China Merchants, Cosco Pacific to cut spending

China Merchants Holdings (International) and Cosco Pacific, the two biggest mainland port operators, plan to cut capital expenditure for this year because of slumping demand for industrial products, the South China Morning Post reported.

China Merchants, which operates and owns ports in western Shenzhen and invests in Shanghai International Port Group, will cut capital expenditure by 50 percent to between US$257.8 million and $322.2 million, from $515.5 million last year, deputy general manager Cynthia Wong Sin-yue was quoted as saying in a Merrill Lynch report.

The investment for next year would fall further to $193.3 million, as the company was cautious about taking on new projects, the report said.

Cosco Pacific, which operates and owns ports on the mainland, and in Hong Kong, Singapore and Belgium, also planned to cut investment by withholding some projects to which it had not committed, deputy managing director Kelvin Wong Tin-yau said.

Expansion plans in Qingdao would be partially put on hold, he added.

A Cosco Pacific source said six of the 10 new berths scheduled to be finished by 2011 would be postponed.

Cosco Pacific will also trim purchases of container boxes this year as demand is softening.

Wong predicted throughput at the company's container ports to have zero growth or even a five percent decrease.

China Merchants forecasts container traffic would be little changed this year, compared with a seven percent increase in 2008.

Total cargo throughput at mainland ports fell for the first time in at least seven years in November.

Source: http://www.cargonewsasia.com