Container sector hit by West's woes

PUBLISHED : Saturday, 10 December, 2011, 12:00am
UPDATED : Saturday, 10 December, 2011, 12:00am


Europe's debt crisis and the weak United States economy has caused a sharp deterioration in the shipping container trade at leading ports in China.

Year-on-year growth in container throughput at Shanghai, the world's busiest port, dived from 14 per cent in October to 1 per cent in November, according to Nomura International.

'November for China's ports was worse than October,' said Nomura analyst Jim Wong. 'The weak container throughput in Shanghai and Shenzhen is due to weakness in the US and Europe.'

Container throughput at Shenzhen, the second busiest Chinese port, fell 4.8 per cent to 1.84 million twenty foot equivalent units (TEUs) in November, according to the Shenzhen Ports Association.

Empty containers, the main factor in the decline in Shenzhen's container throughput, fell 13.1 per cent to 652,612 TEUs in November.

'Shipping lines expect demand from the US and Europe to slow down several months ahead,' said Sunny Ho Lap-kee (pictured), executive director of the Hong Kong Shippers' Council. 'So shipping lines left empty containers in Europe and the US instead of bringing them to the Far East.'

'Guangdong and Hong Kong shippers are already experiencing more late payments from Europe. Hong Kong and Guangdong exporters are inquiring about the credit ratings of European buyers and the possibility of non-payments by European buyers.'

Among Shenzhen's ports, Chiwan in western Shenzhen saw container throughput plunge 17.6 per cent to 435,000 TEUs last month, a much sharper drop than the 6.5 per cent decline in the first 11 months of this year, according to the Shenzhen Ports Association.

Wong said weak European demand was a possible cause of the steep fall in Chiwan's throughput, as ports in western Shenzhen, including Chiwan, export more to Europe, while ports in eastern Shenzhen export more to the US.

Seasonal changes and loss of business to other ports might also have resulted in the decline of Chiwan's throughput, Wong said.

'What's happening in Shenzhen is what happened in Hong Kong decades ago,' said Wong.

'Hong Kong used to be a big manufacturing centre, but it stopped because factories moved to cheaper locations like Shenzhen and Dongguan. For Shenzhen and Guangdong, the exit of factories accelerated this year.'