No discussion of China's tour de force economic performance would be
complete without taking a look at its maritime strengths and port development,
as a majority of its international trade is carried by sea.
China has been ranked as the world's third-largest trading country by the 2005
US-China Business Council Report, and its fourth most important maritime state
in terms of number of merchant vessels and its 6.77% contribution to the
world's total shipping tonnage [1]. At the end of 2004, China commanded a 6.2%
share of world trade generated in terms of value.
The explosion in international trade has had a tremendous impact on the growth
of China's port sector and has excited state planners to hurriedly continue
expanding the country's port
capacity to support trade and container traffic growth. This has become a
matter of national interest, as the coming years promise to see China sustain
its strong trade performance. This is expected to boost its cargo base,
especially from the manufacturing sector, and demand more of its ports,
shipping and associated services. Accordingly, the government's 11th Five-Year
Plan lays down a systematic strategy to develop its ports, and a huge amount of
funds have been allocated for this purpose.
Today, as a result of the economic boom across Asia, no doubt galvanized by
escalating trade with China, 14 of the world's top 20 container terminals are
Asian-based [1]. An amazing seven of these terminals are in China, underlining
the rapid growth of its trade and economy and its growing clout as a maritime
power.
Main Chinese ports have grown tremendously to be listed in the above ranking of
the world's top 20 terminals, displacing such ports as Kobe and Yokohama. Their
growth rates have also far outstripped other, more established Asian ports. For
example,
Hong Kong, the world's busiest port since 1992, has been
growing more slowly than the
Shanghai and Shenzhen ports, which have
experienced a more than threefold increase in throughput from 1999 to 2004.
Leading the explosion of growth of Chinese ports is Ningbo Port, which notched
the highest-percentage gain in 2004. The port has registered an astounding
average growth rate of 44% in TEU [2] terms for the past six years. The
Shanghai port is projected to be the biggest hub port in East Asia and to serve
as China's distribution and logistics services base for global trade. The
concentration of a vast cargo base and increasing foreign direct investment
(FDI) has resulted in the Shanghai region's growth outpacing other areas in the
country. It is expected to be able to
handle 25 million TEUs annually by 2010, double the volume handled in 2004.
Besides container ports, other types of terminals are being commissioned to
serve China's emerging energy needs and growing demand for bulk commodities
such as iron ore and grains. The largest Chinese oil terminal, able to unload
VLCC (very large crude carrier) vessels, is being constructed in Dalian,
equipped to serve six refineries with a total capacity of 46 million tons.
The formation of economic clusters of regions has also contributed to the
development of Chinese ports. The economic regions include the Yangtze River
Delta, the Pearl River Delta, the Beijing-Tianjin-Hebei area, the western
region, the central China region and the northeast industrial region.
As more manufacturing industries move from the south to the eastern and
northern regions of China, infrastructure development in this region has
intensified. With the concentration of manufacturing activities in the Yangtze
River corridor, the need for China to improve the connectivity between central
China and its coastal ports has become more critical. With the opening of the
Three Gorges Dam, container movement is expected to intensify in the area.
River transport and river ports have also been given priority in infrastructure
development to meet China's growing trade.
The booming Chinese economy has led to increasing container volumes going in
and out of China, resulting in the increase of feeder services. Feeder lines
are bringing in more cargo from industrial centers and small, less accessible
ports along the Yangtze River to main ports, where the cargo is consolidated
for loading on mainline carriers. This was underlined by the construction of
the 3-million-TEU-capacity Yangshan Port, aimed at
providing spare capacity for the predicted traffic growth in the Yangtze River
Delta.
China and Southeast Asia
Reflecting ever-growing inter-regional trade, containerized trade between China
and Southeast Asian countries is expected to grow across the board this year.
In 2004, bilateral trade volume between China and Southeast Asian states
reached US$105.9 billion and, according to Chinese state media, soared to
$130.4 billion in 2005, a 23% increase. Yi Xiaozhun, a Commerce Ministry vice
minister, said that ASEAN (the region represented by the Association of
Southeast Asian Nations) became the fifth-largest export market for China and
the fourth-largest source for imports in 2005, partly because of tariff
reductions on about 7,000 categories of goods.
President Hu Jintao is bullish regarding trade with the region, setting a $200
billion target by 2010 during a visit to Southeast Asia in April 2005. This
bodes well for port throughput and port development in the region. Regional
ports such as Singapore and Malaysia's Port Klang and Tanjung Pelepas have
benefited tremendously from the flourishing Chinese economy, recording
substantial growth in throughput, and will continue to enjoy the patronage of
Chinese trade.
Chinese ports have also engaged in strategic alliances with foreign
port-management companies. The port of Dalian has entered a strategic
partnership with APM Terminals, Cosco Pacific and the Port of Singapore
Authority to develop the port to serve the northern regions of China. The
Xiamen Port Authority has also signed an agreement with APM Terminals to
finance the development of a new three-berth terminal estimated to cost $350
million. These engagements underline the ambition of Chinese ports to grow in
line with the explosive trade growth in the country.
A good example is Singapore's foray into China, via PSA International's
operations in the ports of Dalian, Fuzhou and Guangzhou. Its involvement in
these ports has enhanced their cost of service, value for money, average speed
to berthing, onsite facilities, turnaround time, frequency of liner calls and
overall efficiency and management. Underlining the positive impacts of this
strategic alliance, PSA China secured the Best Emerging Container Terminal
Award for Guangzhou Container Terminal at the Lloyd's List Maritime Asia Awards
in 2004.
In addition to PSA's initiative, the Maritime Port Authority of Singapore has
been at the forefront of capturing business from growth markets such as China
via strategic alliances. In May 2004, Singapore and China signed a memorandum
of understanding on maritime cooperation, paving the way for cooperation in
areas such as port management and development, shipping, training and research
and development. The two countries also signed a protocol to allow their
shipping companies to set up wholly owned subsidiaries on each other's turf
without any geographical hindrances.
Energized by strong performance in trade with China, ports in the ASEAN region
have also expanded and improved not only in terms of infrastructure and
sophisticated equipment but also in their functions and business activities.
Many have added and improved value-added logistics and ancillary services to
gain a competitive edge to attract cargo from China and to facilitate exports
to it. With ever-increasing international maritime container cargo movement in
and out of China, and the deployment of ever-larger container ships to
accommodate this, several key hub ports in the region have upgraded their
facilities, even building new ones.
An example is the new port city in Zhangjiagang, which in the past few decades
has seen tremendous development around its port. The port acts as a
multifunctional trade harbor servicing the city and industries along the
Yangtze River. Part of the larger Suzhou Port organization that includes
Changshu and Kundhan, Zhangjiagang Port has 40 berths with 10,000-ton-class
capability and handles 40 million tons of cargo annually. If it meets the
expectation of being able to handle 100 million tons by 2010, it will become
the first port to reach that capacity in
Jiangsu province.
The influence of the "China factor" on the development of ports - a crucial
facilitator of international trade - has been momentous and looks set to color
the ports scene in the years ahead. Although the consequences of the impact may
not be applicable to all the ports in the Southeast Asia region, some effects
are particularly noteworthy because of their magnitude or because they mirror
global trends in port development. These include advances in shipping
technology and practices, the concentration of resources and processes, and
door-to-door delivery stretching across the supply chain [3].
Larger ships with better technologies are being built, requiring ports that are
able to match their features with the capacity and skills to facilitate their
visits. The spate of mergers and alliances among shipping economies to achieve
economies of scale will continue to push the envelope for ports to enhance
their infrastructure and manpower to cater to bigger ships with more loads.
Just-in-time production and the increasing pressure to deliver more goods at
lower cost and shorter time to wider market areas have spurred the development
of multi-modal transport, facilitating the seamless movement of goods across
the various transport modes. These have been critical to the planning,
organization, development, management and operation of seaports in the region.
Challenges for ASEAN
Challenges abound for port planners in the Southeast Asian region to plan their
port development, enhance their infrastructure, keep updated with
state-of-the-art technologies, increase their productivity, organize their
operations efficiently, invest wisely and allocate resources effectively to
cater to greater Chinese maritime trade volume. In light of the growing trade
between the ASEAN region and China, and the projected growth due to the
free-trade agreement between the two, regional ports keen to capitalize on
growing cargo volume should enhance their capacity and competitiveness to
attract mainline operators and process ever-growing throughput.
Notes
1. United Nations Conference on Trade and Development (UNCTAD), Review of
Maritime Transport, 2005.
2. Twenty-foot equivalent unit (TEU) is the standard measure for counting
shipping containers.
3. Nazery Khalid, "The Impact of Cargo Trends on Terminal Developments in
Asia", paper presented at the third ASEAN Ports and Shipping Conference 2005,
Surabaya, September 22, 2005.
Nazery Khalid is a research fellow at the Maritime Institute of Malaysia.
This article appeared in China Brief, March 29, and was posted on Japan Focus
on April 8.
handle 25 million TEUs annually by 2010, double the volume handled in 2004.
at
providing spare capacity for the predicted traffic growth in the Yangtze River
Delta.
