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Port race in
China
By Shadow Low
HONG KONG - China's foreign trade has been
going up over recent years, crossing US$1 trillion
in 2004 - a 35.7% growth over the year before.
This sustained upward trade momentum has turned
out to be a strong incentive to seaport
development as container ports both along the
Yangtze River Delta and the Pearl River Delta are
rapidly upgrading in anticipation of a
nip-and-tuck race.
Shanghai, the prime
engine of the Yangtze River Delta economic
powerhouse in east China, is playing an
increasingly important role in the global economy.
Last year, Shanghai hit a cargo throughput of 382
million tons, an increment of 60 million tons from
2003. With this, Shanghai overtook Rotterdam as
the world's second-largest port after Singapore
(388 million tons). But Shanghai's race to the top
is far from an easy run.
The Shanghai Port
Administration recently highlighted the need for
necessary coordination with the nearby Jiangsu and
Zhejiang provinces, which it said would help make
the region an international shipping hub. Some see
in this Shanghai's fears that the emerging Ningbo
port in Zhejiang is fast catching up with it.
Ningbo port's construction has been in full swing
for the past several years, especially at the
prodding of Xi Jinping, secretary-general of the
Zhejiang provincial Communist Party committee -
the No 1 in the state hierarchy, followed by the
provincial governor. "In order to boost the growth
of Ningbo port, logistic services must be
developed," he told Asia Times Online during the
recently held Hong Kong-Macau-Zhejiang Promotion
Week. He also pointed out that foreign investment
should fill the bill straightaway.
The
Hong Kong-listed Orient Overseas (International)
Limited has entered into an agreement with Ningbo
over the fifth phase of harbor construction that's
expected to cost $650 million in gross investment.
Orient is to pool $130 billion and hold a stake of
20%. In addition, Hutchison Whampoa Limited has
signed a contract with Ningbo for joint
re-development of the harbor's second phase
construction, estimated at $150 million.
Indeed, Ningbo has enormous potential for
deepwater cargo. The latest statistics from the
Ministry of Communications indicate that Ningbo in
2004 handled over 4 million 20-foot equivalent
units, up 44.5% and ranking fourth among all
domestic seaports, while Shanghai topped the list
with 14.55 million 20-foot equivalent units and a
29% growth.
But Ningbo still has a long
way to go before it can take on Shanghai, admit
Zhejiang's provincial authorities. "The new Beilun
and Zhoushan docks are under construction, the
programmed wharfage layout should be among the
largest in China. But it's still uncertain whether
it can be on a par with Shanghai," said Zhejiang
Development & Reform Commission Chief Director
Shi Jiuwu. Added Zhejiang Economic and Trade
Commission Chief Director Ding Yaomin: "At
present, we don't have a well-developed logistics
network, so the freight turnover is still below
international levels."
As the bellwether
of China's, or even the world's, cargo terminal
services providers, why does Shanghai condescend
to invite ports in the vicinity into cooperation?
The key to this lies in the inter-dependence
taking shape between Shanghai and its
neighborhood. Driven and sustained by the Shanghai
motor, the whole of the Yangtze River Delta has
evolved into the most advanced and fastest-growing
economic powerhouse in the country, said Dong
Xianfeng from Peking University, who is conducting
research on economic regionalization in China.
Today Shanghai is orienting itself toward
the world's economic, financial and commercial
hub. This will propel development not only in the
Yangtze River Delta but also along the entire
Yangtze River. In the previous decade, a two-way
circulation of capital, materials as well as human
resources evolved between Shanghai and the rest of
the Delta. According to the Shanghai Municipal
Government, more than half of the capital influx
into Shanghai is from other parts of the Delta as
many powerful investors - in particular from
Zhejiang and Jiangsu - have set foot in the
Shanghai market.
An investment survey in
December by the Zhejiang provincial authorities
shows that enterprise or company relocation is
fairly frequent inside the Yangtze River Delta.
Some 41.3% of the 346 companies interviewed have
relocated among Shanghai, Zhejiang and Jiangsu. Of
the 196 businesses pulling out of Zhejiang, 40.3%
resettled in Shanghai while 13.3% did in Jiangsu.
Of the 150 enterprises moving into Zhejiang, 16.7%
came from Shanghai while 10.7% from Jiangsu. Dong
perceives the free flow as a crucial signal of
strong interlinkages between local markets.
Some scholars agree that Shanghai can
sustain its rapid growth only through cooperation.
"Shanghai's is not a deepwater seaport, and that's
a hindrance to its further development. The nearby
Dayangshan and Xiaoyangshan are deepwater ports,
so seeking cooperation with these will be in
Shanghai's best interest," said Chan Man Hung,
head of China Business Center, at Hong Kong
Polytechnic University. "Considering the escalated
inter-dependence between Shanghai and the rest of
Yangtze River Delta, any negotiation between them
is no longer lopsided," Dong said.
Till
date, there is no sign that the central government
has mapped out a conclusive seaport blueprint for
the Yangtze River. According to Zhejiang
Development & Reform Commission Chief Director
Shi, "The planning of Yangtze River Delta is
presided over by the State Development &
Reform Commission, and the seaport layout is a
pivotal part of the integral planning. Ningbo port
has a unique function in the seaport layout, for
it boasts a natural geographical advantage. As a
large base of the petrochemical industry, Ningbo
is bound to be a part of important ocean lanes."
On how Shanghai and Ningbo can be positioned
properly in order to evade vicious competition,
Shi said: "Planning is underway".
Hong
Kong slows down
The newly released world's
top 10 container ports in 2004 are, in the order
of magnitude: Hong Kong, Singapore, Shanghai,
Shenzhen, Pusan, Kaohsiung, Rotterdam, Los
Angeles, Hamburg and Antwerp. Statistically, each
of them has grown in throughput over the previous
year. But frontrunner Hong Kong, reporting a
slight uplift of 7.3%, is evidently losing
business to the neighboring quays like Shenzhen in
south China's Guangdong province. Shenzhen's
throughput leaped by almost 30%. Experts believe
the key lies to the less expensive services that
Shenzhen offers.
Multinational consultancy
McKinsey points out that the Hong Kong port
charges a lot more than Shenzhen. Many experts
believe that Shenzhen will soon outperform the
world's busiest harbor if it continues to optimize
terminal services. On the face of it, Hong Kong is
now confronting mounting competition from the
Yantian port in Shenzhen owned by the Hutchison
Whampoa Port Holdings Group of China's richest man
Li Ka-shing. Geographically, Yantian isn't just
near the special administrative region, but also
the vast southern China where logistics service
providers could put it to good use and avoid entry
fees that Hong Kong charges. Yantian is also a
deepwater harbor able to dock giant ocean liners,
according to Wang Jixian from the department of
geography at the University of Hong Kong.
"Yantian is oriented to proffer
preferential services to multinationals such as
Wal-Mart," said Wang. Dispelling the notion of
Yantian as competition to Hong Kong, he said:
"Earning data show that Yantian only has a few
fixed clients, all big multinational companies.
There's no doubt that it offers high discounts to
them. To small clients, however, it charges much
more than the Hong Kong [port] ."
Echoed
Hong Kong International Terminals chairman Lee
Yiu: "At present, only Hong Kong and Yantian
provide first-rate ocean-going services. But the
latter mostly caters to large multinationals,
whose massive cargo volumes can be a strong
bargaining counter. But when it comes to small or
medium-sized businesses that normally order three
to five containers, Yantian will not give any
discount while the Hong Kong port quotes better
prices."
But Lee suggested that the
towering total through costs of the Hong Kong
terminal may outweigh its quality services. First
of all, the terminal handling charge in Hong Kong
is about $100 higher than that in Shenzhen,
according to the "Study on Hong Kong Port - Master
Plan 2020" unveiled last year by the Hong Kong
Economic Development and Labor Bureau. Decided in
world shipping summits, that fee can't be lowered
unilaterally. But an opinion poll indicates that
most Hong Kong-based shipping companies will take
more initiative to resolve the problem as long as
the local government helps to keep trucking costs
down.
Second, road haulage is already
exorbitant in Hong Kong, including parking,
insurance and maintenance expenditure. The costs
go up even higher in the event of
boundary-crossing. A Hong Kong container lorry
driver has to pay an admission fee of HK$6,000
(US$769) a month to enter the highway network of
mainland China.
"To sharpen Hong Kong's
competitive edge in the expanding container
terminal market, we must remove the limitations
that increase boundary-crossing trucking costs.
However, removing these limitations entails
negotiation between the governments of Hong Kong
and the mainland, and is not possible in the short
term," said Lee. In a bid to prevent trafficking
and stowaways, the mainland has imposed several
rigid restrictions on Hong Kong transporters. For
example, a container truck must be driven by the
same driver throughout the mainland journey; a
driver must stay with the same tractor, trailer
and containers during the journey, etc. As a
result, transport efficiency is terribly poor.
The Hong Kong government has started talks
with Guangdong provincial authorities on the
matter, Asia Times Online learned from Raymond
Fan, deputy secretary for economic development and
labor. The efforts began to pay off last December
when the Customs General Administration of China
announced that a Hong Kong container transporter
entering the mainland could have its tractor,
trailer and containers replaced en route since
January. "The flourishing Hong Kong port mainly
relies on the strategy of market-directing
terminal services and planning. To revalue the
Hong Kong port, it's crucial to expand the client
base of Hong Kong terminal services. The
government's involvement is needed for that. Hong
Kong must also actively integrate with the Pearl
River Delta, for instance, the construction of the
Hong Kong-Zhuhai-Macau bridge," said Fan.
The pan-Pearl River Delta cooperation
coupled with the grand bridge will be the future
locomotive for the Hong Kong port's boom, said
Yeung Yue-man from the Institute of Asia-Pacific
Studies, Chinese University of Hong Kong. "In
effect, the western Pearl River Delta [PRD] next
to the Pearl River estuary was far more developed
than the eastern PRD some 10 years ago. Today,
light and export-oriented industry is thriving in
the western PRD. Therefore, when the Hong
Kong-Zhuhai-Macau bridge is completed, the Hong
Kong terminal can reach for exporters in west PRD
and further extend its market."
Above all,
"the greatest charisma of Hong Kong port lies in
its liberal status, an advantage that mainland
terminals do not have", said University of Hong
Kong's Wang. In addition, Hong Kong has developed
a first-rate one-stop service chain of logistics,
finance and insurance, far ahead of other seaport
cities, according to Hong Kong International
Terminals' Lee.
(Copyright 2005 Asia Times
Online Ltd. All rights reserved. Please contact us
for information on sales, syndication and republishing.) |
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