Profit and Growth Opportunities in Container Port Logistics Software

Goldman Sachs Infrastructure Partner's investment in Carrix, Inc signals investor interest in high-quality, core infrastructure software systems. Whilst container shipping has been suffering from overcapacity of vessels, the competitive landscape for container terminal software suppliers is limited to a select number of vendors - TideWorks, Navis, Maher, Advent Inc, Cosmos - in a growing market in the global port operations industry. Goldman saw a substantial growth opportunity in Carrix.

Container liner companies like Maersk have evolved into a highly integrated logistics services with worldwide presence. The container logistics business is moving to a manufacturing business model with forecasting and advanced planning. Often they own their own terminals and are actively investing in new terminals in key locations. The trend is to merge air freight, trucks and container services. The European Union will shortly change customs regulations such that cargo must be declared on departure to the arrival port customs authorities. This will add new demands on container port  terminal operating systems (TOS's). These systems pay for themselves quickly.

Container registration is a core task. It is simply not possible for terminal to keep track of their container cargo without appropriate software systems. Today container logistic systems are fully on line so that containers can be tracked from door to door. Once a container terminal chooses a software system, it is difficult to change and move to another software vendor. Service and backup are essential. Software suppliers compete by leveraging proprietary algorithms. As time goes on, the technology advances in computing power.

The right container terminal operating system (TOS) ensures the long-term success of a terminal by being efficient, adaptable, cost-effective and scalable. Terminal operators need an automation system that enhances container terminal operational efficiency and supports future growth while reducing operational overhead and maintaining customer-focused services. For independent terminal operators, it is essential to have reliable, accepted TOS systems to maintain competitive advantage over alternative port terminals with liner company customers.

The leader in container port software is Navis, which is owned by Zebra Enterprise Solutions, which services over 400 ports worldwide. Cosmos was started by an Antwerp services company. Carrix is the parent company of SSA Marine and Tideworks Technology. SSA Marine is the largest U.S. owned, and privately held, marine terminal operator in the world, with over 120 marine and rail operations worldwide, including 11 container terminals in LA/Long Beach, Oakland, Seattle, Panama, Mexico and Chile. Tideworks has focused more traditionally on truck warehousing and is less interesting to terminal operators than competitors like Navis.

Both Piraeus Port Authority and APM Terminals in Rotterdam use Navis software systems. Latest Navis SPARCS N4 software has integrated two previously separate systems. It is a terminal operating system that is very maintainable and adaptable over the entire life-cycle of the product while allowing customers the flexibility and scalability they need to run their operations - from a single terminal to multiple terminals across multiple geographic locations, all within a single instance. It is priced at the lowest possible total cost of ownership (TCO).  As market leader, Navis systems are sold at a premium to competitor software vendors.

The large terminal companies make annual reviews of their software systems and future needs. APM Terminals, which is one of the largest container port terminal operators in the world, has prepared a comparative report on software vendors for external use with a look into the future with a five-year horizon.