Archive for September, 2006

The way in which logistics moves is indicative of a country’s trade progress. According to the China Federation of Logistics and Purchasing, China’s logistics and purchasing volume rose 15.3 percent year on year to RMB26.8 trillion ($3.35 trillion) in the first six months of this year.

During the six-month period, China’s total expenditure on logistics and purchasing came to RMB1,678.6 billion, a rise of 14.7 percent over the same period of last year.

The federation said fixed assets investment in logistics and purchasing in the January-June period totaled RMB432.2 billion, an increase of 20.7 percent year on year.
Source: Xinhua

The EU and China have agreed to set up secure trade lanes between the two trading blocs as a result of the EU-China Agreement on Customs Co-operation. A pilot project will initially involve the ports of Rotterdam, Felixstowe and Shenzhen and will extend to other ports across Europe if it is successful.
Source: International Freighting Weekly

The Port of Oakland has opened an office in Shanghai, representing the California port’s commitment to move more Californian farm products to China and ship more Chinese consumer products back to the United States.

The office is the port’s first in China and located on the 31st floor of the Jinmao Tower. It will take care of relations with Chinese shipping firms, cargo owners, various logistics links and government trade development agencies.

The Port of Oakland began to admit container ships back in 1962 and was probably the first port on the west coast of the United States to handle them. By the late 1960s it was the second largest port in the world in container tonnage. However, depth and navigation restrictions in San Francisco Bay limited its capacity and it lost that title. Since then there has been a massive investment in infrastructure and now, once again, it is climbing up the league table.
Source: China Daily

The ILCC will be held on October 18-20 in Beijing. The event will provide a networking opportunity for global senior level executives in the Chinese logistics industry with exhibitors from across the world.
Source: ILCC 

STX Pan Ocean has established a subsidiary, Qingdao STX International Logistics, in Qingdao, Shandong, to extend global shipping network.

This is the fourth subsidiary based in China by STX Pan Ocean, following one in Hong Kong and Shanghai set up last year and another one in Qingdao last April.

The shipper’s new Chinese affiliate will operate as a third party logistics contractor involving shipments and delivery as well as cargo handling and ground transportation of containers.

China accounts for about 24 percent share of the global goods transport market.

STX Pan Ocean was established in 1966, and is Korea’s third-biggest shipping company running about 270 vessels. It now plans to look for other growth opportunities in Ningbo, Zhejiang Province and Tianjin with the company’s overall aim of achieving revenues of $5 billion by 2010 and becoming one of the world’s logistics leaders.
Source: Korea Times

Business associations and financial groups from Portugal, Macau and China have signed a multilateral agreement to create a distributions center for Portuguese products in China. The center will probably be based in the Cross-border Industrial Park built between Macau and mainland China and overall investment in the project is expected to be around RMB51 million.

The center will be managed by state Chinese group Nam Kwong. As well as its logistics hub, the center will have representation in Macau and in the Great Pearl River Delta and in other cities such as Shanghai.
Source: Macau Hub

The trade that passes through Shanghai’s port is mostly regional in nature. It would like that changed, please. Shanghai is keen on becoming a key port for international cargo in the next five to 10 years.

So it is developing plans to speed up export rebates and create an offshore financial center and other good things to bring its shipping services up to world-class standards.

The physical infrastructure of its shipping industry is already pretty solid. Shanghai is already the world’s busiest port in terms of total cargo volume and No. 3 in container traffic.

The hardware is right, the software needs improving. That is the neat image advanced by Xu Peixing, director of the Shanghai Port Administrative Bureau. He said, ‘To sharpen the competitiveness of Shanghai port we must greatly improve its software, meaning its functions as an international shipping hub, with support services in finance, insurance, maritime arbitration and other areas.’

Shanghai is trying to get approval to allow exporters to receive tax rebates the moment their ships leave a domestic port if the cargo is headed for Shanghai’s new Yangshan Deep-Water Port. The city now refunds export taxes as soon as domestic freight arrives at Yangshan.

Shanghai will also lobby the central government to further open the country’s shipping industry to foreign investors, eliminating restrictions on establishing shipping agents and lowering thresholds for foreign firms seeking to invest in international marine companies and affiliated marine services.

Shanghai is expected to handle 500 million tons of seaborne cargo this year, up from 443 million tons last year, when it beat Singapore to become the busiest port in the world.

Shanghai was the world’s third-biggest container port last year, handling 18.08 million boxes, following Singapore and Hong Kong. It expects to be the world’s biggest container port in 2010, moving about 30 million boxes.

Odd note: The illustration, which has been left large on purpose, came from an apparently defunct site called Japan Focus. It definitely is the port of Shanghai but that is a lorcha with its sails somewhat worn. And the shipping looks perhaps a little dated. So when was the picture taken?
Spurce: Shanghai Daily

Lahmeyeb and Krebs und Kiefer (K & K) have won contracts to jointly design the world’s largest shiplift project for the Three Gorges Hydropower Project. It will raise ships to the higher water level on the upstream side of the dam and is the first Sino-foreign co-operation program in the designing of the Three Gorges project.
Source: NewsGD

Jones Lang LaSalle and the China Supply Chain Council (CSCC) recently partnered to undertake a survey of 138 domestic and foreign companies involved in logistics in China. The idea was to look at the potential of China’s logistics market and to provide new insights about the future.

Current logistics facilities are concentrated in the three main regional clusters, Yangtze River Delta, Pearl River Delta and Great Bohai Bay. According to the survey that is 85 percent of the total. Then comes Chengdu with 5 percent.

Trent Iliffe, head of Jones Lang LaSalle Industrial Business China, said, ‘The findings also indicate that plans over the next two years will see a continued focus on the three regional clusters, stable at 85 percent.’ However the survey also shows a shift away from Shanghai and the Yangtze River Delta. This will be balanced by a rise in the Pearl River Delta at 35 percent, notably in Guangzhou (19 percent) and Shenzhen (15 percent) where there has been significant investment in road, rail and port infrastructure.

Security is seen as by far the most important extra service required of a warehousing facility, and levels of security are cited as the most critical problem area with current warehousing.

Trent Iliffe said, ‘A number of other shortfalls are also mentioned in the current warehousing provision, which has provided new insights into future building requirement in China. Even though, the China’s logistics market is still in its relative infancy, we can see it offers great opportunities and challenges to real estate. Balancing huge demand for property with regulatory hurdles and the lack of market transparency will be the key factor for the future success of the China Logistics Market.’
Source: PR Release

As logistics increases in importance in China so it becomes more and more a game for the big players. As a result small logistics operators are being squeezed by expansion-minded multinationals. When an industry is predicted to grow by 15 to 20 percent a year until after 2010 it will attract the major players.

Consolidation has been in full swing since China opened up its logistics sector on December 11 last year under World Trade Organisation agreements. Now multinationals have seized the opportunity to enter the market. They and the big Chinese domestic firms are taking over small mainland companies in a contest for the major prizes.

Cai Jin, director of the China Logistics Information Centre said that in the coming years, ‘there will definitely be fewer but stronger players in the logistics market. Many will have to pull down their shutters or merge with rivals.’

According to the Chinese Federation of Logistics and Purchasing there are now more than 700,000 logistics enterprises registered on the mainland, mostly small and medium-sized operators. Most of them lack strategic planning, trained personnel and systematic management.

Since the opening of the logistics market:

Schenker has set up a logistics centre near Beijing’s airport.

STX Panocean of Korea launched a joint venture in Qingdao.

US multimode operator Burlington Northern Santa Fe Corporation set up an office in Shanghai.

Prologis and Wurth plan to expand their logistics park in Shanghai.

Container service provider Scoular settled down in Guangdong.

FedEx, which entered into a 50-50 joint venture with Datian in 1999 after leaving another partner, paid the company $400 million to purchase the other 50 percent early this year.

TNT offered $135 million for 100 percent control of Huayu Logistics, the biggest truck operator on the mainland, based in Heilongjiang Province.

Earlier, UPS agreed to pay $100 million to break free from a joint venture with Sinotrans.

A source at the Chinese Federation of Logistics and Purchasing said if Chinese operators specialise in specific areas in which they hold the upper hand they could get stronger, despite the flood of foreign capital.
Source: Cargo News Asia