Container terminal operators in China are discovering to their dismay that their greatest strength over the last decade has rapidly become their biggest weakness.
Several years of record export numbers have this year turned into dust. Or rather double digit declines, which is almost as bad.
China started its container transportation industry in September 1973 at Tianjin port with the first international container route from Tianjin to Kobe in Japan. At the end of 2007 the mainland throughput passed the 100 million TEU mark for the first time. This year China will be lucky to hit that figure.
Take the mainland’s leading port operator. Hong Kong-listed China Merchants Holdings (International) has a strong presence in the South China port complex of Shenzhen and in the terminals around Shanghai, the mainland’s two largest container-exporting centres.
Booming exports saw the throughput rising so rapidly at these ports that in just a few years Shanghai overtook Hong Kong to become the world’s second busiest port and Shenzhen would have vaulted over its neighbour this year had throughput growth continued at the same rate.
It never did, of course, and the fragility of the export-oriented economy was starkly revealed. The huge capacity building drive by terminal operators during the growth years has left berths empty and cranes idling, with tonnes of revenue-neutral space-sapping empty boxes cluttering up the yards.
Trying to put a smiley face on his interim results, China Merchants boss Fu Yuning reckons the worst is over for world trade. Shareholders of his company will be hoping so too, because in the first half China Merchants’ throughput crashed by almost 20 percent.