China's ports ease overcapacity from highs of 2009

CHINA's port operators claim that the situation of overcapacity, estimated to be up to 40 per cent more than current demand by China Merchants Holdings International (CMHI)'s chief economist, was improving.

A report by London's Containerisation International cited CMHI's Su Xingang as saying at the World Shipping Summit in Guangzhou that it could take more than three years for demand to match capacity at ports that were well operated, and up to five years for the others, even if no new terminals were constructed in the country.

But APM Terminals Asia Pacific chief Martin Gaard Christiansen argued that while there was still some overcapacity in China, it was not nearly as bad as in 2009, and that volumes this year had "rebounded much more strongly than anticipated".

Mr Christiansen believes "there wasn't so much an issue of over capacity, more that since the downturn, ports in China were becoming more adept at balancing capacity with market demands," the report said.

"Port groups have been more disciplined in slowing capacity build-up and are now looking at adding capacity. Previously, there would be large port developments of say four million TEU. We expect capacity will be added in smaller chunks - two berths at a time - when capacity is needed," he said.

Shanghai International Port Group's (SIPG) Jiang Haitao, secretary of the board of directors echoed this sentiment: "As a whole, there's a structural capacity imbalance in China's port industry, while the situation differs from region to region. In Yangtze River Delta region, at the current stage, capacity basically meets with its market demand."

DP World Shanghai chief Kris Chang said most of China's terminals had emerged from the economic downturn suffering from overcapacity.

"The problem is that construction is planned a couple of years in advance, so for it to be started in 2009 - the year capacity was running far above market projection - it was planned in 2007. We are now back to the volumes of 2007, so the current capacity is good for another four or five years," said Mr Chang.

"Everybody has slowed down capital investment, which has helped," he said, adding that DP World had managed to convert some of the new capacity in its Qingdao terminal that recently opened to bulk, "otherwise there would have been too much capacity for the container terminal."
(Source:www.schednet.com)