By Stephen Willis
The global trade slowdown has affected international freight forwarding from China as the scale of the China import market contracts. As world demand for China imports falls away, especially in the very important markets of the United States and Europe, container volumes in China have fallen at double digit rates. As a result of the changing international freight market, expansion plans have been shelved as the freight transport industry reviews it operations and investment planning. For example, plans previously in place for developing the port at China's Ningbo-Zhousan port have been put on hold. It had been intended to build nine new container terminals as part of the port's ambition to compete with Shanghai. Central to the freight services expansion plan was the development of the Jintang Dapokou Container Terminal, with a 1.8km quay and five container berths, which would redefine freight services in the area.
However, these plans are now on ice as China's export dependent economy reels from the impact of the slowdown in global demand for China imports. The main ports in China, which is the world's third largest economy, have all seen substantial declines, with international freight volumes at Shanghai down 15% year on year in the first quarter of 2009. This followed six consecutive months of steep declines as the economic slump takes its toll. Guangzhou port suffered the worst decline, with nearly 25% year on year decline in the first quarter of 2009. This was followed by Shenzhen at 21%.
Against this pattern of declining volumes for shipping companies, however, it is worth noting that there has been a booming demand in domestic trade in China, especially with the freight transport of cargo from the south of China to the north. For example, freight forwarding to Dalian in the north has increased 50% year on year and other ports in the north of China are also showing single digit growth due to the strong domestic demand. However, this is still a small proportion of the total freight forwarding market and does not begin to compensate for the worldwide decline in demand for China imports.
Dr Fu Yuning, Chairman of China Merchants Holdings International, which has investments in nearly all China ports and whose terminals handle around 34% of all China's container traffic, has said that 2009 will turn out to be 'the most difficult year in a generation' for shipping companies and the freight services industry in China. As well as the downturn in freight forwarding trade, China's port operators are having to deal with operational difficulties created by the problem of empty containers piling up and this impacts negatively on operational efficiency.
It should be kept in mind however that despite the downturn, China is still seeing economic growth of around 8% this year, which is still a very rosy picture and one that bodes well for the future, as once the global economy resumes normal activity, China will be bound to continue to grow still further. Dr Fu anticipates that the worst of the slump will be over by 2010, so long as the US market for China imports begins to pick up as a result of a recovering US economy.
Not all investment plans are being postponed therefore, as many in the freight transport industry still have their eye fixed firmly on future opportunity. For example, 2009 has seen the start of building works for Huizhou's first container terminal. Located in eastern Guangdong, roughly 75 kilometres from Shenzhen, this new container terminal will have a total berth length of 800m and a yard area of 60 hectares.It will help transform Huizhou from a container feeder port and a terminal handling bulk and non-containerised cargo into one of South China's leading container ports at the forefront of the China freight forwarders industry.
So despite the current gloom in the China import market and the difficulties currently faced by many a shipping company and freight company in the short term, there is still a mood of underlying optimism about the medium and long term prospects as the demand for China import returns.
Stephen Willis is Managing Director of RW Freight Services a UK based freight transport company, established in 1971 and operating worldwide freight forwarding services including specialist freight services to and from China
Source:www.isnare.com |
