The slowdown in growth in the world’s leading low cost manufacturing centre is having consequences not just in the container shipping world but also now in the terminal sector.
Data just published by China’s General Administration of Customs shows that exports fell in April by 1.8% year-on-year in US dollar terms. This exceeded an earlier official estimate of a 0.1% drop, and came after an 11.5% surge in March thus curtailing hopes of a sustained recovery.
Imports into China in April slid 10.9% from the same month last year, more than double the consensus forecast for a 5% drop and deepening the previous month’s 7.6% decline.
China’s descent into the doldrums has been severely impacting the container shipping industry for some time now. Reduced demand for container shipping capacity combined with the ongoing delivery of new containerships has had the inevitable downward impact on freight rates and the associated earning power of shipping lines. Indeed, the decision by certain companies to dispose of their container shipping businesses and by a large number of others to form mega consortia is a symptom of this
It is also now becoming increasingly clear that the port and terminal sector – in many cases also beset by regional economic problems such as in the case of Russia or Europe as a whole – is also now feeling the cold wind of leaner times. Cost cutting has also come to the port and terminal sector as made clear recently by APM Terminals drastically reducing the size of its business development division.
Generally, the writing is on the wall that investment in new terminal opportunities will proceed but at a significantly lower level. There will be a much more selective approach.
Consolidation is set to be the order of the day in the terminal business for the foreseeable future.