Global container terminal operators have seen consistent profit margins in the range of 20 percent to 45 percent in recent years.

Even in 2009, when the storms of global economic volatility were raging and volumes fell by nine percent, container terminal operators maintained their margins, according to research from Drewry Maritime Research.

But the researchers at Drewry wonder whether the global container port industry may be entering a new phase, where those kinds of robust margins are no longer sustainable.

The industry enjoyed double-digit growth as the global economy emerged from the Great Recession, rates which have since plateaued to around five percent per year.

In 2015, ports grew by around one percent and in 2016 it that rate will be around 2.5 percent, according to Drewry.

“These are the lowest growth rates ever seen by the industry apart from in 2009,” states a Drewry report. “The industry has adjusted to a new normal of five-percent growth per annum, but what if the new new normal is less than half of this?”

There are several factors which suggest rough waters ahead for port terminal operators, according to Drewry. Container ship sizes have been increasing dramatically in recent years, a phenomenon not seen in the run-up to 2009. Bigger ships mean lower-frequency services and greater volume peaks.

Larger carrier alliances means that the bargaining power of terminal customers is on the rise. “This is a double edged sword though,” says Drewry, “because as ships and alliances get bigger, the choice of ports and terminals that can accommodate them reduces.”

Acquisitions in the port terminal business has intensified in recent years, putting upward pressure on prices for these companies and downward pressures on returns given the challenging shipping environment.

The Drewry report envisions several possible scenarios to ameliorate the situation, none of them all that likely or attractive. Terminal operators and shipping lines could cooperate “to mitigate the negative impact of larger ships and alliances.” Terminal operators could demand significant price hikes from shipping lines, but it is doubtful whether price increases would stick.

Terminal operators could accept lower margins and returns and some of them could choose to leave the market. Or, they could refuse to invest in new capacity on the grounds that the returns are insufficient to satisfy their shareholders. “This is an extreme option that will in effect leave shipping lines with nowhere to berth their large ships,” says the report.

“The global container port and terminal industry is on the cusp of a critical turning point,” the report concludes. “To safeguard the provision of suitable capacity and productivity for the long term, changes will have to take place to ensure sufficient returns on investment for port operators. Something has to give.”