Port overcapacity looms in China as harbour investment increases

AS state-owned and foreign enterprises' investment in Chinese ports is heating up, the shipping industry experts sounding overcapacity alarms, Xinhua reports.

In mid June, Maersk signed a deal with Ningbo Port Group to jointly invest CNY4.3 billion (US$677 million) developing the Meilong Terminal inside Ningbo's Meishan Bonded Port Area. Ningbo Port Group holds 75 per cent share and Maersk 25 per cent.

Weifang city also signed an agreement with Malaysia's largest state-run company Sime Darby at the same time. The latter will spend about CNY2.8 billion expanding Weifang Port in the coming three years, which is even more than the collective investment sum it made on Weifang in the past five years.

On the other hand, domestic state-owned powering company Huaneng Power International entered an agreement with Fuzhou Port Group in April on spending CNY6 billion on building a terminal

A report from the Ministry of Transportation showed that China's investment on sea ports totalled to CNY80 billion in 2011, navigational channels not included. This year the sum is estimated to rise to CNY85 billion.

It is earlier reported that a port's actual capacity exceeding what it states is quite common in the industry. Among major ports in China, Dalian's utilisation rate is 78 per cent, Qingdao's is 68 per cent, Tianjin 58 per cent, Xiamen 40 per cent.

Jia Dashan, Assistant Dean of Waterborne Transport Research Institute of Ministry of Transportation, said according to the official statistical standard, the designed capacities of the ports are falling behind their throughput, but in fact, their real capacities have far surpassed. The suitable value of capacity against throughput should be at 1.1, but China's has come to 1.17 as of the end of 2011.

A senior official from the Qingdao Port once pointed out that port competition has worsened in Bohai Rim, Yangtze River Delta and Pearl River Delta. There is one large port every 50 kilometres in China. But in the rest of the world, there will not be two large ports of the same size within 200 kilometres.