Little need for another transshipment centre in Asia.
News that China Ocean Shipping Co (Cosco), the mainland’s biggest carrier, had abandoned its bid to build a shipbuilding and transshipment centre in the Philippine port of Sangley Point in Cavite hardly comes as a surprise.
The proposal should be firmly shoved into the “what the heck were we thinking” file in the executive offices of Cosco boss Capt Wei Jiafu.
The carrier was invited by Philippine president Gloria Arroyo in 2007 to collaborate in the giant project that would cost the Chinese line around US$5 billion. The project never materialized.
It is a pity for the people who live in and around Sangley Point, a few miles southwest of the capital Manila. The area is in desperate need of investment and if the project had gone ahead, much of the investment from Cosco would have gone into redeveloping the area.
But Cosco is a commercial shipping line and to plough $5 billion into a Luzon transshipment port would have been more philanthropic than sound business sense.
Transshipment ports need high volumes of container traffic to be successful and it is difficult to see how Sangley Point could prove attractive to carriers. It is situated across the South China Sea between Hong Kong and Singapore.
Shipping lines on the Asia-Europe or Asia-US route will not have any incentive to stop and transship TEUs in the Philippines. At best, Sangley Point could be a feeder port but then it will be in direct competition with the Vietnam terminals that are a lot closer to the major routes and to the transshipment giants of Singapore and Hong Kong.
Wei said other developers were given parts of the port but for Cosco, the project “did not materialise”. Business dealings in the Philippines are notoriously fluid and we can only speculate that the president had her fingers crossed when pledging to collaborate with the Cosco boss.