DETERIORATING business conditions at Chinese ports are expected to slow in the second quarter of 2016 according to a quarterly survey carried out by the Shanghai International Shipping Institute.
The institute’s prosperity index of port enterprises forecasts a 20.23-point rise to 99.27 points in the second quarter of 2016, just below the 100-point level separating the prosperous intervals signifying positive business trends from the stagnant intervals reflecting negative business trends.
According to the index, small port enterprises are expected to lead a business recovery in the second quarter with a forecast prosperity index of 115 points in the relatively prosperous interval, while medium-sized port enterprises and large port enterprises are still forecast in relatively stagnant territory at 90.91 points and slightly stagnant territory at 98.82 points respectively.
Port operators' profit margins are likely to recover in the second quarter and falling operating costs improve throughput, with berth utilisation and financing options leading the prosperity index of profitability forecast to hit 101.27 points, which is in positive business trends territory.
These come after significant deterioration in business performance and profitability for the first quarter of 2016.
The institute’s Global Port Development Report forecasts Europe-Asia trade to gradually recover where lower trade costs boost demand for commodities in Europe and Asia for the rest of 2016 versus 2015.
The report added that the implementation of the Maritime Silk Road component of Chinese president Xi Jinping’s ambitious One Belt, One Road initiative to develop port logistics and infrastructure will also increase trade demand in European and Asia countries along the route.
On the domestic front, the increasing proportion of containerised transportation and rising regional commodity trade are expected to help Chinese ports maintain a moderate pace of growth overall, with the annual growth rate for container throughput in China remaining above 3%.