10 May (Lloyd's List) - OCEAN carriers are likely to explore an investment in North American terminal operator Ceres Terminals, while pension and infrastructure funds will also “undoubtedly” be in the running, according to Drewry analyst Eleanor Hadland.
Hadland told Lloyd’s List that Hapag-Lloyd would likely explore an investment in Ceres, while other liners with larger portfolios may also evaluate the opportunity.
The Wall Street Journal reported Tuesday that Australia-based Macquarie Asset Management was looking to offload Ceres for about $1bn, citing sources familiar with the matter. The sale is part of a wind-down of its Macquarie Infrastructure Partners III fund, which is expected to take 12-18 months, the WSJ reported.
Macquarie Infrastructure Partners first bought a 49% in the terminal and stevedoring company from NYK in 2015. The sale generated ¥34.5bn ($289m) for NYK in extraordinary income, according to a statement. The remaining 51% was transferred in 2019, with NYK reporting the transfer generated about ¥10bn ($89m) in extraordinary income.
Ceres, which handles cargo in some of the largest US east and US Gulf coast ports including Savannah, Virginia, Charleston and Houston, moves about 4.3m containers per year, according to its website. It also handles ro-ro, bulk and breakbulk, and cruiseships.
“On the plus side, the location of Ceres’ operations in east and US Gulf coast ports is beneficial as the underlying trend in these markets has been positive,” Hadland said, noting shifting US sourcing towards Southeast or South Asia, favourable US demographics, and east and US Gulf coast ports’ exposure to a broader range of trades.
East and US Gulf coast container ports have also benefited from diversions of discretionary cargo from the west coast, where uncertainty over a labour contract that expired in July last year has promoted disruption-wary shippers to redirect cargo eastwards.
“Ceres has also taken steps to change its competitive position in Savannah and Charleston — forming joint venture stevedoring companies with its major competitors to provide a consolidated service provider for container operations at each port,” Hadland said. “This action should have generated cost benefits for all parties involved in the joint venture.”
However, the market’s rapid slowdown and major economic uncertainties make the timing of the sale “unfortunate”, Hadland said. “There will also be concern regarding expiry of the dockers master contract in 2024 — with the US west coast contract remaining unsettled after 10 months, then undoubtedly would-be investors will be pricing this risk higher than they would have been back in 2020/2021.”
Macquarie did not immediately respond to a request for comment.
