Overcapacity in South China?
May 23, 2007 by SwizStick
Filed under China, Seafreight
According to GHK consultants, it’s a possibility:
“Ports all across Asia risk the supply of capacity outstripping demand,” he warned.
Simpson said ports in South China were looking at serious overcapacity in the near future and would begin to face pricing pressure.
However, he said the need to expand was often out of the hands of the port operators, citing the example of the giant 12,000 TEU Emma Maersk. A further seven of the mega vessels are to be built and they will have weekly sailings between Asia and Europe, requiring to be filled at ports at both ends.
I’ve been skeptical of the mega-ships coming online for quite some time now, but I’m not sure I’m convinced of overcapacity problems at South China ports. China to Europe is bigger than the China to U.S. market and I would assume that Maersk and others are hoping that the mega vessels will mean fewer ships to load as the mega ships take on the large volume lanes. I could be wrong, but I think there will be plenty of demand coming out of southern China for some time to come.
Still, he makes a very good point in regards to the U.S. woeful acreage utilization at terminals on the West Coast, as well as to terminal management in general:
“No one would dare to send the Emma Maersk to LA-Long Beach because you wouldn’t see it for a month,” he said.
The comment raised a chuckle, but it also illustrated the vital need for ports to improve productivity, especially in the US where capacity doesn’t come easy or quickly.
Simpson gave an example. LA’s Pier 400 handled 3,300 TEU per acre, while Hong Kong’s Kwai Chung berths handle 24,000 TEU per acre.
“Improving productivity is the way you make money, not by pouring concrete,” he said.
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