Are China’s Ports at a Turning Point?


China’s ports could be set to hit a ‘turning point’ in 2016, amid reports of a potential swing from profits to losses in times of more severe port overcapacity, according to Shanghai Daily.

Wang Shouyang, Director of the Center for Forecasting Science at Chinese Academy of Sciences, said: “Central and local governments must now pay attention to the consequences of redundant port construction.”

Xie Gang of the Center for Forecasting Sciences said: “Policymakers should avoid further redundancies and overcapacity.”

An annual forecast released by the centre of the top 20 container ports globally found that negative growth is expected in areas such as Dalian and Hong Kong.

In a previous article by PTI, it was found that overcapacity is a big risk for ports globally, and although China and Southeast Asia are set for huge growth by 2030, there is concern that planned capacity will outpace demand.

Technical Paper: Huge Overcapacity: In Absence of Global Demand

The annual growth at China’s mega ports is set to grow 6% until 2030, which is also set to reach over six billion tonnes by 2030.

Jonathan Paul Roach, Container Market Analyst at Braemer ACM Shipbroking, said: “China’s container port capacity has expanded exponentially in the past few years in correlation with globalisation. In the short-term, aggressive expansion may cause marginal over capacity but China is likely to remain a key exporter and manufacturer.

“Another issue for individual terminal operators is the trend of liner consolidation, which could cause changes in terminal customer base, with some terminals seeing gains and others seeing losses.”

PTI previously found that capital expenditure costs and operational expenditure costs are increasing for terminals, with demand relatively static.

Drewry argue that the new nature of demand is for less fragmented terminal capacity (fewer, bigger terminals needed in each port).

This will require consolidation of terminals, both physically and in terms of ownership.

However, despite the difficulties that overcapacity presents, China Merchant Holdings International recently saw its volumes surge by 8.7% from January-May, 2016.

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