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

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

Jiangsu Jinling ship construction

China’s CSC Jiangsu Jinling Ships has won orders for six 92,500 dwt bulk vessels from Tianjin-based Centrans Ocean Shipping Logistics.

The shipyard declined to disclose the exact ship price, but said each vessel costs close to RMB400 million ($58.4 million). The ships will be delivered in 2011.

Including this latest order, the yard has orders for 21 92,500 dwt new ships on hand.

CSC Jiangsu Jinling Ships is a subsidiary of the China Yangtze Transportation Group, which is also known as China Changjiang National Shipping.

CSC Jiangsu Jinling Ships can deliver a maximum of 22 vessels a year.
Source: Lloyd’s List

SYMS, the cash-strapped Chinese container line
which is formally Shandong Yantai International Marine Shipping was in negotiations between the intra-Asia operator and potential buyer Grand China Logistics.

These talks have now ground to a halt partly because of the money involved and partly because of  regulatory issues.

Grand China Logistics, also known as Da Xin Hua Logistics, which is part-owned by the Hainan Airlines Group, had been the frontrunner to acquire SYMS. Talks have been going on for at least 10 months without result.

SYMS has been losing money for a long time, hit by the notoriously low freight rates in the China-Japan trades on which the line has concentrated.

SYMS has fallen badly behind on ship charter payments, and several owners have now taken legal action in an attempt to recover the money owed and their ships back.

The company’s outstanding debt stood at RMB500 million ($71m) in March this year when it invited investors to take a 90% stake in the business.

SYMS operates a fleet of 50 vessels totalling 440,000 dwt and 28,000 containers, and has been looking for a buyer since 2005. Prospects do not look pleasing.

Much more here ci-online and HERE.
Source: Lloyd’s List

Chinese logistics giant Sinotrans has agreed to merge with China Yangtze Transportation.

The merger is still subject to approval according to statements published in the China Securities Journal.

The government supports consolidation of this large but fragmented sector. If it goes ahead, the move would create a sprawling transport corporation operating everything from marine, oil and river shipping to express delivery, freight forwarding and warehousing.

At the same time Sinotrans has reached a merger agreement with China Changjiang National Shipping, the country’s largest river shipping company, and Nanjing Water Transport.

It was stated: ‘There is no certainty as to whether or not the plans will be approved by authorities.’
No further details were given.

Beijing’s Sinotrans Group is the largest shareholder of Hong Kong-listed Sinotrans and Sinotrans Shipping.
Sources: Reuters and Quamnet

ResearchInChina publishes China Logistics Industry Report, 2007-2008. More on this at the ResearchInChina site

China’s total value of logistics in 2007 reached RMB75.2282 trillion, up 26.2% year on year.

According to a conservative estimate by the China Federation of Logistics and Purchasing, China’s logistics industry is expected to have a compound annual growth rate of 16% in the coming three years.

In 2007, the added value of China logistics industry was RMB1.7 trillion, up 20.3% year on year, accounting for 17.6% of the total of China service industry and 6.9% of China’s GDP.

In the same year, China’s total cargo transport volume was 22.53 billion tons and its turnover volume of freight transport was 10.1 trillion tons/kilometers, up 10.7% and 11.8% year on year respectively. Broken down by modes of transportation:

Water transportation 67%.
Railway 22.5%.
Road transport 10.5%.
Aviation 0.1%.

This report is based on the authoritative statistics from the China Federation of Logistics and Purchasing, the National Development and Reform Commission, the Logistics Association of China, the China Auto Logistics Association of CFIP, the General Administration of Customs, the State Information Center, and the National Bureau of Statistics.
Source: PR Inside

Shipping lines running the Taiwan — Hong Kong/South China trade announced that from July 1 they would levy a new surcharge of RMB400 per TEU to be collected from consignees in South China, regardless of whether the freight had already been prepaid in Taiwan.

Shipper organizations in Shenzhen, Hong Kong and Macau have called on their members to reject this.

Toland Lam, executive chairman of the Shenzhen Shippers’ Association, said, ‘South China shippers are very angry with shipping lines’ action, which is totally unjust. Shippers will reject the charge.’

Hong Kong Shippers’ Council chairman Willy Lin said the emergency bunker surcharge ‘violated international shipping practices’ and would not be accepted.

The shipping lines involved comprise most of the carriers on the trade, leaving shippers with no choice of taking their business elsewhere.

The annual volume on the trade is estimated to be around one million TEUs, and the shipper’s organization estimate that the lines will pocket $56 million from shippers in Hong Kong and South China.
Source: CargoNews Asia

The Ministry of Commerce (MOC) has announced that China saw its export and import volume in service trade (excluding government service) reaching $250.91 billion U.S. dollars in 2007.

At which point we need a definition of service trade. This can come through purchases of services and goods by China travelers abroad and by foreign visitors to China.

Passenger fares are a good example. As are charges for the transportation of goods by ocean, air, waterway, pipeline, and rail carriers to and from China. Then there are royalties and license fees, and transactions of China government non-military agencies with foreign residents.

Export volume of service trade in 2007 was $121.65 billion, up 33.1% over the previous year, while the import volume of service trade was $129.26 billion, up 28.8%.

The trade deficit stood at $7.61 billion U.S. dollars, representing a decrease of 14.6% year on year.
China was the seventh biggest service export country and the fifth largest service import country in 2007.

China’s Hong Kong, the United States, Japan and the Republic of Korea are the four biggest service trade partners of China’s mainland.

Yi Xiaozhun, the MOC vice minister, said China was making efforts to beef up service trade and to expand cultural-related service trade in overseas markets. China was also trying to boost its tourism industry, marine transport industry, and promote service trade in traditional Chinese medicine, insurance and finance, and technological service.

China accounted for 3.6% of the world’s service trade volume in 2006.
Source: China View

Dry bulk shipping in China has come into its own in the past ten years or so. Dry bulkers ships carry everything from grain to coal to metals. One of the biggest players in the business is China COSCO Holdings Company, generally known as Cosco.

More than half of its revenue comes from dry bulk shipping — about 52% — but the group also handles container shipping, integrated logistics services, and terminal and container leasing.

Dry bulk shipping services are predicted to grow in 2008 with increasing demand for iron ore and coal to India and China.

Last year, Cosco, considered to be the second largest integrated shipping company in the world, spent over RMB17 billion to increase the size of its fleet and expand its port interests. Yet it still managed to post almost 135% net profit growth over 2006.

Management plans to up its capital expenditure to over RMB23 billion in 2008 which is an increase of 37%.

In the first quarter of this year Cosco increased its net profits by 135% over the same period a year ago.
Source: Seeking Alpha

Shipping giant China Cosco Holdings will add 64 vessels to its fleet of 144 container ships this year.

China’s top ship line will raise its 2008 capital expenditure by 37% to $3.32 billion to expand its fleet and port investments.

China Cosco’s net profits more than doubled last year, going up 134% (these three digit increases have astoundingly become commonplace) to $2.78 billion, compared with $1.14 billion in 2006.

Much of the increase in profits was attributable to China Cosco’s acquisition of a subsidiary owned by its parent company, Cosco Group, which owns the world’s largest dry-bulk shipping fleet.
Source: CargoNews Asia