The global financial crisis and the ensuing economic downturn are putting enormous strains on China's once booming ocean shipping industry, the English China Daily reported on Friday.

As global demand substantially weakens, major container shippers, bulk operators and port authorities in China are suddenly suffering badly as the slumping export sector passes on the impact of slumping worldwide demand, it said.

Shanghai, one of the world's busiest ports, has cut its container traffic target for the year by 5 percent, blaming this on the global financial crisis and an economic slowdown.

With a container volume of 26.15 million twenty-foot equivalent units (TEUs) last year on the back of over 20 percent growth, Shanghai surpassed Hong Kong for the first time in 2007 to become the world's No 2 container port, second only to Singapore.

However, such phenomenal growth has been tempered by the ongoing global economic recession. Total container throughput this year is expected to reach 28.5 million TEUs, less than its earlier target of 30 million TEUs.

The port attributed the slowdown to the drop in export volumes and sluggish domestic demand, according to Chen Xiyuan, president of the port operator Shanghai International Port Group Co.

The Daily quoted Chen as saying that container exports to the US, which account for 20 percent of the city's total export volume, have slid 7.8 percent in the first nine months of this year.

In addition, shipping fees have been dropping like a stone, Chen said. The shipping price from Shanghai to Europe, for example, has fallen from US$1,000 to US$200 per container since the beginning of this year.

As slowing economic growth cuts demand for steel, coal and ironore, demand for ships is also falling. According to shipbrokers Clarkson, global demand for container ships has fallen by nearly 50 percent this year.

China is among the hardest hit countries. According to a recent report from China International Capital Corporation Limited, Chinese shipyards experienced a 34 percent drop in new ship orders in the first nine months of this year, as compared to the global average of 27 percent.

This trend is expected to continue as global trade growth is projected to continue its downward spiral. In its recent forecast, the International Monetary Fund projected that world trade growth would slow to 4.9 percent this year and 4.1 percent next year, due to reduced demand for imports as a result of the overall weakness of the global economy.

The volume of trade growth could begin to contract for the first time since 2002, industry experts said.

(Xinhua News Agency November 28, 2008)