Trade war to slow growth among Chinese ports
May 23, 2019 (China Knowledge) - The current trade war environment is expected to stall China’s container shipping business over the next 12 to 18 months, according to a report from global rating agency Moody’s.
Annual growth rate in container throughput may be reduced to zero or low single digits from 4.7% and 8.3% in 2018 and 2017 respectively, while port handling charges are also expected to decline, eroding revenue and profits among the country’s port operators.
Moving forward, trade relations between the two countries are still expected to be tenuous at best as any potential trade deal will still require a significant negotiating period which will result in a prolonged challenging operating environment for Chinese port operators.
This decline in container throughput will place further pressure on a Chinese port industry that is already under pressure from overcapacity and consolidation.
Should the US move forward with tariffs on another USD 300 billion worth of Chinese exports, demand for Chinese goods will further soften, accelerating the exodus of manufacturing and supply chains out of China.
While container throughput had surged during the fourth quarter last year and early this year, this increase was likely the result of manufacturers front-loading their exports in preparations for a potential tariff hike and will likely decline over the year.
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