Port enterprises facing difficult times

China's port enterprises saw their business climate index decline to a negative level for the first time since the global financial crisis, dragged down by the sluggish global economy, according to a report by a shipping research institute e-mailed to the Global Times Wednesday.

The business climate index for port enterprises declined to 97.42 points in the third quarter of this year, 20.72 points lower than the index in the first quarter, according to the Shanghai International Shipping Institute (SISI).

A reading of above 100 points suggests port business activity is expanding, while one below 100 indicates contraction, according to the SISI.

"Dragged down by sluggish global economic performance and the slowdown in China's imports and exports, the country's port enterprises will still experience a hard time in the forth quarter," Zhou Dequan, deputy director of the shipping research department at SISI, told the Global Times Wednesday.

Zhou said competition among the port enterprises has become more intense, especially in the Bohai Bay area where many ports are located, and the enterprises are suffering pressure from overcapacity.

Bohai Bay near North China's Tianjin is one of China's three major bays. The others are located near East China's Shanghai and South China's Guangdong Province.

"The whole layout of the country's ports needs to be improved and restructured," Luo Renjian, chief researcher at the Institute of Comprehensive Transportation of the National Development and Reform Commission, told the Global Times Wednesday.

"Some ports compete to snatch consumers from the same region, rather than developing new customers, which leads to overcapacity," Luo noted.

China's exports rose by only 1 percent in August this year compared with July, and imports dropped for the third consecutive month, declining 2.6 percent year-on-year, according to data released by the General Administration of Customs in September.

Although the demand for port throughput is declining as a whole, development and improvement of ports should not be suspended, Luo said.

"The port enterprises need to improve the operating efficiency of their existing ports, rather than enlarging the scale and number of ports," Luo noted.

Boosted by the State Council's supportive policies released in 2003 for ocean-related businesses and the fast growth of China's exports and imports in recent years, local governments have been competing to build more ports.

Hebei Province will invest a total of 18 billion yuan ($2.85 billion) on port construction this year, sources from Hebei Transportation Bureau were quoted as saying Monday by hebei.com, a provincial news portal.