Market Overview

Contship Italia Completes Sale Of Gioia Tauro

Contship Italia Completes Sale Of Gioia Tauro

Contship Italia SpA has sold its 50 percent share in the southern Italian port of Gioia Tauro, which includes the Medcenter Container Terminal (MCT), to Mediterranean Shipping Company (MSC) a source told FreightWaves. Eurokai owns two-thirds of Contship Italia SpA; Eurogate owns the remaining one-third.

MSC already owned the other 50 percent of Gioia Tauro. According to banking experts, the deal will cost MSC around €120-130 million ($135-146 million) to secure the other 50 percent stake in the southern Italian transhipment port. MSC holds the equity through its investment vehicle, CSM, which is 51 percent owned by Terminal investment Limited (TiL) and Global Infrastructure Partners (GIP) which has a 49 percent stake.

Because the deal was a closed negotiation there was no public tender. Therefore, the exact price that MSC paid remains private.

According to Neil Davidson, the ports and terminals spokesman for shipping consultants Drewry, "MSC and Eurogate had not been getting on in Gioia Tauro for several years, it was not a comfortable joint venture."

Davidson said there were many disagreements between the partners over the years with one of the key sticking points including investments at the facility. "It sounded like one or other [partner] had to go," he said. Drewry pointed out that MCT was the last major Mediterranean transhipment hub to move from independent ownership to being affiliated with a carrier.

A source close to the deal told FreightWaves that the sale was inevitable given the lack of understanding between the two companies. MSC was keen for Contship Italia to invest in container handling equipment, including new gantry cranes and straddle carriers. For its part Contship Italia was ready to make the investment if there were capacity guarantees.

"MSC was just not willing to make a commitment to volumes, and even if they did it was not clear if the company would honor those commitments; it had given similar assurances twice before and had not met them," he said.

Mediterranean transhipment hubs are virtually all in the hands of carriers with the exception of a small terminal in Limassol, Cyprus, and TC2 in Tangier, Morocco. Both are operated by Eurogate; however, CMA CGM has a share in TC2 in Tangier. "All the smaller hubs [in the Mediterranean] have struggled, including Cagliari and Taranto," said Davidson.

Negotiations between Contship Italia and the MSC-backed consortium had continued for nearly three years. At the peak of its operations MCT handled in excess of 3.5 million twenty-foot equivalent units (TEU), but following the financial crisis in 2008 and the departure of all other major lines, MSC was the sole customer at the port. Volumes had declined to around 2.5 million TEU.

Davidson pointed out that there have been other changes to the container shipping market that have caused the Mediterranean transhipment ports to suffer. Terminals only have three major customers to choose from following the growth in modern alliances – the Ocean, 2M and THE alliances. In addition, the redefining of the alliance system led to orders of ultra-large container ships (ULCS) that offer economies of scale. However, over-ordering of tonnage and a decline in demand growth has meant that these ULCS have made more direct port calls as a consequence.

"Direct calls mean that the ship operators can use up more capacity," explained Davidson.

In addition, liner shipping companies such as Maersk have developed their operations with a two-hub strategy in the Mediterranean now the favoured option. Maersk operates terminals in the eastern Mediterranean at Port Said (the northern entrance to the Suez Canal) and at Algeciras, near the Gibraltar Straits, in the west.

Regulatory approval is still needed for the MCT sale to MSC.

Image sourced from Pixabay

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Posted-In: acquisition container FreightNews Eurozone Global Markets General


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