Analysts see freight industry outlook as 'bad, bad and bad' and about to get even worse
If Hong Kong's trade transport executives have grown numb from digesting a stream of dismal trade data and forecasts this year, they need only cast an eye towards Singapore for some relief.
While the figures to July show throughput for the four main terminal operators at Kwai Chung has dropped 2.4 per cent year on year, to 6.4 million teu (20 ft equivalent units), the port of Singapore saw its box trade drop a whopping 13 per cent in the first half, to just over 7.5 million teu.
Project those respective declines on last year's final throughput figures and Hong Kong would eclipse Singapore's box trade by 2.8 million teu this year, the largest gap since before 1996.
Things are so dismal in Singapore that PSA Corp has stopped releasing all but annual throughput numbers, and the Maritime Port Authority is now charging for trade data.
Asked to put the numbers into context, one Singapore-based trade analyst said: 'It's simple - bad, bad and bad, and it's going to get worse.'
Much of the Singapore port's declining throughput is attributable to Maersk Sealand's pull-out in July last year, the full affect of which is only now being felt.
The Danish-US container-shipping giant opted to use Malaysia's Tanjung Pelepas, where it has acquired a terminal operating stake. It had been Singapore's biggest customer, responsible for 13 per cent of throughput.
More worrying for Singaporeans, however, is the decline in air-cargo volume, the high-value end of the trade-transport sector.
Traditionally fuelled by the electronics sector, volume through Chiangi airport fell 8 per cent year on year in the first half, to 743,000 tonnes, according to the Civil Aviation Authority of Singapore (Caas).
While roughly in line with the volume decline at Hong Kong's Chek Lap Kok, most analysts agree that much worse is yet to come for Chiangi.
'The big drop in air-cargo volume has yet to show up in the numbers released by the Caas,' said GK Goh economist Song Seng Wun. 'Air-cargo numbers will shrink even more in the second half. We anticipate seeing a 15 per cent to 20 per cent year-on-year decline in production from the electronics sector by year end.'
Declining demand in the United States and Europe for integrated circuits, disk drives and telecommunications equipment led to a 9.4 per cent drop in non-oil domestic exports in the second quarter, according to Singapore's Trade Development Bureau (TDB).
The TDB uses a 'three-month moving average' to calculate growth, meaning the speed at which the decline is gathering steam is masked.
For instance, Mr Song says production in the electronics sector actually was down 20 per cent in May and 26 per cent in June, shrinkage that has yet to show in numbers supplied by the Caas, which monitors Chiangi activity.
'The air-cargo numbers will tell the full story in the next few months,' he said. 'The end customers, the shops, are trying to push excess inventory down the supply chain. Any ordering for the peak period will be last minute.
'While booking has somewhat stabilised - it is not falling as much as it was - the biggest problem is yet to come. The corporate sector may have corrected somewhat, but asset prices have not. And there can be no recovery without an asset-price correction. It doesn't bode well for Singapore, or Asia.'
