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The shipping & ports industry has been facing dramatic changes in recent years. While global demand for transportation services remains strong, the deregulated market place is forcing individual companies to compete harder for new and existing customers. As cost pressures and service demands escalate, shippers and carriers are collaborating strategically to share resources and information while also realising economies of scale. Business cycles are becoming shorter so all players have to be quick to respond to market forces and continually anticipate change.

Recent mega mergers and acquisitions are affecting the global water transportation scenario in a big way. Key areas affected are destination ports and transhipment hubs. A transformation in logistics chains is also expected. New routes are expected to open as competition between the big players intensifies, resulting in strategic alliances between shipping lines and ports. Bigger players will enjoy increased bargaining power and container business will move to terminals preferred by these respective players.
Big port operators have recently been on a buying spree with examples such as Dubai Ports buying CSX World Terminals and PSA taking up a stake in Hong Kong International Terminals. In the future, customer volumes for ports on certain routes will have to be matched with port capacity to ensure port profitability. As a result, terminal operators will need to be smart and ‘think on their feet’. Port operators might be faced with issues such as capacity to meet demand, sustainable tariffs to give reasonable returns, management of port congestion, port security and fuel prices.

Another important factor impacting the water transportation industry is the ever increasing ship sizes. The 10,000 TEU vessels are already here. Fewer and larger players continue to emerge, as port operators and their privatisation lead to potential for M&A activity. Increasing involvement of the private sector is already providing the necessary capital and technical expertise, while new technology is bound to give rise to new opportunities. According to industry experts, if the current performance and utilisation levels by ports and shipping companies are maintained, then by 2008, additional port capacity will have to be created in order to meet forecasted global demand. In fact, a doubling of port capacity might be required by 2012.

Deloitte´s shipping & ports group specialises in providing professional services to the water industry and reaches across the whole spectrum including cruise lines, ferries, cargo shipping ports and harbour authorities among others. Our main objective is to develop solutions to assist our clients resolve the issues affecting them and the complex industry environment in which they operate.

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