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LONDON-A new report from Drewry Shipping Consultants Ltd. says the drop-off in global cargo volumes may force some owners to sell their interests in shipping terminals, creating opportunities for investors and terminal operators with access to funds to pick up assets or contracts at bargain prices. Drewry researchers say the most likely terminal portfolios to become available are those owned by shipping lines.

According to the firm’s Annual Review of Global Container Terminal Operators, released in early October, global container port throughput is likely to shrink by more than 10% this year, with little or no growth in 2010. The report projects a modest recovery the following year, but it says most regions will not see throughput return to ’08 levels for three to four more years. As a result, Drewry researchers say, “With all container lines under severe financial pressure – and some bankruptcies expected – the sale of some terminal assets owned by carriers in the near future seems likely.”

According to the report, earnings were down last year for a number of global terminal operators compared to ’07, though it says all global container terminal operators for which data was available made a positive EBITDA/net profit. But the researchers point out that a much weaker financial performance can be expected this year, given the sharp contraction in container volumes.

At the same time, they add, many international terminal operators are likely to be able to maintain a reasonably strong EBITDA margin in percentage terms. “This will be a remarkable achievement in the worst year the industry will have ever experienced,” the report notes.Despite the decline in cargo volumes, Drewry says most leading global container terminal operators are schedule to add capacity to their networks by 2014, though most have adopted a more cautious approach, with an unprecedented number of expansion projects shelved, deferred or canceled. The report writers say they don’t know the precise scope of down scaling because the lack of “transparency” among global operators makes accurate assessment of development plans impossible.

Drewry researchers says the valuation of port and terminal assets has shifted significantly downward over the past 12 months. They note that port companies were being valued and bought at multiples in excess of 20 times EBITDA during the peak period of ’05-’07. But with the crash in demand and the credit crunch, they say anecdotal evidence suggests that multiples of around 8-12 times EBITDA are the new benchmark. “[B]ut there have yet to be any deals go through to cement these new levels in the market,” they add.

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