Razon says ICTSI’s Mexico business at risk from US-China trade conflict

MANILA, Philippines — The trade war between the United States and China may affect the global economy, a validation that US President Donald Trump remains the biggest threat to global growth, ports tycoon Enrique K. Razon said yesterday.

 A full-blown war between the two superpowers could affect International Container Terminal Services Inc.’s (ICTSI’s) port in Mexico where most goods going to China pass through, he said.

Razon was quick to add that if China seeks other markets outside the US, it may also translate to new businesses for ICTSI’s other ports.

ICTSI owns and operates 30 container ports and terminals worldwide – from Manila to Madagascar.

“The outlook globally is good unless there is a disruption because of the trade war. The only risk is the naptha issue. A lot of goods going to China are from Mexico,” Razon said.

 “Trump is still a threat, even more so now,” he added.

Despite the possible trade disruptions, Razon believes the ports business will continue to perform strongly this year as it did in 2017.

“The year 2017 was the first time in many years that we saw synchronized growth in global trade across almost all markets and regions. The last half of the year also marked a turnaround for the container shipping industry where all the major carriers were profitable again for the first time since 2007.

The year was both steady for the company where we enjoyed organic growth in our operating terminals with a few exceptions, and a year of start-ups where we completed and started up four terminals,” he said in his report during the company’s annual stockholders’ meeting yesterday.

ICTSI posted a net income of $207.7 million last year, up seven percent from the previous year.

It handled consolidated volume of 9.15 million TEUs, five percent more than the 8.7 million TEUs in 2016, amid continuing improvements in global trade, the ramp-up in Iraq, new liner services in Mexico, and the contribution of new terminals in DR Congo and Australia.

 “Operations in Asia Pacific continue to account for the biggest slice of the group’s total volume for 2017 at 52.6 percent. This is followed by the Americas at 31.2 percent. Europe, Middle East and Africa accounted for 16.2 percent,” he said.

 Gross revenues rose 10 percent to $1.24 billion.

 For this year, Razon said the company has set a capital expenditure budget of $380 million “mainly for continuing capacity expansion in Manila, Mexico, and Iraq; completion of the Honduras expansion; equipment and infrastructure development in Papua New Guinea; and the new barge terminal in Cavite.”