Here's the reason why Contship Italia opted to leave Cagliari
Only 44,000 TEUs handled in the first 4 months of the year. Battistello: “Competition among shipowners made all ports which can't handle large quantities to become non-competitive"
Constant traffic reduction, 3,5 million Euro loss in 2019 and no reverse trend envisaged.
For this reason Contship Italy, majority shareholder in Cagliari International Container Terminal – CICT (whose Cacip consortium controls 8% shares) finally determined to shut down the terminal by next August 1st 2019 with subsequent collective redundancy for the whole staff.
As substantiated by the failed transactions negotiated with major customer, German liner Hapag Lloyd and with other shipowners, a wide variety of reasons caused such irreversible trend, from shipowners mergers to the lack of competitiveness versus other Mediterranean transshipment ports, as outlined by Contship Italia's President, Cecilia Eckelmann Battistello.
First of all, latest mergers decidedly overturned containers transport market, also hurting road transport, stated Battistello, adding that containers sector suffered particular changes which has not ended yet.
Moreover, the lack of innovative road and railway structures connecting port area to major European markets and an adequate local consumers area, definitely reduced competitiveness and any potential relaunching for CICT terminal. Furthermore an intermodal transport system couldn't be developed”.
Since late 2017, major customer, Hapag-Lloyd, and other companies backed by the German liner, “determined shifting trade to other Mediterranean ports considered more competitive than Cagliari”, such decision caused a drastic drop in containers volumes handled by CICT”.
Going down from 617,000 TEU recorded in 2016 to 432,000 TEU in 2017, 214,000 TEU in 2018 and just 44,000 TEU in 2019 first 4 months.
The handling drop also affected other ancillary services provided by CICT and most of all financial results: The afore mentioned drop in containers volumes produced a drastic drop in revenues and – except for fixed unchanged cost – showed an exponential loss increase.
In 2016 CICT recorded over 4 million Euro profit, dropped to 500,000 Euro profit in 2017, while 2018 recorded 3.3 million Euro net loss which drained CICT capital, previously reaching 670,00 at December 31st, 2018.
Considering such loss and the whole negative trend “further deteriorated in early 2019” (2 million Euro net loss at April 31st 2019), on May 2nd CICT board's assembly determined to cover 4.2 million euro through Contship Italia”.
However such commitment would not allow CICT, which continues worsening their results, to start operating again: considering handled annual volumes would (optimistically) reach the ones recorded in 2018, overall 3.5 million Euro losses would be recorded, which is 3 times higher thatn the capital and therefore unbearable by CICT.
The enduring negotiations between the company and Hapag Lloyd couldn't convince the German carrier to bring trade back to Cagliari, with new customers, particularly CMA CGM and Maersk Line, definitely corroborating the crisis CICT is going through.
On June 7th Cagliari International Container Terminal's board announced the launching of the collective redundancy procedure for the whole 210 employees which could not be re-engaged in other companies of the group, while business will be shut down on August 31st 2019.