port projects funding after the crisis toc americas, rio nov 2010

1

Port projects funding

after the crisis

- TOC Americas 2010 –

Rio de Janeiro 9-11 November

Michel Donner

Port & Maritime Transport Consultant

Michel Donner, Port & Maritime Transport Consultant2

Contents

Role of the port industry

Trade rebound

Congestion knocking at the door ?

Financing : less abundant, more expensive

Private capital flows to developing countries

Endangered concessions

Attracting finance for port projects


Role of the port industry

To serve the international trade of the Country, incarnated by:

• The Citizen (local and national)

• The Consumer

• The Economy

• The Exporter

• The Importer

Providing them with port services and capacity in time and in terms of quantity, quality, efficiency and cost

Enabling the national products to compete on the exterior markets on a “level playing field” or better.

Michel Donner, Port & Maritime Transport Consultant 4

Trade rebound

Merchandise exports, percent change

Source : Global Economic Prospects

10 Jun 2010 – World Bank


Volumes are back to 2008 level

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

1000000

deep

sea

full

TE

U Jan

-Ju

l

source Datamar

Brazil deepsea full TEU volumes Jan-Jul

2008

2009

2010


And so are the ships… and congestion

Source: Datamar AIS

3 Aug.2010


And so are the ships… and congestion

(2)

Source: Datamar AIS

3 Aug.2010


Berthing delays

13 1311

7

58

12

18

6

0

10

20

30

40

50

60

70

Santos Santos (2) Paranagua Rio Grande

Ave

rag

e w

ait

ing

ho

urs

Berthing delays - Brazil

2008-2010 (containerships)

2008 2010


Berthing delays

-6,0

-5,0

-4,0

-3,0

-2,0

-1,0

0,0

da

ys o

n ro

ad

s

1 - 21 Oct average 2.4 days

Santos berthing delays

72 vessel calls


Berthing delays

0,0

0,5

1,0

1,5

2,0

2,5

Berthing tim

e (days)

1 - 21 Oct avg 18hrs

Paranagua berthing delays

41 vessels


Berthing delays

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

Tim

e fo

r b

ert

hin

g(h

rs)

1 - 21 Oct average 6 hrs/call

RGR berthing delays

52 calls

Not enough ? … too late ?


Upcoming additional capacity

Santos Libra 300m quay 2011

Santos BTP I 1,1 mio teu/y 2013

Santos Embraport I 0,4 mio teu/y 2012

Itapoa (SC) TSC I 0,3 mio teu/y 2010

Portos, em busca de soluções 13

Regiões com problemas de capacidade

2008

Source : Drewry


Regions with port capacity problems

2010

Source :Drewry and own research


Less financial capital available, more

expensive

increased debt of high-income countries

public sector financing needs in high-income countries

competition for funds is increasing the cost of

borrowing

banks need to rebuild their balance sheets

increased risk aversion on the part of investors


Foreign direct investment flows (FDI)

0

100

200

300

400

500

600

700

2004 5 6 7 8 9 10 11 2012

$ b

n

Source : World Bank June 2010

Foreign Direct Investments flows to Developing Countries

FDI flows, $ b


Net private capital inflows to Developing

Countries will stage a modest recovery

Source : Global Economic Prospects

10 Jun 2010 – World Bank


Map of Endangered concessions

2 concessionnaires

breaking camp

Tender prequalification

conditions unclear, now under

Congress/Government review

Endangered

terminal

concessions

Resistance by

existing

concessionnaires

$ 105 mio. terminal

without concessionnaire

since 2 years

Only one

bidder nationalisation

Port congestion;

Uneven playing field; complex

environmental approval

procedures

No bidder; incumbent

concessionnaire

threatening lawsuit


Attracting financing for port

development projects

Non-traditional investors (ex. Pension funds, hedge funds) as well as commercial lenders have, mostly, left the scene, time-being. There are signs that some might start showing renewed interest, though.

It is still necessary to look for private investors because public funding is also under pressure.

Public-Private Partnerships (PPP) and the Landlord model remain the most adequate vehicle.

Operators remain the same, but, due much tighter financing availability, as well as for their own protection, they are much more cautious.


Attracting financing for port

development projects (ctd)

Over-ambitious or ill-timed public tenders run the risk to find few candidates

Difficulties encountered by ongoing concession projects in the region scare investors away

Port projects can take from 5 to 10 years to be commissioned

Risk aversion can be mitigated and overcome by:

Clear rules

regulation through contract

Alignment of respective goals & strategies

Level playing field.


Conclusion

Trade volumes recovery outpacing financing availability

Congestion is back in the same places as before the crisis

To fully play the role assigned to a country’s port system in terms of timely capacity development, Authorities need today to go out of their way to propose and facilitate the right projects that will attract the right private investors and operators.


Thank you very much for your attention

Illustration : Thierry Cap de Coume


Post Scriptum

I would like to make a final statement :

One may agree or disagree with the policies implemented by SEP, but the singlemost decisive achievement made under the tenure of Minister Brito is the completion of the program of dredging and deepening of the Brasilian ports.

This remarkable advance will change the landscape of the South Atlantic commercial navigation, and should go down in history as a decisive accomplishment.

The coming generations of the Brasilian port, trade and maritime communities will remain thankful.

port projects funding after the crisis toc americas, rio nov 2010

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