Tianjin ( 天津 ) seems to have put last year’s deadly explosions in the Binhai New Area behind it after reporting robust growth in economic output.
But the question remains: Can businesses really be immune to such a scandalous accident – one that claimed 173 lives and devastated 10,000 homes?
Cao Ye, a senior manager with German shipping firm Rickmers’ Beijing branch, said the city government’s subsequent ban on hazardous goods being loaded or discharged at the port was “painful” and it continued to take a toll on ocean transportation businesses.
“Cargo owners have to pay thousands of yuan extra to send their goods to other ports for loading,” she said.
The explosions on August 12, 2015, at a warehouse operated by Ruihai International Logistics where 11,000 tonnes of chemicals and hazardous goods were stored, was estimated to have caused losses of 70 billion yuan (HK$82 billion).
That is equivalent to 4.2 per cent of Tianjin’s total economic output in 2015, which topped 1.65 trillion yuan with year-on-year growth of 9.3 per cent, making the municipality one of the mainland’s fastest-growing provincial-level regions. During that time national economy expanded just 6.9 per cent, the slowest in a quarter of a century.
Xiao Jincheng, director of the National Development and Reform Commission’s research institute on territorial development, told state media the incident had caused “massive damage” to the economy but it was hard to gauge the exact losses.
More than 120 government employees were punished for offences such as dereliction of duty after the disaster.
Tianjin barred shipping liners from handling hazardous goods as it embarked on a head-to-toe revamp of the facilities for dangerous goods and increased industry regulations.
There has been speculation local authorities will soon lift the ban, but industry insiders downplay the possibility.
“As a matter of fact, tighter regulations are much needed to improve safety,” said Bai Yun, who works for PanAsia Shipping.
“But it’s unfair for cargo owners and shipping firms since they have either to pay extra transportation costs or lose business.”
In the past 12 months, Tianjin cargo owners have had to ship hazardous products bound for foreign markets through the ports of Qingdao ( 青島 ) and Weihai (威海) in Shandong (山東) province.
Road transportation costs for a typical 20ft-equivalent-unit (Teu) container between Tianjin and Qingdao can cost as much as 5,000 yuan.
At a time when Chinese goods are losing their lustre on the global market due to increasing labour costs, additional bills for transportation further eat into manufacturers’ profits.
Tianjin authorities have been inspecting facilities and redesigning the certification process for operators who specialise in the storage and transportation of chemicals and hazardous goods.
“Safety and security is always paramount in dealing with businesses,” said Rich Bolte, chairman and chief executive of BDP International, a forwarding company specialising in chemical logistics.
“It’s important for authorities to work out a blueprint while companies take these principles to heart.”
The economic losses for export-oriented manufacturers of chemicals, port operators, and ocean carriers might appear minimal next to the staggering size of the city’s gross domestic product.
However, in September and October 2015 container throughput via Tianjin port dropped nearly 30 per cent from the same period the year before to 9 million Teus.
Shanghai-listed Tianjin Port, operators of ports in Tianjin, and providers of related services including loading, storage and transportation, reported sales of 15.4 billion yuan in 2015, a 40 per cent drop from the year before.
Even so, local authorities appear unfazed.
Tianjin has been promoting its services sector to bolster the city’s competitiveness and become a financial centre.
Last year, services generated total output of 860.4 billion yuan – 52 per cent of the city’s total. This was the first time services had contributed more than half of Tianjin’s GDP.
The local government said it was relishing a readjustment of its economy as the services sector, particularly financial firms, became the new bright spot.
Tianjin’s financial services posted an 11.7 per cent rise in output, hitting 159 billion yuan.
Tianjin is also among only four provincial-level regions to have received a green light from Beijing to develop a free-trade zone. Its Hong Kong-style free port is seen as a testing ground for the nation’s economic reforms.
But shipping industry executives give a cold shoulder to the buoyant figures and the “hyped” free-trade zone.
“All those figures have nothing to do with businesses,” said Xiong Hao, assistant general manager with Shanghai International Shipping. “Doing business is about making life easier for people who want to increase their volumes and better serve their clients. I think the loss from the Tianjin explosions could amount to several times [the initial estimate of] 70 billion yuan due to the increasing difficulties facing business people around the country.”
The Tianjin disaster prompted port authorities in Shanghai to relocate some hazardous goods warehouses to minimise risks. Cargo companies say the move costs them an extra 800 yuan per Teu.
“The impact from the Tianjin explosions can be found in Shanghai as manufacturers and the shipping industry are grappling with increasing costs and less business,” said Lu Ming, an agent with Shanghai Ocean Shipping Agency. “It’s not a good sign because business morale is already low amid the sluggish economy.”