Westports the first shipping hub to suffer a downside from alliance reshuffle

Malaysia’s Westports facilities at Port Klang has lost out to nearby competitors in the ocean carrier alliance reshuffle.

Westport saw an overall volume decline of 3% for the first five months of the year – the first major global hub to reveal the impact of the alliance changes.

In an announcement to the Malaysian stock exchange, Westports disclosed that its throughput for April and May had been “lower than originally expected”, at 1.55m teu.

After reporting a 1% growth for the first three months, compared with the same period last year, at 2.4m teu, Westports said in its quarterly financial report that it was targeting “similar container throughput as that achieved in 2016”.

In full-year 2016, container volumes at Westports surged 10% to 9.95m teu, boosted by growth from its major customers, CMA CGM and UASC.

Westports said: “We had originally expected to grow our volume this quarter due to increased amounts of transitional moves or ad-hoc calls as a result of the changes in shipping alliances. However, these did not materialise as planned, due to the fact that competition for these volumes was intense.”

But more importantly, Westports described the 12 services in the restructured Ocean and THE alliance networks that will be calling at its facilities as “more eastbound-focused than westbound” and will thus call at Port Klang “only on the backhaul segment of their voyage”. Those vessels likely to be carrying far more empty containers.

Therefore, it said, “with the more moderate container throughput”, it now expected the container volume for the year to be “lower than the previous year by a single-digit percentage”.

The biggest alliance restructure in the history of container liner shipping will result in winners and losers among the global port hubs, which will be seen when they post the results of their first quarter of trading under the new arrangement.

Many of these ports have been obliged to invest heavily in upgrading landside facilities to accommodate the higher peaks associated with the huge roll-out of ultra-large container vessels (ULCVs) by the alliances.

A Linked-In post by Neil Davidson, senior analyst ports & terminals at Drewry, wonders how many terminals around the world now have a lower capacity than before, due to the introduction of ULCVs and the resulting volume peaks, even though they have the same infrastructure and equipment.

He explains that the “pain of these peaks is felt most acutely in the yard”; in that more landside space is required to handle the same annual volume.

“If you can’t, or don’t want to expand your yard,” said Mr Davidson, “and all other factors remain unchanged (especially dwell time), then the capacity of your terminal shrinks, quite possibly by a significant amount.”