Annual Report 2023

Management Discussion and Analysis CHINA MERCHANTS PORT HOLDINGS COMPANY LIMITED 28 Due to factors such as macro-economy, supply-demand imbalance, geopolitics, situation in the Red Sea region and the extreme weather, as well as changes by the factors of shipping capacity control, cost reduction measures and alliance cooperation of shipping companies, the container shipping market will witness the “short peak and long tail” cycle feature in 2024 and will continue to grow at a low level. The imbalance between supply and demand in the container shipping market is expected to continue to weaken the freight rate and the market will enter a new normal of complex, changing and low-speed growth. As the main carrier and node of international trade flows, the ports occupy an important position in the global trade and transportation systems. The global port operators will seize the opportunities of the times, strive to improve the quality of port services, continuously expand the coverage of the port hinterland, strengthen the synergy with other logistics participants, with a view to provide a better quality and comprehensive logistics solutions for customers. The competition for cargo sources among international ports will continue, bringing new opportunities and challenges to the port industry. Based on the above analysis and judgment, the Group will continue to capitalize on the general principle of seeking progress while maintaining stability, follow the general working direction of “seeking progress while maintaining stability, stable yet progressive growth, and breakthrough after revitalization”, take the development measures of “endogenous growth”, “innovation and upgrade” and “global layout”, and focus on “improving the core competitiveness and enhancing core functions of the enterprise”, in order to create a lean operation and management system for high-quality development, promote business models and technological empowerment innovation and continuously improve the global network layout. The Group will continue to promote comprehensive and high- quality development so as to accelerate the building of a world-leading enterprise. Adhere to strategic leadership and get on the construction of a strong port. The Group will continue to promote the implementation of the six major strategies namely “domestic homebase port strategy”, “overseas strategy”, “innovation strategy”, “digitalization strategy”, “lean operation strategy” and “low carbon strategy”. The West Shenzhen homebase port will get on the construction of a strong port, optimize the collection and distribution infrastructure, expand the supporting resources outside the port, strengthen regional collaborative development, and implement green and low-carbon development, so as to further enhance the competitiveness of the homebase port. With an aim to build a world leading benchmark enterprise, CICT actively responds to competition from surrounding areas, gives full play to its advantages, consolidates and improves the main business capacity of container ports, and accelerates the building of the South Asia Commercial and Logistics Hub, in order to extend the comprehensive port logistics business. HIPG focuses on oil and gas, RORO, bulk cargo, maritime services, regional container transshipment and park development. It aims to speed up the construction of “six centers” of HIPG. Intensify lean management and facilitate endogenous growth. Based on the concept of lean management, the Group will adhere to the principle of driving internal development and reducing costs and increasing efficiency. First, the Group will improve its financial management capabilities to build a world-class financial management system, establish a lean operation team, and explore new measures for cost reduction. Second, the Group will improve its capital operation capability to optimize the action plan for quality and efficiency improvement, and to continuously improve the efficiency and effectiveness of capital operation, as well as the cash return of investment projects. Third, the Group will improve its operation and management capabilities and take measures to establish a professional and efficient strong operation and management headquarters, while fully implementing lean management; strengthening cost control, cost reduction and efficiency improvement; deepening reform; and reinforcing the headquarters control. Fourthly, the Group will improve its asset management capabilities and further enrich the project life cycle management system, and gradually form the terminal operation capability, cost control and operation management model.