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December 2008 The State Council has withdrawn the Yangtze Waterway Maintenance Fee as part of its reform on petrol tax. This means that the fee, approved by the council in February 1987 and paid by all shipping companies ever since, will cease to exist. The total cumulative collection of Rmb4bn was used to compliment central government funding for improving shipping conditions of the Yangtze trunkline. Analysts believe that the move will ease some cash pressure on struggling shipping lines in the current difficult economic climate. Initial figures show that the major Yangtze ports recorded a total throughput of 1bn tons of cargo and 692,700teu for the whole of 2008, representing a growth of 9.2 per cent and 25.1 per cent year-on-year. Compared with the same figures for 2007, however, they point to a decline of growth rate of more than six percentage points and 12 percentage points respectively, indicating that the worldwide economic meltdown is drastically slowing down the growth of Yangtze cargo traffic. In fact, throughput of export-oriented cargo recorded an actual decline of 1.1 per cent to 114m tons.
Shipping prices continued to slide in December with the Yangtze Container Index shedding 0.79 per cent and the Yangtze Dry Index 1.48 per cent compared with November. The container index for the lower reaches experienced the greatest decline, falling 2.92 per cent to 963.78. The coal index element of the Yangtze Dry Index dropped by 6.75 per cent to 767.91 due to a sharp reduction in demand, particularly for coal coming out of Sichuan and Chongqing.
Chongqing government has recently unveiled a plan to open the waterway as an environmentally-friendly means of public transport. The completion of the Three Gorges Dam has significantly improved water conditionson the Yangtze and its tributary the Jialing River.
According to the municipal planning bureau, the 58km journey from Caotianmen Quay to Beipei and the 40km journey from Caotianmen Quay to Yudong will be no more than 30-40 minutes one way. At the moment, the planning bureau is working closely with the port authorities and transport officials on a feasibility study.
According to Wuhan planners, a total of Rmb40bn will be set aside in 2009 to speed up major transport projects that help better connect the city’s three major districts: Hankou, Hanyang and Wuchang. They include the ring road project and the Yangtze tunnel project. The ring road project will concentrate on the completion of various sub-projects, allowing just 30 minutes from one destination to another within the Second Ring Road. Construction of the Hankou section and the flyover between Wuhan Science University, Donghu Hotel and Xiongchu Avenue will also start. The southern section of the Third Ring Road (Luoshi Nanlu-Lao Wuhuang Lu) will be completed and the eastern section next to East Lake will start. Money will be spent on completing the Tianxinzhou Yangtze Bridge and the Yangtze tunnel will be completed, along with the repair of the Baishazhou Yangtze Bridge. Another tunnel, Yingwuzhou Tunnel, will start construction.
Money has been set aside to start building the airport expressway and an expressway linking Hankou and Yangluo, the container terminal. Other major transport arteries in the city will receive funding for renovation.
According to the planning department of the Yangtze River Waterway Bureau, five major dredging projects along the middle and lower reaches of the river costing a total of Rmb40bn have passed a round of rigorous examinations by technical experts and are ready to apply for funding from the Ministry of Transport. The five projects are due to be completed in 2013 and involve 42 shoals and shallows along a length of 1,645km of the trunkline. The costliest two are the 408km stretch between Yichang and Chenglingji, a traditional bottleneck, and the 301km stretch between Nanjing and Liuhekou, the busiest stretch; they will cost Rmb13.7bn and Rmb18.3bn respectively. The Yichang-Chenglingji stretch will cover 18 trouble spots. The target is 3.2 metres (currently 2.9 metres) in water depth, 150 metres in width (currently 80 metres) and 1,000 metres in turning radius (currently 750 metres), allowing the passage of 10,000dwt barge fleets. Six major trouble spots will be tackled on the Nanjing stretch, bringing the water depth to 12.5 metres (currently 10.5 metres), 500 metres in width and 1,050 metres in turning radius. This means that vessels of 70,000dwt will be able to sail to Nanjing all year round and vessels of 100,000dwt may sail on tide.
Money will also be spent on the 228km stretch between Chenglingji and Wuhan, covering six trouble spots and costing Rmb2.17bn. The target is 3.7 metres (currently 3.2m) in water depth, 150 metres in width (currently 80m) and 1,000 metres in turning radius, also allowing the smooth passage of 10,000dwt barge-tug fleets. The nine trouble spots in the 402km stretch between Wuhan and Anqing will cost almost Rmb3.5bn, with a targeted water depth of 4.5 metres (currently 4 metres), width of 200 metres and a turning radius of 1,050 metres. A total of Rmb2.15bn will be spent on three trouble spots in the 306km-stretch between Anqing and Nanjing, with a targeted water depth of six metres (currently 5 metres between Anqing and Wuhu and 6.5 metres between Wuhu and Nanjing), a width of 200 metres and a turning radius of 1,050 metres.
As part of the efforts to stimulate the economy, the central government plans to speed up the dredging projects with substantially increased investments. In 2007, a total of Rmb15bn was spent on dredging the Yangtze waterway, of which more than Rmb1.1bn came from local governments. Every increment of one metre in water depth will allow an increase of about 1,000 teu to be carried on vessels, reducing costs for shippers.
The first phase of Wanzhou Jiangnan Tuokou Terminal started formal operation on 20 December. When completed, theRmb1.2bn container terminal project will be the largest on the Three Gorges Reservoir, with four 3,000dwt berths. The US-headquartered Prologis has agreed to sell its China operations and property fund interests in Japan in order to reduce its substantial debts. The assets have been sold to affiliates of GIC Real Estate of Singapore for cash US$1.3bn billion, plus liabilities assumed. Prologis is the world’s largest developer and owner of distribution centres. GIC is a real estate investment unit of the Government of Singapore Investment Corp. The deal is expected to be concluded at the end of January.
Prologis’s China assets include 20.7m square feet of completed properties and properties under development with a total expected investment of US$861m. It has premises in Shanghai, Suzhou, Beijing, Tianjin, Guangzhou and Shenzhen.
A stimulus program to revive China's shipbuilding industry is being discussed and will be submitted to the State Council for approval in early 2009, reported China Business news quoting a senior industry official. Zhang Guangqin, chairman of China Association of the National Shipbuilding Industry, said the stimulus package provides detailed instructions to Chinese shipbuilders that will help them cope with the financial crisis in the next two to three years. The programme will emphasise the shipping of energy resources and strategic materials such as crude oil by state-owned fleets. The Wanzhou-Yunyang expressway was opened to traffic on 27 December, reducing the journey time between the two places to 40 minutes from 90 minutes, according to Chongqing Express Development Co. The 78km road cost Rmb6bn to build and comprises 129 bridges and 28 tunnels. Yunyang is situated in the northeast of Chongqing municipality. Construction of the Chongqing-Lichuan Railway officially began on 27 December. This Rmb26.18bn line runs 260km from Chongqing North railway station to Liangwu railway station of Lichuan city, Hubei province. When completed in 2012 it will have a designed speed of 200 kph, reducing the journey time from Chongqing to Wuhan to four hours. The project is funded by the Ministry of Railways and Chongqing Municipal Government.
Chongqing will initiate construction of four new railways in 2009: to Guizhou, Wanzhou, Chengdu and a second line to Huaihua, according to the meeting between Wang Hongju, mayor of Chongqing, and Liu Zhijun, Minister of Railways on 28 December.
Wuhan-based Dongfeng Automobile said it expected to sell 170,000 vehicles in 2008, reported China Daily. The Chinese carmaker outstripped its competitors in sales of pickup trucks for the first 11 months of the year, rising 14.2 per cent year-on-year. In the same period, it exported 12,000 vehicles, rising 85 percent year-on-year. Its engine-making joint venture with Cummins of the US, the Dongfeng Cummins Engine Co, sold 158,000 units of engines between January and November. A four-year project to widen and deepen the Luohuzhou section of the Yangtze River was completed on 21 December in Hubei province, reported Xinhua, allowing a 10,000 ton tug barge fleet to pass through the former bottleneck.
The central government allocated Rmb133m on the comprehensive clearance of this section in the middle reaches of Yangtze. The width of section ranges from 350 metres to 510 metres, with a minimum year-round depth of 4.5 metres, said Peng Songbai, a Wuhan-based Yangtze River Waterway Bureau official.
From now on, 5,000-tonne ships and 10,000-tonne cargo barge fleets can pass the 12km section which previously had led to some large vessels being stranded en route to Wuhan, according to a report by the Transportation Ministry.
Around half of the more than 40 major shallow water areas or rocks hindering transport on the Yangtze are found in the middle reaches.
The major ports along the Yangtze trunkline recorded a total throughput of 28.46m tons in November, equivalent to just 80 per cent of the amount carried in the same period last year. Out of this total, 5.191m tons was foreign trade-related cargo, representing just 78 per cent of that of last year.
Container throughput continued to increase, though at a slower pace. The Yangtze ports recorded a total throughput of 488,000 teu in November, up eight per cent year-on-year. Among them, 228,000 teu were for exports, one per cent down from last November, while 260,000 were for imports, up 17 per cent.
According to Mr Fan Lijian, board chairman of Jingzhou Port Group, the growth trend in container throughput has been affected by shrinking export volumes, but will continue to be driven largely by domestic trade. The biggest port operator in Jingzhou, where multinational giant Philips has been operating an auto lighting manufacturing plant for 10 years, has enjoyed impressive growth in container throughput over recent years. In 2006, its container throughput doubled to 40,000 teu, rising by 30 per cent to 51,900 in 2007. Mr Fan is predicting a 40 per cent increase by the end of this year.
Those mainland-registered shipping lines and their agents that wish to start direct services between the mainland and Taiwan have been promised a speedy approval procedure by the Ministry of Transport. Starting from 15 December, so long as applicants submit the relevant documentation, use capital and deploy vessels registered inside the mainland or Taiwan, the ministry will issue permits within a maximum of 20 days, according to a recent ministry circular.
Until now, 18 shipping lines with more than 30 vessels have been involved in regular container services between the mainland and Taiwan via a third territory, typically Hong Kong. Irregular services for bulk cargo such as coal and sand have also been provided via a third territory.
The circular also states that foreign shipping lines and foreign flagged vessels are not allowed to conduct direct service without permits.
Minsheng Shipping Co has been given permission to operate direct sailings between Chongqing and Taiwan, the first company in central or western China to win such approval. Two cargo vessels will be deployed on the service, which will result in a time saving of some 15 hours on single voyages. Previously, vessels sailing from Cuntan had to sail first to Ishigaki, the second-largest island of Japan’s Yaeyama Island group, and register there before completing the journey to Taiwan.
As a result of this development, more cargo from Chongqing, Yunnan, Guizhou, Sichuan and other areas in the region will be transported to Taiwan, said an employee of Minsheng Shipping.
The freight carried on the national road network in November totalled 1.48bn tons and 107.69bn ton kilometres, up 5.5 per cent and 9 per cent respectively compared with the same period last year. The growth in Sichuan, Guangdong, Hubei and Henan provinces accounted for nearly 50 per cent of the increase in road cargo volumes.
The cargo carried on the national waterway network in November totalled 240m tons and 493.46bn ton kilometres, up three per cent and down 14 per cent over the same period last year, representing a decreasing of 11.3 and 39.2 percentage points.
November statistics also revealed that 75.2 per cent of the total national of cargo volumes were moved on the road while the waterway accounted for 12.2 per cent of the national total; however, taking into consideration the distance travelled, road transport accounted for less than 14 per cent of the national total while the waterway network represented 62.2 per cent.
The proportion of cargo moved by rail decreased by 1.1 per cent in absolute volume terms but up nearly one per cent in ton kilometre terms, whereas both categories for air cargo remained the same.
Siemens is looking to increase sourcing and exports from Asia to help control costs, said Richard Hausmann, the chief executive for Siemens North Asia, according to the China Supply Chain Council.
The company also wants to increase the level of exports from China. In fiscal 2008, its exports from China were equal to about 10 per cent of the Rmb57bn in its total mainland sales, said Hausmann.
Siemens is forecasting mainland sales to grow about 16 per cent in fiscal 2009, up from 19 per cent in the previous year.
China will spend Rmb5,000bn up to 2020 to add 41,000km to its rail network, Xinhua reported, as the government tries to boost domestic demand and ease bottlenecks in the overburdened system.
Deputy Railway Minister Lu Dongfu was quoted as saying the new railways would help promote economic growth and provide at least six million jobs.
The report did not say how much of the investment was new, and how much had already been approved by the central government, although some of the projects have already begun, such as a high-speed link from Beijing to the commercial capital Shanghai.
The first phase of Wanzhou’s Jiangnan Tuokou container terminal area was completed on 20 December. Work started on the project in Chongqing municipality in March 2005 and its annual throughput capacity is 240,000 teu.
Some Rmb390m has so far been spent on the project, a figure that will rise to Rmb1.2bn when the second phase is completed. The two phases have a designed annual throughput capacity of 500,000 teu.
Vehicles are now running under the Cuntan interchange in Chongqing, according to a local government website. The interchange, located at the intersection of Jinyu Road and Haier Road, includes the tunnel from Haier Road to Cuntan port terminal area and the overpass over Haier Road, which is expected to be opened to traffic on 25 December. From then, vehicles will be able to travel directly from the New North Zone to the bonded port area via the tunnel. The State Council granted bonded port status to Chongqing and Zhangjiagang in December, joining Yangshan Terminal in Shanghai as the three bonded areas along the Yangtze River.
The 4.1 sq km Zhangjiagang Bonded Area covers the existing bonded area and the bonded logistics park. The decision to grant Chongqing bonded port status is part of an effort to boost the opening and development of central and western regions. The 8.37 sq km Cuntan Bonded Area encompasses Cuntan Terminal and Jiangbei International Airport. Construction will be completed in 2015.
Bao Zichuan, chairman of Chongqing Bonded Area Development Company, said the bonded area would focus on port business, air transport, foreign trade and export-oriented processing. Enterprises in bonded areas enjoy various preferential tax policies.
So far, China has established 12 bonded terminals. All cargo leaving the bonded area for the domestic market are treated as imports and are therefore to be customs-cleared and taxed accordingly; all domestic cargo entering the area are treated as exports and are therefore tax-refunded; and transactions between companies within the bonded area are exempt from value–added tax and consumption duty.
Since June 2005 when Yangshan became China’s first bonded terminal, the number has risen to 12 countrywide. They are nearest thing in China to a truly free port.
A revival in Chinese demand for iron ore and coal has led to a significant recovery in charter prices, reported the Financial Times. One market participant was quoted as saying that average rates for Capesize vessels, which move coal and iron ore, nearly tripled over one week in mid-December.
The rise in prices was in part due to a return of iron ore shipments from Brazil and Australia to China. Previously, China had halted iron ore imports and relied on stockpiles because of falling steel demand and a dispute over prices with Brazilian producers.
However, the return of ships to the market could once again lead to over-supply which, combined with falling demand for coal, iron ore and wheat, depressed prices this year.
New shipping orders in China decreased 44 per cent year-on-year in the first 11 months of 2008, compared with a fall of 37 per cent worldwide, according to a report by shipping research company Clarkson Research Studies. Over this period, China won shipbuilding orders with a dead weight of 54.26m tons. The other two major shipbuilding nations are South Korea, which recorded 65.97m tons, and Japan, which registered 17.92m tons.
The sharp decrease in China was attributed to the depressed state of the shipping industry worldwide and the types of vessels the nation specialises in building. Chinese ship manufacturing companies excel at producing bulk freighters but demand for this type has fallen significantly in the last year.
The first cargo ship from Taiwan via a direct shipping route to the Chinese mainland since 1949 docked at the port of Xiamen, Fujian province on 17 December.
Goods unloaded from 326 containers on the ship included oranges, machinery, electronic products, auto parts and chemical materials.
The vessel left Kaohsiung on Tuesday evening and arrived in Xiamen the following morning. Zheng Yonggang, a mainland buyer of the Taiwan oranges, said the same journey via Hong Kong used to take a minimum of seven days.
Direct daily air transport across the straits started two days earlier when the mainland-based Shenzhen Airlines plane took off from Shenzhen Airport for Taipei, ending a 59-year ban on such links. Another mainland jet left from Shanghai on a direct flight to Taiwan and returned on Wednesday, fully loaded with Taiwan-made electronic goods.
Shanghai port’s container traffic will rise 9 per cent in 2008 to 28.5m teu, predicted municipal government spokesman Chen Qiwei. In the first 11 months of 2008, the port's container traffic rose 8 per cent year-on-year, down from the 20.4 per cent increase in 2007.
Shipping demand has weakened significantly due to the global financial crisis, Liu Zuoliang, a senior economist at Shanghai Tongsheng Investment (Group) Co told Dow Jones Newswires.
Port throughput at all China’s ports stood at 460m tons in November 2008, according to the Ministry of Transport, an increase of 0.5 per cent year-on-year. This represented the lowest growth in a decade. Of this total, 310m tons was domestic trade, up 1.5 per cent year-on-year, while foreign throughput actually contracted. Container throughput at ports totalled 10.6m teu, down 4 per cent from October but up 6 per cent year-on-year.
A ministry spokesman said the economic slowdown had reduced domestic demand for raw materials, including iron ore and coal, impacting the dry cargo transport business.
Chongqing’s 187km outer ring highway is due to be completed at the end of December. The highway passes through seven districts, including Beibei, Shapingba and Jiulongpo, connecting the key economy areas in the outskirts of Chongqing. The 58km Beibei-Xipeng section in the southwest is the fastest section of road, with a designed maximum speed of 120 kph. Li-Ning has started construction of a Rmb3.2bn manufacturing and distribution centre in Jingmen, Hubei province. Zhang Zhiyong, chief executive of the sportswear company, said the project will be a milestone in its expansion into the markets of central and west China.
When the entire project is completed in 2013, annual output value is expected to be Rmb6bn, or 40-50 per cent of the company’s total production. Some 50,000 new jobs will be created in Jingmen.
Li-Ning has also agreed to finance a logistics centre and a product research facility in the industrial park.
The prolonged drought in the Xiangjiang River and Dongting Lake is worsening, prompting officials to flag up orange alert on 17 December. The low water has severely affected Chenglingji port which every day receives more than 200 vessels of 2,000-3,000dwt from the tributaries. Because of the low draught, vessels can carry only 60-65 per cent of their normal load. According to officials from Changsha Jixing Container Company, one of the major barge operators in Changsha, it has to use smaller barges to get to Chenglingji and Wuhan and use trucking as contingency. Consequently, the cost of shipping containers between Changsha and Wuhan has risen by Rmb400 each.
Since 26 October 2008, the Three Gorges Dam has released 2,500 cubic metres of water per second more than the normal 5,500 cubic metres in an effort to raise the water level in Chenglingji. The record low water level in the Xiangjiang River and Dongting Lake has not only made shipping difficult but also affected the water supply and water quality for people living in the middle and lower reaches of the Xiangjiang River such as Changsha, capital of Hunan province.
Chongqing municipal government has recently announced its ambition to invest Rmb164bn in transport infrastructure within the next five years. Among them, Rmb55bn will be spent on expressways totalling 1,100km, Rmb67bn on local intercity railway lines and Rmb3bn on local airports.
Two container barge models that will operate on both river and sea have been approved by a panel of experts at a meeting in Wuhan on 13 November. The barges were assessed on the basis of their technical capability and suitability for use on the Yangtze River and the short ocean stretch from Shanghai to Yangshan deepwater terminal.
The China Classification Society organised the assessment on behalf of the Ministry of Transport to evaluate the models in terms of four factors: safety, environmental protection, building cost and aesthetics. Mass production of the new model has now been given the go-ahead. The process is part of the government drive to standardise vessels operating along the Yangtze.
One of the models, an open-top container barge designed by the Wuhan-based Yangtze Ship Design Institute, is 122.8 metres long and 18.8 metres wide with a draught of 4.2 metres. Capable of carrying 424 teu, the new model is designed to sail directly from the river to Yangshan where containers are moved onto large ocean-going vessels. At the moment, a typical container barge on the Yangtze has a capacity of 150-200 teu; upon reaching Waigaoqiao terminal in Shanghai, the containers are transhipped onto a shuttle service for Yangshan, where they are then loaded onto large ocean-going vessels destined for Europe and America.
The other model, also designed by the Yangtze Ship Design Institute, is a combo tug/barge with a combined length of 129.29m and a maximum capacity of 360 teu. It will be used on the shuttle service between Waigaoqiao and Yangshan terminals; indeed, several such vessels are already in operation along the route. However, shippers complain that services are insufficient and that containers often miss the scheduled service to Yangshan as a result.
China will increase retail fuel taxes and abolish some fixed charges for car owners in 2009 to encourage the use of more efficient vehicles and to meet energy-saving targets.
The National Development and Reform Commission announced that the government was seeking public advice for a plan to raise the consumption tax on gasoline from Rmb0.2 per litre to Rmb1 per litre. The tax on diesel will rise from Rmb0.1 to Rmb0.8 per litre.
Existing road maintenance fees and certain other fixed charges will be abolished.
UPS of the US has opened an international air hub in Shanghai Pudong International Airport with an investment of US$125m. The hub will connect China to its global air network with direct service to US and European destinations. The facility, covering 35,000 sq m, will be able to sort 17,000 pieces of goods per hour by 2012.
Meanwhile the US express delivery company is moving its intra-Asia air hub to Shenzhen from its current location in the Philippines. The new hub will start operations in 2010 and will involve an estimated investment of US$180m.
DHL is also building an express transfer facility in Shanghai, due to open in the second half of 2010, while FedEx will open its own facility in Guangzhou next year.
Power giant China Huaneng Group plans to invest Rmb500m in setting up a shipping company that will operate on the middle and lower reaches of the Yangtze River, reported Caijing. Shanghai Rui Ning Shipping is set to operate two cargo ships with a combined capacity of 65,000 tons.
An industry expert from Citic Securities said that since ship prices have fallen more than 20 per cent due to the global economic downturn, the risks associated with forming a new shipping company had lowered. It was for this reason that Huaneng decided to set up a small company to test the water.
South Korea is to open a consulate general in Wuhan by the end of 2008 or early 2009, said Wan Yong, assistant to the city’s mayor. Only two other countries have consulates in the city, France and the US.
A total of 62 South Korean companies had invested in Wuhan by the end of 2007, involving a total investment of more than US$200m.
The American Chamber of Commerce in China opened a new office in Wuhan on 20 November. AmCham-China Chairman James Zimmerman said that US businessmen were alive to the opportunities in central China and the chamber’s presence in Wuhan demonstrated its commitment to central China and the Yangtze River Delta Area.
The main route of China’s huge south-north water transfer project has been put back four years because of pollution concerns, reported Xinhua. The 1,267km central route, which will run from the Danjiangkou Dam in Hubei province to Beijing, will now be completed in 2014 and not 2010, as previously planned.
A Hubei environmental official, Zou Qingping, was quoted as saying that once water is drawn from the dam, it will reduce flows along the Han River that cuts past it and thereby exacerbate water quality problems in the province. This means that Hubei needs to build more water treatment plants and ecological restoration facilities.
The third-phase construction of Yangshan deepwater terminal was completed on 4 December, expanding the terminal’s annual throughput to 9.3m teu said Liu Zuoliang, chairman of Shanghai Tongsheng Investment Group and vice director of the project.
The completed north part of Yangshan is equipped with 16 berths along a 5.6km waterfront. It took six-and-a-half years to complete.
Liu admitted that the global economic crisis had impacted operations, with a container handling growth of 9 per cent in the first 11 months of 2008 well down on same period in the previous year. Freight rates from Shanghai to Europe have slumped from US$1,300 to US$200 per container over the course of this year, Liu added.
However, the Shanghai government is pressing ahead with the construction plan of Yangshan; a total of 30 berths will be built on a 10km waterfront, able to handle 15m teu a year upon completion. In 2009, construction of the port's west part will begin, comprising 10 to 12 berths with a designed capacity of 7m teu. These berths will gradually come into use between 2010 and 2013.
A new road tunnel under the Yangtze in Wuhan is to open to traffic on 28 December, said Hubei provincial website. The 3.6km tunnel will connect the city’s two major districts, Wuchang and Hankou. Its capacity will allow 52,000 vehicles to cross each day at a top speed of 50 kph. As a trial, the four-lane tunnel will open only from 6am to 10pm in the first year and 6am to 12pm in the second year. It has been built to withstand an earthquake measuring 6 on the Richter scale, according to Xinhua.
There are five Yangtze bridges in Wuhan, and a sixth is under construction.
Construction has begun on China’s first state-level rice trading centre, reported People’s Daily. The Wuhan National Rice Trading centre, covering an area of 1.3 sq km and with an investment of more than Rmb3.7bn, will be situated in the city’s Yangluo Economic Development Zone in Xinzhou district.
Upon completion in five years, it is expected to have an annual trade volume of 10m tons and a grain storage capacity of 350,000 tons. The centre is designed to become a large-scale modern logistics zone for grain incorporating the eight major functions of grain storage: processing, transhipment, trading, delivery, inspection, information and services.
Construction will start in 2009 on a 1,000km railway line dedicated to transporting coal from Inner Mongolia to Hebei province. The new line will stretch from Erdos to Caofeidian in Tangshan, sources told China Daily.
When completed, the line should help to relieve pressure on the two existing coal lines – the west-to-east Daqin and north-to-south Shuohuang – that connect Inner Mongolia’s coalfields with coastal ports. Currently, transport bottlenecks mean that only 150m tons of coal can be transported out of the autonomous region, compared with a coal output in 2008 that is expected to stand at 400m tons.
Another construction project to start next year will be the Rmb120bn second railway linking Xinjiang autonomous region in northwest China with inland cities. The new passenger line will run parallel to the existing Lanxin Railway linking Gansu, Qinghai and Xinjiang. When it is complete, the old 1,892km Lanxin railway will be used by cargo trains only.
Falling iron ore imports are unlikely to lead to an imminent reduction in handling costs at Chinese ports, according to a report by Securities Times. Representatives from the coastal ports of Rizhao and Tianjin said their ports had no plans to reduce iron ore handling costs. Rizhao has already increased handling costs twice in 2008 and a reversal was unlikely due to the fact that its throughput remained much greater than handling capacity.
The China Ports and Harbours Association said that it had heard of no handling cost cuts among its members so far, nor of any plans to introduce them. This is despite an expected surge in China's iron ore handling capacity over the next two years as a result of the recent investment by ports in iron ore docks in response to surging ore import levels over past years.
Now, as a result of the global economic downturn and its impact on the steel industry, import levels are falling fast. According to official data, China imported 30.62m tons of iron ore in October, a fall of 21.9 per cent on the previous month’s total.
According to a subsequent report in Caijing, Chinese steelmakers are set to ask major iron ore suppliers to slash next year’s benchmark prices. Annual contracts are set to begin next April and one analyst said Chinese steel companies may seek cuts of up to 40 per cent. Shan Shanghua, secretary of the China Iron & Steel Association, said that steelmakers are now buying ore for about US$50 per ton on the spot market, even though prices under the current year’s contracts with Australian suppliers are around US$90.
The Ministry of Transport said it expects to spend Rmb1,000bn on transport infrastructure in 2009, up from about Rmb800bn in 2008. Li Xinghua, deputy director of the ministry's comprehensive planning department, said some of the funding would come from non-government entities, including domestic and foreign sources.
Some Rmb400bn-500bn will be spent on highway construction, Rmb200bn on rural roads, Rmb70bn on ports and Rmb20bn on inland waterways.
Guangxi Zhuang autonomous region in southern China will invest more than Rmb400bn on transportation infrastructure over the next five years, reported Xinhua. Ma Biao, chairman of the region, said priority would be given to developing a 1,700km transportation passage between southwest China and the South China Sea. That passage starts in Sichuan province and ends at the Beibu Bay in Guangxi, on the border of Vietnam. The regional government also plans to make Guangxi into a hub for transportation from China to countries in the Association of Southeast Asian Nations.
Suzhou port’s throughput capacity (which includes the three terminals of Changshu, Taicang and Zhangjiagang) increased 16.8 per cent to 137m tons between January and August 2008, according to Jiangsu Transportation Department. Changshu terminal alone recorded a growth rate of 20.8 per cent.
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