Moving factories spell doom for HK, Shenzhen ports

The role of Guangdong and Hong Kong as the world's manufacturing and export powerhouses may be on the wane as the mainland's inland cities grow into new manufacturing hubs, according to industry insiders.


Weak shipping data for Hong Kong and Shenzhen in the first quarter of this year already shows a decline as the world's leading ports,l the South China Morning Post reported. And an upcoming rail service from central China to Germany could accelerate that fall.


Container throughput at the 10 leading mainland ports grew 12.3 per cent on average in the first two months of this year, according to official data.


By comparison, the container throughput of Shenzhen, the world's fourth-largest port, rose just 3.6 per cent to 5.1 million TEUs, according to the Shenzhen Ports Association, while cargo throughput fell 2.3 percent to 50.3 million tonnes in the first quarter.


The container throughput of Hong Kong, the world's third-busiest container port, rose 2.4 percent to 5.6 million TEUs in the first quarter, according to the Hong Kong Port Development Council.


"In the coming years, Hong Kong and Guangdong ports will continue to see weak performance because of the shift of factories away from the Pearl River Delta," said Willy Lin Sun-mo, chairman of the Hong Kong Shippers' Council.


In contrast, container throughput in Shanghai, the world's busiest port, jumped 12.3 percent to 7.3 million TEUs in the first quarter, while its cargo throughput rose 9.1 percent to 111.4 million tonnes, according to the Shanghai International Port Group, Shanghai's port operator.


Manufacturing in the Yangtze River Delta, served by Shanghai, has not suffered as it has in the Pearl River Delta. That is because Yangtze River Delta companies ship higher-value, less labour-intensive goods and the factories enjoy economies of scale because they are larger than the Hong Kong-owned factories in the Pearl River Delta, Lin said.


Douglas Sheridan, a United States shoe trader and a shareholder in HDS Group, a Chinese shoemaker, said: "The southern provinces have lost the manufacturing of shoes, apparel and toys.


"In a few years, Guangdong may upgrade to electronics, but I don't think Pearl River Delta ports will be up to the level of the last 10 years. Those days are gone."


HDS plans to open a shoe factory in the central city of Chengdu in 12 to 16 months, and its shoe factory in the coastal province of Fujian will become mostly an administrative facility in three to five years, he said.


Factories in central mainland cities such as Chongqing and Chengdu will ship goods through Yangtze River ports such as Shanghai and Ningbo, but not Hong Kong or Shenzhen, said Sheridan. "In the short to medium term, Shanghai will benefit a lot from the move of manufacturing inland."


Guangdong has lost some ski jacket factories to northern China, which is why northern ports such as Qingdao have enjoyed double-digit container throughput growth in the past few months, Sheridan said.


"All the big US buyers are telling Hong Kong manufacturers to move their manufacturing to India," said Lin. "If not, they will have no business."


India now accounts for 40 per cent of the cheap garments sold in the US, while Guangdong accounts for only a third, he said. Five years ago, Guangdong accounted for more than half the cheap garments sold in the US, while India accounted for only 15 percent.


Later this year, DB Schenker hopes to gather enough customer interest to start a regular container rail service between China and Germany once or twice per week, said a DB Schenker spokesman.


The rail service would take 16 days, while the same journey by sea will take 35 days, he said.
(Source:http://www.cargonewsasia.com)