SISI recently released the Global Port Development Report 2015Q3, which showed that global port growth lingered at a low level in Q3 and the year-on-year and quarter-on-quarter growth of cargo throughput at main ports was reduced by varying degrees, the former even below 2%, down 1.35 and 0.56 percentage points respectively from a year ago and last quarter.
Economic and trade recovery in the eurozoneis weak, the US economic recovery is restrained by weak exports, consumption and government spending, while emerging economies such as Russia and Brazil have fallen into economic recession because of the feeble recovery. As a result, the slow recovery of the global economy has deteriorated, international trade growth has slowed down significantly, the sluggish demand cannot sustain continuous capacity growth and the continuous growth reduction of the macro-economy won’t change for the better in the short term.
Of the main economies around the world, only South Africa’s imported goods and services took a larger share of GDP, but the growth was obviously slower in 2014. In the rest of the world, including the eurozone, Latin America, South Asia, the Far East and the Pacific region, the share in GDP taken by imported goods and services of developing countries has all geared down since they were severely hit by the financial crisis in 2008/2009.
The overcapacity and supply-demand imbalance in the industry won’t be solved in the short term. Q3 is the traditional peak season for the shipping industry, but the incremental effect of the peak season and the continuous drop of bulk cargo prices haven’t resulted in the massive increase of shipping volume, and the peak season didn’t see a “peak”. According to the Report, the year-on-year and quarter-on-quarter growth of global container shipping volume in Q3 has each decreased to 5.63% and 3.08% respectively.
China, which contributed 20% to the world’s economic growth, is the main driving force for the global economy. In Q3, China was under the threefold pressure of de-capacity, de-leveraging and prominent financial risks. Drive for independent economic growth was insufficient, downward pressure was larger, the real economy such as investment, export and industrial production maintained slow growth and year-on-year growth of total import/export volume saw a “continuous fall”. The sluggish macro-economy in China resulted in the continuation of weak domestic and external demand and Chinese port operations have gradually deteriorated, causing the general port industry to develop at a slower pace, while cargo throughput at ports above the designated scale increased only 2% or so year on year. The Chinese port industry already showed signs of weakness in the first half of this year.
The further slowdown in China’s economic growth will definitely curb the growth in trade demand, with Australia’s Port Hedland taking the most serious hit this quarter. Although the Australian economy saw hopes of growth in Q3 and the falling bulk cargo price boosted regional exports, it was not enough to counteract the adverse effects caused by economic slowdown among main exporters and weak trade demand. As a result, cargo throughput at Australian ports decreased by a surprising 4.4% year on year to 151 million tons, ranking last among all continents.
As a major customer of the iron ore exports from Port Hedland, China’s iron ore imports account for about 80% of its shipments. The Report showed that in 2015Q3, China’s iron ore imports from Port Hedland slumped by more than 35 percentage points, plunging the port’s cargo throughput out of the world’s top five with a steep year-on-year growth decline.
Economic recovery in Europe was also feeble, where port development encountered a “yellow light” and slower growth became the general trend this quarter. In Q3, Europe experienced both economic slowdown and deflation, the manufacturing PMI took another dip and main member states in the eurozone suffered weak exports and a high unemployment rate. The Report pointed out that cargo throughput at main European ports increased 1.06% year on year, the slowest quarterly growth since 2009, while container throughput maintained a high-speed growth of 7.92% year on year although still slower than before. However, thanks to factors such as low prices, high inventories and low costs, dry bulk and throughput at European ports still registered a slightly faster year-on-year growth.
Despite the general background of the macro-economic slowdown and general recession in the port industry, North American ports scored the highest year-on-year cargo throughput growth of 10.16% this quarter, a triple-fold increase from a year earlier, while its container throughput increased sharply by three percentage points from a year earlier. Among that, ports along the west coast of the North America registered a sound growth based on freight advantage, not only attracting some cargoes on the east-coast route to shift to the west coast, but also effectively boosting the container throughput at ports on the west coast, as evidenced by the Port of Long Beach, the Port of Seattle-Tacoma and the Port of Vancouver, whose container throughput increased by a steep 14.76%, 23.73% and 28.12% year on year respectively.