China Slowdown And Taipei Competition The Main Threats For Keelung
Tonnage and container throughput at the port of Keelung, Taiwan's second-largest port, is down year-on-year (y-o-y) in the first two months of 2013. BMI attributes this decline to Chinese New Year celebrations, when trade grinds to a halt for the week-long holiday period. Due to this, BMI is retaining its view that 2013 will be the year that total tonnage and box throughput at Keelung returns to growth. This view, while positive, is tempered by the slowing in growth in Taiwan's main export partner, China, and the impact that this will have on Taiwan's port sector. BMI also highlights the growing competition for Keelung from the port of Taipei, which is steadily gaining on its rival's container throughput levels.
Short Term: Dip For NY, But On Course For Recovery
On the back of the Chinese New Year holiday, which in 2013 started on February 10, throughput volumes at Keelung dropped dramatically in February 2013 with total tonnage volumes dropping by 21% y-o-y and container throughput falling by 23%.
For the first two months of 2013, although volumes for tonnes and container are down y-o-y, dipping by 3% and 4% respectively, the decline was tempered by the positive throughput growth recorded at the port in January 2013, when total tonnage volumes increased by 14% and container levels grew by 15%.
|Chinese New Year Nothing To Celebrate In The Port Sector|
|LHC: Port of Keelung Total Tonnage y-o-y % Change Jan and Feb 2013. RHC: Port of Keelung Container Throughput y-o-y % Change Jan and Feb 2013.|
BMI considers Keelung's February 2013 decline to be an outlier in trend terms and believes that data for January 2013 is a better indicator of the year ahead for the port, with BMI retaining its view that 2013 will be the start of a recovery, following declines in throughput at the facility in 2012.
In 2012 total tonnage at the port of Keelung dropped by 8% y-o-y to reach 69.4mn tonnes. In 2013 we are projecting total tonnage throughput to grow by 1.3% to reach 70.3mn tonnes.
Container volumes at the port fell by 8.1% in 2012 to 1.6mn 20-feet equivalent units (TEUs), but are projected to start to recover in 2013 with growth of 1.3% forecast and box volumes for the year predicted to reach 1.63mn TEUs.
The major risk to our forecasts in 2013 stems from China. Taiwan's main export partner - which accounts for 28.1% of the island's total exports - China's economic growth is slowing. In 2013 we project China's real GDP to expand by 7.5% y-o-y marking a slowing on the 7.7% growth recorded in 2012.
Medium Term: China Slowdown A Worry; Competition Heating Up
Over the medium term (2013-2017) we believe that the threat from a Chinese slowdown to Taiwan's port throughput will become more acute and places downside pressure on the slow-but-steady recovery we forecast in throughput at Keelung.
|Chinese Slowdown A Threat|
|China Real GDP Annual Average % Change 2007-2012 and 2013f-2017f|
China's economy, although still growing over the medium term, is forecast to expand by an annual average of just 6.4%; this compares to the 9.2% growth that the country recorded in the previous five years (2008-2012).
This slowing places downside risk on our medium-term forecasts with BMI currently projecting total tonnage at Keelung to grow by 5% (an annual average of 1.2%) to reach 73.8mn tonnes in 2017. Container throughput is forecast to expand by 10.8%, an annual average of 2% to reach 1.8mn TEUs in 2017.
|Risks To The Downside|
|LHC: Port of Keelung Throughput, Tonnes '000 and y-o-y % Change. Port of Keelung Container Throughput, TEU and y-o-y % Change|
BMI also highlights that over the medium term the development of the port of Taipei is increasing competition in Taiwan's port sector; Taipei could have a negative impact on Keelung's throughput.
|Keelung On Top, But For How Much Longer?|
|Port of Keelung Container Throughput (TEU) and Port of Taipei Container Throughput (TEU) and y-o-y % Change|
In 2012 Keelung remained ahead of Taipei in terms of container throughput, handling 1.6mn TEUs to Taipei's 1mn TEUs. However, the gap between the two ports is narrowing; in 2011 Keelung's container throughput put it at 1mn TEUs in front of Taipei, in 2012 this lead had slipped to 510,401 TEUs.
Long Term: Commercial Role To Continue?
Taipei's rapid growth, with container volumes growing by 68% y-o-y in 2012, will place pressure on the port of Keelung's development and growth. In fact, questions are being raised as to Keelung's long-term commercial role following a strategy announcement by the Taiwan International Ports Corporation (TPI), which singled Keelung out as a facility which will promote cruises and tourism - non-cargo business.