Yangtze Traffic Gets Stimulus

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Stimulus package boosts Yangtze traffic volumes – according to our friends at Yangtze Business Services (whose second Yangtze Business Network conference, focusing on the logistical challenges of accessing China’s interior, will be held in Shanghai on 15 April). They provide the following details:

    “Accelerating investment in transport infrastructure in China’s interior has halted the recent sharp decline in cargo throughput at ports along the Yangtze River, according the latest official figures.

    In January 2009, the major ports along the Yangtze trunkline reported a year-on-year cargo throughput increase of 5.7 per cent to 80m tons, the first monthly rise since last August. Container throughput increased 19.6 per cent to 550,000 teu, compared with eight per cent in November and 14 per cent in December.

    “This is impressive growth in the current climate,” said Ms Zhang Tingting, co-author of the much acclaimed investment guide Yangtze Transport 2008: Accessing China’s Interior. “Both the January 2009 general cargo and container throughput growth levels are on a par with the same month last year, when the global economy was in much better shape.”

    According to statistics released by the Yangtze River Administration under the Chinese Ministry of Transport, cargo throughput reached 1.15bn tons in 2008, up 9.2 per cent year-on-year. However there was a marked downturn in activity towards the end of the year due to the impact of the worldwide economic downturn. Throughput increased by 14 per cent during the first nine months, followed by zero growth in September, and falls of 17 per cent in October, 21 per cent in November and 30 per cent in December.

    Higher levels of government spending to construct railways, roads, bridges and metros is driving the demand for imported iron ore and construction steel, two of the major commodities shipped on the Yangtze. According to the recently revised blueprint for the national rail network approved by the State Council at the end of October, planned new lines for the period up to 2020 will more than double from 16,000km to 41,000km. In 2009 and 2010, work will start on 20,000km of the new lines, including the Chongqing-Guizhou and Guizhou-Guangzhou lines, two major routes that connect the interior to the south coast.

    Projects to improve shipping conditions on the Yangtze are also making the river a more viable mode of freight transport, according to Mr Tang Guanjun, newly appointed director of the Yangtze River Administration. “Huge investments in developing the Yangtze in recent years, involving dredging the waterway and modernising the ports, have made Yangtze shipping the backbone of the transport network for industries along the riverbank and beyond,” he said.

    Detailed January commodity figures are not yet available, but according to major iron ore-handling ports such as Zhenjiang, iron ore volumes are picking up as steel producers add to their stockpiles to take advantage of iron ore prices that have fallen to about 40 per cent of their 2008 peak.

    Reconstruction efforts in the aftermath of the Sichuan earthquake last May, sometimes involving the creation of entire new towns, continue to drive demand for building materials such as sand, stone and cement.

    The single largest commodity shipped on the Yangtze, iron ore, accounted for more than 20 per cent of the total cargo throughput in 2008, increasing 4.7 per cent year-on-year to 210m tons. Iron ore throughput grew 22 per cent in the first half of the year, before slowing in the third quarter and falling by 17 per cent in October, 28 per cent in November and 38 per cent in December.

    Coal and building materials, the second and third largest commodities shipped on the Yangtze, followed a similar pattern. Throughput of all the leading three commodities combined reached 557m tons last year, accounting for nearly 55 per cent of the general cargo total.

    Similarly, container throughput during the first nine months grew by nearly 31 per cent but the pace slowed to 20 per cent in October, eight per cent in November and 14 per cent in December. Over the whole year, throughput increased 25 per cent to 6.92m teu, compared with 38 per cent in 2007.

    These slowdowns in the container sector are less pronounced than in the export-driven ports along the coast. Throughput at China’s two largest ports, Shanghai and Shenzhen, fell by 6 per cent and 15.7 per cent respectively in December, the sharpest falls on record. “To a certain extent, we are less affected by the rapid shrinking of foreign trade than in the coastal ports because of continued robust domestic trade,” said Mr Gu Qiangsheng, executive deputy general manager of Wuhan Port Group. He believes, however, that it will take until May or June for government efforts to stimulate consumer demand to be translated into sustained and strong cargo growth.

    Mr Huang Qiang, Communist Party Secretary of the Yangtze River Administration, agrees that there could be “a few more difficult months before we can be certain that we have come out of the woods in terms of throughput. But we are confident that business will improve markedly in the second half of 2009 and annualised cargo growth will be in the region of 9 per cent.”

    Analysts point to encouraging China car sale figures in January and that this may, in turn, boost demand for high-end steel and therefore iron ore, too. In Beijing, for example, more than 60,000 passenger cars were sold last month, up 17 per cent year-on-year, according to Chinese Central Television. A new government initiative, setting aside Rmb5bn between March and December 2009 to subsidise farmers to upgrade to low-emission vans and passenger vehicles, is another reason for analysts to predict double digit iron ore throughput growth in the second half of this year.

    Mr Huang, scheduled to speak at the second Yangtze Business Network conference in Shanghai on 15 April, emphasised that the greatly accelerated speed of investment in rail, road and waterway projects along the Yangtze corridor will transform transport infrastructure and reduce supply chain costs for shippers which, in turn, will boost Yangtze cargo traffic in the long run.”

About Yangtze Business Services
Yangtze Business Services Ltd is a publisher and event organiser that specialises in Yangtze transportation issues. It is the leading independent source of business information on the region, helping companies to assess the logistical challenges involved in moving goods and raw materials to and from inland China.

Its second Yangtze Business Network conference, focusing on the logistical challenges of accessing China’s interior, will be held in Shanghai on 15 April. This one-day conference, with full co-operation from the Yangtze River Administration under the Ministry of Transport, aims to bring together under one roof officials from central and local governments in charge of ports, transport and inward investment across the entire length of the Yangtze. So far, half of the 24 major port cities have written to confirm their intention to participate: Luzhou, Chongqing, Wanzhou, Yichang, Jingzhou, Wuhan, Wuxue, Jiujiang, Anqing, Yangzhou, Zhenjiang and Jiangyin. Many of them have already submitted to the conference lists of approved investment projects. These projects cover a wide range of areas, from the production of auto components and solar panels to the construction of leisure facilities and port infrastructure.

For more information, contact:
David Lammie on +44 (0)20 8874 3217, +44 (0)7922 285766 or email dl[AT]YangtzeBusinessServices.com

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