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China Industrial Feeling Recession's Impact

Port volumes and transactions are down in Hong Kong and neighboring ports in China.

By John McCloud | Updated on March 04, 2009

A year ago, China’s industrial sector looked like it was going to be safe from the repercussions of the credit crisis that was beginning to engulf the US. But today the picture is far less rosy. While most analysts predicted the Asian nation’s growing internal demand would more than compensate for any falloff in the export economy, the much larger falloff than expected combined with growing numbers of unemployed make it virtually impossible for the domestic market to make up for the loss of overseas business.

According to the China Container Ports Review 2009 from Paris-based AXS-Alphaliner and Liner Research Services, China’s 10 largest ports saw throughput volumes fall by 13.9% in January, compared with the same period a year ago. Though overall figures for last year were up as much as 20% at some ports, volumes began to plummet in Q4. Hong Kong’s container volumes, for example, fell by 13.2% in November and 15% in December. The report projects Chinese ports will handle 115 million 20-Foot Equivalent Units (TEUs) in ’09, down from 126 million TEUs last year. To make matters worse, the report warns that expansion projects in progress at every major Chinese port could produce an excess capacity of 35 million TEUs by the end of next year.

Air cargo volumes are also off. Hong Kong Air Cargo Terminals Ltd. began seeing volume declines in midyear, and the International Air Transport Association says air freight in the wider Asia Pacific region fell a record 23% in January. On top of this, the Chinese Purchasing Managers Index’ survey by Hong Kong-based CLSA fell below 50 in September for the first time since its inception in the early ’90s and has remained in the upper 40s since. A measure below 50 indicates the manufacturing sector is contracting.

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