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The value of container terminal investment to ocean carrier strategy.

Pawlik, Thomas, Stemmler, Lars, Baird, Alfred and Helch, Manfred (2011) The value of container terminal investment to ocean carrier strategy. Maritime Economics & Logistics, 13 (3). pp. 319-341. ISSN 1479-2931

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Abstract/Description

In the current adverse economic environment, container lines strive to cut costs and secure cash flows in order to remain solvent. A number of container lines have invested in container terminals whose divestment could be an opportunity to raise finance. Here we consider whether a short-term divestment strategy aimed at generating liquidity quickly is more attractive than the continuation of a long-term strategy of sustained investment in terminals. At present, carriers cannot expect to sell any terminal participation at pre-crisis price levels when earnings multiples of up to 20 times were paid. The study evaluates the potential impact of container lines on the financial performance, assuming a strategy of divestment of terminal activities. Key questions addressed in this context relate to the current value of a terminal investment and what value it offers towards a shipping line's strategy, and hence its balance sheet. In other words, what is the trade-off between short-term gains derived from divesting terminal activities as opposed to long-term value creation of these activities for shipping line operations. The article reviews carriers with terminal investments and compares them to maritime terminal operators. The methodology draws on the Economic Value Added® as a risk-adjusted performance measure.

Item Type: Article
Print ISSN: 1479-2931
Electronic ISSN: 1479-294X
Uncontrolled Keywords: Container shipping; economic value added; terminals; investments; valuation; freight transportation; economic aspects
University Divisions/Research Centres: Edinburgh Napier University, Transport Research Institute
Dewey Decimal Subjects: 300 Social sciences > 380 Commerce, communications & transportation > 387 Water, air & space transportation
Library of Congress Subjects: H Social Sciences > HE Transportation and Communications
Item ID: 5201
Depositing User: Mr David Main
Date Deposited: 10 Apr 2012 14:22
Last Modified: 30 Nov 2012 16:20
URI: http://researchrepository.napier.ac.uk/id/eprint/5201

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