Quality comes first for port growth

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By Ding Qingfen (China Daily)
Updated: 2009-02-16 07:57

Lianyungang Port in East China's Jiangsu province handled more than 100 million tons of freight last year, most of which was for exports. [Asianewsphoto]

Despite being battered by the ongoing global financial crisis, China's shipping industry hopes to return to calmer waters by the latter half of this year.

The nation's major ports, whose business has shrunk sharply since late last year thanks to nose-diving exports, are making the most of the central government's 4 trillion yuan stimulus package, upgrading themselves into logistics centers by building dry hubs, adding domestic shipping lines and expanding into barge, railway and road transportation.

For example, a 500,000 sq m logistics center is under construction involving a total investment of 1.8 billion yuan at Shenzhen Yantian Port.

Freight vehicles will be able to load and unload goods for stockpiling or further transfer at the logistics center, reportedly the largest in China.

However, China's largest export-oriented port has been hardest hit and witnessed historically sluggish business last year as demand for Chinese goods dropped dramatically in the United States and the European Union.

Yantian has 86 shipping lines under operation, of which 69 run to the US and Europe.

In the first half of 2008, Yantian's container throughput fell 5.3 percent year-on-year, the first decline since the port opened 14 years ago, and its corporate assets and profit fell 2.2 and 13.8 percent year-on-year, according to the port's financial report. Meanwhile, the port's share price fell a staggering 171 percent from a high of 19 yuan in January last year to a mere 7 yuan in June 2008.

Depressing prospects

Yantian is by no means the exception to the rule, with all of China's ports hit by the global financial crisis.

According to statistics from the Ministry of Transport, the cargo throughput handled by Chinese ports last November was 460 million tons, an increase of just 0.5 percent year-on-year, the slowest growth in the past decade, and the cargo throughput for exports even witnessed negative growth. Both cargo throughput and cargo throughput for exports enjoyed double-digit growth on a yearly basis in the first half of 2008.

Shanghai, China's second-largest port next to Hong Kong, saw its share price dive 190 percent between January and December 2008, while Tianjin, the largest port in northern China, suffered a fall of 220 percent.

"Ports in the southern part and coastal areas were more severely battered than the northern and inland regions," said Wu Yunying, a shipping analyst from Changjiang Securities.

Considering the ongoing economic woes of the US and the EU, Chinese ports "cannot expect to resume growth until the second half of 2009", Wu predicted.

But Li Wuzhou, director of China Shipping Industry Association, said "that is the most optimistic forecast".

Chinese exports fell for the second consecutive month in December 2008, dipping 2.8 percent year-on-year, after decreasing 2.2 percent last November. Experts expect this decline to continue through the first half of this year.

The local bulk cargo market cannot recover for at least two years, Wu predicted. China's iron ore import volume is expected to reach 400 to 430 million tons in 2009, dropping a little from 2008 and container throughput volume growth is expected to remain below the 2008 level, at around 7 percent, compared with 15 percent between 2004 and 2007.

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