STC reshapes Asia’s shipping routes
Guangxi to explore new freight services linking western China and ASEAN
After graduating from university, Xu Chaoran decided to leave Beijing and return to his hometown of Qinzhou, located in the southern part of South China’s Guangxi Zhuang Autonomous Region, a few years ago, as the prefectural-level city was about to embrace new opportunities for rapid growth as part of the Beibu Gulf Economic Zone.
The zone, established in 2006, covers six cities, including major land ports and seaports linked with Southeast Asia, and is expected to play a more significant role in the China proposed Belt and Road (B&R) initiative in the coming years.
The initiative aims to build trade and infrastructure networks connecting Asia with Europe and Africa, consisting of the Silk Road Economic Belt and the 21st Century Maritime Silk Road.
Since China and Singapore began working together on the Southern Transport Corridor (STC) in 2017, a complementary project linking western regions in China with the 21st Century Maritime Silk Road, the gulf area has become a major pathway in this ambitious transport plan.
Xu, now working for the Guangxi Qinzhou Free Trade Port Area Administration Committee, said he still vividly remembers when Chinese Premier Li Keqiang came to visit the Beibu Gulf back in 2013, when Li urged for the full capacity of the three ports in the area. Those ports were the ports of Qinzhou, Fangcheng and Beihai, which are aiming to reach millions of twenty-foot equivalent unit (TEU) containers in the near future.
“At that time, Qinzhou port handled about 600,000 TEUs. This year, it is aiming for 2.3 million TEUs,” Xu said.
The three ports constitute a trade triangle in the southern coastal areas of the country and face Southeast Asian countries such as Vietnam and Singapore.
When looking through his office window, Xu can now see hundreds and thousands of colorful containers sitting at Qinzhou port, which has been expanding over the past few years.
“Foreign investors have also been participating in this plan. For instance, Singaporean companies PSA International and Pacific International Lines (PIL) came as strategic partners in 2015 to build and manage some berths of the port,” he said.
From January to March, the port handled 468,800 TEUs, an increase of 35.06 percent year-on-year.
Guangxi officials have been dedicated to pushing forward the STC since early 2017, when more provinces including Southwest China’s Guizhou and Northwest China’s Gansu also began taking part in the STC, said Tan Xiuhong, deputy director-general of the Guangxi department of commerce.
The plan, which is believed to reshape logistics and trade routes between West China and the Association of Southeast Asian Nations (ASEAN), will also boost local economic growth in China’s western regions that are less developed compared to eastern coastal areas.
New routes
Several rail and sea routes were launched in 2017, including Chongqing-Beibu Gulf-Hong Kong, and Chongqing-Beibu Gulf-Singapore, Tan noted. “In 2018, more sea-rail freight services will be launched, which will also reshape traditional shipping routes,” she said.
As major ports are located in eastern coastal cities like Shanghai and Lianyungang in East China’s Jiangsu Province, cargos from western regions are usually shipped via water transport along the Yangtze River. “The STC offers another choice, which also saves time for logistics companies,” Tan said.
For instance, the distance between Southwest China’s Chongqing Municipality and Beibu Gulf via rail is on average 1,000 kilometers less than that between Chongqing and Shanghai by water transport, which saves 12 days.
In the first quarter of 2018, Guangxi’s trade volume grew 15.3 percent year-on-year to 86.73 billion yuan ($13.69 billion), and the growth rate was 5.9 percentage points higher than the national level. As a major driver of trade growth, the corridor connects more western regions with Southeast Asian countries, where industries are mostly complementary.
“Fruit and vegetables such as apples, pears and onions are shipped through a route connecting Lanzhou [capital of Northwest China’s Gansu Province] through Guangxi to Southeast Asia. And tropical fruit and seafood in Southeast Asian countries are shipped back to China. Meanwhile, more STC freight services will further cooperate with Yuxinou and Rongxinou, which will finally help connect ASEAN with Europe,” Tan said.
The Yuxinou rail freight service stretches from Chongqing to Duisburg in Germany while the Rongxinou service connects Chengdu, capital of Southwest China’s Sichuan Province, to the Netherlands, with both being major rail freight services in western regions under the B&R initiative.
“Since the beginning of this year, 10 western provinces and regions, except [the autonomous regions of ] Southwest China’s Tibet and Northwest China’s Ningxia, have shown their willingness to join the STC project,” the deputy director-general said, noting that more ASEAN countries such as Thailand and Vietnam have expressed interest in taking part too.
Small port challenges
Qinzhou, Fangcheng and Beihai ports have been fiercely competing against each other for years, as their capacities were once relatively small while they scrambled to attract more shipping lines.
To avoid blind competition among those three ports, local authorities came up with a port integration plan to redefine the different functions of each port. Qinzhou, for example, is now the port handling large-sized containers that are shipped to Southeast Asia.
Qinzhou port, along with the other two in the gulf area, has the ambition to become one of the busiest container ports in southern China. However, there are still challenges ahead.
“Compared to eastern coastal areas, Guangxi sees slower economic growth, which poses problems for cargo sourcing,” Xu said. “Traditional shipping routes via the Yangtze River Delta and Pearl River Delta areas are still dominant.”
So far, Qinzhou port has about 40 shipping routes, and half of them are for exports.
“Our next step is to attract more ASEAN countries to try out new shipping routes, instead of going through Hong Kong or Shanghai,” Xu said.
Also, the small port has to improve its infrastructure, as “the last mile” issue has not been tackled when it comes to sea-rail combined transport from Beibu Gulf to Singapore.
When cargos arrive at Qinzhou rail station, they are then transported by trucks to Qinzhou port.
Without a quicker link between rail and sea, the trucks inhibit the efficiency of this sea-rail freight service.
“Also, traders are charged about 450 yuan per container on their trucks, and clearance procedures take a longer time than expected,” Xu added.