Battle of the Mega Ports: Singapore vs. Shanghai? A tale told by an idiot, full of sound and fury, signifying nothing William Shakespeare TOC Tianjin 14 March 2011 Wai-duen Lee & Jonathan Beard, GHK
The World s Busiest Port 2005-2009: Singapore SH HK SGP SHK HK SH SGP 2010: Shanghai SZ is Singapore really losing out to Shanghai?
How do Ports Compete? Varies by segment: deep-sea origin / destination (O/D), short-sea and transshipment Market size single most important factor hinterland connectivity counts! Services (handling speeds, reliable berth windows) necessary but not sufficient $3,000 $2,500 $2,000 +70 +30 +190 +200 Pricing often insufficient to overcome fundamentals - port operator may only control a small portion of total through costs $1,500 $1,000 $500 $0 via LA via NY via HR via C via S Rail Port & Harbour Ocean Intra-regional competition typically more critical than inter-regional
Singapore: Primarily a Transhipment Centre 80-85% of throughput is TS Direct shipment: approx 5 mil TEU, but considerable volume is imported for further processing or other value added services before being reexported (Regional Distribution Ctr) TS good for headline numbers (double-counted), BUT Revenue per lift rarely more than 60% of revenue of import/export box Footloose market: Maersk relocated from Singapore to PTP in 2000 and took 1.5 mil TEU with it 120 100 80 60 40 20 0 DS F / SS TS Singapore Inc Gov t extremely supportive of its logistics sector. PSA / MPA very aggressive in defending market position (support / ancillary services, feeder incentives, etc.)
Intra-Regional Competition Will T/S hubs survive in the absence of high O/D cargo base-load? Demand driven: direct call vs hub & feeder? Competitive transhipment hubs need: Proximity to main shipping lanes Dense network of connections Handling speeds and reliability of operations, with minimum delays - streamlined regulations / customs Cost and tariffs (port charges, container handling charges, etc.) Infrastructure to handle large mother vessels A large volume of local O/D cargo (but several exceptions) Lines may also seek dedicated terminals Without large O/D baseload can T/S hubs survive: e.g. Singapore Continued dominance as Mega-vessel hub, or Steady decline in face of direct call ports?
Container Port Throughput Will Singapore dominance of ASEAN continue? Xiamen Guangzhou Shenzhen Kaohsiung Hong Kong Ports over 1 mil TEU throughput in 2010 2010 TEU, ASEAN Ports 20010TEU, Non-ASEAN Ports Bangkok Laem Chabang Manila Ho Chi Minh Port Klang Tanjung Pelepas Singapore Note: * CI estimate; Ho Chi Minh incl. Cai Mep Source: CI, CT Operators, GHK Tanjung Priok (Jakarta) Tanjung Perak (Surabaya)
Development of Other ASEAN Ports Port Klang (Malaysia): 8.9 mil TEU in 2010, 22% y-o-y Transhipment hub & regional base for CMA CGM Vietnam: Substantial (but fragmented) development at Cai Mep by international terminal operators Land-side infrastructure remains a challenge Development / expansion plans: Jakarta, India, Indochina / Mekong Delta corridor
Emergence of Surplus Capacity in South Vietnam VICT Cat Lai Ben Nghe 16,000 '000 TEU Demand Supply 14,000 12,000? 10,000 Vinamarine 2009 High* 8,000 6,000 4,000 2,000 0 Vinamarine 2009 Low* 2007 2015 Japan ODA Source: GHK
China: A Major and Growing Economy 2 nd largest GDP ($5.8 trillion) in 2010, high growth rate (10.3% y-o-y) 1.3+ billion population World s manufacturing centre, exported $1,578 bn, imported 1,395 bn in 2010 *Europe: +US$243 bn -US$138 bn Total exports from China Total imports to China Middle East: +US$61 bn -US$58 bn Africa: +US$48 bn -US$43 bn CIS: +US$39 bn -US$31 bn Australia/NZ: +US$25 bn -US$43 bn Japan: +US$98 bn -US$131 bn Other Asia: +US$393 bn -US$407 bn North America: +US$239 bn -US$90 bn S & C America: +US$57 bn -US$64 bn Note: 2009 *Excluding CIS countries. Source: PRC General Customs, WTO.
China Container Ports - Key Economic Regions Drive Growth Coastal regions have dominated, but growth is spreading inland Bohai Yangtze River Delta / YRD Fujian Notes: 2008 data. PRD refers to Guangdong, excluding HK. Int l Trade by cargo O/D. Significant double-counting HK& PRD Population at year-end. USD and RMB in current prices. Pearl River Delta / PRD
Container Port Throughput 2001-2009, China Key Regions Notes: YRD ports include Taicang, which is officially classified as river port. South China Ports include HK. Top 3 Drops 2009 (%) Shenzhen -14.8 Hong Kong -13.7 Shanghai -10.6 Top 3 Growth 2009 (%) Yingkou 39.2 Taicang 4.3 Tianjin 2.4
Lianyungang Yangtze Delta Ports Taicang Port SCT & Waigaoqiao 29 mil TEU Yangshan Notes: *Traditionally classified as an inland river port; re-classified as a coastal/international port recently. 2010 statistics: estimated 13 mil TEU Ningbo- Zhoushan Shanghai CT Throughput (M TEU) & Yr of Opening 7.00 6.00 Million TEU 5.00 4.00 3.00 2.00 SCT '93 WGQ I '94 WGQ II, III '99 WGQ IV '03 WGQ V '05 Yangshan I, II '05 Yangshan III '07 1.00 0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 Throughput 2010
YRD Supply-Demand Balance Capacity tight over the medium term, even without significant international transhipment Both demand and supply of port handling facilities have been and will be rapidly growing Short term: supply may exceed demand; Long term: potential shortage Shanghai as international transhipment hub? Customs? Import/export tariffs? Cabotage restrictions? 180 Demand - Domestic Cargo (2009 projection) 160 Demand - Int'l Exp/Imp Cargo (2009 projection) 140 Terminal Capacity 120 mil TEU 100 80 60 40 20 0 2000 2005 2010 2015 2020 Source: GHK, 2009
50% 40% Relocation of Manufacturing Activities? Not so much a relocation, rather as PRC economy has evolved, activity has spread to other regions (e.g. PRD to YRD). Likewise, development of SE / S Asia & Mid-West's Share of China's Export globalisation provides additional options: China + 1 30% 20% 10% To Mid-West PRD YRD 0% 70% 60% 2000 2003 2006 2009 East vs West PRD Share of Guangdong Exports 50% 40% 30% YRD vs Guangdong Share of China Exports Guangdong YRD 50% 40% 30% 20% 10% 0% ` East PRD West PRD 2000 2002 2004 2006 2008 East PRD West PRD??? China Vietnam, Indonesia, etc but will not replace PRC 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 YRD Guangdong 2007 2008 2009
Competition among NE Asia Ports Transhipment @Traditional Hubs at Threat from PRC? Notes: 2006, T/S refers to international ocean-to-ocean transhipment, domestic transhipment is excluded. O/D = origin / destination cargo
Summary 1: Shanghai vs Singapore Headline asides, the key issues for port performance are closer to home Nature Singapore Shanghai Hinterland SE Asia & beyond China (mainly) Service nature Transhipment Export/import aspiring to handle more TS Soft infrastructure / policy support Well developed world standard Under development Main competition SE Asia ports YRD ports (e.g. Ningbo) N China / N Asia ports if becomes TS hub Shanghai s position was not achieved at Singapore s expense ~ Mrs Lim HH, Second Minister for Transport, Singapore
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Summary 2: Competition in the YRD Ports Market More of the same or new competitive landscape? Competition tends to be more intra-regional (within the same region) than inter-regional (across regions) Oversupply of port handling capacity over short and medium term but some slow-down in rate of expansion: re-evalution post crisis YRD ports are unlikely to turn into competitive international TS hubs without radical regulatory changes Development in the inland-regions potential for interregional competition? Inter-modal competition?
S China HK Port service quality (frequency of services, productivity, etc.) world class, continues to improve But S China competitors improving rapidly, especially in terms of frequency of services for Europe / N America trades HK Port some progress in reducing total through costs, but higher Terminal Handling Charges & cross-boundary trucking costs remain critical weakness losing S China market share (& absolute volume) TEU mn 16 14 12 10 8 6 4 2 0 Road Haulage Costs (HK$) ~ 2000 ~ 800 Port Competitiveness Depends on Total Through Costs - Regulatory - Business Processes - Facilities - Market Structure - Low Productivity ~ 1.2 trips / day - Higher Costs Distance Hong Kong Mainland South China International Cargo Market 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 TEU via HK (mn) TEU via Shenzhen & Guangzhou (mn) HK share 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
South China Supply-Demand Balance Can international transhipment soak up excess capacity?...unlikely 160 140 120 Demand - Int'l TS (mainly HK) Demand - Domestic Cargo (2009 projection) Demand - Int'l Exp/Imp Cargo (2009 projection) Terminal Capacity 100 mil TEU 80 Potential Surplus? 60 40 20 0 Forecast 2000 2005 2010 2015 2020 Notes: S China includes Hong Kong Source: GHK, 2009