China ports cautious despite rise in volumes

Sharp increases in cargo volumes in the first quarter have not dispelled the shadow cast by the recession. The slow and wobbly recovery in demand leaves analysts cautiously optimistic about growth in trade the rest of the year.

Volumes for both general cargo and shipping containers at major ports recovered strongly in the first quarter, registering an estimated 22 percent growth compared with the same period a year ago, according to the Ministry of Transport.

Rising imports of coal, crude oil, iron ore and other mineral resources contributed to most of the growth, according to the ministry. In the first two months, imports of coal and manufactured foreign trade goods hit 31.25 million tonnes, 3.3 times more than in the same period in 2009.

The sharp growth in 2010 was partly explained by the drastic decrease in trade in the first quarter of 2009 as the financial crisis at the end of 2008 went into full swing. The container volumes handled by major mainland ports in the first quarter of 2009 recorded its first decline in two decades, dropping eight percent over the previous year.

Foreign trade volume in China in the first quarter of 2010 jumped 44.1 percent, the largest growth in a decade, according to spokesman of the National Statistics Bureau Li Xiaochao. This is partly because of the sharp drop last year and partly because of the hike in imports, which led to the first unfavourable trade balance for China in years.

However, the growth was still below the figures of 2007, indicating the ports may face serious difficulties in the coming months.

"The cargo growth is expected to continue for the rest of the year unless there is a fresh plunge in the global economy in the second half of the year," said an analyst from the China Communications and Transport Association.

The growth in foreign trade has been largely propped up by imports of mineral resources and automobiles with weak overseas demand for goods made in China. The domestic demand is suffering from excess capital and inflation worries.

Shanghai, the largest container port in China, saw its throughput rise 15.5 percent on average in the first quarter, reaching 6.48 million TEUs, according to port authorities. However, the growth slowed down in March to 8.6 percent, only about half the quarterly average. The throughput rise came mainly from foreign trade, which rose 32.6 percent. The general cargo volume grew 35.1 percent to 102 million tonnes.

Shenzhen, hit hard by the global financial crisis, saw its container volume pick up in the first quarter to 4.91 million TEUs, up 26.15 percent. Its peak also came in February, when reopened manufacturing bases in the region drove up its container volume by 48.4 percent over the same period last year. The Chiwan berths saw a 77 percent hike in container traffic in February.

In Dalian, Northeast China, the general cargo volume rose 21.2 percent in the first quarter over the same period last year, and container throughput was up 19.6 percent.

The average container growth from January to March was 12.7 percent for Tianjin Port in northern China, thanks to the opening of new ocean routes to the Mediterranean and South America.

However, port companies now face extra expenses to meet the global intitiative of lowering carbon emissions. The same is true for ocean carriers, which is likely to increase costs despite various measures such as slow steaming and increases in freight rates.

An executive of a Chinese container carrier said they have been signing contracts for around US$800 per 40-feet container on Asia-US West Coast trade, which is almost double the rate in 2009. The heavy losses suffered by container carriers in 2009 is a major reason cited by the lines for the rate increases as the economy starts recovering.

Carriers have been playing a cat-and-mouse game with shippers by increasing capacity slowly to buoy up rates amid fragile global trade, said analysts.

(Source: Cargo News Asia)