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APM Terminals changes focus by offering more inland services to BCOs

APM Terminals is shifting the focus of its business strategy to provide more inland services to beneficial cargo owners (BCOs) rather than continue investing in deep-sea terminal infrastructure.

The company, which is one of the largest container terminal operators in the world, plans to develop more direct and closer business relationships with BCOs and offer more value-added services beyond the terminal gate, reported IHS Media.

"Liner customers are rapidly becoming fewer but there are thousands of landside customers large and small for us to also focus on. We have always done business with these customers and it is important for us to serve them well and ensure a better flow through the whole supply chain," chief commercial officer Henrik Lundgaard Pedersen was quoted as saying.

Mr Pedersen said the shift in strategy would lead to greater investment in people, products, facilities, and technologies to improve inland services such as distribution from ports to consumer markets, storage, and container stuffing and consolidation. The company also aims to improve processes at the terminal gate to better integrate the port infrastructure with the supply chains of importers and exporters.

The shift towards direct shipper service puts APM Terminals closer in line with fellow Maersk unit Damco, a freight forwarder and supply chain provider, and other third-party logistics companies.

"We will invest in these kinds of services and the facilities to provide them better service throughout the world. These investments are typically much smaller than those required to develop deep-sea terminal infrastructure."

Mr Pedersen said it was unlikely APM Terminals would invest in new deep-sea terminals in the coming years and the company was focused on completing pipeline terminal projects including those in Italy, Costa Rica, Morocco and Ghana.

"We have put a lot of capital into the ground over the past number of years and will take a breather from this for a while. We have such a massive portfolio that we will continue to divest non-core assets, but overall we are still a net investor [in deep-sea terminal infrastructure]."

APM Terminals is divesting its majority shareholding in its Zeebrugge operation in Belgium to COSCO Shipping Ports in a deal that closed earlier this month.

APM Terminals' inland service network currently comprises 120 operations in 37 countries and provides services such as inland transportation, warehousing and container storage, and cleaning and repair services.

Other examples of inland services currently offered by the company include stuffing and transporting containers for banana exporters in Ivory Coast; storing imported containers in Ghana and delivering them to customers by truck once they have been cleared by Customs, and weighing containers for export to provide verified gross mass information at multiple ports.

In the past two years, APM Terminals opened five new regional reefer depots in Peru. The depots are located in the key agricultural areas of the country and provide reefer services, container cranes, spare parts, skilled labour, cross-dock warehousing, and trucking to link the production regions with Peru's two container ports.

Two or three more locations will be opened by the terminal operator in 2018 to connect the agricultural regions with the APM Terminals facility at Callao port, Peru.

Mr Pedersen said, however, APM Terminals will continue to focus strongly on improving services to its liner customers.

"We will continue to do our utmost to improve productivity and efficiency for the benefit of our liner customers. We are ramping up efforts to serve them and have seen a few good wins in that area over the past few months."

APM Terminals reported a year-on-year decline in underlying profit of 13 per cent for the third quarter to US$110 million. The company reported a net operating loss of $267 million and a negative return on invested capital of 13.3 per cent, mainly owing to impairments of $374 million that it said were related to terminals in countries with challenging market conditions.

APM Terminals handled 29.4 million TEU during first nine months of the year, up from 27.6 million TEU in the same period in 2016.
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