Archive for November, 2007

There is a US$18.7 billion project to rebuild the most romantic road that runs across Central Asia. And much more.

Led by the Asian Development Bank, a flock of agencies and countries will pour as much as US$18.7 billion into rebuilding the Silk Road and extending the coverage. Nowadays it is a warren of tracks which runs to its historic terminus at Xian in Shaanxi province city of Xian although today traffic flows all the way to Beijing.

Sean D. O’Sullivan, the director for infrastructure for Central and West Asia for the Asian Development Bank said that, with its deteriorating physical plant, it ‘is the missing link in the whole puzzle of the Eurasian continent.’ And it is the logical extension of China’s Go West policy, which has built or rebuilt roads, railway systems and communications all the way to the border.

Also involved are the European Bank for Reconstruction and Development, the International Monetary Fund, the Islamic Development Bank, the United Nations Development Program and the World Bank.

The US$18.7 billion will go into six new transport corridors, primarily road and rail links, with about half of the funding coming from multinational organizations, while the rest will come from the countries themselves.

The plan was agreed to by the governments of Afghanistan, Azerbaijan, China, Kazakhstan, the Kyrgyz Republic, Mongolia, Tajikistan and Uzbekistan. And if you do not find romance in reading those names you will not be forgiven.

Sean O’Sullivan said, ‘These roads go through the passes. There are challenges for keeping them open in the winter, developing railways, but to the south, going towards Afghanistan, there is no railway infrastructure at all, so there is a huge move to do a ring road, so that it would provide the opportunity to the Central Asian countries to access the sea. Further to the east, you cross the Caspian and the Caucasus.

‘I can’t say it is going to be easy.’

So that you can see the extent and the enormity of the plan the illustration from Asia Sentinel has been made somewhat larger than usual.
Source: Asia Sentinel

Chen Mingde, vice-mayor of Guangzhou and seen here, is encouraging more foreign companies to help in developing the city’s air transportation industry. Guangzhou has mapped out a strategy to expand its postion as an international cargo aviation transportation and logistics hub.

Chen Mingde said the strategy offers a myriad of investment and business opportunities for foreign investors and business representatives. He said the room for foreign investment in the city’s airport-related economy is big enough and he promised foreign investors and businesspeople would earn profits if they participated. Which is a fairly large promise to make.

Guangzhou Baiyun International Airport, one of the country’s three busiest airports, has been determined to become the world’s 15th largest in terms of cargo volume before 2015.

To achieve this the airport has been urged to expand c-ooperation with neighbouring airports in the Hong Kong and Macau special administrative regions, as well as in Shenzhen and Zhuhai special economic zones, to increase the region’s cargo transportation business.

Construction of a new runway will start early next year to accommodate growing passenger and cargo transportation volumes.

The runway, the airport’s third, has been scheduled to be put into use in 2010 when the city holds the 16th Asian Games. The airport plans to operate 50 international flights that year.
Source: CargoNews Asia

DHL has announced it will build a North Asia hub at Shanghai Pudong International Airport for US$175 million. The facility will provide more regional connections for customers in the China and North Asia regions and intercontinental links to Europe and the U.S. The signing ceremony (pictured) was held in Shanghai on Monday.

The facility will cover 55,000 square meters and is scheduled for completion in the second half of 2010.

Wu Nian Zhu, Chairman and President of Shanghai Airport Authority, said Shanghai Airport is now the first in the world with two international transferring hubs.

Across the Asia Pacific region, DHL already has hubs in Hong Kong, Singapore, Incheon (South Korea), Bangkok and Sydney.
Source: PR DHL

China Railway Group raised RMB22.44 billion (US$3 billion) after attracting a record subscription for a mainland initial public offering. The Beijing-based construction contractor is expected to benefit from China’s rapid expansion in railway, and other transport infrastructure such as roads and bridges. The government has said China plans to spend RMB1.25 trillion in railway construction during the five years through 2010.

A Guodu Securities Co report said, ‘China Railway has very few competitors in its industry domestically. It has absolute advantage in winning contracts for those large projects which could net higher profit margins.’

China Railway’s IPO price is 26.7 times its estimated 2007 earnings, based on domestic accounting standards.

China Railway is the world’s third largest construction firm and Asia’s largest. The firm’s other revenue sources include engineering equipment manufacture, construction design and consulting, real estate development and mining.
It work in some very difficult places.

Our illustration shows a worker from China Railway at a construction site of the Jalalabad-Sarobi road, suburb of the eastern Afghan city Jalalabad. Armed guards were needed.
Source: Shanghai Daily

Two new railway lines have been started in Fujian Province on the southeastern coast. When completed the will cut travel times between the coastal and inland areas.

One of the railways starts in Xiamen, a port city facing Taiwan, and runs 502.4 kilometers southwest along the coast to Shenzhen, boom city of southern Guangdong Province.

Upon its completion in 2011, the railway will allow trains to travel at up to 200 kilometers per hour, and a journey between the two cities will take less than three hours compared with the current 11.

The RMB41.7 billion (US$5.6 billion) construction cost will be shared by the Ministry of Railways, and the Fujian and Guangdong provincial governments.

The second major rail project is a 603.6-km railway linking Nanchang, capital of the central Jiangxi Province, with Fujian Province, with terminals in both Fuzhou and Putian.

The RMB51.8 billion railway will open to traffic in 2012, ‘the first modern railway’ to link Fujian Province with the hinterland, said Yu Kaiyang, director of the provincial railway construction office.

He said the new line will cut traveling distance between Fujian and Jiangxi by at least 17 km. The illustration brings to mind Edward Thomas and his splendid poem on Adlestrop:

Yes, I remember Adlestrop
The name because one afternoon
Of heat the express-train drew up there
Unwontendly. It was late June.

With the new lines there will be express trains. They will not be pulling up un-wontedly.
Source: Window of China

Shares in Sinotrans Shipping, China’s third-largest bulk vessel owner, had a Hong Kong IPO and unfortunately saw the shares slump possibly because investors cautiously reduced shares in the bulk-shipping sector because of concerns about falling iron ore and coal freight rates.

The stocks tumbled to HK$7.12 (US$0.93), 13% lower than the HK$8.18 (US$1.06) initial public offering price, while its sister company, logistics firm Sinotrans, fell 7.3%to HK$3.7 (US$0.48.)

Analysts said investors were also worried about the health of the US economy, which shows signs of a worsening credit crisis. In addition, Sinotrans Shipping’s IPO was priced at the high end when the market was still buoyant.

Taifook Securities shipping and aviation analyst Cho Fook-tat said, ‘Sinotrans Shipping is a good quality stock. It is plagued by lukewarm market sentiment.’

It joined other shipping stocks in a broad slide as the Baltic Dry Index, an indicator of commodity-freight rates, has fallen for seven days in a row.

Sinotrans Shipping raised HK$11.45 billion (US$1.484 billion in the largest Chinese shipping IPO since 1999 to expand its fleet.

Zhao Huxiang, president of China National Foreign Trade Transportation Corp, Sinotrans Shipping’s parent group, told reporters, ‘We are very confident about our profitability in 2008 and beyond. Asia, especially China, has strong demand for dry-bulk shipments, and China’s development fuels the global ocean shipping industry.’
Source: China Daily

Australia Post is keen to expand its domestic and international logistics operations and sees China as a potential partner for further growth.

Australia Post has a partnership with China Post called Sai Cheng Logistics which it hopes will be the conduit to its long- term aim of becoming a more significant player in Asia-Pacific logistics.

Australia Post already has alliances in Hong Kong, Japan, Korea, the United States and Britain.

Australia Post has US$91.6 million available for investment it will concentrate on improving warehousing and electrical systems in support of logistics operations.

Australia Post’s managing director Graeme John said: ‘Our growth in parcels and logistics is partly driven by online trading.’

Anyone who has experience with Australia Post will testify to the fact that it is entrepreneurial, efficient and always looking for ways to expand. So it is likely that it will expand into China.
Source: CargoNews

A fleet of hybrid, clean energy fuel-cell buses will be operating in Shanghai by 2009, giving green technology a major role in public life.

A hydrogen refueling station for the buses has been built in the city’s Anting area.

This was announced at the launch of the second phase of a fuel-cell bus commercialization project jointly carried out by the United Nations Development Program (UNDP) and the Ministry of Science and Technology.

Minister Wan Gang at the launch ceremony said, ‘Fuel-cell vehicles are an important technology for the future development of the automotive industry in China.’

Yu Zhuoping, dean of the school of automotive studies at Tongji University, said the automotive industry has spent 20 years working on environment-friendly technology, and clean energy which represents the future.

The first phase of fuel-cell bus use started in Beijing in 2002. Three buses have been operating during weekdays along an 18.2 km route in Beijing.

The second phase of the project is aimed at demonstrating how fuel-cell buses work and determining how best to spread the technology. It will also involve studies of policies to support the use of clean vehicles.

Source: People’s Daily Online

China’s fixed-asset investments in logistics-related sectors hit US$126 billion in the first three quarters of the year, up 18.8%. All of the figures are up and all of them are somewhat mind-boggling. Indeed, some are so large it is difficult to get a handle on them. During that period:

Investments in transportation reached $95 billion, a year-on-year rise of more than 13% and 76% of the total logistics fixed-assets investment.
Trade-related fixed-asset investments came to RMB$22 billion, 31.5% higher.
Warehousing involved an investment of RMB$6.6 billion, 62.7%.
Distribution, circulation processing and packaging segments attracted more than RMB5 billion, up 31.3%.
Logistics makes up 18.3% as a portion of total production costs on the mainland.
The China market imposes logistics costs on businesses that can account for up to 21% of the product costs, which is more than twice the average for developed markets.

The online consultancy Eyefortransport, in one of its China Logistics reports, said the creation of a competitive and effective transportation and logistics industry was one of the key criteria for China’s success as a global trade superpower..
Source: CargoNews Asia

Senior officials with the National Development and Reform Commission state that China will continue to develop its service industry and make logistics a key sector.

Zhu Hongren, deputy chief of the Bureau of Economic Operations under NDRC, China’s top planning agency, said, ‘China’s overall industry production maintained stable growth, with slower expansion in a few high energy-consuming and polluting sectors. The service industry, which is greener, kept a double-digit growth boosted by sectors such as logistics.’

The figures are amazing:

Industrial output rose 18.5% in the first nine months, accelerating 1.5 percentage points from a year earlier.
The profit reaped by industrial enterprises surged 37% year on year to RMB1.56 trillion (US$208 billion) through August.
Sales of China’s service industry expanded 11% to RMB6.4 trillion through September.
The logistics sector posted earnings of RMB1.13 trillion through the third quarter, an increase of 17.6% from a year earlier.

Wang Huimin, an NDRC official, said, ‘Fixed-assets investment in logistics increased 18.8% to RMB943 billion, which is expected to further boost the development of the industry.’

However, the rising price of raw materials puts the government under pressure to strengthen economic controls.

China has now raised the prices of gasoline, diesel and aviation kerosene by RMB500 per ton, further boosting the producer price index and consumer price index.

Zhu Hongren said, ‘We are fully aware of the accelerating growth of production costs and will take some measures to stabilize the momentum.’ He gave no further details.

He added, ‘As for the price increase of oil, from our observation the supply is relatively stable so far and can meet the demand of the market.’
Source: Shanghai Daily