Hong Kong Shipping Industry Update Quarter 3 2012

Includes 3 FREE quarterly updates

BMI has revised down its 2012 throughput forecasts for the port of Hong Kong in 2012 on the back of monthly data for the port, which shows a plateauing of growth for the year so far. This slowing growth is due to the global macroeconomic climate, with the port of Hong Kong exposed due to its role as a major transshipment hub in Asia.
Container throughput and total tonnage throughput growth has flattened so far in 2012, with box volumes increasing by just 1% for the first four months of the year and tonnage not increasing at all for the first two months of 2012 (latest available data).
On the back of this recently published monthly data, BMI has revised down its throughput forecast for the port and is now predicting a growth of 0.1% in total tonnage at the port and for container throughput to increase by just 0.2% in 2012.
The slowing in growth is in part due to Hong Kong's domestic economic outlook, which is sharing China's economic fate. The major reason for the port of Hong Kong's projected poor performance in 2012 is, however, due to the port's role as a transshipment hub on the major East-West trade routes, which expose the facility to the vagaries of economic growth in the US and Europe.
Although the US economy is on the road to recovery, with real GDP projected to expand by 2% in 2012, the recovery is slow, and by extension, so is the growth in container demand. The eurozone, meanwhile, is facing a much tougher outlook, with a double-dip recession projected to play out in 2012, as BMI forecasts the zone's economy to contract by 0.5%, deadening the demand outlook for not only eurozone members, but Europe as a whole.


Headline Industry Data
- 2012 Port of Hong Kong tonnage throughput forecast to grow 0.10%. Over the medium term, we project a 8.5% increase.
- 2012 Port of Hong Kong container throughput forecast to grow 0.2%. Over the medium term, we project a 7.9% increase.
- 2012 total trade growth forecast at 3.60%.

Key Industry Trends
Emission Cuts At Risk As Bunker Price Increases The continuation of the port of Hong Kong's drive to slower emissions has been called into question, as the bunker fuel price continues to increase. The port is running a voluntary scheme, Fair Winds Charter, that has been set up to reward lines that commit to switch to a fuel with a sulphur content of 0.5% or less when berthed at the port. The charter has garnered some big name signatories from the container shipping sector.
Is A Tenth Box Terminal Needed? The need for a 10th container terminal, known as CT10, has been debated over the quarter.
Congestion once again became an issue at the port in 2011, leading some to call for the need for further expansion at the facility. The slowing global trade growth in 2012 and the trend for the Chinese manufacturing sector to move inland have, however, led to questions of whether there is a need for more container terminal capacity in Hong Kong.
APM Terminals Picks Hong Kong As Client Services Base APM Terminals (APMT) is seeking to further establish itself in Asia and has set up an office in Hong Kong to offer a 'resource partner and intelligent solutions' to its clients. The company's decision to establish a client support office in Hong Kong is an obvious choice considering the country's role in the maritime sector and the number of shipping lines based in the country, with 13 of APMT's 20 largest customers based in Asia.
Risks To Outlook The major short-term risk to our outlook for Hong Kong is presented by a potential deepening of the slowdown in demand, leading to a decline in throughput at the nation's port. The movement of industries away from the Pearl River Delta region inland - on the back of rising production costs and labour shortages in the area - is likely to negatively affect the Port of Hong Kong in the short and medium term, but BMI believes that the port's years of expertise and highly developed port operations will mean that it retains its role in the global shipping sector. The facility, must not, however, rest on its laurels and must continue to invest and innovate to ensure it remains ahead of the competition.