Rail remains the south China port’s best bet as export-producing factories move away from the coast.
The south China port of Shenzhen reported the lowest growth percentage of mainland ports last year, its throughput increasing by just 0.27 percent. As an export port, that seems about right given the trade slowdown, until you look to the north and see that Shanghai grew by more than nine percent in 2011.
The problem for Shenzhen, and Hong Kong, is that factories are drifting inland and the ones that are going make goods that are transported in marine containers. Government policies against low value polluting goods, rising labour and rent costs, generous incentives to Go West – all are seeing momentum gathering in the migration inland.
This is undercutting throughput at Shenzhen’s Chiwan, Shekou and Yantian terminals, but the falling numbers have not gone unnoticed. The port authorities are doing what hub airports like Hong Kong have been doing for years: If the cargo is moving further away, go and fetch it.
Factories moving to the rapidly emerging industrial municipality of Chongqing are closer to the Yangtze River and the waterway is a more logical route to a hub port, which is Shanghai.
So Shenzhen is establishing rail links to inland cities to capture the containerised cargo before it gets on the river and is lost. The port has 15 rail links to cities such as Chongqing and Kunming and plans to build more in the future.
Helping Shenzhen are the serious problems involved in using the Yangtze as a transport corridor. Congestion, drought, too shallow, limited capacity –the sort of issues that will make a forwarder look for alternatives.
Unfortunately, rail also comes with its own issues, limited capacity being one of the biggest ones. Only one percent of China’s cargo travels by rail, which is reserved largely for passengers and coal. During national holidays when billions of journeys are made, forget it.
But when it comes to overcoming infrastructure challenges, China is a master. Five years from now the Yangtze will be dredged to a depth that can accommodate larger vessels, easing capacity and making the transport of containers cheaper. Rail links will also be strengthened between the manufacturing heartland and coastal ports.
There will still be considerable issues involved in a complex inland China supply chain, but forwarders will at least have a choice.
And if there is one thing that freight forwarders like it is options.