China's International Freight Industry - Looking forward to the Future
Shipping companies and the Intl freight sector in China continue to feel the effects of the worldwide economic gloom as they experience trading at the early months of 2010. Very large declines in orders for China import goods from the developed economies in Europe and the USA have had cascading effect right across the freight forwarding sector in China.
China's Ministry of Transport has forecast that container movements at ports in China will have reduced by seven percent in 2009. In the first 3 quarters of 2009, China's ports handled more than 77 Twenty Foot Equivalent Units (TEU's), down 9% on the same period in 2008. The impact has not been uniform, with some ports suffering worse than others. Year on year volumes at Shanghai, China's largest container port, fell 15% in the first nine months of the year and the second largest port, Shenzhen saw an even steeper decline at over 20%. This was because nearly half of the freight forwarding boxes handled at Shenzhen are [China import bound for Europe and this international freight business has been particularly badly hit by the global economic slowdown. Meanwhile, some of the coastal ports such as Quindao and Dalian suffered lower declines in container movements and some, such as Ningbo, Yingkou and Tianjin saw positive growth.
However, entering the New Year for 2010, the freight transport industry in China is bullish about the prospects for the future. Spokespeople for shipping companies and freight companies doing business in the China freight forwarding industry are predicting growth in 2010. This point of view is backed up by a recent report on international freight trends by Deutsche Bank which says that throughput in China should recover strongly during 2010. The securities firm has increased its forecast for China's 2010 export growth to 10% as China import comes back in demand in Europe and the United States.
This optimistic prediction is endorsed by the ongoing development activity in relation to China imports. As an example, a sixth container terminal is being built at Waigaqiao Port and is expected to come on stream in 2010 with an annual capacity of over 2 M TEU and 730,000 vehicles.
This will help consolidate the extremely strong freight transport infrastructure in China and improve the country's position as trade resumes, following the recovery of the global economy and the inevitable continued growth of China imports as there is more spending power and available credit in Western economies.
The likely continued economic development of the Eastern European countries are also likely to provide an increasing market for China imports as is improved relations between China and Taiwan.
One of the optimistic pointers for future development of the freight forwarding infrastructure in China is the increasing amount of consolidation as smaller ports tie up with larger ports. For example, Ningbo and Zhoushan ports have merged and this has spurred Shanghai to take equity stakes in Chongquing, Wuhan and other ports on the upper parts of the Yangtse. Meanwhile, in Northern China. Qingdao and Dalian are coming together with neighbouring smaller ports. The aim of the consolidation is economies of scale.
In this way, the main players in the freight services infrastructure in China are building the foundations for a bright future and the various shipping companies and freight companies that use the ports will stand to benefit.
About the Author
Stephen Willis is Managing Director of RW Freight Services a UK based freight transport company, established in 1971 and operating worldwide freight forwarding services including specialist freight services to and from China