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  • Jul 26, 2014
  • Updated: 7:31pm

Companies brace for tough year when any profits will be prized - Ports

PUBLISHED : Friday, 01 January, 2010, 12:00am
UPDATED : Friday, 01 January, 2010, 12:00am

The ports of China and Hong Kong, battered by the economic downturn, are expected to see a slow and fragile recovery in 2010.

'This year will be a turbulent time, but the market will continue to improve, pending no major disruption,' says Willy Lin Sun-mo, the chairman of the Hong Kong Shippers' Council, referring to ports worldwide. 'The market will slowly recover, but it will not be smooth sailing. It will be turbulent and challenging.'

For example, the container throughput in Shenzhen, the mainland's second-largest port, is still shrinking, says Ma Yongzhi, the vice-director general of the Port Administration of Shenzhen. It could take one or two years for Shenzhen port's throughput to rise back to 2007 levels.

In the first 11 months of 2009, the container throughput in Shenzhen fell 17.5 per cent to 16.5 million twenty-foot equivalent units (teu), official Chinese data shows.

In Hong Kong, the world's third-largest container port, container throughout for the period fell 16.4 per cent to 18.97 million teu, according to a Hong Kong Port Development Council estimate.

In Shanghai, the biggest port in China and the second-largest in the world, container throughput fell 12.5 per cent to 22.6 million teu, while the container throughput of the nation's leading coastal ports fell 6.1 per cent to 99.8 million teu.

The recovery in Asia's container port throughput is likely to continue in 2010 on a year-on-year basis, given the low base from the fourth quarter of 2008 to the second quarter of 2009 due to the financial crisis. But much of the recovery is already discounted by the market, says a report by Jim Wong and Andrew Lee of Nomura.

'Consensus estimates for Chinese port companies in 2010 are already generous, projecting net profit in 2010 will return to 2007 and 2008 levels,' says the report. 'We expect a gradual and slow recovery, as US and European unemployment is likely to remain high, which will hurt US and European retail sales. Container demand and retail sales are likely to rebound only gradually.'

Nomura forecasts a shallow, weak recovery in the developed world and a V-shaped one in many emerging markets.

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