Six-year logistics blueprint released
State Council gives go-ahead to mainland port almost doubling its quay length
The State Council has published a sweeping blueprint for developing China's logistics infrastructure and capacity over the next six years, while approving a plan to roughly double the size of the deepwater port in Tianjin in an effort to boost import and export flows.
China's total logistics costs accounted for 18 per cent of gross domestic product last year, more than double the level in developed economies and more than in developing peers such as Brazil and India.
"Industrialisation and urbanisation call for a large-scale, modern logistics service network," the cabinet said.
"The traditional logistics model is no longer sustain- able."
Beijing wants to see logistics costs lowered to 16 per cent of GDP by 2020.
To achieve that goal, the State Council has urged cooperation across different regions and between modes of transport, including the cutting of red tape and toll fees, vertical integration of transport and warehousing operators, and better synergies among seaports, airports, railway lines and expressways.
Mark Millar, managing partner of M Power Associates, a supply chain and logistics consultancy, said effective logistics and supply chain support were crucial as manufacturing bases moved inland and the central government sought to reshape the world's second-largest economy into a more consumption-driven one.
"The extensive guidance will assist the continuing modernisation of this essential services sector, which empowers the supply chain ecosystems that enable trade and commerce to flow, and consumers to shop and consume throughout the mainland," he said.
China ranked 28th in the 2014 International Logistics Performance Index published by the World Bank. The score is the second highest among developing economies in the Asia-Pacific region, following Malaysia.
However, domestic logistics performance punches below its weight, with only 76 per cent of shipments meeting quality criteria, the World Bank report shows. The ratio in Hong Kong is 95 per cent.
The State Council has also urged investment in cold chain infrastructure and "significant growth" in the outsourcing of logistics services, or third-party logistics, a common marker of logistics sophistication in an economy. It also encourages mergers and acquisitions in the fragmented market.
Separately, the State Council gave approval to a prodigious infrastructure plan at Tianjin Port, where waters open to foreign cargo ships will more than triple to 1,590 sq km. Seventy-one more berths would be installed in the vast area, with the quay length doubled to 148km, Xinhua reported.
Tianjin port is the world's biggest artificial deepwater port and the world's fourth-largest port by throughput. It handled more than 500 million tonnes of cargo last year, Xinhua said.
Details of the estimated investment value and the types of terminals to be constructed remain sketchy. Calls to the municipal government and Tianjin Port (Group) went unanswered yesterday as the country is in the middle of the week-long National Day holiday.
The new policies saw related stocks rally yesterday. Tianjin Port Development, a subsidiary of state-owned Tianjin Port (Group), jumped 13.3 per cent to close at HK$1.62. Sinotrans closed up 8 per cent at HK$5.84. The benchmark Hang Seng Index gained 1.1 per cent.
