Port Cargo

A report on the state on China’s port cargo industry has just been published.

Based on the statistics from the Ministry of Transport, the National Bureau of Statistics and the China Federation of Logistics & Purchasing, and the financial statements of some key companies, this report makes:

A thorough study of the current situation of China port industry.
A forecast on the development trend of the industry.
An in-depth analysis on the investment opportunities and risks.

China’s port cargo throughput has continued to grow rapidly in recent years.

In 2007, China’s port cargo throughput rose to 6.41 billion tons from 2.21 billion tons in 2000 and the CAGR (compound annual growth rate) was 16.4% in the period 2000 to 2007.

China’s port cargo throughput in 2007 increased 15.1% against the year of 2006.

The report states China’s economic growth will continue to slow down, due to inflationary pressure and a slowdown of real estate investment.

China’s port industry is closely associated with its national economy and import and export, so the industry will see its growth of cargo throughput decelerate. However, it will maintain the momentum of a relatively fast growth.
Source: PR Inside

Qingdao Beihai shipyard

Qingdao Beihai charges less than Korean shipyards to build cargo ships. The price in China is $100 million for a 200,000-tonne ship; Korean companies charge same for a 175,000-tonne one

Power producers Tata Power and Reliance Power have both turned to China’s state-run Qingdao Beihai Shipbuilding for dry bulk cargo ships, attracted by the lower prices offered by the firm as compared to its South Korean competitors.

Tata Power recently signed a $200 million contract with Qingdao Beihai for constructing two so-called cape-size ships, each capable of carrying 200,000 tonnes of cargo.

The ships were ordered by TPC Energy Asia, a special purpose vehicle incorporated in Singapore by Tata Power for owning ships and to trade in fuels.

The two ships would be ready by 2011 to carry coal for Tata Power’s 4,000MW power plant at Mundra in Gujarat, which starts operations in early 2012.

At the same time Reliance Power executives are in China discussing a possible contract with Qingdao Beihai for six capesize ships. These ships would be used to haul 17 million tonnes of coal a year for the company’s 4,000MW power plant at Krishnapatnam in Andhra Pradesh.

Qingdao Beihai, a shipyard functioning under state-run China Shipbuilding Industry is located at Haixiwan in the Qingdao economic and technical development zone on China’seastern coast.

Much more on this development HERE.
Source: Live Mint, part of the Wall Street Journal

Lufthansa air cargo

Lufthansa’s cargo unit expects the global air freight industry’s growth to slow in the fourth quarter of this year as weaker economic growth hurts consumer spending. This according to the head of the unit, Carsten Spohr, speaking in an interview with Euro magazine.

Carsten Spohr said, ‘But we stick with our forecast that we will beat last year’s earnings this year.’

He said growth markets like China will help the company keep earnings strong.

He said, ‘We are not making any money there in China yet, but we have one foot in the most important air freight market, which will in a few years account for 25% of the global market.’
Source: Forbes

Brazilian iron ore mine

Dalian Port has signed a co-operation agreement with Brazilian mining giant Vale. The port will provide services such as unload, stock and distribution to the mining giant until 2020.

As China’s biggest iron ore provider, the company exported 69 million tons to the country in 2006 and 984 million tons in 2007.

Vale’s  plans to build 12 iron ore vessels of 300,000 tons capacity to serve Chinese customers and  to provide a stable supply.

Dalian Port is one of China’s large coastal ports. It can unload 15 million tons of iron ore every year. The existing two storage yards can stock 4.53 million tons and the figure will expand to 6 million tons after the third one is completed.
Source: Seatrade Asia Online

McKinsey Quarterly

McKinsey Quarterly surveys are detailed, informed and well-written. The current one on logistics and supply chain risk is typical. It surveys 256 companies and comes back with interesting and, perhaps, disturbing information.

It states: ‘worldwide business complexity is rising sharply. However, supply chain management isn’t keeping pace: most respondents say that their companies aren’t meeting strategic goals for it, and relatively few have acted on the global trends with the most influence over supply chains.

‘The increasing complexity of products and services tops the list of global factors that executives say most influence their supply chain strategies.

Reducing costs is even more important for companies in developing markets; perhaps companies in China (and other countries in Asia) are trying to anticipate the effect of rising costs (including labor costs and appreciating currencies) on the competitive advantages they currently enjoy as low-cost manufacturers.

When executives are asked to reflect on the greatest management challenge their companies face as supply chains become more global, they highlight the total resources required, followed by the recruitment and retention of sufficient local talent and the integration of the IT systems of companies and their vendors.

Well worth reading because of the picture of universal and international complanency that it paints. For this full report click HERE. You may have to register but it is worth it.
Source: The McKinsey Quarterly

Sinotrans

Senior government officials have said China will speed up restructuring of its state-owned enterprises in the second half of the year, forcing mergers of large conglomerates and accelerating sales of non-strategic assets across a wide range of sectors.

Wang Huisheng, president and chief executive of the largest state-owned industrial holding company, told the Financial Times in Beijing the government will now begin driving the process.

China has previously said it intends to reduce the number of giant state enterprises under central government control from 150 to as few as 80 by 2010. The State Development and Investment Corporation would consider selling assets to overseas and private investors.

Wang Huisheng said that in the shipping sector, Wuhan-based China Yangtze Transportation Group, the country’s biggest river shipping company, and Beijing-based Sinotrans Group, a logistics group that has partnered with Germany’s DHL, are set to merge at the urging of SASAC. This would allow them to compete with the state-owned China Shipping Group and COSCO.
Source: Financial Times

Tianjin port

CMA CGM Group has signed a 50-year concession agreement to build and operate a 1.7m teu (twenty foot equivalent unit which is a single container) terminal in the Port of Tianjin. The new terminal is expected to become operational in 2011 and will feature a 1,100-meter quay.

It will be operated by a joint venture consisting of CMA CGM (20%); Tianjin Port Holding, a Tianjin Port Group subsidiary listed on the Shanghai Stock Exchange (60%), and Hong Kong-based Asia International Shipping (20%).

The group, which is already present in the Chinese port of Xiamen and operates a network of 64 offices across the country, currently offers 30 weekly services from China, with a departure every six hours.
Source: SeaTrade Asia Online

Shanghai Jiayu Logistics

The largest trucking company in the United States, YRC Worldwide is buying Shanghai Jiayu Logistics, one of China’s largest trucking companies.

YRC paid $44.7 million for a 65% stake in the Chinese hauler, and expects to buy the rest of the company by 2010 for up to $39 million.

Technically YRC is a less-than-truckload transportation services provider and it is its subsidiary YRC Logistics—formerly known as Meridien IQ —  which has made the purchase.

Shanghai Jiayu Logistics has more than 30,000 customers, 1,800 employees, 300 tractors, 200 locations and a 3,000+ vehicle network.

YRC Logistics expects to purchase the remaining 35% interest in 2010 for an amount not to exceed $39 million, as determined by the level of Jiayu’s 2008-09 financial performance.
Much more on this HERE.
Sources: Logistics Management

Sun Lei of CFLP

Outsourcing of services to third party logistics providers was the highlight of two major conferences in Shanghai.

At the 4th China 3PL Summit, speakers discussed how the growth of multinationals has spurred competition among Chinese manufacturers, leading them to upgrade their own supply chains through the heightened use of 3PLs.

Sun Lei, director of the international co-operation department of the China Federation of Logistics and Purchasing (CFLP) said, ‘In China, not many local companies want to use 3PLs and there is a lower concentration of such activities. The market share of the top 10 logistics providers in China is only 13%.’

Sun Lei said that 3PL business in the mainland is still on a small scale compared with developed countries. She believes that the potential for 3PL services in China has not been fully realized.

A full report to be found HERE.
Source: CargoNews Asia

Xi'an and Lianyungang

China Industrial Daily News reports container trains are now running on the Xi’an to Lianyungang line with a round trip every week.

The train has 50 container flat wagons and starts from Xi’an East and West Railway Stations and terminates at Lianyungang on thee coast.

The container train is set to play an important role in the development of Xi’an’s foreign trade market which mainly operates through Lianyungang Port.
Source: CargoNews Asia