Container volumes up despite fears

PUBLISHED : Thursday, 24 May, 2012, 12:00am
UPDATED : Thursday, 24 May, 2012, 12:00am


Container volumes through southern Chinese ports are continuing to grow, despite concerns about the outlook for trade, especially with Europe facing a fresh crisis.

David Skov, head of Southern China for Maersk Line, said that based on feedback from exporters and cargo owners 'growth in general is strong out of South China'.

He said the carrier had yet to see a slowdown and business was still healthy.

Skov said the south still accounted for a third of China's manufacturing exports. 'It's a large and significant base.'

Maersk Line still forecast an increase of 4 to 6 per cent in container volumes from China this year, Skov said. 'Our full outlook this year is not different from 2011.'

His comments came as Maersk Group, which has interests in container and tanker shipping, drilling and container terminals, posted a net profit of US$1.2 billion in the first quarter, up 1 per cent year on year. But excluding divestment gains and one-off tax income, the world's biggest shipping company said it just broke even. The result included a US$599 million net loss from Maersk Line, the container-shipping division, despite an 18 per cent increase in container volumes.

Skov said the carrier had announced several rate increases from mid-March that would buoy the results for the second quarter.

He forecast Maersk Line would break even or see a small loss for the whole of this year. Skov conceded the global economy was still volatile, but 'was slightly more positive about the US'.

His views about Southern China are supported by data from major port operators.

Cosco Pacific said box throughput at its Pearl River Delta and southeast coast terminals climbed 7.5 per cent to 17.3 million teu (20-foot equivalent units) in the first three months of this year. Cosco-HIT Terminals in Hong Kong saw container volumes rise 5.9 per cent to 1.6 million teu, while Guangzhou South China Oceangate Container Terminal at Nansha reported a 27.9 per cent gain to 3.9 million teu.

Yantian International Container Terminals saw box volumes edge up 1.3 per cent to 10.26 million teu, although Michael Beer, a transport analyst at Citi Investment Research and Analysis, said he thought that with limited transshipment volumes, Yantian was more susceptible to any weakening of European or United States demand.

China Merchants Holdings (International) reported a 4 per cent rise to 3.69 million teu in throughput at its western Shenzhen terminals in the first quarter. Within this port cluster, Shekou Container Terminal saw a 10.3 per cent rise in throughput to 1.4 million teu.

In Hong Kong, container volumes through the nine main box terminals at Kwai Chung continued to grow between January and April, although throughput at the river trade terminal and mid-stream operations fell.

Overall, container throughput in the city climbed 0.7 per cent in the first four months to 7.7 million teu, although volumes through Kwai Chung Container Port rose 3.6 per cent in the same period to 5.8 million teu. For the first three months, Hongkong International Terminals, controlled by Li Ka-shing's Hutchison Whampoa, saw a 9.4 per cent rise in throughput.

But sounding a note of caution, Jon Windham, the Asian marine analyst with Barclays Bank in Hong Kong, said for China as a whole, growth of traditional ocean cargoes had been slowing. He said exports of clothes were hit especially hard last month, falling by 6 per cent year on year. 'White goods, furnishings, footwear and toys are all showing significantly declining growth rates.'

China posted an export growth of 4.9 per cent last month, compared with a 6.8 per cent increase for the first four months of this year. Exports to the European Union fell 0.7 per cent between January and April, compared with a year earlier, while exports to the US jumped 12 per cent in the same period.

Windham also pointed out that China's exports of power equipment, car parts and electronics grew faster than average, suggesting that manufacturers 'have been moving up the value chain.

'With the exception of auto parts, most fast-growing categories are either not traditional container cargoes or they are high value and low weight or size, which have a smaller impact on container volumes.'

Separately, British waste-paper exporters said slowing demand from China coupled with higher freight prices had dampened the market and could hurt container volumes from Europe to Asia. Waste paper accounted for 21 per cent of containerised shipments to Asia, according to EU figures, while 34 per cent of the waste paper and cardboard collected in the UK is exported to China.

British recyclers said reduced demand for consumer goods had led to a drop in demand for packaging, which in turn had led a fall in the price for waste newspaper and cardboard. Higher freight prices - which had seen some companies like Cosco Container Lines raise rates five times since the beginning of this year - had added to the pressure of falling material prices, they said.

Growth in general is strong out of South China. It's a large and significant base David Skov of Maersk Line


The number of container ships in service worldwide in 2010, according to United Nations figures