International Container Terminal Services Inc. (ICTSI) has allotted US$380 million for capital expenditures (capex) in 2019, much of which will be used for projects in the Philippines, according to group chairman Enrique Razon, Jr.
Similar to last year’s, the budget will be utilized mainly for ongoing expansion projects in Manila, Mexico and Iraq, as well as for equipment acquisition and upgrades and for maintenance requirements, Razon said in a speech during the company’s recent annual stockholders’ meeting.
In an interview with reporters on the meeting’s sidelines, Razon said a big chunk of the 2019 budget will go to the Philippines, particularly to developing its flagship Manila International Container Terminal’s Berth 7.
The budget will not cover costs of developing the South Port Container Terminal at the Port of Sudan, whose 20-year concession was awarded just last January to the Manila-based port operator through wholly owned subsidiary ICTSI Middle East DMCC.
Referring to a study by maritime consultancy firm Drewry, Razon said “vessels’ sizes are likely to increase further in the next few years even as the outlook for global container port throughput remains healthy,” adding “utilization levels are expected to rise across most of the regions.”
He said this means berths that can handle the largest ships “will be the most highly utilized,” while older berths will be underutilized.
“These indications, coupled with global trade dynamics, our drive in maintaining positive volume growth organically and through M&A [merger and acquisition], our focus on cost and operating efficiency to make our terminals the preferred port of call in their respective countries and regions, all combine to provide a case for cautious optimism in 2019,” Razon said.
“Even if global trade doesn’t grow at all, which is more or less my expectation… you’ll have strong growth in places like Africa and some other markets,” he said.
The US-China trade war, meanwhile, “has [had] no effect so far” on ICTSI’s operations in China.
But he noted that China, as a possible effect of the trade war, might have to export some of its capacities to other areas, benefiting Asian countries with these additional volumes.
“Who knows? The Philippines may benefit from the trade war,” he added.
