A white paper published today on the challenges and opportunities for China's transportation and logistics sector highlights the importance of thinking beyond Shanghai when considering the needs of China's exporters and importers.
The report, published by Drewry Shipping Consultant Ltd (Drewry) in association with global container carrier, APL, and sister company, APL Logistics (APLL) says that while Shanghai is the main strategic hub for Central China, effective strategies for the entire country are increasingly important as the demand for the products of multinational companies rises within China and manufacturing for export extends further into the interior.
Author, John Fossey says his research revealed that despite most investment still concentrating in the Shanghai region, China's "Go West" policy was creating considerable interest in other regions further inland. "However there is an urgent need to overhaul existing through-transportation networks to expedite the carriage of goods from China's underdeveloped interior to its ports, " he said.
"The Yangtze River corridor stretching from Shanghai to Chongqing will continue to be the main arterial link between the China's interior and coast," Mr Fossey said, "but there will be immense opportunities for freight carrying in other provinces such as Anhui, Henan and Sichuan, which still have relatively low levels of containerisation."
The paper also concludes that while the opportunities for those involved in the manufacture and movement of products through the global supply chain are hampered by a host of barriers, a desire to change and embrace international best practice is prevalent in China.
"We are seeing positive movement and indications that China would like to move faster in reducing the red tape and modernizing infrastructure to ease bottlenecks, but we have only really scratched the surface," said Brian Lutt, head of APL and APL Logistics for Greater China.
Port capacity and facilities within China are also cause for concern, the paper said, especially considering that by 2005, it is estimated that the total volume of China's imports and exports will exceed 40 million twenty-foot equivalent units (TEU).
China's third-party logistics industry is in its infancy, but it is expected to grow on average by 20-25 percent over the next five years. Government-led reform and multimodal transportation infrastructure development will be hard pressed to keep pace, the white paper concludes.
"I expect the most intense activity to occur during the middle years of this decade," said Rick Moradian, President, APL Logistics, Asia. "It will be spurred on by the huge trade flows expected to result from China's entry into the WTO and the growing realisation that supply chain management solutions can drive real benefits throughout the business cycle," Mr Moradian said.
There is no shortage of companies that want to get involved in China, but the white paper concludes that the winners will be those with a long-term commitment to China, who have invested in transportation networks and infrastructure and who can provide IT enabled value-added logistics services.
About Drewry Drewry Shipping Consultants (Drewry) provides commercial, economic and technical consulting services to the international shipping industry. The company is headquartered in London, with a support organisation in India and a number of overseas representatives. Established in 1970, Drewry's activities are grouped around the business practices:
* Bulk Shipping * Containers, Ports and Logistics * Specialist Shipping * Technical services
Drewry is a specialist, not a generalist company. Its expertise lies in shipping and related maritime and transport sectors. It has been built by providing specialised advice to leading companies in these industries over three decades.
About APL and APL Logistics APL provides customers around the world with container transportation services through a network combining high-quality intermodal operations with state-of-the-art information technology. APL Logistics is a sister company of APL and offers end-to-end supply chain management services enabled by leading information technology. APL and APLL are wholly owned subsidiaries of Singapore-based Neptune Orient Lines (NOL), a global transportation and logistics company.
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