Slowing global trade this year will force China's ports to scale back investment in container terminals, but investment in bulk-cargo terminals should continue, analysts say.
Container throughput this year in Hong Kong, the world's third-busiest port, will match last year at best and could even shrink, said Sunny Ho Lap-kee, executive director of the Hong Kong Shippers' Council.
'Southern China is suffering from a surge in labour costs and the impact of contracting demand in Europe and the US,' Ho said.
Guotai Junan analyst James Song forecast container throughput growth at mainland ports would be roughly 5 percentage points lower than last year's growth of nearly 12 per cent.
The growth in annual cargo throughput of ports in China and the rest of Asia would be 3 per cent to 5 per cent for last year and this year, JP Morgan analyst Karen Li predicted. 'Globally, it will be even lower,' she added.
Throughput growth at mainland ports was 11.6 per cent last year and 18.6 per cent in 2010. In 2009, amid the global financial crisis, the cargo throughput of mainland ports fell 5.9 per cent, Li said.
'Port operators will focus on the bottom line this year. Some Chinese ports will delay some projects.'
For example, Shenzhen's Yantian port is building three container terminals to be completed in 2013, 2014 and 2015. Li expects the completion of the container terminal originally scheduled for 2015 to be delayed.
No new container terminal projects had been approved recently in Shenzhen, said Luo Ping, transport planning director of the National Development and Reform Commission. 'Ongoing container projects in Chinese ports may slow down due to the slowdown in global trade,' Luo said. 'Some new container projects in Chinese ports may not be approved.'
However, mainland ports would continue to build facilities for coal and iron ore, as iron-ore handling capacity was far from sufficient to meet demand, Luo said.
This year, mainland ports would focus on upgrading bulk-cargo capacity, such as the recently announced plan to build a 300,000 deadweight tonne berth in Tianjin, said Charles de Trenck, a transport analyst at Transport Trackers, a Hong Kong shipping consultancy.
There was excess container capacity in many mainland ports including Shanghai, de Trenck said.
From 2002 to 2008, Chinese ports focused on expanding container capacity, said JP Morgan's Li. 'China's commodity demand is volatile, but capacity lags behind because China focused on container ports in the past. In the past two years, the focus in China was spending on dry bulk cargo and this trend will continue.'
Li said the key driver for demand for dry-bulk-cargo capacity was the domestic economy, while the drivers of container demand were the US and Europe, whose economies were currently weak.
Hutchison Port Holdings (HPH) and Modern Terminals, two Hong Kong port operators with operations in Hong Kong and Shenzhen, declined to say whether they would delay port projects.
An HPH spokesman said: 'Given our strong port diversification model, HPH will be in a reasonable position to respond to any change in cargo movements. We also remain alert to any possible new investments which might arise.'
Some smaller mainland ports such as Zhanjiang are investing in expanding capacity.
The port, in southwestern Guangdong will build two bulk-cargo terminals, one container terminal and other facilities between now and 2014, the Zhanjiang Port Group says in a prospectus for a bond sale.