China’s northeast ports hit the ‘build’ button

China’s northeast ports defied the export slump and actually reported growth in throughput in the first nine months of the year. Tianjin, Qingdao and Dalian are the big three but there are several other container handling ports that have also been posting positive numbers.
This is impressive, considering executives down at the once busy big Yangtze River and Pearl River delta ports spend most of their time these days trying to get out of the way of falling throughput charts.
But there is a downside to this success. Provincial and municipal authorities in the northeast are so excited by their booming terminals that they are falling under the old hub spell.
The ports all want to become known as the “shipping centre of northeast Asia” and are competing frantically to improve their services. This means huge financial support is being directed to boosting terminal and berth capacity.
The problem is that only one port will emerge as the main hub for the region and the rest will be left to deal with the brutal economics of overcapacity. And the road to that point will not be a smooth one, either. As everyone goes for gold there is bound to be a vicious price war.
Officials involved don’t see a problem with that. They reckon the competition will make the ports more efficient and a price war is “beneficial for the market”.
Of course the market benefits from low prices, but what is the actual point here? Why not instead identify a hub port and work towards developing it instead of throwing the idea into the ring and going with the last port standing.
If it were up to me, I would aim at making Tianjin the main hub port of the region. It is close to Beijing and has plenty of room to expand, and its channels are all being deepened.
At least that would focus authorities’ attention on one port and enable it to come up with a masterplan, rather than encourging an infrastructure-building spree that pits ports against each other in potentially destructive competition.