Maersk Group’s APM Terminals seeks ports growth in Africa, Russia

Monday, 2 September 2013 00:00 - - {{hitsCtrl.values.hits}}

Reuters: APM Terminals, the ports arm of Danish shipping and oil group A.P. Moller-Maersk, is investing heavily in fast-growing Africa and Russia to compensate for lack of growth in mature markets like Europe, its CEO said. Based in The Hague, Netherlands, the port operator has announced plans to develop a mega-port project and free-trade zone at Badagry, Nigeria, west of the capital Lagos and has plans to expand ports in Congo, Angola and Liberia. APM Terminals manages or operates 62 ports around the world and is involved in the development of seven new ports. “Africa is a promising market because of its raw materials, its minerals and its growing middle class,” APM Terminals chief executive Kim Fejfer told Reuters in a telephone interview. A trend towards outsourcing production from countries like China and Bangladesh to Africa was also contributing to boosting trade flows, he added. “We think the biggest growth opportunities are in emerging markets,” says Fejfer, adding that Russia too is a priority area for the group. Last September, APM Terminals purchased a 37.5% stake in Russia’s Global Ports from N-Trans for US$ 860 million to establish a foothold in the Russian cargo market.

Russia became member of the World Trade Organisation last August, which, according to Fejfer, will be a boost for shipping companies and port operators with activities there. “Russia’s WTO membership sends a positive signal on global trade,” Fejfer said. Fejfer said that APM Terminals is banking on Africa and other emerging markets where a fast-growing middle class demands more imported consumer goods. For the coming years, APM Terminals expects global annual economic growth at 4-5%, with growth in mature markets at just 0-2% but with emergent markets charging ahead at 6-7%. He said growth for port facilities was generally in line with GDP growth. In a 2012 strategy review A.P. Moller-Maersk said it set a goal for APM Terminals to earn annual net profit of US$ 1 billion by 2016. “I think it’s realistic. We have the right platform and a portfolio of investments in many places,” says Fejfer. The ports unit earned US$ 345 million in the first six months of 2013. Its invested capital stood at US$ 5.6 billion at the end of second quarter. APM Terminals has been forced to invest in larger cranes in several ports after Maersk Line launched the world’s biggest container ship on Asia-Europeroute. As long as four football pitches and 59 metres wide, the vessel is able to carry more than 18,000 twenty-foot containers . “We have cranes that can reach over 23 containers in all terminals on that route,” Fejfer said. The mega-ship is the first of 20 that Maersk will build and it arrived in Europe from its South-Korean shipyard this week on its maiden voyage. APM Terminals – the world’s second-biggest port operator after Hutchinson Port Holding, a subsidiary of Hutchinson Whampoa Ltd – was originally created to support Maersk Line, the world’s number one container shipping company. But volumes from customers outside the Maersk group grew quickly, by 7% in the first half of 2013 alone, and now amount to 50% of APM Terminals’ volume. APM Terminals, which also competes with PSA International, the world’s third-largest ports operator, is one of Maersk’s five core business units. The others are container shipping company Maersk Line, oil producer Maersk Oil, drilling and exploration unit Maersk Drilling and a unit focused on shipping services such as supply, tankers, tugboats and logistics.