As Cargo And Container Levels Drop Ports Fight For Shipping Traffic Worldwide

18 November 2009

WORLDWIDE – Nobody in the industry can be unaware of the rising tension as the dreaded “P” word, Protectionism, gets to be heard more often. As usual in times of strife nation follows nation in trying to ensure the survival of its prime industries and beat off the threat of cheap imports. As the US and Chinese leaders circle the ring this week trade deficits are never far from their thoughts despite all the other pressing matters requiring their immediate attention.

The fight for traffic does not exist of course only in terms of international competition. A look round the worlds ports shows how tough life has become for many, and how neighbour will swiftly turn against neighbour when food needs to be put on the workers and shareholders tables.

Figures out this week in ports across the US and China make for interesting reading. The Port of Los Angeles is feeling pleased with itself, a near 11% jump in TEU’s for September, imports and exports up to a high for 2009. Export figures were actually up against last year, and by a higher percentage than they were down for imports. Just down the coast, Long Beach meant long face, as the port dropped to around 345,000 TEU’s in October. That’s a 10% export and 22% import drop against last year. Local port officials admitted they have never had to worry about local competition before, thirty years of growth has led to complacency, if LA was busy, what the heck, let the guys at Long Beach take the overspill. Not any more, every box handled has a price and hopefully a profit.

Many of the problems faced are due to the shipping lines consolidating their services and moving routes to more profitable, or at least less expensive ports. Maersk pulled out of Tacoma a while ago, this week the port posted a loss of around $18 million, the first time anyone can remember the figures were red not black. Now with NYK pulling out of their new multi modal freight terminal times ahead look far from rosy. Tacoma’s loss of Maersk became Seattle’s gain.

But this wave of internal competition is being as fiercely fought across in China as in the US. With shipping container throughput down around 7% at least this year despite claims of a fractional rise in TEU’s last month. The traditional port strongholds in the South and East of the country, Shanghai, Ningbo, Xiamen and Hong Kong are subject to a concerted attack from the Bohai Rim facilities in areas such as Dalian, Tianjin, and as far south as Qingdao. In Yingkou, in the far north of the Bohai Sea and the closest main port to North Korea, container cargo rose by a staggering 29%.

Now new rivals are entering the fray with such areas as Hebei Province starting its own port organisation which now claims to be the largest by tonnage in the world, whilst Tianjin has grandiose plans to achieve a 17 million TEU, 550 million tonne turnover in the next six years, principally by further dredging works to accommodate 300,000 tonne vessels.

In the meantime the port managements, realising the potential commercial problems, are actively engaged in share swaps to insure against failure. Dalian, with Jinzhou, and more deals on the table; Qingdao putting money in Dongjiakou, for new berths and infrastructure. With shipping lines in no position to refuse a deal and likely to be tempted by lower rates and better facilities, the internal fight for lower traffic levels looks set to continue for some years yet.