UP THE YANGTSE

The Chinese Central government’s Three Gorges project and massive ongoing infrastructure investment at many river ports should help turn the Yangtse River into a thriving corridor for container transport in the next few years. This is the general message from consultants, shippers and logistics providers operating in the Chinese interior.

An American consultant, Jon Monroe, has introduced a number of investors and new manufacturers to the growing potential of the Yangtse River in recent years. He notes: ‘Many port authorities are taking aggressive action to build logistics parks at their terminals to attract manufacturing industries to the port areas. Wanzhou is definitely hot on this policy. Some local governments are taking collective action to improve their market position. For example, Wanzhou, Fuling and Chongqing consider themselves as one port group. As an alliance they aim to attract more business. Prior to this aim, they were only really carrying bulk traffic and road haulage was popular.’

Until recently, transportation along the river has been difficult, mainly due to draught restrictions. Many foreign manufacturers have generally regarded port infrastructure and barge services as inadequate and this has deterred them from locating new facilities along the river. Logistics providers and shipping companies have mainly concentrated their assets on the more lucrative coastal market. But this is all changing.

The first phase of the Three Gorges project, completed in 2004, will help to improve the draught in the upper reaches of the river from 4-5 metres, to 9-10 metres by 2006. Larger vessels, up to 10,000dwt will be able to call at the many river ports and annual navigation capacity will increase from 10m, to 50m tonnes. According to government studies, all this will help reduce shipping costs by 37%, making the river a far more attractive intermodal proposition.

Container traffic at the river’s major ports has been growing at exponential rates since it first started moving in 2000, with 492,000TEUs handled at Nanjing and 139,000TEUs at Chongqing last year. These figures represented 23% and 54% year-on-year growth rates respectively. To cope with this surge of export traffic, eight new river terminals are under construction at Wanzhou, Yichang, Wuhan, Jiujiang, Nanchang, Nanjing and Nantong and all should start operations by 2006. A further US$2 billion is being spent between now and 2020 on renovating 40 banks along the river’s middle and upper reaches.

The Shanghai International Port Group (SIPG) has been a big investor at the ports of Wuhan, Changsha, Anqing and Jiujiang and has set up some joint venture companies. Of course this is in the port’s best interests, considering the Yangtse is a major part of its natural hinterland. Presently, up to 40% of all container traffic carried on the Yangtse is transhipped via Shanghai.

SIPG’s president Lu Haihu, says: ‘The Yangtse River delta is the most economically developed region in China and this is a big part of our future development strategy. Feeder volumes from the Yangtse River showed the biggest increase in contribution to Shanghai port’s overall container volume last year.’

The municipality of Chongqing, with a population of 31m should provide a huge impetus for increasing traffic along the river. It is obviously a major consumer centre, but it is also the centre for most of the major foreign car manufacturers, including Volkswagen and Ford. Brian Carrington, logistics manager at Ford’s Changan factory, says: ‘Our standard method of transport for FCL containers from Shanghai to Chongqing is by river barge. We are hoping the rising water level created by the dam will allow larger vessels to reach Chongqing and costs will be reduced.’

Carrington adds that Ford will open a second plant at Nanjing in 2006, increasing its domestic vehicle production from 20,000, to 150,000 units per annum. This will coincide with the opening of the port’s new terminal.

This renewed activity and investments looks to be propelling some of the Yangtse River’s main ports, such as Chongqing, Wuhan and Nanjing into the big league. No longer will they be considered as antiquated bulk terminals that can only be accessed at certain times of the year.