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Cosco to spend $3b on port projects in Philippines
POSTED: 8:33 a.m. EDT, July 13,2007
Terminal operators in the ports of Singapore and Hong Kong could face fresh competition after a senior official said one of China's largest shipping companies, state-controlled China Ocean Shipping (Cosco), intended to invest US$3 billion in projects in the Philippines, including a new cargo-handling hub.
Francis Chua, the Philippine government's special adviser on China trade and investments, said a Cosco team would arrive in Manila this month to inspect potential locations.
As well as opportunities to develop a container terminal and logistics centre for handling cargo, Cosco was examining the Philippines as a potential base for shipbuilding and crew training.
If Cosco were to set up a facility in the Philippines for moving containers between ships - known as a transhipment hub - it could be a serious setback for Hong Kong and Singapore, which handle much of the transhipment in Southeast Asia.
Cosco is the world's number seven container shipping line but much more powerful in its home area around greater China.
Shipping and port executives in the region said it was too early to be clear about how Cosco intended to use any facility in the Philippines or whether it would go ahead. Cosco has discussed deals to build a similar terminal in Greece, but nothing has come of them.
The Philippines authorities have just awarded a container terminal concession to ICTSI, a Manila-based container terminal operator, to operate at one of the sites that Chua said was a possible location for Cosco's investment ¨C Subic Bay, a former US naval base.
Chua said Cosco would also look at the site of another former US navy base - Sangley Point in Cavite province, south of Manila - and Batangas province, which is home to the Philippines'second-biggest international port after Manila.
A new hub in the Philippines might allow Cosco to transfer some of its transhipment business to a location with a lower cost than either Singapore - the world's busiest transhipment hub - or Hong Kong, which increasingly relies on transhipment because so much of its traditional business now goes straight to mainland China.
Any transfer of services could affect Singapore's PSA, the world number three container terminal operator, and Hong Kong's Hutchison Ports, the number one. Both run terminals Cosco uses for transhipment.
Unlike gateway ports, which handle goods travelling to and from nearby cities, transhipment hubs' business can relatively easily shift location.
Chua said Cosco would have to reconfigure its operations in the region to fit in with a new Philippines hub, though how that would affect its activities in other Asian countries was unclear.
Cosco looks unlikely to abandon the two large ports, partly because it has joint ventures with PSA and Hutchison to run the terminals its ships use.
Neil Davidson, ports analyst at London-based Drewry Shipping Consultants, said no large line did transhipment in the Philippines, however, if a major line such as Cosco committed to transhipment, the project was practically guaranteed success. |
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