China port volumes up in first half but slowdown forecast

The recovery in foreign trade has pushed up China container traffic dramatically, taking the industry by surprise and resulting in a temporary shortage of boxes. However, analysts do not expect this sudden good fortune to continue in the second half.

According to the Ministry of Transport, because of the delayed impact of the European sovereign debt crisis, "the growth in container volumes is expected to slow down in the second half of the year".

Analysts also said the container shortage could be short-lived with an anticipated slowdown in export growth.

In the first half of 2010, China coastal ports handled 61.9 million TEUs, up 22.1 percent, a feat undreamed of a year ago, even taking the favourable comparisons into account. Lianyungang, Yingkou and Ningbo-Zhoushan ports saw the fastest rebound.

Ningbo Port saw its container throughput soar 34.4 percent to 6.27 million TEUs from January to June, according to port authorities. General cargo volume rose 27.7 percent from last year to 159 million tonnes. The recovery in foreign trade enabled the port to resume 19 ocean routes.

Yingkou and Lianyungang saw a sharp rise in first half figures also with the former recording a 36.1 percent growth to 1.65 million TEUs and the latter showing a whopping 40.9 percent growth to 1.89 million TEUs.

The top port, Shanghai, posted almost 19 percent growth, handling 13.85 million first-half boxes, while second-ranked Shenzhen saw throughput up 29 percent to 10.43 million TEUs.

The strong recovery caught a number of carriers by surprise and created a shortage of containers, but it appears the shortage was greatly overestimated by the container lines, some of which have dropped plans to charge for "equipment repositioning".

"The rebound does not mean a full recovery of international trade," said Ren Yuan, chief of shipping consultancy division of Fast East International Leasing Co, adding that it was likely shipping rates will rise further.

The Shanghai Shipping Exchange ended the the first half of the year with a 43.1 percent hike in the New Shanghai Containerised Freight Index to 1,581.85 points from less than 1,000 points around January 1. But the index fell 2.69 percent to 1,579.16 in the second week of July.

The China Containerised Freight Index rose 16.7 percent in the first half to 1,171.54 points and increased slightly in July.

The freight rate from Shanghai to Europe was US$1,999 per TEU in January and peaked at $2,150 in February. It slid downhill to $1,850 in May and climbed marginally to $1,870 by last month.

Industry analyst Chen Yi attributed the sudden drop to the release of extra capacity on the key route and with the approach of the peak season, he believed the lines would continue to increase capacity.

But he anticipated after the peak season lines would be forced to again lay up vessels following the economic upheaval in European nations.
"The rate could go up further but it will not be easy for it to return to $2,200 per TEU in the second half of the year," Chen said.

With the rise in foreign trade, lines have been placing more orders with shipbuilders. South Korean yards have so far skimmed off the cream of the orders from lines such as Evergreen and NOL, but China's shipbuilders are also receiving orders.

However, this rush to buy new vessels could drive the shipping sector back downhill, warned Liu Weichang, an industry analyst. He noted that besides finding cargo for the 380,000 TEUs of vessel capacity lying idle, the lines had to also absorb the 4.16 million TEUs on the way in the form of newbuildings in the next few years.

"By the end of May, the idle container capacity was about 550,000 TEUs. The delivery of new container vessels could amount to 900,000 TEUs by the year-end and the trade could absorb 400,000-500,000 TEUs in the latter half of the year," Liu said. "By year-end there could be one million TEUs in idle capacity.''

 

2009 China first half container throughput (million TEUs)
Throughput Growth
Total 50.56 -10.7%
Shanghai 11.66 -15.6%
Shenzhen 8.04 -21.1%
Qingdao 5.101 2.0%
Guangzhou 5.10 14.5%
Ningbo-Zhoushan 4.66 11.0%
Tianjin 4.16 1.9%
Xiamen 2.12 14.0%
Dalian 2.10 -1.4%
Lianyungang 1.34 0.4%
Yingkou 1.21 20%

2010 China first half container throughput (million TEUs)
Throughput Growth
Total 61.90 22.1%
Shanghai 13.85 18.7%
Shenzhen 10.43 29.0%
Ningbo-Zhoushan 6.27 34.4%
Guangzhou 6.01 16.9%
Qingdao 5.68 11.4%
Tianjin 4.71 13.1%
Xiamen 2.74 28.3%
Dalian 2.45 16.6%
Lianyungang 1.89 40.9%
Yingkou 1.65 36.1%
(Source:www.cargonewsasia.com)