Six percent increase in global box throughput for port operator China Merchants

Pictured: the Hong Kong skyline at sunrise. China Merchants is headquartered in Hong Kong. Photo: Shutterstock.

Global mega-box port operator China Merchants Port Holdings recorded a 6 percent increase in its world box throughput in 2018 compared to the year before. The Hong Kong Stock Exchange-listed port operator revealed its throughput details while disclosing that it had generated revenues of HK$10.16 billion (US$1.29 billion) in its annual report.

There were many box-related highlights in China Merchants’ operational year. In 2018 the group handled 109.06 million twenty-foot equivalent units (TEU), up 6 percent on the 2017 figure. Mainland Chinese ports had  box throughput of 80.73 million TEU, an increase of 4.7 percent, the group states, adding that the increase was driven by a recovery of the Chinese economy and the growth of imports/exports to/from mainland China.

Pearl River Delta

The core of China Merchants Port Holdings’ business is the box trade. And the core of China Merchants’ trade is its operations in China’s Pearl River Delta region. That’s the region around Hong Kong-Macau and Guangdong. The company’s terminals in the West Shenzhen Port area handled 10.69 million TEU last year, down 4.4 per cent on the previous year. The company attributed the downturn to the HK$4 billion sale of its entire equity interest of a subsidiary formerly known as Shenzhen Chiwan Wharf Holdings (since renamed to China Merchants Port Group Co. Ltd.).

Meanwhile, the Chu Kong River Trade Terminal handled 1.17 million TEU, down 13.3 percent compared to 2017. Overall box trade handled by the company’s Hong Kong ports declined by 5.7 percent. Operations in Hong Kong and Taiwan contributed 7.67 million TEU last year, which is a 2.5 percent increase on the previous year. It appears that Taiwan drove growth as China Merchants’ Kao Ming box terminal in Kaohsiung handled 1.75 million TEU, an increase of 2.8 percent.  

Yangtze River Delta

Turning now to the Yangtze River Delta region (the area around Shanghai), box throughput at Shanghai International Port was up 4.4 percent to 42.01 million TEU. The company attributed the uptick to an increase in the number of shipping routes which, in turn, was driven up by the recent reorganization of shipping alliances. Another driver was the increase in automated handling capacity at Yangshan.

Ningbo Daxie China Merchants International Terminals saw a 5.1 percent year-on-year increase with 3.16 million TEU. This increase was driven by a rearrangement of shipping routes, China Merchants indicated.

Head north to the Bohai Bay area (the Chinese bay area near the two Koreas, home to the cities of Dalian, Tianjin and, nearby, Beijing). A China Merchants’ subsidiary, Dalian Port Company, handled 11.11 million TEU, which represented an increase of 3.3 percent. Qingdao Qinwan United Container Terminal handled a total box throughput of 6.93 million TEU, which is an 11.1 percent increase over 2017.

Outside of China

Total box throughput overseas stood at 20.66 million TEU, which is a 12.9 percent increase compared to the previous year. Overseas box throughput figures benefited from “rapid growth” at ports around the world: Colombo, Sri Lanka, up 12 percent to 2.68 million TEU; Lomé, Togo, increased by 18.3 percent year-on-year to 1.05 million TEU; Terminal Link at Thessaloniki Port, Greece, handled 13.64 million TEU, up 8.6 percent; Kumport Liman, Turkey, increased 18.3 percent to 1.26 million TEU. There was also a smattering of box throughputs in Nigeria (0.48 million TEU); Djibouti (0.86 million TEU); and Brazil (0.69 million TEU from March to December).

China Merchants Port Holdings opened Djibouti International Free Trade Zone in July 2018; it was (and is) a controversial move. The concession at the Doraleh box terminal, in Djibouti, was formerly operated by global port operator DP World on a 30-year concession. Note the past tense. The concession was somehow transferred by the Djibouti government from DP World to China Merchants. Litigation on this matter is reportedly underway in the Hong Kong court system.

The company also discussed its Hambantota port project. This is also a controversial port. Beijing has repeatedly been accused of engaging in debt-diplomacy – ensnaring countries in debt to build infrastructure – and then using that financial leverage to acquire assets for its one-belt-one-road project. Hambantota port was reportedly funded by debt that Colombo found difficult to repay. Hambantota was reportedly transferred to China in a 99-year lease in return for debt relief.

Hambantota has developed a wheeled and bulk cargo business that “achieved results exceeding expectations,” the company reported. China Merchants added that it is “committed” to developing its ports in Colombo and Hambantota into “regional leading ports.” China Merchants said that Colombo will be developed into an international shipping center in South Asia, while Hambantota will focus on “regional strategic planning, strengthening resource utilization and promoting implementation of port strategies, thereby maintaining a sustainable profitability.”

China Merchants also stated that it will develop an international free trade zone at Djibouti and, at Hambantota, a logistics park.