Chinese ports feel the pinch

Slow down: Ports such as Shanghai are being particularly affected by slowing container throughput Slow down: Ports such as Shanghai are being particularly affected by slowing container throughput
Industry Database

The news that Maersk Line is to end services to and from ten Chinese ports from September in a cost cutting exercise could be construed as an unhappy symptom of China's growth slow down.

In its latest trading update, the shipping giant reported an 89% slide in quarterly profit and a 16% decline in revenue, despite still making a profit. Its 2% annualised return on invested capital during the last quarter was just one-fifth of its target.

“We frequently review the ports/terminals that we service in China, including the inland ports where we provide transport solutions through the Connecting Carrier Agreement. We focus on the ports where we can offer the most benefits that create growth, better service and opportunities for our customers,” it said in a statement.

The trouble is that the shipping sector is beset by overcapacity and deflating costs, which means severe belt tightening across the industry.

Ocean carriers have also accelerated the shift towards more direct calls at the expense of transshipment because it is too expensive. Instead, feeder ports are being added to mainline services to save on feeder costs

So in light of this tricky environment, Maersk's only real option has been to slash spending.

And the news is not good for Chinese ports, of which Maersk has a presence in 41 locations across the country, certainly not when it comes to exports anyway.

A new report from Moody’s Investors Service has highlighted that port operators in China are facing headwinds from slower economic growth and weaker throughput outlook.

It warned that export-oriented ports such as Shanghai and Shenzhen will be particularly affected by slowing container throughput amid muted export growth in China with overcapacity in the liner industry exacerbating the pressure on the operators' margins.

Because shipping lines are also facing significant pressure on freight rates, this is expected to make it increasingly difficult for port operators to negotiate higher container handling chargers.

Moody's notes headroom is narrowing in the ratings of the port operators, which it says will likely prompt them to preserve cash flow through stringent cost controls and discipline in overseas expansion.

LATEST PRESS RELEASES

Siwertell road-mobile capabilities added to Ashdod’s sulfur-handling operations

Bruks Siwertell has secured a further Siwertell ship unloader order from Israel’s Ashdod Port Compan... Read more

SANY Boosting Business in Europe for Container Handling Equipment

SANY Europe have had a very busy 1st half of 2019. Several orders have been secured and machines hav... Read more

SOHAR Port Anticipates Potential Business Opportunities

Muscat, July 2019: With several developmental plans underway, including future projects, SOHAR Port ... Read more

BEST - The coolest terminal in the Med

Hutchison Ports BEST terminal in the Port of Barcelona has recently increased its storage and connec... Read more

SFT participates in extensive Tema Port expansion in Ghana

Meridian Port Services (MPS) invested USD 1.5bn to expand the infrastructure of Tema Port in Ghana, ... Read more

LASE opens first office in Australia

LASE announces local presence in Perth, Australia in order to support the growing base of Australian... Read more

View all