Earlier this month, the Chinese government announced plans for a sweeping free-trade zone in China, a move with implications that would stretch far and wide.
The biggest consequence of the FTZ for the liner shipping industry, however, would come from the allowance of foreign-flagged vessels to participate in some form in Chinese domestic trades. That would open the possibility for non-China-based ocean carriers to essentially serve trades between Chinese ports.
Carriers like Maersk Line have been clamoring for years for the opportunity to engage in such activity, claiming their ability to move cargo from, say, the Bohai Bay ports in northeast China to Shanghai would benefit China from a transshipment standpoint. The thinking goes that China’s three major port clusters — around the Pearl and Yangtze River deltas and the Bohai Bay — individually produce so much cargo and function essentially as disparate regions.
China’s two major carriers, COSCO and China Shipping, have fought the move, as both rely heavily on the massive volumes transported between the three regions.
Jonathan Beard, managing director of the port consultant GHK Hong Kong, said this week that the free trade zone could be a “game changer.”
“Carriers have argued it would be beneficial to take cargo from Bohai to Shanghai for transshipment,” he said at the Journal of Commerce-organized TPM Asia conference in Shenzhen Thursday. “That cargo (unless carried by China Shipping or COSCO) has to go to Busan for transshipment.
“The details (of the FTZ) are yet to be seen, but if it is true liberalization, there will be major growth in transshipment for Shanghai, some impacts on Hong Kong and Kaohsiung, and a major impact on Busan, whose growth and expansion has been based on international transshipment.”
Beard said, however, that he would be surprised if China’s cabotage laws would be fully liberalized.
“Look at other countries, like the United States,” he said.
Shanghai FTZ could be ‘game changer’ for transshipment
