Port operators in China are facing major headwinds from slower economic growth and a weaker throughput outlook, which could lead to margin pressure due to the high fixed costs of port operations, global ratings agency, Moody’s, said in a report.
“Although manageable capex plans over the next three years will alleviate some of the pressure on their financial profiles, weak liner profitability will limit the port operators’ ability to raise handling charges,” said Osbert Tang, Moody’s vice president and senior analyst.
He added that in addition, export-orientated ports such as Shanghai and Shenzhen would be particularly affected by muted export growth in China.
Overcapacity in the liner industry is exacerbating this pressure on the operators’ margins, said Tang, commenting that this would likely prompt the port operators to preserve cash flow through stringent cost controls and discipline in overseas expansion.
