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            november 15, 2019

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Automation adds to appeal of OOIL's LBCT for potential buyers


Buyer interest has been heating up in the highly automated Long Beach Container Terminal (LBCT) that has been on the auction block since last year, a requirement for its owner Orient Overseas International Ltd (OOIL) is to fulfil, in order to secure US approval that will pave the way for its merger with Cosco Shipping Holdings.
The Wall Street Journal reported one of the bidders, Yilport Holdings, is lining up US$2 billion in financing for the terminal's acquisition on the US west coast. Yilport, the tenth largest port operator in the world by cargo volume, is joining other potential bidders including EQT Infrastructure, Macquarie Group and Stonepeak Infrastructure Partners.
A deal for the Long Beach box terminal would provide a big boost to Yilport's business, adding capacity of three million TEU to the 6.4 million TEU in volume Yilport handled last year. Aside from the terminal's impressive size, Yilport chairman Yuksel Yildrim said that the fully automated facility "is one of the best terminals in the world."
The terminal is set to complete a nine-year project that combined three separate docks into one mega gateway, enabling it to handle 40 per cent of the volume coming into the port of Long Beach. Once complete, LBCT will be able to berth up to three containerships of 21,000 TEU simultaneously, reported New York's FreightWaves.
To handle that volume, LBCT invested in remote-controlled yard equipment and container stacking technology, among other types of automated port equipment.
While the full development of the terminal is not yet complete, the results of those investments are beginning to positively impact LBCT's earnings.
With the second phase of its expansion and automation project wrapped up in September 2017, the terminal generated an operating profit of $32.7 million last year, compared to a $5.9 million operating loss in 2017. Much of that gain came from lower operating expenses, which shrank by a third from 2017 to 2018 due to OOIL's investments.
LBCT's operating margin of 28 per cent last year beats that of Maersk's APM Terminals subsidiary and Cosco Shipping Ports, which both achieved a far lower operating margin of 18 per cent.
LBCT's results are in line with what port executives expect from automation, according to a report from consulting firm McKinsey. Their survey showed that automation could result in operating expenses declining up to 35 per cent through the introduction of automation.

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