Lower port volumes signal slowdown in global trade

PUBLISHED : Thursday, 08 July, 2010, 12:00am
UPDATED : Thursday, 08 July, 2010, 12:00am

Analysts foresee a slowdown in global trade on the horizon as the mainland's two biggest ports, Shanghai and Shenzhen, report lower volumes last month compared with May.

The volume of containers through Shanghai, the world's busiest container port, fell 4.7 per cent to 2.44 million 20-foot equivalent units (teu) from 2.56 million teu in May, according to Shanghai International Port Group, the Shanghai-listed operator of the city's ports.

Shanghai's cargo throughput fell 4.95 per cent to 35.97 million tonnes from 37.85 million tonnes in May.

The container throughput in Shenzhen, the mainland's second-busiest port, fell 1.4 per cent to 1.91 million teu from 1.93 million teu in May, after three consecutive months of increases to May, according to the Shenzhen Ports Association.

Shenzhen's cargo throughput fell 1.3 per cent to 18.74 million tonnes from 18.99 million tonnes in May.

'The global recovery has reached a turning point as the momentum provided by the inventory cycle wears off,' Melissa Kidd wrote in a report for Lombard Street Research, a London economic think tank.

'Recent falls in the BDI (Baltic Dry Index), with weakening hard commodity demand in China and softening global data, point to a slowing down in the global recovery.'

But, Charles de Trenck, an analyst at consultancy Transport Trackers, pointed to the double-digit year-on-year growth, as opposed to the month-on-month figures, of the Shanghai and Shenzhen ports in June.

'These are not bad numbers,' de Trenck said.

Shenzhen's container throughput grew a sizzling 35.2 per cent year on year last month, while Shanghai's container throughput growth was 21.4 per cent year on year.

However, he predicted slower growth for the mainland's port throughput in the coming months, because retailers in the United States were likely to slow down their inventory restocking.

In Hong Kong, estimates from the Port Development Council show the pace of growth and the volume of containers through the city's port were still on the rise compared with the first part of last year. Figures for May show 15.2 per cent year-on-year growth to a little more than 2 million teu, up from 1.7 million teu.

Hong Kong, through its Kwai Chung, river trade and mid-stream operations, handled almost 9.4 million teu in the first five months of this year, up 15.5 per cent compared with last year.

These figures show a gradual month-on-month improvement in container volumes which could gain in strength as the container shipping sector moves into the peak season, starting around now, as goods are shipped to meet pre-Christmas demand.

Based on current projections, Hong Kong is on course to handle about 23.5 million teu, the same level as in 2006.

One of the problems facing shippers, de Trenck said, was a shortage of containers that could grow more acute if container volumes continued to rise in the peak season.

He said the liner industry thought the shortage 'was going to be solved, but it could last the whole summer'.

Part of the problem has been caused by container lines cutting the speed of their ships to reduce fuel consumption and increase available capacity, resulting in containers kept on board ships at sea for longer.

Asian shippers groups estimated the slow sailing had reduced the number of containers available by about 20 per cent. Container liners cannot easily 'change their schedules around' either by increasing the speed of their ships or withdrawing ships from service, de Trenck said. This is because most carriers are in alliances with other shipping lines and each contributes vessels or deck space to each route or service.

Shipping news

Shanghai, the world's busiest container port, handled 2.44 million teu last month

Compared with May, the volume of containers through Shanghai in June fell by: 4.7%

But, year on year, Shanghai's container throughput growth in June was: 21.4%