¡¡¡¡In 2008, the global economy has been severely challenged and China¡¯s export growth has slowed significantly. It was pointed out that the Pearl River Delta (PRD) port industry is highly dependent on imports and exports, and has thus been more vulnerable compared with counterparts.

¡¡¡¡Warning on excessive capacity

¡¡¡¡The current financial crisis, triggered by the sub-prime mortgage crisis, has moved on into the consumer market in the United States, with imports from China cooling as a result. Our export volume to the U.S. in 2006 grew by 24.9% over 2005, and the volume in 2007 reduced to a 14.4% increase. During the first quarter this year, it was just 5.4%. Though 2007 container throughput increased by 20.4%, it is the second lowest rise ever since the nationwide port container throughput has exceeded 1 million TEU, just after the 17.8% boundary in 2001.
¡¡¡¡In 2007, each port in the PRD substantially raised its container throughput, however, a capacity surplus still remains. While on paper there are the 750,000-TEU Kwai Chung Container Terminal in Hong Kong, the 9 berths of 6.2 million TEU in Chiwan of Shenzhen Port and the 4 berths of 1.4 million TEU in Nansha of Guangzhou Port, in reality capacity is much higher. Previously a single berth, Kwai Chung Container Terminal now is able to handle over 100 million TEU per year. By 2010, 40 large deep-water berths scattered around Yantian, Shekou, Chiwan and Dachanwan in Shenzhen will be able to complete 32 million TEU. But within 2007, only 55% of the capacity was fully utilised in Nansha of Guangzhou Port. In addition, Gaolan of Zhuhai Port, Zhongshan Port, Humen in Dongguan Port and Huizhou Port all have deep-water berths in plan. These berths will not only add to the port handling capacity in the PRD, but aim each place ambitiously at becoming trunk ports. This will reduce the transit load onto small and medium-sized ports, also lowering the demand for the three major ports.
¡¡¡¡According to statistics, every container transit reduced in the PRD will pull down throughput equivalent to the handling to three containers. Therefore, it is the time ports in the PRD were warned of excessive capacity. It is therefore recommended that large-scale construction on container terminals be suspended.

¡¡¡¡Three major ports, several ways out

¡¡¡¡Port competition in the PRD is among the most complex in China, the current three most outstanding ones are Hong Kong Port, Shenzhen Port and Guangzhou Port, who are faced with rather different situations within the one hinterland in the PRD.

¡¡¡¡Hong Kong Port: severe challenges

¡¡¡¡At present, Shenzhen and Guangzhou feed part of their throughput to Hong Kong. While Hong Kong has taken over more than half of the foreign trade container transport volume in the PRD, however its proportion among the three has been declining year by year. This shows that the cargo that used to flow to Hong Kong is gradually going over to the other two.
¡¡¡¡In this situation, Hong Kong Port manages to maintain far more advantages in capacity, routes, flights, and the quality of service, based on its traditionally leading position. In the past quarter, its container throughput grew by 7.5%, a long-cherished upsurge for many years. With no rise in the total cargo volume in the PRD, this result owes much to the increasing volume provided by feeder ports via near-sea lines. Skyrocketing oil prices have forced cargo owners to turn to less fuel-consuming water transport as much as possible, and water transit is consequently developing with liner companies adjusting their routes accordingly. Therefore, Hong Kong Port need to position itself accurately for broader prospects in the ever-changing market.

¡¡¡¡Shenzhen Port: external strength established on internal competition

¡¡¡¡Shenzhen Port is in a situation of some delicacy. Firstly, it is maintaining its foothold at the top throughout Chinese ports. In 1995 its container throughput was only 284,000 TEU, and in 2007 it mounted to the 21.1 million TEU mark. But on the other hand, Guangzhou Port has limited the development of Shenzhen Port, whose container throughput growth rate dropped to its lowest level in 2006 and remained sluggish through till 2007.
¡¡¡¡Now, Hong Kong Hutchison Whampoa (HWL) has a controlling stake in Shenzhen Yantian Port area, China Merchants Group Hong Kong has allocated capital into the western part of Shenzhen, say Shekou, Chiwan and Mawan areas, Hong Kong Wharf Group has invested in Dachanwan area. This internal competition involving three major investors from Hong Kong has promoted Shenzhen¡¯s external competitiveness generally.
¡¡¡¡First of all, the throughput capacity of Shenzhen container terminal has actually been raised. Just when the four 100,000-ton container berths are still under construction through the third-phase project in Yantian Port area, HWL claimed to have added an extra RMB 10 billion for expanding the current project into a total of six 100,000-ton container berths; The Dachanwan Port area, invested in by Hong Kong Wharf Group, will be completed in four phases to a total of fifteen 6,000-TEU and over container carrier berths, seven 2,000-TEU berths, three 100,000-ton and two 80,000-ton berths. Shortly after the beginning of the first phase of construction, the second phase was launched by the Wharf Group. Four more 100,000-ton berths will be built and the total capacity will rise to 6 million TEU.
¡¡¡¡In the western area, Shenzhen Chiwan Wharf Holdings Ltd. moved its grocery berth from Chiwai area to Humen Mayong area in Dongguan two years ago so that berths in Chiwan could focus on container handling. In 2007, while Yantian in the eastern part achieved a container throughput of 9.31 million TEU, Chiwan and Shekou in the western part have completed 6.01 million TEU and 5.03 million TEU respectively.

¡¡¡¡Guangzhou Port: stand out from Nansha

¡¡¡¡As Guangzhou Port progresses its channels dredging, 50,000-ton vessels are able to berth with the influx. By 2010, Guangzhou Port will become suitable for navigation by 100,000-ton ships two-ways in all-weather conditions, a promising claim for a hub or trunk terminal.
¡¡¡¡In September 2004, four 50,000-ton multi-purpose terminals in Nansha area entered into service. After just one year, Nansha had handled 1.08 million TEU, with international business accounting for roughly 20%. Guangzhou Port container throughput in this same year grew at a rate unprecedented in China, being twice the speed Shenzhen Port could make. Then, in 2006, Nansha container throughput was 2.411 million TEU, with more than one third from the international business. Coming into 2007, the volume has mounted to 4.428 million TEU, pushing the total of Guangzhou Port to 9.204 million TEU. Its average annual growth rate of 40.6% in the past three years has doubled that of Shenzhen Port.
¡¡¡¡At this moment, the Nansha second project has been completed, with ten deep-water berths already in the container terminal. The development of Nansha is not only to develop the port itself, but more importantly to accelerate Guangzhou City in achieving its ¡°Southern Extension¡± strategy. With more projects settling down in Nansha, a development pattern has initially taken shape¡¯motor vehicles and equipment industry in the northern part, high-tech industries in the central area, and logistics and portside industries in the south.