Shanghai International Shipping Institute: Ports operate smoother in 2013 and to compete fiercer in 2014

The Shanghai International Shipping Institute (SISI) issued on March 10, 2014 the Global Port Development Report (2013), pointing out that slower trade growth of emerging markets and repeated economic fluctuations of developed countries demonstrate the fragile world economic recovery during “post-crisis era”  while global port industry is moving forward slowly amid major reforms.

Bilateral/multilateral trade agreements like TPP, TIPP and PSA will drive regional economy development, giving direct benefits to small and medium-sized ports. Liner alliance like P3 Network will accelerate the building of larger ships, which not only poses a new challenge for ports’ collection and distribution operating system, but will also trigger the transformation of global port network. Privatization campaign in Brazil and Australia is promoting the operation system reform of coastal ports. In addition, with large-scale construction of container terminals in recent years, structural overcapacity risk of Indonesia and Vietnam is emerging. In such a background, competition among ports will further intensify, and market status of ports within a given region will also face adjustment. Only through transformation and development can global ports have their share in the market in 2014.

I. Global port throughput rose slightly in 2013

According to the Report, cargo throughput of major ports in the world saw a YoY increase of 4.7 percent in 2013, continuing the slow recovery like 2012, but already turning around the trend of declining annual growth rate. In 3Q in particular, driven by the shipping demand of large bulks like coal and ore, port throughput surged dramatically. European ports experienced a slight decline of 0.29 percent as Europe hasn’t completely get rid of debt crisis, but were demonstrating the signs of recovery. Antwerp, Hamburg and Zeebrugge already stopped declining and entered the growth channel. Countries in America made great efforts to revitalize its own real economy, with international trade dropping continuously and major ports maintaining the “weak growth” of 1.3 percent. The growth rates of Asian, African and Australian ports were higher than previous year. To be specific, as import and export demand was weak at the beginning of 2013, Asian ports,  with large-scale capacity, only achieved an annual growth rate of 5.7 percent, up 0.1 points from 2012. Driven by more demand for dry bulk trade, Australian ports saw their throughput further increased 14.7 percent. Hedland Port, High Point Port and Newcastle Port rose 35.1 percent, 18.6 percent and 15.8 percent respectively, becoming important forces in the steady growth of global ports.

  • Asian ports enjoyed expanding market shares with Ningbo-Zhoushan Port ranking the first

17 Asian ports were listed among world’s top 20 ports in 2013 with the other three filled by Rotterdam Port in Europe, Louisiana Port in America and Hedland Port in Australia. The reshuffle of the ranking mainly showed the aggressive development of Chinese ports and decline of European and American ports. The throughput of Ningbo-Zhoushan Port rose 8.8 percent driven by 17.8 percent-growth of coal shipping volume and 12.4 percent-growth of ore shipping volume, expanding the difference with Shanghai Port from 8 million tons to 37.78 million tons. Rotterdam Port had “zero growth” due to the sluggish import demand for oil products, with a ranking slipped by four places filled by ports of Guangzhou, Suzhou and Qingdao. Dalian Port declined to 10th due to slower growth than Tangshan. Hedland Port saw its throughput increase 35.1 percent as propelled by iron ore demand with its ranking climbing to 12th. Busan and Rizhao ports were surpassed by others in terms of ranking albeit their steady growth. In addition, due to less grain exports, Louisiana Port slipped to 17th, the largest slump among top 20 ports.

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  • With domestic trade and foreign trade leading the rise in turn, Chinese ports showed strong growth momentum 

Chinese ports maintained a positive expansion in 2013. Chinese ports above designated size completed the aggregate throughout of 10.73 billion tons, a YoY increase of 9.7 percent, higher than the 7.7 percent growth of GDP. The increase of domestic water transport volume and the turnaround of import and export in the second half of 2013 played a significant role for the increase. It is worth noting that June was a divide line. In the first half of 2013, the throughput contributed by China’s domestic trade climbed drastically. In the second half of 2013, with the turnaround of international economic trend and large import increase of coal and iron ore, foreign trade again led the increase, while domestic trade’s growth slowed down continuously.

Among top 30 ports in China, throughput of Nantong, Nanjing and Lianyungang ports surpassed 200 million tons for the first time. Therefore, the ports with a throughput of more than 200 million tons totaled 16 in China. Growing 24.9 percent, Dandong Port became the 29th port with a throughput of 100 million tons in China. The ranking was relatively stable for top 15 ports, while competed fiercely from 16th to 30th. Ports of Tangshan, Nantong, Xiamen, Taizhou and Fuzhou marched forward at double-digit growth rates. With top growth rate of 35.7 percent, Huanghua Port surpassed inland river ports of Zhenjiang, Jiangyin and Taizhou and became one of top 20 ports in China.

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II. Global ports saw weak growth impetus in container throughput

The Report points out that without obvious improvement of global economy, each country’s trade protection policy for certain industries directly resulted in the slower growth of container throughput of global ports. The container throughput of global ports only increased 3 percent to 641 million TEUs in 2013. Such growth decline for three successive years demonstrated the lack of recovery momentum. Asian ports experienced four stages, namely, slip, increase, falling and consolidation in 2013. Ports in China and East Asia demonstrated sluggish growth with the growth rate of major ports reduced from 5.8 percent last year to 4.9 percent. In Europe, container throughput experienced “zero growth” as manufacturing recovery at the end of the year hadn’t brought recovery of trade and port industry. The ports of Rotterdam, Antwerp and Bremen saw negative growth. In North America, ports had diversified performance as affected by the adjustment of alliance routes, but the overall port growth slowed down due to the falling of imports and exports, thus making container throughput grow by only 1.9 percent. In Africa, with continuous improvement of regional economy and infrastructure, as well as effective mitigation of Somali pirate problem, trade volume grew drastically with container throughput increasing 3.6 percent year-on-year, 2.2 points higher than the previous year. Africa became the only region of container throughput expansion in the world.

  • With narrowed gap, container ports saw fiercer competition

In 2013, the competition among container ports in the world became fiercer. It is common to see mutual replacement of ranking among world’s top 20 ports. Shenzhen, for the first time, surpassed Hong Kong and became the third largest container port in the world. Qingdao Port advanced to 7th. Ports like Dalian, Xiamen and Long Beach also performed well with their rankings climbing rapidly. The difference of container volume between Busan and Ningbo-Zhoushan, Dubai and Tianjin, Rotterdam and Klang, Kaohsiung and Hamburg, Antwerp and Xiamen, Los Angeles and Tanjung Pelepas is narrowing albeit no replacement by each other. As we can see, the ranking of world’s top 20 container ports was not stable. What’s more, affected by container alliance like P3 Network, ports are likely to face a new round of reshuffle in the future.

In addition, container ports of emerging markets like China expanded fast with their foreign trade demand staying high. 4 out of 5 ports which saw ranking rising among top 20 came from China, and Chinese ports’ share in global container volume rapidly rose to 30.4 percent from 28.7 percent in 2012. China is expected to continue to lead the development of global ports in the future.

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  • With port growth slowed down in China, containers for domestic trade led the growth

In 2013, container throughput of Chinese ports above designated size only grew 6.8 percent, down 1.1 points from 2012. It’s the third successive year to see a decline in growth rate. The main cause was sluggish growth of foreign trade, with 3.9 percent growth rate far less than the 13.9 percent growth rate of domestic trade. The volume growth rate of international routes was only 2.7 percent while that of domestic feeder routes and domestic trade routes was 10.8 percent and 13.9 percent respectively. The domestic trade at the beginning of 2013 played a key role in throughput growth. The slight improvement of foreign trade in the second half of 2013 promoted the moderate growth of container throughput of Chinese ports to some extent.

The ranking of top 20 Chinese container ports only changed a little with the leap of Qingdao, Lianyungang, Rizhao and Humen. Shanghai Port still topped the list with 33.62 million TEUs, seeing a gap from Shenzhen Port further expand to 10.33 million TEUs. With the growth of 24.19 percent and 35.92 percent, Dalian Port and Humen Port became the fastest growing ports among top 10 and top 20 in China respectively. In addition, with falling container volume on domestic feeder routes in the second half of the year, Suzhou Port slumped 9 percent to 5.34 million TEUs, becoming the only port of negative growth among top 10, ranked 10th as surpassed by Lianyungang Port, followed by Yingkou Port which was only 40,000 TEUs less.

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III. Global ports are expected to expand greatly in 2014

2013 consolidated the foundation for global shipping industry, while the upcoming 2014 may become the first year for the expansion of global ports. The U.S. has announced to quit QE, and emerging economies is see a great upward pressure, but world authoritative forecasters are optimistic about the prospects of world economy in 2014. According to the latest IMF forecast, world economy is expected to grow 3.7 percent in 2014, and the world trade volume in 2014 and 2015 is expected to grow 4.5 percent and 5.2 percent respectively. Moderate economic growth and faster recovery of international trade are favorable to the recovery of world shipping industry and port throughput. In addition, with rising enterprise purchasing demand fueled by economic recovery and expanding domestic demand driven by government investment, the shipping volume of iron ore, coal and other large bulks will grow at high rate. It is expected that global ports will welcome higher growth rate in 2014 with port throughput rising by more than 6 percent.

World container throughput grew slightly in 2013. However, in the background of continuous recovery, multilateral/bilateral trade agreements like TPP and TTIP led by the U.S. and ASEAN Free Trade Area will be further expanded in terms of scope, and regional trade will improve obviously, which will in turn pull the climbing of world container throughput. Therefore, the container throughput of global ports is expected to bounce to above 4 percent in 2014.

It is worth warning that the effects of economic and trade recovery are not generally positive. Larger ships and the change of regional trade pattern pose challenges to ports. Liner alliance will undermine the negotiating power of ports. Privatization accelerates the reform of port operation system. Following such new trend, ports must reform and upgrade continuously to win more benefits brought by recovery.

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SOURCE: Shanghai International Shipping Institute (SISI)


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