Port throughput declines as ships sit idle around the world
The number of container ships sitting idle in ports around the world is growing, and leading mainland ports such as Shanghai and Shenzhen continue to suffer double-digit annual declines in container throughput.
Although throughput at Shanghai, the world's second-busiest port, has been increasing on a week-by-week basis since last month, analysts do not believe a sustained recovery will happen soon. CONT Shanghai container throughput had been rising last month and into this month, said Citi analyst Ally Ma.
However, she said: 'Given the ongoing financial turmoil, the growth in March is unlikely to be sustainable.'
Nomura analyst Jim Wong agreed, saying: 'For the first and second quarters, we don't see a recovery for many Chinese ports, including Shanghai and Shenzhen.'
Last month, Shanghai's throughput suffered a year-on-year drop of 16.5 per cent to 1.52 million 20-foot equivalent units (teu), slightly better than the 19.1 per cent drop in January, according to a Citi report by Ms Ma.
The report indicated the year-on-year fall in Shenzhen's throughput worsened from 17.4 per cent in January to 26.2 per cent last month, the worst performance in the history of the second-busiest mainland port.
The throughput of full containers in Shenzhen suffered an even worse yearly drop of 33 per cent in the first two months of the year, while empty containers rose from 38 per cent in January to 46 per cent in February, wrote Ms Ma.
Container throughput at Ningbo last month fell 24.2 per cent to about 600,000 teu, while Qingdao posted growth of 0.2 per cent to about 800,000 teu, she said.
The apparent rebound in China's manufacturing was not echoed by its real export activities, she wrote.
In February, China's purchasing managers' index, an indicator of manufacturing health, rose 3 percentage points to 49 per cent, while its export order index rose 9 percentage points to 43 per cent.
However, Ms Ma wrote: 'Actual order flows in Guangdong and Shanghai fell 20 to 30 per cent so far this first quarter, suggesting the PMI may be more reflective of warming sentiment than a sound pick-up in manufacturing orders.'
Mr Wong said he expected 'the worst for Shenzhen. The Pearl River Delta has been the most impacted by the slowdown. We see other Chinese ports holding up better'.
Many Pearl River Delta factories produced low-value-added goods with low profit margins. Many had closed down during the economic slowdown, which was one reason for the steep drop in Shenzhen's trade, Mr Wong said. In contrast, the Yangtze River Delta, served by Shanghai, produced more high-value goods such as electronics, he added.
The number of idle container ships around the world doubled in the past two months to 10.7 per cent of the global fleet in March from 5.5 per cent in January.
The high number of idled ships reflected deteriorating demand for cargo in the United States and Europe, according to shipping industry research Institute Alphaliner's latest report. The idle container vessel fleet increased to 1.35 million teu or 453 vessels on March 2 from 675,000 teu in January, the report said.
China Shipping Container Lines, the second-largest mainland container shipper, had idled 6 to 7 per cent of its 500,000 teu fleet, up from 3 per cent in the fourth quarter last year, said Frank Fan, manager of investor relations. 'It is hard to tell whether the percentage will climb,' he said. 'We have to wait and see demand from the US and Europe.'
