Asia’s ageing ports and railways are struggling to cope with fast-growing demand for energy and commodities, risking supply shortages and threatening to curtail economic growth unless massive investments are made.

Shipping markets and oil traders have basked in a three-year boom on surging Chinese fuel demand and expanding global trade, but analysts say the delay between expected capacity increases and demand growth could create bottlenecks for consumers.
“These things take time and there’s a lag. We’re back to where we were before the Asian crisis in 1997 when everyone was crying out about a lack of infrastructure,” said Andrew Symon of the Institute of Southeast Asian Studies.
The 1997 Asian financial crisis has left investors wary of long-term projects in the region, while the International Energy Agency (IEA) estimates the world must spend over $5 trillion on energy investment by 2030 in Asia and OECD Pacific countries.
Analysts picked ports and pipelines, power and gas supply in major consumers such as China and India as well as growing transport demand for coal across the region as risk areas.
“Most major ports will require upgrading to accept larger tankers and more frequent arrivals. This also means larger ship-to-shore pipelines and more onshore tankage to accommodate quicker turnarounds,” said Steve Williams of Energy Solutions.
Container throughout at Hong Kong, the world’s busiest container port, grew by two per cent last year, while China's largest port Shanghai doubled shipping volumes from 2002 to 2004.
Vessel draft restrictions on Chinese ports is leading to increasing reliance on Singapore as a shipping hub. The city-state has seen annual growth of five per cent – eight per cent in marine fuel sales since 2002 and record volumes last year.
It plans to double oil storage capacity by 2008, but infrastructure development elsewhere may lag demand.
In India, Asia’s third-largest oil consumer, congestion is causing frequent ship delays and experts say ports may need to double capacity to handle eight per cent economic growth, more crude or coal imports and an aim to become a products export hub.
“India would need to invest heavily into port and shipping infrastructure as well as the transmission grid,” said Dagmar Graczyk, India analyst for the IEA.
Industry officials say ports across the region need to deepen drafts commonly less than 10 metres to take larger vessels. Very Large Crude Carriers (VLCCs) need 24 metres water depth, or a quarter of a football pitch.
Vietnam, Asia’s second-largest gasoline and diesel importer, aims to build a 500,000 cubic metre oil terminal by 2008, though the government is calling for more foreign investment.
“They had been reticent to have foreign investment in strategic areas, such as energy, but now they realise there’s a need and they're certainly facing constraints,” said Symon.
In Thailand, new pipelines needed to run from southern ports and refineries through to the north of the country and the Chinese border, said Bangkok-based Williams.
Port congestion for coal in Australia, the world's largest exporter, was the highest for seven months recently and helped lift freight rates, with the country’s infrastructure stretched on a resurgence of Asian demand for power and industry.
BHP Billiton is evaluating further expansion of its Hay Port facility in Queensland while the Dalrymple Bay terminal is expanding this year, though delays at the world's top coal port Port Waratah have been blamed for constraining exports.
The Australian Council for Infrastructure Development estimated A$8 billion ($5.9 billion) should be spent on railways.
“Those bottlenecks and similar problems in other major bulk commodity exporters contributed to the high prices of last year. As those bottlenecks ease, so will prices,” said David Thurtell, commodities strategist at the Commonwealth Bank of Australia.
China has huge coal reserves but imports surged 40 per cent last year, as coal makes up 75 per cent of its energy use.
“The bottleneck in China is not so much the ports but the railways. This is exacerbated by the need to move vast quantities of coal by rail and thus competition for available capacity,” said Tony Regan of energy consultancy Tri-Zen.
China has boosted its power-generation capacity, slowing demand growth for oil imports that rattled markets in 2004, but faces a shortage of natural gas supply as planners have been caught off guard by booming demand.
An $8 billion west-east pipeline looks too small, with PetroChina racing to boost capacity by 2009, while developers back off plans to build liquefied natural gas (LNG) import terminals as prices soar and term supplies sell out.
Part of the problem is government-capped prices, aimed at protecting customers from international markets but frustrating firms needing to justify returns on infrastructure costs.
The result of overworked energy infrastructure could be an inability to supply enough to meet demand, checking growth.
“Forecasts of very strong growth are predicated on a significant expansion in infrastructure,” said Julian Lee, analyst at the Centre for Global Energy Studies.
“Constraints on consumption have a feedback effect on potential economic growth,” Lee said.