Unabhängige Zeitung zu Wirtschaft und Verkehrspolitik
CENTRO INTERNAZIONALE STUDI CONTAINERS
ANNO XXXVIII - Numero APRILE 2020
PORTS AND TERMINALS
CHINESE PORTS: QUO VADIS?
"Slower traffic growth, increased competition and
growing international opportunities in the aftermath of the
financial-economic crisis gave rise to more port cooperation and
integration in China."
In the past weeks, the guest columns by colleagues Peter de
Langen and Bart Kuipers for ESPO addressed possible impacts of the
Coronacrisis on trade, supply chains, and European ports. In this
contribution, I like to focus on ports in a country that is taking
centre stage not only in the world economy but also in the
Coronacrisis, i.e. China. COVID-19 finds its origins in China and
it, therefore, was the first country in the world to feel its full
impact on economic life. However, as the number of new daily cases
has dropped to almost zero, it is also the first country that has
seen a resurgence of economic life through the relaxation of
restrictions on firms and people. Recent history has taught us that
China shows remarkable resilience in dealing with external shocks.
I believe this resilience is a combination of effective
government intervention, the incredible speed with which resources
(capital, people and technology) can be mobilized and the strong
cultural identity, positivism and unity/community feeling among
Chinese people. The country's resilience also generates some side
effects: each shock in the world economic system seems to accelerate
China's rise as a political and economic power. Despite the
country's strong resilience and the growing importance of its
domestic market, China obviously is not free from shocks in a
Let's go back to the financial-economic crisis which started in
late 2008. China still managed to reach 9.4% GDP growth in 2009
compared to 9.7% the year before. In comparison, EU GDP growth
dropped to minus 4.4% in 2009. However, this difference in economic
growth between the two regions was not reflected on container ports:
the total container throughput in the top 95 container ports in
Europe dropped by 14.3% in 2019 with some hub ports recording more
significant volume losses (e.g. -57% for Constanza, - 45% for
Thamesport, -30% for Barcelona, -28% for Hamburg and -16% for
Antwerp). In China, container throughput dropped by more than 7% in
2009 with Shanghai losing about 11% of its volume and Shenzhen and
Hong Kong both more than 14%.
Already in April 2009, the ports of Qingdao, Rizhao and Yantai
signed a strategic alliance agreement in which was agreed that
Qingdao port act as the leading port and Yantai port and Rizhao port
act as assistant ports in view of establishing a regional shipping
centre. The port integration wave at provincial level eventually
resulted in the creation of port groups such as the Zhejiang Port
Group (i.e. Ningbo-Zhoushan and some other smaller ports), the
Liaoning port group with ports such as Dalian and Jinzhou and the
Hebei Port Group which controls Qinghuangdao port, Caofeidian port,
and Huanghua port.
The international distribution systems in China initially were
very much focused on the large export flows centred around major
gateways along the coastline, mainly in the Pearl River Delta and
the Yangtze River Delta. In the past decade, the growing consumption
in China has also given a strong impetus to the development of
distribution structures for import flows.
In geographical terms, the distribution systems in China are no
longer only located near the main gateways along the coastline, but
have expanded to major inland locations in the West (e.g. in cities
such as Chongqing, Chengdu or Wuhan) and seaport regions in the
Northeast (e.g. near the Bohai rim ports). Major infrastructure
investments in highways, railways, and inland terminals have
facilitated the increased participation of these regions in
distribution networks and rising penetration of containers inland.
The Belt and Road Initiative or BRI, particularly the Belt part, and
the 'Go West' policy give a prominent role to rail (and where
available also barges) in securing future domestic and Eurasian
freight mobility. Chinese seaports are rapidly developing dry/
inland ports to compete for hinterland access and to gain a
A good example is the port of Tianjin which has built and helped
to build 21 dry ports in Northern and Western China, and SIPG which
has invested in eight containers terminals along the Yangtze River.
At the same time, many inland areas are promoting the construction
of dry port logistics parks. In some areas, the government has
stepped up to fight fragmentation by developing very large terminal
facilities with associated logistics parks.
From an investment perspective, the 13th five-year plan promotes
the notion of a 'two-way opening up', i.e. attracting foreign
investments and encouraging Chinese enterprises to go abroad. This
policy direction is also having an impact on the functioning and
role of seaports. Foreign players are in principle allowed to invest
in and operate ports without a local Chinese partner. In practice,
there are no cases in which a foreign operator or investor has a
majority shareholding in a Chinese container terminal. Foreign
investors typically end up either engaging into partnerships with
local port business groups who have a majority shareholding, or, in
case of the local port business group does not have a majority
share, are forming partnerships with Chinese or Hong Kong terminal
operators such as CMHI, Cosco Shipping Ports or Hutchison Ports.
With regard to the internationalization of Chinese enterprises,
also Chinese terminal operators are increasingly exploring
international expansion and investment opportunities. Compared to
other global terminal operators, the international expansion
strategy of Chinese terminal operating companies seems to be
strongly embedded within geo-economic and geo-political policies of
the Chinese government. The internationalization of Chinese terminal
operating companies such as CMHI and Cosco Shipping Ports is
supported by Beijing in view of creating champions able to play a
role on the international scene and to support broader policies such
as the BRI. The role of companies in BRI has been made very explicit
in the 13th Five-Year Plan through the ambition to enhance
co-operations between China and Belt and Road countries, with
private and corporatized enterprises taking a leading role.
Irrespective of the drivers behind integration, the observed port
integration processes are resulting in a wider spatial reach of
corporatized and commercially-driven provincial port groups. As a
result, CMHI and Cosco Shipping Ports, but increasingly also the
integrated provincial port groups, are investing in foreign ports,
also in Europe. In the past decade, Chinese port actors have
demonstrated major advances in the field of terms of supply chain
integration, connectivity, service availability, and productivity.
At the same time, Chinese port actors seized the windows of
opportunity created by the BRI to go international.
The current Coronavirus crisis poses a major challenge for
Chinese ports. It is still early days to measure the full impact on
the cargo flows, but figures for the first two months of the year
already show year-on-year TEU drops of between 10% to 25%. The
current decline in demand in Europe and North America will put
downward pressure on port volumes also in the coming months, despite
the fact that virtually all ports have resumed activities in the
past weeks. Still, I do not believe the current crisis will create a
rupture in the trends of integration, hinterland orientation, and
internationalization that have characterized Chinese port
development in the past decade. Again, they will show resilience.
The Chinese use two brush strokes to write the word crisis. One
brush stroke stands for danger; the other for opportunity, i.e.
every crisis is an opportunity. The European port industry, just
like other regions in the world, is challenged to avoid that the
current crisis becomes an opportunity for China and a persistent
problem for the rest of the world.