China's local port consolidation is conducive to improving bargaining power

Consolidation at China's major ports this year will give some bargaining power to shipping companies.

"Every province is actively pushing for port consolidation, with liaoning being the most aggressive."Xu bin, an analyst of the transportation and infrastructure industry at ubs securities, said in an interview with reporters including jiemian news on August 23 that the port industry has always been relatively stable and the market has not paid much attention to it.

Dalian jinzhou port (601880. SH), (600190. SH), port of yinkou (600317. SH) three listed companies announced in June, according to the liaoning province government and China merchants group will work together create a unified management platform, liaoning ports for completion by the end of 2017 the establishment of port group in liaoning and mixed ownership reform, completed by the end of 2018 to the integration of other port operators in the province.

Jiangsu and zhejiang established jiangsu port group and zhejiang port investment and operation group co., LTD.Other cities and provinces, such as shenzhen, do not necessarily have similar port groups, but have more or less come up with plans or ideas for port consolidation.Mr Xu said consolidation of Chinese ports would help improve bargaining power with global shipping companies.

Shenzhen, Shanghai and other coastal ports to Europe and the main routes.And the containers are basically concentrated in eight ports, namely, Shanghai port, ningbo-zhoushan port, shenzhen port, Qingdao port, xiamen port, tianjin port, guangzhou port and dalian port."More than 90 percent of foreign trade routes are linked to these eight ports."'if the eight terminals can be integrated, the bargaining power will be greatly improved,' Mr. Xu said."Consolidation is not necessarily asset consolidation, it's just consolidation from a operational, pricing perspective."At present, ports negotiate prices with shipping companies separately.

From the perspective of containers alone, China's port bargaining power is nearly 60% different from that of foreign countries.Revenue per standard container is $44 at home and $105 at foreign ports, a 58% difference.

In recent years, the port overcapacity has brought fierce competition, and the price war has led to the continuous decline of the port's profit margin. The integration can eliminate the adverse effect of the price war to a certain extent.

After the reorganization of xiamen port in 2012, the unit bargaining power of containers in 2014 increased by 54% compared with that in 2013. The profit margin of containers increased from 20% in 2013 to 36% in 2014 and reached 40% in 2016.Xu bin believes that port consolidation can bring three benefits, price increases, cost savings and more efficient utilization of capacity.

This article is from the port circle