Guangxi gets moving on freight
Port of Fangchenggang seizes opportunities from serving industries in inland provinces such as Yunnan, with a focus on Southeast Asian trade
Row after row of fertiliser containers line a cargo platform at Kunming railway station in Yunnan province. Their destination: Fangchenggang.
For the factories of Kunming in land-locked Yunnan, Fangchenggang has opened the door to Malaysia, Indonesia and other overseas markets.
The biggest port in Guangxi province has also opened up a new income stream for container shipping lines as they are taking advantage of the intermodal connection between Fangchenggang and Kunming to offer services that have radically cut transit costs.
Previously, the fertiliser coming out of Kunming factories would either have to be transported by train to the port, where it would have to be reloaded on to dry bulk vessels, or it would have to be loaded into containers that could only be taken to Fangchenggang by truck.
With the new sea-rail intermodal container service, the fertiliser can now be loaded into containers and taken straight to the port and on to ships.
"Hauling a container of fertiliser from Kunming to Fangchenggang used to cost 20,000 yuan (HK$25,300) by road but it's just 8,000 yuan through the sea-rail intermodal service," said one exporter of phosphate fertiliser in Kunming.
Last year, Fangchenggang handled more than 100 million tonnes of cargo, mainly coal, iron ore and fertiliser, 11 per cent more than in 2011.
In the first five months of this year, the container throughput in Guangxi rose 11.23 per cent to 372,772 teu (twenty-foot equivalent units) from the same period last year, outpacing the 8 per cent growth of major mainland ports in the same period.
CMA CGM, one of the largest shipping lines in the world, said its major shipments from Guangxi were chemical products such as fertiliser, seafood and machinery, which originate from Yunnan, Guizhou, Hunan and Guangxi.
But while Guangxi looks set to benefit from the trade growth between China and the Association of Southeast Asian Nations through intermodal transport services like these that connect the manufacturing bases in the hinterland to overseas markets, an increasing bottleneck in its railway system is threatening to derail trade growth.
The new intermodal services have pushed up traffic, leading to more congestion at the sea-rail junction.
"It used to take three to four days to take goods from Kunming to the port," said a freight forwarder for sea-rail shipment.
These days, it takes five to seven days for containers to reach the dock from the factory.
According to CMA CGM, a shortage of stevedores and warehouses may also hinder the growth of the sea-rail service.
Freight forwarders are pinning hopes on the newly built high-speed rail in the province to divert passengers from the conventional train network to free up more capacity for freight movement.
About 1,100 kilometres of high-speed railways will be completed by the end of this year in Guangxi and will connect Nanning to Guangzhou in a three-hour train ride.
Guangxi is the nearest Chinese gateway to Southeast Asia. Trade between China and Asean countries has grown 7.3 times to US$400 billion in the past 10 years.
A free-trade agreement that came into effect from 2010 eased tariffs on 90 per cent of the products traded between China and six members of the bloc, covering nearly 8,000 product categories. The free-trade agreement will from 2015 cover all 10 members of Asean, bringing a windfall to the likes of Fangchenggang.
"Guangxi will benefit from a trade spurt as it has both land and sea access to Southeast Asia," said Allen Shi Lop-tak, a legislator representing the province.
Last year, the value of trade between Guangxi and Asean countries amounted to US$12 billion. Shi, who runs printing factories in Shenzhen, Henan and Sichuan, said Guangxi was also an alternative destination for Hong Kong factory owners to move their plants from the coastal areas as labour shortages and soaring rents in the eastern hubs dent manufacturing bottom lines.
Frustrated factory owners in Guangdong have been looking to move further inland or migrate altogether to Vietnam and other low-cost Southeast Asian countries.
Sensing new opportunities, the Guangxi government is pressing ahead with improving the port infrastructure.
It has earmarked 133.9 billion yuan to expand the capacity of container ports and multi-purpose ports in the Beibuwan region, including Fangchenggang. In an investment promotion event organised by the Guangxi government in Hong Kong recently, Peng Qinghua, the province's party chief, said he wanted to partner with Hong Kong in promoting the logistics service in Guangxi. He has invited Hong Kong manufacturers to the province.
Peng used to be the director of the central government's liaison office in Hong Kong.
One hitch for Hong Kong businesspeople to move factories to the province, however, is labour costs.
The minimum wage in Guangxi is more than 2,000 yuan per month, compared with about 1,140 yuan in Vietnam, for example, making Southeast Asia a better destination in some respects.