Transport boost needed to handle Yangtze growth
More investment in road, railway and barge networks along the Yangtze River needs to take place to cope with the swift pace of manufacturing and development in the west of the mainland, logistics experts say.
Total domestic and international cargo volumes in the Yangtze River Delta are forecast to grow from 62 million teu (20-foot equivalent units) this year to 82 million teu in 2015 and 122 million teu in 2020.
Jonathan Beard, managing director of transport consultancy GHK (Hong Kong), said bottlenecks had emerged along the river, partly caused by ship congestion at the Three Gorges dam and seasonal low-water restrictions. But rapid development in the western areas called for other transport modes. 'Putting everything through the bottlenecks' was not a solution, Beard said.
Instead, he said, the growth of cargo volumes would spur investment in rail, road and river infrastructure.
Beard said intermodal rail services, including inland container depots to handle rail cargoes, were undeveloped and service was unreliable. It cost almost double and took an extra four to 14 days for a container to reach Shanghai from Chongqing by railway compared with barge, based on data from Sinotrans and Singapore shipping line APL, he said.
'Service reliability and speed have to improve before rail becomes a serious player for inland container movements,' he said.
More frequent trains and better reliability would drive up rail cargo volumes, spurring further service improvements, he said.
A consortium including NWS is developing a network of 18 container rail depots; the first eight handled 1.25 million teu last year. China Shipping Container Lines also helped launch a dedicated rail service between Changsha to Shekou, but utilisation has been low.
'Investment in rail infrastructure will be quicker than the reform of the Ministry of Railways,' Beard said.
This view was echoed by Lars Jensen, chief executive of SeaIntel Maritime Analysis, who said discussions about reforming the ministry had been going on 'for a few years' and would take a couple of years more to materialise.
Jensen said there would be significant investments in rail infrastructure, with 120,000 kilometres of new track planned by 2015, while money had also been earmarked for container rail hubs, barges and roads. 'What I don't see is investment in the institutional framework that solves the problems.' Europe took years to develop a similar framework, he said.
Turning to road transport, Beard said trucking costs were higher at about US$2.50 to US$3 per mile in the Yangtze River Delta, compared with US$1.75 in the US even though salaries were low.
These higher costs are partly the result of a fragmented trucking sector together with regulatory inefficiencies, including restrictions on cross-province movements.
Beard said a shift to larger river vessels would improve the economies of scale of barge services, while removing cabotage rules and reforming customs operations would improve competitiveness.
Average annual growth of rail container volumes on the mainland, compared with 14 per cent for barge traffic