cons about shipping lines’ investment in container terminal industry. The discussion is carried out about shipping lines’ considerations facing the ever larger alliance in the future and the competition against other players in the terminal business.