KCT container moves second lowest in 10 years
The volume of containers handled at Jamaica's main cargo port, Kingston Container Terminal (KCT), during financial year 2013-14 was the second lowest in a decade, according to the company's annual report released last Wednesday.
The 833,309 containers handled generated revenue of $9.3 billion, but KCT ended the year with a loss of $882 million, said Peter Melhado, chairman of KCT Services Limited, the manage-ment company for the port operation.
Directors of KCT Services noted that the global economy showed some improvement during the review period as the recovery in developed economies, particularly the United States, gained traction.
However, while this develop-ment did much to boost business confidence, they said the recovery was not sufficient to generate robust growth in global container volumes. Consequently, containerised cargo volumes grew by a meagre 3.7 per cent in 2013, a respite which was insufficient to generate positive financial results.
Against that background, shipping lines reported low operating margins during 2013. The 19 carriers surveyed posted a combined operating income of $247 million, although only six carriers reported positive operating margins in 2013, among them CMA CGM, one of KCT's major clients, said the report tabled in Parliament.
A notable strategic response to the market challenges was renewed interest in operational alliances among shipping lines, driven by carriers' need to achieve economies of scale and associated reduction in cost as they seek to deploy larger, more fuel-efficient vessels, it said.
"The dynamic changes in the global container market and the responses of the lines, including our main clients, provided the context for KCT's operational performance and strategic thrust during the period under review," the directors said.
The 833,309 containers handled during the year represented a decline of 14 per cent compared with the previous year, and was the second lowest recorded in the last 10 years, the lowest being 796,722 in 2005, KCT said.
Just 11 per cent of the volumes handled was for the local market, and approximately 30 per cent of the containers handled were empty, the report said.
It pointed to a report by the Economic Commission for Latin America and the Caribbean, which noted that sluggish exports and slower growth prospects for the world economy accentuated the slowdown in port activity in Latin America and the Caribbean during the first half of 2013.
Melhado said that whereas global trade is yet to achieve levels seen in previous years, industry experts believe that the expansion of the Panama Canal will realise a new phase for transshipment in the Caribbean, although the prospect is conditioned by the efficiency and competitiveness achieved by the Canal.
"As such, our outlook is cautiously optimistic for growth in transshipment volumes as a result of larger vessels transiting the Canal and the gradual recovery of the world economy," the chairman said.
KCT said contracting new businesses - new lines or additional volumes from existing customers - has become increasingly difficult given the current global trends and conditions.
"Given the increased competitiveness in the region and lack of prospective new business, KCT focused on maintaining the current customer base by intensifying efforts to engage customers on a regular basis and providing a forum to have customers' issues aired and addressed timely," the report said.
It said a recent debt restructuring by ZIM - KCT's largest customer - which contributes 56 per cent of the terminal's annual volumes, further indicates the continued financial losses being experienced by shipping lines.
CMA CGM, KCT's second-largest customer, contributing 32 per cent of the terminal's annual volumes, continues to operate profitably.
KCT is owned by the Port Authority of Jamaica. The terminal has throughput capacity of 2.8 million TEUs.
The port is projecting 914,732 container moves this financial year ending March 2015 - some 89 per cent of which is expected to be transshipment cargo - and revenue of $10.3 billion.