China port operators to feel tariff fallout

Yangshan Yangshan Deepwater Port Area. Credit: Shanghai International Port

The US-China trade war will likely see port handling charges decline, resulting in a reduction of revenue and profit margins for China Merchants Port Holdings, Hutchison Port Holdings and Shanghai International Port, a new report has found.

Moody’s Investors Service report said that the continued trade war will halt the growth of China’s container shipping business during the next 12-18 months, reported South China Morning Post. Annual growth rate in container throughput may be knocked down to zero or a low single-digit percentage, from 4.7% in 2018, and 8.3% in 2017, Moody’s said.

“We expect US-China relations to remain contentious and trade negotiations to continue for some time even if the two countries reach a trade agreement, resulting in a difficult operating environment for China’s port sector,” said Moody’s analyst Ralph Ng.

Container throughput decline will put further strain on Chinese port operators that are already under pressure from overcapacity and consolidation, while possible economic stabilising policies that requires cutting handling charges may further weight on their credit profiles, Ng said.

A 25% US tariff on US$200bn of Chinese goods was implemented on 10 May.

By Rebecca Jeffrey

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